Monday, August 24, 2009

I'll be back, again...

So, once again real life responsibilities require me to be away for a few days, possibly a week. Believe me, I'd MUCH rather be here, but we do what we must. Meanwhile, there are 4,980 posts here, I hope you find something of interest. Thank you all for stopping by, see you soon. - CoyotePrime

Karl Denninger, "America Is Running Out Of Rope"

"America Is Running Out Of Rope"
by Karl Denninger

"Oh no, we don't cheat: Goldman Sachs Group Inc. research analyst Marc Irizarry's published rating on mutual-fund manager Janus Capital Group Inc. was a lackluster "neutral" in early April 2008. But at an internal meeting that month, the analyst told dozens of Goldman's traders the stock was likely to head higher, company documents show. Nothing like selling bonds out the front door and shorting them on your prop desk, right? Oh wait, Goldman did that too!

Securities laws require firms like Goldman to engage in "fair dealing with customers," and prohibit analysts from issuing opinions that are at odds with their true beliefs about a stock. Steven Strongin, Goldman's stock research chief, says no one gains an unfair advantage from its trading huddles, and that the short-term-trading ideas are not contrary to the longer-term stock forecasts in its written research. Riiiight. And I'm the Easter Bunny.

The tips usually go to top clients who have expressed interest in having the information and have short-term investment horizons, he says. Goldman doesn't want to overload other clients with information that isn't relevant to them, he says. "We are not in the business of serving thousands of retail customers," he says. Let me guess: They also go to the proprietary (inside) traders that are gambling with the firm's money (and your "liquidity guarantee" as a taxpayer, since they're a BANK now.) Am I right?

Research-department employees prepare telephone scripts, then call top clients, typically several hours after the meeting has ended. Goldman says its in-house traders are prohibited from trading on the tips until after they've been relayed to clients. Documents reviewed by the Journal indicate that anywhere from six to 60 clients are contacted, depending on the investment.

Oh, its even better. Let's see, we have a computer program that's engaged in a bit of "high frequency trading", and we have the guys that run our own trading (which includes that) that are in on the recommendations and they even know when these recommendations go out to the "select customers"! There's nothing wrong with this, right? Nothing wrong with having a "slight edge' in knowing up front what's going to be said to these "good" (read: they have and swing around lots of money) customers? Pull the other one boys.

Last year, the Financial Industry Regulatory Authority, the industry's self-regulatory body, proposed new rules meant to clarify existing disclosure obligations under the rule requiring "fair dealing" with all clients. Firms could issue contradictory ratings as long as clients were told that such inconsistencies were possible. Yeah, ok. Shall we hire some more foxes to guard that henhouse? What sort of scheme-laced system do we have here? These institutions have sold securities out the front door they're shorting out the back (subprime mortgage bonds), they're disseminating "short-term opinions" that differ from their published research reports, and even better, their own proprietary trading desks are in on the latter, so if and when the move starts they can get in on the action with their "high frequency trading" too!

You won't hear CNBS talking about this, I'll wager. Nor will you hear them talk about their parent company discuss their lobbying expenditures - the highest of any company in the first quarter at a mind-blowing $7.2 million dollars. Zerohedge has provided a copy of the disclosure form, which reads like a who's who of "how to screw the consumer", including issues such as the Credit Card Bill of Rights, the disapproval resolution on the second half of TARP, proposed TARP reform and accountability, the mortgage reform and anti-predatory lending bill and more. The disclosure does not tell you which side or exactly what position has been taken by these paid hacks, but that's not hard to figure out - no corporation is going to lobby for something that would cost it money (while spending copious amounts of money), so the direction of these "contacts" is clear on their face. Nothing more need be said.

This is a serious issue for all Americans, since allegedly the "fourth estate", that is, the media, is supposed to be a check and balance on government (and corporate) behavior. But what happens when the media is the corporation? When conglomerates become entwined in the news system to the point that anything that would go against the corporation is suppressed by that very same media? When editorial independence is lost? I have (as have others) heard CNBS anchors "slip" in the past and say things on the air that strongly hint (or outright state) that their producers don't want a certain slant covered. One wonders whether that producer just had their phone ring - and it was the executive offices of GE on the other end.

Let's be clear: These banksters have robbed well over $100 billion dollars from taxpayers and citizens via various schemes in the last decade. These scams have included securitizing loans that they either knew or should have known were laced with fraud, in some cases shorting them while selling them on to other people. It includes outrageously-complex and intentionally-obfuscated securities "packages" for municipalities which have resulted in huge losses for the town (and huge fees and profits for the bank.) It has included marketing "auction rate" securities which were claimed to be as liquid and safe as cash, when in fact nothing of the sort was true. The schemes and scams run the gamut but at their core was the intentional obfuscation of the true nature of the risk embedded in these instruments so that the dupe (that would be you, your town, your state) would wind up losing money all for their benefit: you would enter into a complex swap transaction you didn't understand, you'd buy a bubble house with an OptionARM after being told you "definitely" could refinance before payments would go up, your kid was sold an expensive educational loan package without being told that it was unable to be discharged in bankruptcy, you were given a credit card with 27 pages of fine print, and buried somewhere in there was vague language letting the company jack your interest rate to anything it wanted - including the 36% it did jack it to - if you missed an electric bill by three days.

Then, when the game of musical chairs ended and all this debt that could not possibly be paid off started to default these very same banksters went to Congress through Paulson and Bernanke, the chiefs of the bankster scam parade, and in my opinion literally committed economic terrorism: hand over $2 trillion dollars hiding all but $700 billion, or we detonate the entirety of the economy and everyone literally starves.

How does this differ from an old-fashioned Al-Quaida terrorist who calls in a nuclear bomb threat? "Hand over $2 trillion dollars or New York City will be vaporized." Hmmmmm... sounds kinda like the same thing to me! Now let's juxtapose this with the fact that every Congressperson took an oath to defend The Constitution against all enemies, both foreign and domestic.

So riddle me this my fellow Americans: How is it that Bernanke, Paulson, Geithner, and both Presidents Bush and Obama are still free men instead of being housed at GITMO? How is it that on that fateful night in September of 2008 when Bernanke and Paulson "briefed" Congress and demanded $700 billion in random and a blank check to back-door an unlimited amount in "guarantees" and "pass-throughs" to their banking buddies the Sargeant At Arms was not immediately called to place these goons under arrest pending indictment and prosecution?

The next question is equally obvious and leads one down some pretty disturbing paths: If there is NOT ONE man or woman Congress who will discharge THEIR oath of office, is there anyone left in this country who took an identical oath that will?

