Friday, November 20, 2009

Recovery, " A Cruel Hoax"

Thursday, November 19, 2009 certain treasury bills traded at a premium to discount, meaning the interest rate was negative on them. This isn't a sign of an improving economy, but instead a total lack of demand for cash to make economic transactions and an extreme aversion to risk in the market place. All the same, the game of running commodity prices along with rallying stock markets defy the picture shown in the treasury markets. Add to the fact that t-bills are some of the most shorted assets in the world can only mean the other side of the trade is massive.

I watch repeatedly as stories of massive budget shortfalls in tax revenues in states and localities which reflect roughly 10% declines are fronted by stories that the economy grew by 3.5% in the third quarter. Which one is it, as retail sales and economic activity show up in tax revenues as fast as they show up in economic growth. Asian reports, one of the most recent being China great 10% while its exports dropped in the 15% range don't wash. Retail sales are up while sales tax receipts are down. Also, there is a massive reduction and payoff of consumer credit going on at this time, which implies that the retail sales figures are a hoax. Job losses are 500,000 a week while there are 6 people looking for every potential job available. In the past, there were twice as many job vacancies and close to 200,000 fewer layoffs weekly which implies to me that the story that the economy is only losing about 180,000 jobs a month is a boldfaced lie.

Mish Shedlock posts charts from time to time which show that prior to the 1991 recession, unemployment rallied with the end of a recession, while afterwards unemployment kept increasing. What this means is they understate unemployment when the recession is occuring and then overstate growth when it comes to an end. Clearly we have recoveries that are nothing more than downsizing procedures to add to corporate profits while employment suffers. Also, there is some kind of statistics that are twisted to show a recovery is occuring when one hasn't started.

Currently talk is turning to the double dip idea. From what I can gather, there hasn't been a recovery, else after nearly 2 years job losses wouldn't still be exceeding any seen for the first year of the recession. Instead, employers would be holding onto workers if new orders were rolling in. It costs money to lay off and rehire workers, so why get rid of them a mere few weeks or months before you need more help?

News about this recession has been cooked from the start. It was a year old before they declared it and proponents of a healthy economy kept preaching we might miss a recession all the way to the point that we had an almost total collapse of the economy. Then, out of the blue in late 2008, recession was reported to have started in December 2007. The bulls then proposed that recessions only last x months and this one was already over. Next we had the Obama stimulus which was designed to stop unemployment at 8%, as recovery was already in sight. 8% became road kill for the stimulus and the bank stress test. All of this is forgotten as the banks are now in a pile of rubble while people wonder why they aren't lending and why they are paying huge bonuses. in the meantime, Obama is claiming all the jobs he saved (for $700 billion one could have hired a new US army along with a new arms business and $700 billion was enough to pay 14 million people $50,000 a year)

More than anything, I am amazed and stunned at the dishonesty and blatant crookedness of the American system. There aren't any dictatorships on earth as dishonest as what we have going here today. Reports come out of strange options trades on Bear Stearns prior to failure on deep out of the money puts with 9 days left to expiration that netted $270 million and the SEC says they have no clue. The SEC can find a transaction that size easier in an 8 hour day than the average person with 20/20 vision can find the moon in the sky once a year in the high desert. So can the Fed as transactions that size aren't that easy to miss. Next we have former Goldman CEO's at the Fed front running news about AIG (the NY Fed, which he was a part of) making Goldman whole in the default swaps, making the trades nearly 6 months ahead of the release of the news. These aren't mailroom employees getting a tip, but rich pigs that can't get enough and have probably never made over a few thousand honest dollars in their lives. It is like the ship is going down, so lets loot the safe and get the first lifeboat.

I don't believe the economy is doing as well as they state, neither do I believe we will have a double dip recovery because I don't buy what has happened as a recovery. Double dip implies that what they did worked or we went back down because we quit doing what they were doing. It is a lie that is meant to allow for more theft and a transfer of liabilities from the few to the many. In the meantime, we have Goldman and the hedge funds throwing stock back and forth between themselves hoping to excite the poor idiots that have been busted by them already. We will get the bill for Goldman and the hedges or they will totally collapse.

Wednesday, November 4, 2009

Executive Powers, it is all in the hands of the President. Keep your eyes open

I wrote this May 26, 2004

I'm sorry to say, but this mess is a lot older than the current administration. The bubble popped in 2000 and we should be not in a recession, but a full blown depression. I too think they should get the power out of DC, but this wasn't arranged in the 1960's, 1970's, 1980's, 1990's or in Y2K. It was created to start by giving popular election of the Senate in 1913 and moving the representation of the states from the legislature in most cases to the multinational corporate world. There was also the passage of an income tax, which wasn't a direct tax as levied, but an excise tax to be passed on as a cost of doing business. There was so much done under the eyes of Woodrow Wilson and his crony, Colonel Mandel House, a new world order communist that just slipped by us. The Federal Reserve was one of the planks of the communist manifesto and one of the organizations that few of our founding fathers favored. It transferred all money power from the people to a few.

