source: UPI.com

WASHINGTON, May 30 (UPI) — Federal debt last year amounted to a record $545,668 per U.S. household
– a 12-percent spike in just one year, government sources said.

The increase burdens each household with an additional $55,000 in national debt for just 2008, USA Today reported Saturday.

The increase can be pinned on the explosion of federal borrowing during the recession and an aging population that is driving up the costs of Medicare and Social Security.

“We have a huge implicit mortgage on every household in America — except, unlike a real mortgage, it’s not backed up by a house,” said David Walker, former U.S. comptroller general, the government’s chief auditor.

The federal government assumed $6.8 trillion in new debt last year, pushing its total debt to a record $63.8 trillion, USA Today reported.

The enormous burden has increased awareness of the government’s financial challenges, U.S. Rep. Jim Cooper, D-Tenn., said.

“More and more, people are worried about our fiscal future,” Cooper said.

For the last several decades, our civilization has steadily approached the point of no return.  This is the point which, when passed, we can no-longer salvage our lifestyle as we know it.  This means that we cannot simply steer ourselves out, as a society; but we must first endure a painful collapse in which millions will be ruined financially and lose everything they have.  Indeed many people will be absolutely shocked and dumbfounded when the very fabric of the society they are completely reliant on, comes apart suddenly, in a devastating wave of hyper-inflation.

There is no doubt in my mind that hyper-inflation is headed our way very soon.  The unprecedented level of money creation will not be wiped by deflation.  In point of fact, the circumstances we are now in are virtually identical to other situations throughout history, which have all resulted in hyper-inflation.

Basically the economy is in a deep slump, while governments are rapidly increasing the money supply with Quantitative Easing (a fancy academic term for creation of large amounts of money).  This formula has a long history of causing currency failure.

Indeed, the system has been abused to such an extent that they have little choice at this point; the only way to wipe out the massive public and private debt obligations is to shrink the size of the debt by debasing the currency.

In the process of dropping the value of the dollar, they are also wiping out the savings of many people and governments around the world.  Indeed most of the dollars in circulation are actually held overseas.  So this debasement of the currency is going to rob the savings of a great many people who trusted in the integrity of the US government.  I doubt this mistake will be made again; at least for a few generations.

This is precisely why the wealthiest and most successful families in the history of our civilization, will only hold their money in hard assets or quality companies which produce hard assets.  They learned through experience, that hard assets are the only way to preserve their family’s wealth, generation after generation, in situations where the currency has no convertability.

I find it truly interesting to observe the behavior of different types of people, as we head into this period in our history:

• There is a significant segment of our population that doesn’t want to know anything; they prefer to think that their lifestyle is untouchable.  They have everything they own in some mutual funds or money markets in their 401(k) or IRA.  Anything in regards to money is “better left to the professionals” despite the fact that these “professionals” are the ones who created the terminal situation which has robbed so many people of their life’s savings.
• Another portion of our population wishes to be blindly optimistic.  They celebrate the fact that the new President is an well-spoken intellectual who says and does much of what they always wanted their leader to say and do.  There seems to be little to no concern, amongst these pseudo-intellectuals, that nothing is being done to address the fundamental problems which plague our society.  Instead new bandages are being applied to mask the problems and “keep up appearances.”
• Finally, there is another portion of the population who have become thoroughly disgusted with the dis-ingenuous left-right paradigm.  They realize that both political parties are leading us down the primrose path, not into the land of milk and honey; but into the desert to die.  It is this segment of the population, which has chosen to rely on their own abilities; to adapt in whatever ways they are able.  To this group of individuals, the solutions to our problems are not top-down, as we are accustomed to; instead the solutions are implemented by each of us in our own lives.  The basic idea is to reduce and eliminate the dependency on this failed society; instead relying on their selves and the local community.  They don’t wish to wait and hope for someone or something outside of themselves to produce “change ™”; instead they fundamentally change the way they live their lives.

I prefer to identify with the third group, because I feel strongly that the first two groups are simply accomplishing nothing of substance. I believe in our power as individuals to produce what we need to live on this planet. Its not like we’re having to live on Mars or something inhospitable like that. This is a very fertile planet which is positively bursting with life and genetic diversity.

I often hear naysayers say that you must have 40 acres and significant financial resources to change your lifestyle; but I have seen examples of urban homesteaders who have been able to produce the majority of their food on small lots (less than 1/4 acre). Sure, they aren’t totally “off the grid” but producing one’s own food is a significant step in cutting costs and achieving sustainability.