The worst part is that it didn't end with payment of the ransom. No, the banks didn't come clean, they didn't clear their balance sheets, they didn't take their losses using the backstop they had managed to secure through threat of imminent economic doom. On the contrary: They lied some more! They in fact lobbied Congress and had them bring pressure on FASB, threatening to legislate legalization of accounting fraud, and twisted FASB's arm into issuing what amounted to an executive order making legal any and all lies about asset valuation! We now know this happened because in point of fact the amount of loss that has been seen in the form of write-downs when banks fail has roughly doubled from last year to this, and these are not small numbers: we're talking about going from roughly 15% to roughly 35!

Who eats that? You do. The FDIC is required to make your deposit whole, but they "assess" (tax) the banks. Who pays? You do, of course: your bank re-orders your deposits and withdrawals to generate nearly forty billion dollars in "overdraft fees" and similar penalties over the last year, they jack your interest rate to the moon and drop your CD rate to 1% and less.

In the meantime as I pointed out last week your personal "interest spread" has ballooned - more than doubling against you. In terms of GDP and economic activity this has brought a structural near-2% subtraction to GDP that will be with us until the banks either confess and are wiped out OR they "work it off", with the latter option requiring more than a decade. California's unemployment rate reflects the outcome of this idiocy, having risen to 11.9% - our largest state. And before you believe the "green shoot" mantra on housing, you better pay attention to the California home start numbers: Permits for July were down a staggering 47.4% over the prior year.

Nor does the "good news" end here. This Friday, after the market closed (of course) the Obama Administration confessed to what the CBO had said earlier this year: Over the next 10 years the government will add $9 trillion dollars to our public debt, up more than $2 trillion from their previous claims.

Let's be clear about this: This is not a "80%" increase. Oh no, its much worse than that. You see, about 40% of the debt is in fact held in what are called "intergovernment holdings" - that is, the scams known as Social Security and Medicare (the subject of another recent Ticker.) The externally-held debt today totals about $6 trillion dollars, so this "admission" means we're going to try to add 150% to that.

I say "try" because this year's interest payments are likely to total some $400 billion or so, and against a GDP of $13 trillionish (down from the peak) that is roughly 3% of GDP for interest cost. Today.

The sustainability of this level of debt (today) requires that interest rates not rise, for if they do so will the payments. And that's a problem because historically (over the last 100 years or so) every time a nation has gotten to around 6% of GDP for interest payments both its monetary and political systems have imploded. Argentina anyone?


You might think that all these bailouts and handouts would have produced a stable banking system. You'd have thought wrong. Chris Whalen of Institutional Risk Analytics has updated his bank ratings for the second quarter: they now rate 1,882 banks as "failing" (or just "F" if you prefer) which is up a whopping 16.5% from the end of March - just three months ago. The number of banks with "A" or "A+" ratings fell by 21% during the same time. The problem is that "hide the bad stuff" games (no matter what particular sort of fraud you're engaged in) doesn't change the outcome - it just changes the when. The "what" doesn't change. That which is dead and decomposing simply stinks up the place more, since you refused to throw it out.

The good news is that some banks have raised capital during these past few months of investor optimism. But a host of operational problems remains at many institutions. In addition to loan losses and rock-bottom recovery rates on assets they’re trying to unload, for example, banks also face rising expenses (because they’re paying to carry properties that generate scant — or zero — revenue). All of this cuts significantly into earnings, which banks desperately need to bolster their battered financial positions.

Optimisim? You mean a stock market rocketshot based on lies, right? After all, if the true condition of these institutions did not improve, then where did the "optimism" come from if not false claims of solvency and good times just ahead? Never mind the statistical nasty: the majority of the daily volume on the stock exchanges over the last couple of months has been centered in a half-dozen "liars stocks" such as AIG and Citibank. A healthy rally? Uh, no; where's the volume-based broad support? Missing, that's where.

Of course these institutions issued stock into that sort of market environment. Why not? There was no reason not to - FASB gave them a pass after being literally told to sanction lying and fraudulent reports of asset values by Congress, and they complied. This in turn let them issue "glowing" first quarter earnings that were based on nothing other than one-time gains and lightening loss reserves based on better-than-previous valuations. The rude awakening is that the cash-flow from these "assets" does not change with the stroke of a pen, however. You can't fake a deposit ticket for very long, and a non-performing asset (for instance, a homeowner who is living free in his house because he's not paying his mortgage!) is still a non-performing asset. Nothing changes that other than actual performance, and yet that performance is and remains missing.

The so-called pundits put it this way:
'Meanwhile, in the United States, the Federal Reserve said the world's largest economy appeared to be "leveling out" and many economists see a second-half rebound.'
'It all adds up to an improving picture ahead of an economic summit next month in Pittsburgh of the world's top 20 industrial and developing economies.'

Really? May I politely ask "how"? The entire cusp of this rests here: 'But until American consumers begin spending again, and so long as jobs are still being lost, the durability of any recovery is questionable. Major retailers reported this week that U.S. consumers are continuing to rein in spending on all but basics.'

Despite slight recent improvements in many U.S. economic statistics, many consumers have not seen a change in their lives. Nor will they on a durable basis until the fraud and scamming stops because they can't. The interest spread between savings and spending, as I noted above, has been driven to historic wide levels as a means of grifting off billions of dollars from consumers to cover up the banksters frauds! That's not money the banksters bonus out and thus spend into the economy either - it literally disappears into the black hole of fraudulent accounting and coverups! Thus far there has been no appetite for putting a stop to this in Washington DC, but the proletariat are starting to figure it out - they've been had. Had on "stimulus", had on "TARP", had on so-called "health care reform", had on their CD rates going to the floor and their credit card rates going to the moon, had on everything.

It's all one gigantic scam, and anger is seething beneath the surface, as it should be. Youtube is exploding with videos of demonstrations at "Town Hall" meetings, and those protests are not just about Health Care. I've watched over two dozen of them so far, and in virtually every one TARP and Bailouts are being discussed as well.

The people have figured it out - they said not just no but hell no back in September and October, and Congress ignored them. The people correctly surmised that this was in fact economic terrorism and correctly told their Congressfolk NOT to pay the demanded ransom. Now we're seeing our nation systematically looted and destroyed and again, Congress is ignoring the people. The people want justice. They want the grift and fraud excised. They want those who blew these huge bubbles for their own personal aggrandizement and profit while ripping off the common man to get their just desserts - an indictment and a prison sentence, not another billion-dollar bonus.

Most Americans understand that they were gullible, they fell for it, and they're partly responsible as a consequence. They "get it" in that regard - they came, they saw, they bought - even though they knew they couldn't pay. But their acts were not those of lone rangers. They were goaded on at every corner - "you can afford this house", "let's qualify you to see how many bedrooms you can buy", "let's work a deal on this car", "here's another credit card with a $10,000 line", "here's a 1% OptionARM refinance with a $10,000 cash-out."