One of the things that happened in the Wilson administration was we went to War in Europe. Our history books blame the Lucitania incident, but that occurred in 1915 and Wilson was re-elected on a platform of, he kept us out of war. Back in that day and time, the inaugeration of the President was the first week in March, not in January as we have it today. By March 1917, we were of course in war. With war came the passage of war power acts, which allowed the executive to prosecute the war. Among these powers was a law called the trading with the enemy act, the act of October 6, 1917.

Going forward, in 1933, the Federal Reserve bank was bankrupt and so were most of the other banks. The currency was not any good. Coming to the rescue was Franklin Roosevelt and his moral equivalent of war. What was this moral equivalent of war? Well, it was the repeal of traditional constitutional limitations on government under the concept of emergency and it is codified in 12USC95a and together with 12USC95b, made the President, the Secretary of the Treasury and others with delegated power dictators. Roosevelt replaced the liabilities of the Federal Reserve with liabilities to the Federal Reserve. Instead of the Federal Reserve owing us, we owed it and the only remedy was to try to borrow ourselves to prosperity.

You can also find this 12USC95a codified in 50USC5b. If you don't know what 50USC5b is, go check and you will find out. Senate report 93-547 was put out after the Vietnam war and it discusses this law broadly.

What happened under this law? Well, you have all heard of War on Poverty, War on Drugs, War on Crime, etc. In times of war, there is no constitution or private property. You might have heard of the Schecter poultry case where the New Deal was overturned. It basically said that a tax was for the legitimate support of government and what was being practiced was socialism, in direct violation of the 5th amendment of the constitution. See, there is no just compensation for taking of property and when one group is fed the property of another group by the government, that is taking and not tax. Like it or not, we have been deluded in thinking we live in a government set up in 1787 by our founding fathers.

Roosevelt and then Truman took this mess one step farther. At the end of world war II, the United States was made the banking system for the world. One of the reasons our trade deficit runs so high is we are the only country in the world that can create good and unlimited credit. Money when needed takes the path of least resistance. There are always rumors that such and such a country is going to quit buying our bonds, but the truth is that Japan and Europe went broke fighting wars decades and in some cases close to a hundred years ago. The Federal Reserve was created for no other reason but to allow for the continued modern fighting of more wars.

To wit: Much was made of the recent massive buying of treasuries by the Japanese with dollars bought with yen. Japan has tried to interest rate themselves out of their bankruptcy, social spend their way out of their bankruptcy, but the only way they could produce money for their system with any validity was to use American credit in the form of banknotes.

The 1990's and the Clinton administration was an economic nightmare. I can't say much about the administration since or the ones before either, but Robert Rubin with the assistance of Greenie created and perpetuated a bubble. Did anyone notice the Congress voting money to bail out Mexico in 1994 or 1995? No, Rubin acted on his own, a few months after he and his former employer, Goldman Sachs took all the money out of Mexico to help finance this bubble. The United States leveraged the credit out of Asia, then the IMF came in and replaced it.

What we really need is a cleanout, but that isn't politically feasible. We are in a time of permanent financial overhang and the times are going to get rough. Had Roosevelt left the situation alone and people taken their losses in the 1930's, we would be a prosperous country today, but the fib is that he saved the country. Instead he put us under the same system as Adolph Hitler set up within weeks of the same event, corporate socialism, better known as fascism. Like a frog in a cold pot of water put on the stove, we have been boiled and never knew it was happening.

Why do you think every socialist in the United States walked up to the stand in DC when a man was nominated to the Supreme Court by the name of Robert Bork, who favored something called original intent? I think people on that side of the aisle didn't want to be reminded of the law. They would rather deal with these illegalities like some right to privacy that only applies to right to privacy from other private citizens, not the government itself. Who cares about right to privacy when we are having our capacity to act as living humans taken from us by some system that now can tell us when to jump, when and where to empty our pockets, look in our bank accounts over some assinine international war or some war on drugs. Someone mentioned buying land, well Roosevelt nationalized farming in 1933 and now there aren't any farmers left, only corporations who run on huge central planned agriculture programs and subsidies.

You don't have to take my word for it. Plug in a search for war and emergency powers and look for a guy named Eugene Schroeder. Schroeder published a book called "Constitution, Fact or Fiction". Do your best to find Senate Report 93-547, as it has some very interesting statements in it. You will probably have to go to a Federal Repository. We aren't a constitutional republic any more, but an excutive branch bureaucracy that enforces and carries out powers given it by Congress and never gives the power back. In the meantime states are now sucking on the central planning tit and jump when the Feds say, do so or lose your Federal Funds.