We may as well start where we are at. If we are going to strive for something, we must strive for goals that we know we can achieve in a reasonable amount of time. If a significant segment of our population learned to decrease their dependency on this failed system, the benefits would be innumerable.

May 03, 2009 | SeekingAlpha.com

Since the economy began sliding downhill in late 2007, mainstream economic and market experts have consistently erred on the sunny side.

As late as June 2008, mainstream consensus held that the U.S. was heading for a “soft landing” and would avoid recession. Several months later, the slump was acknowledged to have started in January 2008, but we were supposed to see renewed growth by mid-2009, with unemployment peaking in the eight-to-nine percent range. A quick “shovel-ready” stimulus bag was supposed to set us back on the road to prosperity.

In January, recovery projections were pushed forward to late 2009. Today, the consensus is for a mid-2010 recovery, with unemployment peaking at just over 10 percent. Clearly, the mainstream has struggled to catch up to reality for well over one year. What are the chances that they finally have it right this time?

Moreover, the mainstream continues to see what is going on as a plain-vanilla recession that will be quelled with some on-the-fly monetary and fiscal tinkering. Washington, we are told, will pull us out of this slump—as soon as the masses can be enticed back to the shopping malls. Then things will return to how they were before. But what if the experts and politicians are wrong not only on their ever-changing recovery timeline, but also on the nature—nay, the very existence—of a recovery?

America’s reigning political-economic ideology has demonstrably failed. Given that its government is obviously fumbling along without a clue, its foreign and domestic credit is tapped out, and its 300 million people are discovering that their hopes for continuous material improvement will never be met, could the U.S. be headed the way of the USSR?

Instead of a recovery as the mainstream envisions it, what if America permanently bankrupts, impoverishes, and marginalizes itself? What if its cherished institutions fail across the board? For example, what happens when the police realize that their under-funded pension plans cannot support a decent retirement? Will they stay honest, or will they opt to survive by any means necessary? These are questions that the mainstream does not even begin to contemplate. Read the rest of this entry »

Mike Whitney | Counterpunch

This time the banks are zeroing in on Geithner’s cash giveaway bonanza, the “Public Private Investment Partnership” (PPIP). As expected, Bank of America and Citigroup have angled their way to the front of the herd, thrusting their snouts into the public trough and extracting whatever morsels they can find amid a din of gurgling and sucking sounds. Here’s the story from the New York Post:

“As Treasury Secretary Tim Geithner orchestrated a plan to help the nation’s largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market, sources told The Post…

But the banks’ purchase of so-called AAA-rated mortgage-backed securities, including some that use alt-A and option ARM as collateral, is raising eyebrows among even the most seasoned traders. Alt-A and option ARM loans have widely been seen as the next mortgage type to see increases in defaults.

One Wall Street trader told The Post that what’s been most puzzling about the purchases is how aggressive both banks have been in their buying, sometimes paying higher prices than competing bidders are willing to pay.

Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids.”(“Double Dippers; Citi and B of A buy laundered loans at lower rates”, Mark DeCambre, New York Post)

Thus begins the next taxpayer-subsidized feeding frenzy, featuring all the usual suspects. The race is on to vacuum up as much toxic mortgage paper as possible so it can be dumped on Uncle Sam at a hefty profit. These are the same miscreants the Obama administration is so dead-set on rescuing. Better to let them sink from their own bad bets.

How is it that industry rep Geithner couldn’t see that his latest round of corporate welfare would create incentives for the bank scoundrels to game the system again? Naturally, if the government goes into the business of buying crap-loans from teetering financial institutions, the speculators and snake oil salesmen will follow. And so they have. Citi and B of A are just the first to respond to Geithner’s pigwhistle. Next will be the hedgies and the Private Equity porkers, all nuzzling up to the Treasury’s feedbin.