All of these hucksters knew full well that the so-called "consumer" was in fact a patsy. They ran their credit, they ran their assets, they ran their employment. In many cases the brokers and bankers even falsified the numbers themselves; I've seen proof of it myself in documents sent to me where the handwriting doesn't match the signatory or the printing of the applicant's name on the income declared. Who filled it in? Not the applicant.The people are willing to take their pain. But they demand, with solid justification, that those who ripped them off also bear their pain for what they have done.

Washington has gone tone-deaf to the facts - an intentional deafness engendered by millions of dollars of campaign "contributions" (read: bribes) being handed out like candy, all financed by the people who are being robbed! The banksters not only ripped everyone off and got bailed out after doing it by threatening to blow up the economic world BUT THEY ARE STILL RIPPING EVERYONE OFF TODAY and using a small piece of the grift to continue to buy Congress at the same time!

Not a damn thing has changed, except that we are lurching closer and closer to the cliff of national insolvency and both economic and political failure as a nation. The inability to fund the operating expenses of our government is quite possible. Social Security and Medicare have gone into deficit years earlier than expected and these programs have no money - they have only "IOUs" and to turn them back into money Treasury will have to sell more bonds. But who will buy them? The Chinese? Why? Bernanke is lying about monetizing the debt - in fact he lied under oath - but the currency markets are not fooled.

The dollar is in the toilet and threatening to break all support levels. If it does, it may collapse to as low as 40, which will in turn rocket oil north to $300 or more and gasoline to $10! If that happens it is too late to stop it and too late to reverse course. What we now know as a middle class will be reduced to sheer destitution - literal destitution.

What are the odds that, under this scenario, some of the billions of rounds of ammunition that have been purchased and stockpiled by Americans who have gotten rather "uneasy" over where our nation is going find their way into unlawful use? Rather high I wager. After all, the banksters may have bought Congress and the White House but they don't own the guns, and a desperate, hungry man is a dangerous man, especially when he was formerly a middle-class American with a good job who had his future, and that of his wife and children ruined as a direct consequence of the lawless, conniving acts of a handful of "elites" who ripped him off twice - first with his "OptionARM" that gnawed his arm off and then again by going to Washington, extorting more than $12 trillion in bailouts, handouts and guarantees with which they paid themselves bonuses instead of clearing their balance sheets!

Over a year ago I started writing and calling Congress, including letters I faxed to all 535 members. In it I called for Congress to put aside $200 billion dollars - a big fat wad of money - to cover the potential need to house, feed and clothe one quarter of this nation for up to 12 months. I meant it then and I mean it now.

We are not on the cusp of recovery, we are on the precipice of disaster. Whether we avert it is an open question but this much is certain - if we wait until external funding disappears it will be too late to prepare and too late to act in furtherance of our nation's interests. When gasoline is $10/gallon as is heating oil the price of food will more than double, heating costs in the northeast will quadruple and millions will either starve, freeze to death or both. At the same time the ability to fund Social Security and Medicare will vanish - at the precise moment when it can't.

The economy cannot survive another commodity shock - Roubini agrees, and he sees the possibility - but he calls the potential cause "speculation." Nonsense: there is nothing speculative about money printing and intentional currency debasement. This is an intentional act being promulgated by our government for the express purpose of papering over what has been the largest fraud and scam ever run in the history of mankind. The banks are indeed using this "profit opportunity" to buy and stockpile oil along with other commodities via both physical delivery and futures contracts, but this is not speculation - a bet made on an uncertain outcome.

Rather, it is a bet made on a CERTAIN outcome that is being created by the government as a DIRECT CONSEQUENCE of the demand (which was and is being met!) by the very same banksters to legalize the fraud and deceit that got us in this mess in the first place!

On the point of "greenback emissions" Warren Buffett has it right but a prescription to fix what ails us is missing, so I'll supply it: we must detoxify the drunk and lock up the bartenders, extortionists and their accomplices - all of them. This means the end of "stimulus", it means the end of subsidization of grift and fraud, it means prosecution of those who have scammed throughout the last ten years, it means the cancellation of the so-called "guarantees" for the banking sector and it means a relentless cadre of regulators who go bank-to-bank - literally, to each and every one of them, marking every asset to the market and closing every last insolvent financial institution, no matter how large or small, barring for life from any financial role and prosecuting to the fullest extent of the law any executive in any firm that is found to have fraudulently overstated asset valuations, no matter by how much.

It means biting the bullet and recognizing that we cannot borrow our way to prosperity, nor can we solve a "declined" credit card problem by opening another one - either individually or as a nation. It means Congress must force The Fed to disgorge every MBS they hold that does not have a full-faith-and-credit guarantee, we must allow real rates to rise in the economy and we must allow housing and other asset prices to contract to where they are supported by the underlying economic activity.

Yes, this means homes will get cheaper - a lot cheaper. So what? Those who don't own a house now or who get foreclosed upon would certainly like to buy a house at a lower price, not a higher one! It means that we must stop the looting and start prosecuting, we must put Glass-Steagall back in place, and we must force all of these super-conglomerates to split off any trading and asset activities from their regulated banking counterparts. We must repudiate all CDS contracts that cannot be proved to have 100% asset backing on a nightly margin basis, without exception. That means central-counterparty surveillance and clearing for all such instruments - period.

We must add criminal and civil liability to all so-called "securitizations" so those who sell garbage through either willful ignorance or intentional deceit cannot avoid liability and neither can the purchaser claim "ignorance" and we must ban all off-balance sheet vehicles, without exception.

We must add an "or else" to every regulatory law, so that the "or else" for robbing a bank by intentionally overstating asset valuations is the same (20 years) as when you rob that same bank with a gun. We must put an "or else" into The Federal Reserve Act, the OCC and OTS' chartering documents, the enabling law for the SEC and all other agencies so that those who allegedly serve the public are held to account when they knowingly look the other way or even actively conspire with lawless action in the institutions they regulate.

The People have and continue to speak, and they're pissed. It is long past time for Congress to get off its ass and perform its job - to represent the will of the people, not the cadre of lobbyists who continually press for more grift, more fraud, more scams and more lies. We have come to the end of our rope as a nation and we must climb back up, even though it will be difficult, even though those who stole, cheated and robbed must be imprisoned, and even though the economic fallout has been and will be harsh.

We have no alternative in that under us there is no more rope but there is an an active volcano, and if we let go, we will not only fall but be consumed by the lava below, and if we try to hang on here, without excising the fraud and grift we will slip and fall to our deaths as the monkey on our back continually increases in weight. It is time for Americans to demand that our government do the right thing, and it is time for Congress and The Administration to shut up and listen instead of prattling on about this or that add-on to the scam of the day. Health Care "reform" is a laudable goal, but we cannot waste our time on that or indeed any other priority until we truly stabilize this nation's currency and economic system."
- Karl Denninger,

The only issue I disagree with Mr. Denninger on is rope. I think we have lots of rope,
we're just not using it the right way...

Sunday, August 23, 2009

"Colonial Bank Failure Highlights the Problem"

"Colonial Bank Failure Highlights the Problem"
by Jeff Nielson

"The bankruptcy of Colonial Bank (CNB) was the largest bank-bankruptcy in the U.S. since several large, U.S. financial institutions collapsed last year – with the most recent being Washington Mutual, last fall. However, there is one huge difference between the mega-bankruptcies of last year and the collapse of Colonial Bank a week ago.

During the large bank-failures of 2008, the acquiring institutions wrote-down the “assets” on the books of these banks by an average of 18% - according to a Bloomberg article. However, when BB&T Corp purchased Colonial, it immediately wrote-down Colonial's assets by 37%, double the amount of discounting done last year. What has changed between now and then? The legitimizing of fraudulent accounting, when the supposed “watch-dog” of U.S. accounting, the Financial Accountability Standards Board brought in new “mark-to-fantasy” accounting rules in the U.S. this spring.

As the Bloomberg article points out, all U.S. bankers lie about the value of their assets – specifically the quantum of their future losses. The more they underestimate future losses, the less they put aside as “loan-loss reserves”. The less they put aside as reserves, the bigger they can pretend the bank's profits were. The larger the phony “profits”, the more they can give themselves as “performance bonuses”.

This is not a new phenomena. In fact, U.S. bank-lying was found to have severely aggravated their last “banking crisis” in the 1990's through also consistently under-estimating/under-reporting the deterioration of their “assets”. Given this context, it makes it even more obvious how utterly ludicrous and irresponsible it was for the U.S.'s accounting “cop” to create new rules to greatly facilitate lying about assets. If you want a heroin-addict to stop using heroin, then you shouldn't hand that person a jumbo-pack of syringes. Clearly this politically-motivated change in U.S. accounting rules had nothing to do with “more accurate” accounting – which was the false pretext of the banksters, and the media propaganda-machine which serves them.

The changes had two, and only two goals: allowing the weaker, Wall Street fraud-factories like Citigroup and AIG to pretend to be solvent, while for the slightly stronger members of the U.S. financial crime syndicate it was a “green light” to loot the same corporate treasuries which had just been stuffed full of U.S. taxpayer dollars.

As I have observed previously, the “performance bonuses” which Wall Street hands out are rewarding one aspect of their performance: the ability of these career-criminals to lie. As Bloomberg wrote, the bigger the lies, the bigger the bonuses. Not surprisingly, bank-fraud rose by double-digits last year in the United States. However, what is a truly remarkable feat for this cast of compulsive liars is that despite the fact there were millions fewer mortgages financed last year, mortgage-fraud jumped 23% from 2007. It takes a truly dedicated group of criminals to achieve that sort of year-over-year gain in a collapsing market.

However, the significance of this new level of lying in the U.S. financial sector goes beyond stealing all of the money from their own corporations – and calling it “performance bonuses” (Goldman Sachs is set to hand out more than 100% of its “profits” as “performance bonuses” this year). It once again raises the issue of bank-solvency for the sector, as a whole, and once again illustrates that the Geithner “stress tests” were nothing but a ludicrous sham.

If the lies which the management of Colonial Bank were telling concerning their “assets” were twice as large as the average magnitude of bank-lying last year, then what does this tell us about the “stress-tested”, Wall Street fraud-factories? Having just finished scamming investors and institutions all over the world for trillions of dollars (leaving many of them in financial ruin), is there the slightest doubt that these champion-liars would be engaging in much greater falsification in their accounting than Colonial Bank?

The difference in the U.S. now from a year ago is that every single category of bank loans are experiencing much higher rates of defaults and much higher rates of delinquencies than a year ago, yet in the fantasy-world of Wall Street accounting, suddenly almost all these banks are “profitable” again?

Previously, critics of the new “mark-to-fantasy” accounting rules in the U.S., had to rely upon only overwhelming logic to discredit the claims of “profitability” from these professional liars. However, Colonial Bank provides us with the much sought-after “smoking gun”.

With all categories of delinquencies near or at all-time records, and with a huge spike in mortgage-resets about to kick-in over the next two years, there was never a possibility that the U.S. financial crime syndicate had miraculously returned to “profitability”.

Indeed, as I wrote less than a month ago, credit-reporting agency, TransUnion, recently released a report showing that its “credit risk” index just hit a new, all-time record in July. Much like loan delinquencies are a highly accurate indicator for future defaults, the soaring reading in “credit risk” is a highly accurate indicator of a pending rise in delinquencies. Thus, despite the constant stream of delusional hype which emanates from the U.S. propaganda-machine, there has never been the slightest doubt that the only possible direction for the U.S. financial sector (and the economy, as a whole) is down.

Throughout this decade, the Wall Street banksters plundered more than $100 BILLION in fantasy “profits” from their global Ponzi-scheme – and then needed roughly twenty times that amount in government hand-outs to avoid a sector-wide collapse last fall. Then, as soon as that crisis (temporarily) passed, they began to immediately loot the taxpayer hand-outs, as well. At the same time, all of these fraud-factories have slashed their dividends to shareholders, adding to the massive losses of these investors from the melt-down in share prices.

One might think that these shareholders might be getting tired of being financially “raped” by these banksters. However, more than 50% of the shares of these fraud-factories are held by the wealthiest 1% of the U.S. population. These ultra-wealthy aristocrats are more out of touch with the real world than was Marie Antoinette – when she offered the starving French masses “cake”, just days before they chopped off her head.

While this is unlikely to occur in the United States (given the acute shortage of guillotines), it might be time for the Wall Street banksters to take heed of history.

They may own the politicians. They may own the regulators. And they may simply own most of America. However, they don't own the billion or so guns currently in the possession of an increasingly angry American population."

Cherokee Expression

"When you were born, you cried and the world rejoiced.
Live your life so that when you die, the world cries and you rejoice."
- Cherokee Expression

What is "Transient Global Amnesia?"

What is "Transient Global Amnesia?"

"Amnesia is a fascinating condition, and as such it comes up commonly in popular culture. It’s such a wonderful (and by wonderful, I mean wonderfully over-used) plot device – after an unfortunate whack on the head by a large blunt object, characters can be caught in precarious positions as they struggle to recall one key piece of information, acting as a detective of their own minds. Sometimes the amnesia is temporary, lasting long enough for one 22-minute television program; in others, their amnesia is a lifelong problem.