Geithner’s plan is a disaster from the get-go. It jacks up the price of garbage assets, rewards the misallocation of capital, invites rampant fraud, and prolongs the recession. Worst of all, it transforms the FDIC into a hedge fund putting individual bank deposits at greater risk. Economist Jeffrey Sachs sums up Geithner’s “public-private” boondoggle in his article “Will Geithner and Summers suceed in raiding the FDIC and Fed?”:

“Geithner and Summers have now announced their plan to raid the Federal Deposit Insurance Corporation (FDIC) and Federal Reserve to subsidize investors to buy toxic assets from the banks at inflated prices. If carried out, the result will be a massive transfer of wealth — of perhaps hundreds of billions of dollars — to bank shareholders from the taxpayers (who will absorb losses at the FDIC and Fed)…

The FDIC is lending money at a low interest rate and on a non-recourse basis even though the FDIC is likely to experience a massive default on its loans to the investment funds….In essence, the FDIC is transferring hundreds of billions of dollars of taxpayer wealth to the banks…The public will not accept overpaying for the toxic assets at taxpayers’ expense. Thus, it is very likely that the Administration will attempt to avoid Congressional oversight of the plan, and to count on confusion and the evident “good news” of soaring stock market prices to justify their actions. ….

Other parts of the plan support subsidized loans from the Treasury and, even more, from the Fed. The Fed is already buying up hundreds of billions of dollars of toxic assets with little if any oversight or offsetting appropriations. Since the Federal Reserve profits and losses eventually show up on the budget, the Fed’s purchases of toxic assets also should fall under the Federal Credit Reform Act and should be explicitly budgeted. (“Will Geithner and Summers suceed in raiding the FDIC and Fed?”, Jeffrey Sachs, Huffington Post)

As Sachs points out, the Fed’s liabilities will eventually be shifted onto the taxpayer. But that hasn’t stopped Bernanke from writing checks on an account that is overdrawn by $11 trillion. Nor has it compelled Geithner to seek congressional authorization before he leverages the FDIC up to its eyeballs. These decisions are all being made by a small coterie of bank loyalists who operate independent of any oversight or government supervision. They do what’s best for their constituents and let the chips fall where they may.

Earlier this week, Geithner asked Congress for additional powers to take over insolvent non-bank financial institutions. The Washington Post:

“The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.”

Geithner must think he’s a shoe-in for the new “systemic regulator” post because of the exemplary way he handled the AIG bonus scandal.

Of course, in the bizarro world of Washington–where failure typically catapults one to higher office–it’s only logical that Geithner would be elevated to Uber-Regulator, not only controlling the public purse, but using his own peerless grasp of the marketplace to decide which institutions pose a systemic risk and need to be sidelined, and which need stepped-up government support via limitless capital injections.

Prediction: If Geithner is granted these special powers by the braindead Congress, the country will undergo the greatest period of bank consolidation in its 230 year history. This is a blatant power grab by a shifty character who has risen to his present pay-grade by nosing his way up the political stepladder. Congress had better get its act together and put an end to this nonsense or the nation will continue its fast-paced metamorphosis into a feudal oligarchy run by the Bank Mafia and Wall Street racketeers. The first step, is to give Geithner, Summers and any other of the Rubin-clones a full-body bacon-rub followed by a few brisk dunks in the shark tank. Then, hose down Treasury and bring in a whole new team.

Nobel Prize winning economist Joseph Stiglitz summed up Geithner’s “public-private” fiasco like this:

“Quite frankly, this amounts to robbery of the American people. I don’t think it’s going to work because I think there’ll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer.”

It looks like the Attorney General of New York will at least attempt to shut down the Wall-Street/Federal Reserve brothel, in which billions of U.S. tax dollars were stolen by high-level U.S. government and Federal Reserve crooks.

The loot was placed into the hands of large institutions such as Goldman Sachs, formerly headed by the Treasury Secretary Henry Paulson.

This was, of course, one of those action/reaction/synthesis aka problem/reaction/solution enterprises, where those in positions of authority create the problem, then wait for the public to react and demand a solution; then they provide the perceived “solution,” which only goes to further the agenda they had set out with initially.

Cuomo Widens His A.I.G. Investigation

Andrew Ross Sorkin | DealBook Blog

Attorney General Andrew M. Cuomo of New York said Thursday afternoon that he was widening his investigation of the American International Group to examine whether its trading counterparties improperly received billions of dollars in government money from the troubled insurer.

Those counterparties include Goldman Sachs, which received $12.9 billion, as well as Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion.

“Our investigation into corporate bonuses has led us to an investigation of the credit default swap contracts at A.I.G.,” Mr. Cuomo said in a statement. “CDS contracts were at the heart of A.I.G.’s meltdown. The question is whether the contracts are being wound down properly and efficiently or whether they have become a vehicle for funneling billions in taxpayers dollars to capitalize banks all over the world.”