Yet there’s one type of amnesia that is rarely covered in the media. It strikes spontaneously, without warning or easily detectable cause. Its victims go through the normal conditions for amnesia, forgetting a good portion of their past and becoming unable to form new memories. They are disoriented, confused, lost. But here’s the surprising part – within 24 hours, the amnesia is gone and previous mental abilities return. It’s called Transient Global Amnesia (TGA), and is among the more harmless (though bizarre) conditions one can have.

No one knows the exact cause of TGA, but there are a few (highly educated) guesses out there. First, it occurs most commonly in older people – while it has an overall occurrence of about five per 100,000 per year for all ages, the rate is quadrupled for those over the age of 50. In general, it appears to be caused by stress or emotional trauma – but then again, what isn’t? Also, many people who experience TGA also suffer from migraines, so it is thought that TGA may be a form of a mega-migraine-like headache.

People who are struck with TGA retain all of their normal cognitive abilities – they can still talk and function normally, except anything they learn will be forgotten within a few minutes because information in short-term memory is somehow prevented from being stored in long-term memory. Also, some recent history is temporarily lost, ranging from a few hours to 40 years. Naturally, this situation causes people to become very disoriented. Someone with TGA will constantly be asking for basic information, such as “where am I?”, “what is going on?”, or “what happened to the good old days?” Providing them with the answers does not help at all – though they may grasp that they are having short term memory loss, in a few minutes… well, you know.

The worst of TGA does not last long (only a few hours), but can take up to a day or more to fully recover, much like a hangover. Unless the TGA is masking some sort of more serious condition, the worst that can happen is that one permanently forgets what happened during the state of amnesia. So if one of your loved ones suffers from TGA, remember to inform them of that fact while they’re not having an episode… otherwise they may never know."


The Daily "Near You?"

San Luis Obispo, California, USA. Thanks for stopping by.

Biology: "Artificial Life Will Be Created Within Four Months?"

"Artificial Life Will Be Created Within Four Months?"
by Mark Henderson

"Artificial life will be created within four months, a controversial scientist has predicted. Craig Venter, who led a private project to sequence the human genome, told The Times that his team had cleared a critical hurdle to creating man-made organisms in a laboratory. “Assuming we don’t make any errors, I think it should work and we should have the first synthetic species by the end of the year,” he said.

Dr Venter, who has been chasing his goal for a decade, is already working on projects to use synthetic biology to create bacteria that transform coal into cleaner natural gas, and algae that soak up carbon dioxide and turn it into hydrocarbon fuels. Other potential applications include new ways of manufacturing medicines and vaccines. Dr Venter’s prediction came after scientists at his J. Craig Venter Institute, in Rockville, Maryland, announced that they had developed a new method of transplanting DNA into bacteria, promising to solve a problem that has held up the artificial life project for two years.

The team took the first step in 2007 by implanting the genome of a bacterium, Mycoplasma mycoides, into cells belonging to a close relative, Mycoplasma capricolum. This transformed the host bacteria into Mycoplasma mycoides. Last January the team built a bacterium’s entire genetic code from scratch. The next step was to transfer this synthetic genome into a host cell, using the 2007 transplant technique, to “reboot” it with genetic instructions written by humans. This has failed so far because the synthetic genome will not work when it is transplanted into host cells.

The new research, published in "Science," has identified the probable reason for this failure and developed a new approach that should address it. Natural bacterial genomes, such as the one that was successfully transplanted, are chemically modified by a process called methylation. When they are inserted into other cells this process appears to protect them against chemicals called restriction enzymes, which defend against viruses. The synthetic genome, however, is not methylated, as it has to be grown in yeast, which does not provide the necessary chemical modifications, thus leaving it open to attack by the restriction enzymes.

In the new study, the Venter team grew the natural M. mycoides genome in yeast, under similar conditions to the synthetic genome, so that it had no methylation. These genomes failed to take when they were transplanted into host cells. The team then remethylated the M. mycoides genome in the laboratory before placing it into the host cell. This time the transplants worked and the cells were rebooted as M. mycoides. The success suggests that methylating the synthetic genome before transfer should allow it to take over host cells and reboot them with its DNA. Experiments in this have now begun. Methylation should protect the synthetic genome against the host cells’ defences, much as drugs that suppress the immune system protect transplanted organs against rejection.

Hamilton Smith, a Nobel laureate who is another leader of the research, said: “I believe this work has important implications in better understanding the fundamentals of biology to enable the final stages of our work in creating and booting up a synthetic genome. This is possibly one of the most important new findings in the field of synthetic genomics.” Dr Venter said the research was particularly important because it opened the door to altering algae and bacteria to perform useful functions. “This could be one of the most powerful tools in biology,” he said.

Mike Whitney, "Economy On A Scaffold"

"Economy On A Scaffold"
By Mike Whitney

"We're making this way too complicated. It's simple really. The Fed has only one tool at its disposal; to create more money. Typically, the way the Fed adds to the money supply is by lowering interest rates. When the Fed lowers rates below the rate of inflation; they're basically selling dollars for less than a buck. That's a good deal, so, naturally, speculators jump on it and trigger a credit expansion. What follows is a frenzy of market activity that ends in a housing, credit, tech or equity bubble. Eventually, the bubble bursts and the economy goes into a tailspin. Then, after a period of digging-out, the process resumes again. Wash, rinse, repeat. It's always the same.

The moral is: Cheap money creates bubbles; and bubbles move wealth from workers to rich motherporkers. It's as simple as that. That's why the wealth gap is wider now than anytime since the Gilded Age. The rich own everything.

The Federal Reserve is the policy arm of the big banks and brokerage houses. Period. Ostensibly, its mandate is to maintain "price stability and full employment". Right. Anyone notice how many jobs the Fed has created lately? How about the dollar? Is it really supposed to zig-zag like it has been for the last decade? The central task of the Fed is to shift wealth from one class to another. And it succeeds at that task admirably.

The Fed's "mandate" is public relations claptrap. Bernanke hasn't lifted a finger for homeowners, consumers or ordinary working stiffs. All the cash is flowing upwards...according to plan. The Fed is a social engineering agency designed to serve as the de facto government behind the smokescreen of democratic institutions. Does anyone that a black, two year senator with no background in foreign policy or economics is calling the shots? Obama is a public relations invention who's used to cut ribbons, consoling the unemployed, and convincing Americans they live in a "post racial" society. Right. (Just take a look at that footage from Katrina again.)

The Fed has complete control over monetary policy and, thus, the country's economic future. Bernanke doesn't even pretend to defer to Congress anymore. Why bother? After Lehman caved in, Bernanke invoked the "unusual and exigent" clause in the Fed's charter and declared himself czar. Now he has absolute power over the nation's purse-strings. The $13 trillion the Fed has committed to the financial system since the beginning of the crisis- via loans and outright purchases of mortgage-backed garbage and US sovereign debt- was never authorized by Congress. In fact, the Fed stubbornly refuses to even identify which institutions got the "loans", how much the loans were worth, what kind of collateral was accepted for the loans, or when the loans have to be repaid.

In truth, the loans are not loans at all, but gifts to the industry to keep asset prices artificially high so that the entire financial system does not come crashing down. Check this out: "In an analysis written by economist Gary Gorton for the Federal Reserve Bank of Atlanta’s 2009 Financial Markets Conference titled, "Slapped in the Face by the Invisible Hand; Banking and the Panic of 2007", the author shows that mortgage-related securities ballooned from $492.6 billion in 1996 to $3,071.1 in 2003, while asset backed securities (ABS) jumped from $168.4 billion in 1996 to $1,253.1 in 2006. All told, more than $20 trillion in securitized debt was sold between 1997 to 2007. "

$20 trillion! How much of that fetid paper is sitting on the balance sheets of banks and other financial institutions just waiting to blow up as soon as the Fed asks for its money back? And the Fed will never get its money back because the prices of complex securities and derivatives will never regain their pre-crisis values. Why? Because these derivatives are linked to underlying collateral (mortgages) which have already declined 33% from their peak and are headed lower still. Also, these toxic assets were sold as risk-free (many of them were rated triple A) and have now been exposed as extremely risky or fraudulent. Because these assets were heaped together in bundles to strip out their interest rates, they cannot be easily separated which means that they are worth considerably less than the 33% that has been lost on the underlying collateral (mortgages) The securitization markets are not expected to rebound for a decade or more, which means that the Fed will have to find other more-creative way to goose the credit system to avoid a downward spiral.

But how? Zero percent interest rates haven't worked because qualified borrowers are cutting spending and saving their disposable income, while people who need to borrow, no longer meet the banks' tougher lending standards. Bank credit is shrinking even though excess bank reserves are nearly $900 billion. When banks stop lending, the economy contracts, business activity slows, unemployment soars and growth sputters.

Presently, the economy is still contracting, but at a slower pace than before. "Less bad" is the new "good". All the recession indicators are still blinking red- income, employment, sales, and production- all down big! But it doesn't matter because it's a "Green Shoots" rally; plenty of cheap liquidity for the markets and a freeway off-ramp (for sleeping) for the unemployed.

The Fed's lending facilities are designed to pump liquidity into the system and inflate another bubble by generating more debt. Unfortunately, most people accept Bernanke's feeble defense of these corporate-welfare programs and fail to see their real purpose. An example may help to explain how they really work: Say you bought a house at the peak of the bubble in 2005 and paid $500,000. Then prices dropped 40% (as they have in Calif) and your house is now worth $300,000. If you only put 5% down, ($25,000) then you are underwater by $175,000. Which means that you own more on the mortgage than your house is currently worth. (This is essentially what has happened to the entire financial system. The equity has vaporized, so institutions are using dodgy accounting tricks instead of reporting their real losses.) So Bernanke comes along and gives you $175,000 no interest, rotating loan to you so that no one knows that you are really busted and you can continue spending just as you had before. Not bad, eh? This is what the lending facilities are all about. It is a charade to conceal the fact that a large portion of the nation's financial institutions are insolvent and propped up by state largess.

But there's more, too. Now that Bernanke has given you $175,000 no interest, rotating loan; you expect that eventually he will ask for his money back. Right? So your only hope of saving your home, in the long run, is to engage in risky behavior, like dabbling the stock market. It's like playing roulette, except you have nothing to lose since you are underwater anyway. This is exactly what the financial institutions are doing with the Fed's loans. They're betting on equities and hoping they can avoid the Grim Reaper.

Here's how former hedge fund manager Andy Kessler summed it up last week in the Wall Street Journal: "By buying U.S. Treasuries and mortgages to increase the monetary base by $1 trillion, Fed Chairman Ben Bernanke didn't put money directly into the stock market but he didn't have to. With nowhere else to go, except maybe commodities, inflows into the stock market have been on a tear. Stock and bond funds saw net inflows of close to $150 billion since January. The dollars he cranked out didn't go into the hard economy, but instead into tradable assets. In other words, Ben Bernanke has been the market." (Andy Kessler, "The Bernanke Market" Wall Street Journal) Only a small portion of the money that has gone into the stock market in the last 6 months (since the March lows) has come from money markets. The fed's loans are being laundered into stocks via financial institutions that are rolling the dice for their own survival. The uptick in the markets has helped insolvent banks raise equity in the capital markets so they don't have to grovel to Congress for another TARP bailout.

Everybody's elated with Bernanke's latest bubble except working people who have seen their wages slashed by 4.5%, their credit lines cut, the home values plunge, and their living standards sink to third world levels. And the Fed's spending-spree is not over yet; not by a long shot. The next wave of home foreclosures (already 1.9 million in the first half of 2009) is just around the corner--the Alt-As, option arms, prime loans. The $3.5 trillion commercial real estate market is capsizing. The under-capitalized banking system will need more assistance. And there will have to be another round of fiscal stimulus for ailing consumers, otherwise, foreign holders of US Treasurys will see that the US can no longer provide 25% of global demand and head for the exits.

Bernanke's back is against the wall. The only thing he can do is print more money, shove though the back door of the stock exchange and keep his fingers crossed. The rest is up to CNBC and the other media cheerleaders. The Fed chief has committed $13 trillion to maintain the appearance of solvency, but the system is bankrupt. The commercial paper market, money markets, trillions of dollars of toxic debt instruments, and myriad shyster investment banks and insurance companies are now backed by the "full faith and credit" of the US Treasury. The financial system is now a ward of the state. The "free market" has deteriorated into state capitalism; a centralized system where all the levers of power are controlled by the Central Bank. If Bernanke's Politburo withdraws its loans- or even if he raises interest rates too soon- the system will collapse.

The economy is now balanced on the rickety scaffolding of the dollar. As the Obama stimulus wears off, the rot in the economy will become more apparent. Household red ink is at record highs, so personal consumption will not rebound. That means US assets and US sovereign debt will become less attractive. Foreign capital will flee. The dollar will fall. The world needs a breather from the US. And they'll get it sooner than many think."

Mike Whitney lives in Washington state. He can be reached at

"Why Sleep? Increase Efficiency, Minimize Risk"

"Why Sleep? Increase Efficiency, Minimize Risk"

"Bats, birds, box turtles, humans and many other animals share at least one thing in common: They sleep. Humans, in fact, spend roughly one-third of their lives asleep, but sleep researchers still don't know why.