Other counterparties that received money from A.I.G. include Barclays of Britain ($8.5 billion), Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), UBS of Switzerland ($5 billion), Citigroup ($2.3 billion) and Wachovia ($1.5 billion).

The government injected about $180 billion in bailout money into A.I.G. to prevent its collapse after the company found itself on the wrong side of the credit default swaps that it sold. The swaps are insurance-like instruments that allow investors to hedge against bond defaults.

A.I.G.’s financial products division sold the credit default swaps, and it has faced a wall of public outrage after it paid out $165 million in retention bonuses. Earlier this week, Mr. Cuomo said A.I.G. employees had agreed to return $50 million of those bonuses.

Here is an interesting discussion between Congressman Ron Paul and Paul Volcker in which Dr. Paul starts by describing the blow-up of the global fiat credit bubble; he later inquires to former Federal Reserve Chairman Paul Volcker’s ideas on the reform of the international monetary system.

Among his concerns were:

• the creation of supra-national powers for international financial institutions
• moving away from the free market
• international negotiations for the replacement of the dollar system

It is interesting, that during this discussion the idea of the IMF having an increased role in the world economy was brushed off; while in recent days there is new talk of the world returning to a new standard of IMF-issued SDR’s.

Eric deCarbonnel | MarketSkeptics.com

The fed is planning moves that would more than double its balance-sheet assets by September to $4.5 trillion from $1.9 trillion. Whether expressing approval or concern over the fed’s intentions, most commentators fail to understand the real magnitude of the projected expansion of the US monetary base because they don’t take into account the amount of dollars circulating abroad.

At least 70 percent of all US currency is held outside the country, and this means the US monetary base is considerably smaller than the fed’s overall balance sheet. Take, for example, the true US domestic money supply at the beginning of September 2008, before the fed started its quantitative easing. From the Federal Reserve’s website, we know that currency in circulation was 833 Billion. This translates as 583 Billion dollars circulating abroad (70 percent), and 250 Billion dollars circulating domestically (30 percent). Since the bank reserve balances held with Federal Reserve Banks were 12 billion, that gives us a 262 Billion domestic monetary base as of September 2008. Now compare that to the projected US domestic monetary base for September 2009 which is 3,818 billion (4,500 billion – 583 billion (dollars circulating abroad) – 99 billion (other fed liabilities not part of the money supply)). The fed’s planned balance sheet expansion results in a 15-fold increase in the base money supply.

262 Billion = US monetary base as of September 2008 (minus dollars held abroad)
3,818 Billion = projected US monetary base in September 2009 (minus dollars held abroad)

3,818 Billion / 262 Billion = 15-Fold Increase in US monetary base
Read the rest of this entry »

Two of the most corrupt professions on the planet are at work here: banking and accounting. Its funny that they should even call it “accounting” anymore; as it is meant to provide for “accountability” and the “rule of law.” Instead we are stuck with “deceivability” and the “rule of men.”

As you will soon learn, if you haven’t already; there is no reason whatsoever to hold the securities of most of the corporations today. They simply don’t have to account for the value of their assets anymore. If there is no real accountability, then there will be no confidence. If there is no confidence, then there will be no speedy recovery.

This depression will languish for years. People are getting FED-UP with these kinds of cheap, inbred bankster shenanigans; they are starting to buy real hard assets to squirrel away what they are able, to whether the coming storm.

What? You thought the recovery is around the corner. Do you honestly believe what these people who have been repeatedly wrong are telling you once again, like a broken record? The recovery, as you may picture it, is not going to happen.

People are going to have to change their habits to adapt to the new paradigm. They are going to have to cut out the waste, become more sufficient unto themselves, manage their own money with sound economic principles. They must be guided by a understanding of just how perverted the whole economic system has become, over the past couple of decades.

Accounting Brothel Opens Doors for Banker Fiesta

Jonathan Weil | Bloomberg News

March 19 (Bloomberg) — The banks demanded that the accountants give them leeway in how they report losses to investors. The accountants responded by giving away their souls.

This week, the Financial Accounting Standards Board unveiled what may be the dumbest, most bankrupt proposal in its 36-year history. If it stands, the FASB ought to change its name to the Fraudulent Accounting Standards Board. It’s that bad.