According to the journal "Science," the function of sleep is one of the 125 greatest unsolved mysteries in science. Theories range from brain "maintenance" — including memory consolidation and pruning — to reversing damage from oxidative stress suffered while awake, to promoting longevity. None of these theories are well established, and many are mutually exclusive.

Now, a new analysis by Jerome Siegel, UCLA professor of psychiatry and director of the Center for Sleep Research at the Semel Institute for Neuroscience and Human Behavior at UCLA and the Sepulveda Veterans Affairs Medical Center, has concluded that sleep's primary function is to increase animals' efficiency and minimize their risk by regulating the duration and timing of their behavior. The research appears in the current online edition of the journal "Nature Reviews Neuroscience."

"Sleep has normally been viewed as something negative for survival because sleeping animals may be vulnerable to predation and they can't perform the behaviors that ensure survival," Siegel said. These behaviors include eating, procreating, caring for family members, monitoring the environment for danger and scouting for prey. "So it's been thought that sleep must serve some as-yet unidentified physiological or neural function that can't be accomplished when animals are awake," he said.

Siegel's lab conducted a new survey of the sleep times of a broad range of animals, examining everything from the platypus and the walrus to the echidna, a small, burrowing, egg-laying mammal covered in spines. The researchers concluded that sleep itself is highly adaptive, much like the inactive states seen in a wide range of species, starting with plants and simple microorganisms; these species have dormant states — as opposed to sleep — even though in many cases they do not have nervous systems. That challenges the idea that sleep is for the brain, said Siegel. "We see sleep as lying on a continuum that ranges from these dormant states like torpor and hibernation, on to periods of continuous activity without any sleep, such as during migration, where birds can fly for days on end without stopping," he said.

Hibernation is one example of an activity that regulates behavior for survival. A small animal, Siegel noted, can't migrate to a warmer climate in winter. So it hibernates, effectively cutting its energy consumption and thus its need for food, remaining secure from predators by burrowing underground. Sleep duration, then, is determined in each species by the time requirements of eating, the cost-benefit relations between activity and risk, migration needs, care of young, and other factors. However, unlike hibernation and torpor, Siegel said, sleep is rapidly reversible — that is, animals can wake up quickly, a unique mammalian adaptation that allows for a relatively quick response to sensory signals.

Humans fit into this analysis as well. What is most remarkable about sleep, according to Siegel, is not the unresponsiveness or vulnerability it creates but rather that ability to reduce body and brain metabolism while still allowing that high level of responsiveness to the environment. "The often cited example is that of a parent arousing at a baby's whimper but sleeping through a thunderstorm," he said. "That dramatizes the ability of the sleeping human brain to continuously process sensory signals and trigger complete awakening to significant stimuli within a few hundred milliseconds."

In humans, the brain constitutes, on average, just 2 percent of total body weight but consumes 20 percent of the energy used during quiet waking, so these savings have considerable adaptive significance. Besides conserving energy, sleep invokes survival benefits for humans too — "for example," said Siegel, "a reduced risk of injury, reduced resource consumption and, from an evolutionary standpoint, reduced risk of detection by predators."

"This Darwinian perspective can explain age-related changes in human sleep patterns as well," he said. "We sleep more deeply when we are young, because we have a high metabolic rate that is greatly reduced during sleep, but also because there are people to protect us. Our sleep patterns change when we are older, though, because that metabolic rate reduces and we are now the ones doing the alerting and protecting from dangers."

Source: University of California - Los Angeles. ScienceDaily. Retrieved August 23, 2009, from
- /releases/2009/08/090820161333.htm

L. Thomas Holdcraft

"Life is a grindstone.
Whether it grinds us down or polishes us up depends on us."
- L. Thomas Holdcraft

Kari Henley, "The Difference Between Stress And Burnout"

"The Difference Between Stress And Burnout"
by Kari Henley

"Clearly the stress barometer in our country, and around the world, is escalating. The reaction to the recession has moved from shock and fear, into anger and rage. The honeymoon of President Obama's 100 days has evaporated into gun carrying dog fights, screaming matches, and the high hopes of "Yes We Can" have deteriorated into, "Is This Ever Going to End?"

Research shows that some stress is important in our lives. It keeps us on our toes, helps to strive toward goals, and makes us feel alive. The hormones related to feeling stressed are designed to get us out of danger - like a fire or enemy attack. Yet the body will also surge adrenaline when driving down the highway and some jerk cuts you off. Stress hormones are not selective - they activate whether the threat is perceived or real. We are not meant to be living with the pedal to the metal 24/7 - and we are pushing our proverbial panic buttons far more than is healthy to maintain.

If stress continues to operate at full scale for an extended period of time, there is an increased risk of burnout. What is burnout? I have taught classes on stress and burnout, with Ceridian development experts who define burnout as: "a constant depletion of mental, physical and emotional energy - without expected or real needs being met."

Burnout is a normal response to putting out too much effort, without taking in what you need to balance and restore yourself. Signs of burnout include feeling overwhelmed with things that used to be exciting, thinking work or personal problems will never end, or having a pit in your stomach of constant dread. When too much of life is draining and not enough is fulfilling, a sense of hopelessness creeps in.

How many of you feel burned out at the end of the day? Studies show well over half of us do- in a steady economy. I have not yet found data for the increase in numbers of disability cases related to burnout and stress. Burnout happens with over commitment, or unrealistic expectations that lead to a feeling of powerlessness or hopelessness. Periods of stress can last for a while without long term affects, but burnout is a more serious and chronic condition. The good news: burnout is preventable - if warning signs are recognized, and actions taken to reverse the cycle.

Some of the physical symptoms of burnout are: low energy, muscle tension, headaches, digestive disorders, frequent colds, or changes in sleep patterns. Mentally, symptoms include feeling inadequate, overwhelmed, loss of meaning, bored, frustrated, sad, irritable, unappreciated or trapped. The outcomes of these symptoms can include withdrawal, increased sick days, accidents, crying or increased used of alcohol or food to self soothe.

Burnout is a cycle of negative emotions, withdrawal and paralysis. Getting out of a crash course with burnout requires putting your hands back on the steering wheel, realigning with your personal vision, surrounding yourself with support, and making time for humor.

Here are a few tips for reducing burnout:

Clear the Clutter - both in your office and in your head: One of the first steps is echoed in the uprising of personal organizers- clear the clutter! There must be a reason that helping people organize their "stuff" has become a recognized and valued profession. The clutter of emails, paperwork, projects and obsessive to do lists, increases stress, and is an easy place to start. There is a great relief to tackling one small project, when the world seems overwhelming.