Here’s what the board is floating. Starting this quarter, U.S. companies would be allowed to report net-income figures that ignore severe, long-term price declines in securities they own. Not just debt securities, mind you, but even common stocks and other equities, too.

All a company would need to do is say it doesn’t intend to sell them and that it probably won’t have to. In most cases, it wouldn’t matter how much the value was down, or for how long. In effect, a company would have to admit being on its deathbed before the rules would force it to take hits to earnings.

So, if these rules had been in place last year, a company that still owned shares of American International Group Inc. or Fannie Mae, for instance, could exclude those stocks’ price declines from net income entirely. It would make no difference that the companies were seized by the government last year, or that both are penny stocks. The loss would get buried away from the income statement, in a balance-sheet line called “accumulated other comprehensive income.” Read the rest of this entry »

by Michael S. Rozeff | LewRockwell.com

If you like economic depression, Obama is your man. The stock market is shouting this message loudly and clearly. The S & P 500 (measured by the security SPY) made a little high at 100.41 on November 4, 2008. The election was the next day. It has been downhill ever since. The close on March 2, 2009 was 70.60. This 30 percent decline qualifies as what used to be an ordinary bear market!

Congress and the President could not construct better measures, proposed and enacted, to deepen this depression if they tried. Congressional Democrats intend to ensconce Democrats as the majority party for the next 25 years or so. Their chosen method is wasteful pork sold as rational investment. But by gilding the nests of their chosen constituencies and supporters with huge taxpayer-funded giveaways, they will deepen and lengthen the depression.

The stock market tells us this, but it is easy for stimulus supporters to explain away the stock market’s drop in other ways. Obama supporters are likely to extol the good things that his program is doing to revive spending in the economy, and to regard the stock market as an aberrant den of gamblers and thieves who deserve their Bush-induced fate.

Very few men on the street, including my doctor, understand that spending, whether private or government, does not get rid of economic depression; and the lack of spending does not cause it. They do not fathom that government spending, borrowing, and taxing will further gash the sinking economy below the water line and send it to its watery grave. They are more inclined to believe, along with prominent economists, that government spending should be increased by trillions more. There cannot be too much of a good thing.

People automatically think that if everyone does not spend, then how can businesses keep going and hire people? How can the economy work? Then they think, if people only have money, then they can spend. If the government spending will only put that money into their hands, this will cause people to spend. It will jump start the economy, restore business confidence, and all will be well.

This story has a firm hold on the public imagination, but things don’t work that way. People in the aggregate can only earn money to spend by working productively. Money still doesn’t grow on trees.

The government doesn’t have a money tree either. Without resorting to inflation, it can only shift money around. America’s federal government is a group of Americans who are empowered to tax the rest of us and borrow from anyone in the world. This money is collected from you, me, and others. We then have less to spend. Shifting money from the left pocket to the right pocket doesn’t enhance the total amount. Read the rest of this entry »

source: LaRouche Political Action Committee

December 9, 2008 (LPAC)–”It’s all gone ‘poof’,” one Goldman Sachs banker told today’s Wall Street Journal. Bankers who once wrecked companies and looted pension funds are now finding themselves reduced to irrelevance. Once Masters of the Universe, they are now lucky to have a job. “Investment banking has become a phantom realm,” the Wall Street Urinal said “where everyone is busy but no one is doing anything,” where “status is conferred by a quality meeting, not a completed transaction.” The “basic reality” of their profession, the paper said, is an “excess of bankers.” If you feel tears swelling in your eyes at the plight of these poor souls, who are now faced with selling their yachts and their country homes, and cutting back in other ways, perhaps the knowledge that Wall Street played a major role in destroying the productive power of the U.S. economy, laying waste to countless American businesses and families, will help. This is a classic case of “they did it to themselves.” And, of course, to the rest of us.

Then there’s the spectacle of hyena versus hyena, which we see breaking out as the members of the pack turn on each other in self-preservation. Take the case of Carl Icahn, the notorious corporate raider, and Leon Black, head of private equity giant Apollo Management. Former allies (both got rich from the Drexel Burnham Lambert junk-bond machine, Black as a Drexel banker and Icahn as his client), they are now fighting over money. Apollo needs to reduce its debt by getting its holders to cash it in at as little as 36-cents on the dollar, while Icahn, who owns a bunch of it, calls that fraud and has filed suit.

Hyena versus hyena. Maybe they should have a quality meeting.