Stop Eating Crap - Believe me, when I am stressed out, Snickers bars and Starbucks are my best friend. It is hard to cozy up to a chopped salad and lemon water, but your body will thank you for it later.

Walk - How many of us take about 15 minutes to park at the grocery store circling round and round to get a spot right up front? Jeez. Park in the back, walk a bit during lunch, get up a few minutes early and walk around the block. Nothing strenuous, just breathe some fresh air and clear the mental cobwebs.

Take a One Minute Vacation! - This is one of my favorites as a stress management tool that can be done literally anywhere- in your car at the beginning and end of each day, in the elevator before meeting the boss, or at your desk before answering a rousing email.
Here's how it works: close your eyes and think of your absolute most favorite vacation spot - it can be a lovely white sand beach, a gorgeous mountain path by a stream, or rocking on a chair at the family's cabin in the woods. Choose a spot and sharpen it's image in your mind's eye. Check out all the details you may not have remembered. Now turn on the sound: notice what background noises are present in this place. How about the sensation of the temperature on your skin? How does it feel to fully surround yourself with a favorite place?

Once all the "dials" have been set, give yourself a full 60 seconds to enjoy it - literally set a timer on your watch or cell phone! I guarantee if you try this exercise at home, you will be amazed at how LONG one minute actually feels. I have taught this many times, and afterwards, everyone blinks their eyes as if they had a long sleep, yawns, stretches and have a softness to their faces - it works!

Burnout Management for the Girls vs. the Boys: new research in brain development show that men and women react to stress differently. Men usually respond with the classic "fight or flight" response, and can reduce stress by engaging in some sort of activity. Cleaning out the garage, fixing a broken appliance or taking a long bike ride are classic examples of letting off some steam.

For women, finding ways to trigger oxytocin is the fastest way to reduce symptoms of stress, rather than the "fight or flight" tricks, they need more of the "tend and befriend." Women often need to talk, sort, clean, cook, or nurture in some way to feel balanced and calm.

If you have a friend who appears to be on the fast track to burnout- be compassionate. Lend a hand, offer to help. We're all in this together and our country has too much on the line to lose momentum, or hope."
Kari Henley,
President of the Board of Directors at the Women & Family Life Center

"How It Really Is"

Theodore Roosevelt

"Have you got a problem?
Do what you can where you are with what you've got."
- Theodore Roosevelt

On Sheep, Wolves and Sheepdogs

"On Sheep, Wolves and Sheepdogs"
by Lt. Col. Dave Grossman

"Honor never grows old, and honor rejoices the heart of age. It does so because honor is, finally, about defending those noble and worthy things that deserve defending, even if it comes at a high cost. In our time, that may mean social disapproval, public scorn, hardship, persecution, or as always, even death itself. The question remains: What is worth defending? What is worth dying for? What is worth living for?"
- William J. Bennett

"One Vietnam veteran, an old retired colonel, once said this to me: “Most of the people in our society are sheep. They are kind, gentle, productive creatures who can only hurt one another by accident.” This is true. Remember, the murder rate is six per 100,000 per year, and the aggravated assault rate is four per 1,000 per year. What this means is that the vast majority of Americans are not inclined to hurt one another.

Some estimates say that two million Americans are victims of violent crimes every year, a tragic, staggering number, perhaps an all-time record rate of violent crime. But there are 300 million Americans, which means that the odds of being a victim of violent crime is considerably less than one in a hundred on any given year. Furthermore, since many violent crimes are committed by repeat offenders, the actual number of violent citizens is considerably less than two million.

Thus there is a paradox, and we must grasp both ends of the situation: We may well be in the most violent times in history, but violence is still remarkably rare. This is because most citizens are kind, decent people who are not capable of hurting each other, except by accident or under extreme provocation. They are sheep.

I mean nothing negative by calling them sheep. To me it is like the pretty, blue robin’s egg. Inside it is soft and gooey but someday it will grow into something wonderful. But the egg cannot survive without its hard blue shell. Police officers, soldiers and other warriors are like that shell, and someday the civilization they protect will grow into something wonderful. For now, though, they need warriors to protect them from the predators.

“Then there are the wolves,” the old war veteran said, “and the wolves feed on the sheep without mercy.” Do you believe there are wolves out there who will feed on the flock without mercy? You better believe it. There are evil men in this world and they are capable of evil deeds. The moment you forget that or pretend it is not so, you become a sheep. There is no safety in denial.

“Then there are sheepdogs,” he went on, “and I’m a sheepdog. I live to protect the flock and confront the wolf.” Or, as a sign in one California law enforcement agency put it, “We intimidate those who intimidate others.”

If you have no capacity for violence then you are a healthy productive citizen: a sheep. If you have a capacity for violence and no empathy for your fellow citizens, then you have defined an aggressive sociopath- a wolf. But what if you have a capacity for violence, and a deep love for your fellow citizens? Then you are a sheepdog, a warrior, someone who is walking the hero’s path. Someone who can walk into the heart of darkness, into the universal human phobia, and walk out unscathed."
- Lt. Col. Dave Grossman, from the book "On Combat"

And you don't need to be a policeman or soldier to be a sheepdog, just the ability...

Congressional Budget Office: "Deficit ONLY $1.58 Trillion"

"Deficit ONLY $1.58 Trillion"

"The Obama administration will trim its budget deficit forecast for fiscal 2009 to $1.58 trillion, after scrapping money earmarked for bailing out more banks, officials said on Wednesday. The record deficit has made investors anxious and threatens to thwart Obama's ambitious domestic agenda to overhaul healthcare, reform education and make the country less reliant on fossil fuels. Polls show the deficit is one of the top concerns of Americans who fear that it could lead to higher taxes.

An administration official said the drop in the projected deficit was due to the elimination of $250 billion that had been set aside for further possible financial rescues. The new estimate involves a calculated judgment that financial markets have sufficiently stabilized and the administration will not have to go back to the U.S. Congress to ask for additional money to bail out more banks.

President Barack Obama says there are signs the economy is returning to normal and that his $787 billion stimulus program is working, although any recovery has a long way to go. Officials said the government's budget office would announce next week that deficit this fiscal year would total $1.58 trillion, about $262 billion lower than the deficit forecast in May. One official, who spoke on condition of anonymity, said the decline was due "primarily to not having used the financial stabilization placeholder that was in the budget." A further $78 billion set aside for the Federal Deposit Insurance Corp to pay for bank failures will also be saved because fewer than expected banks went under.

Economists had predicted the $250 billion placeholder could be removed because of the reduced likelihood that the government would have to use more taxpayer money to bail out troubled banks. Congress last year granted $700 billion under the Troubled Asset Relief Program to protect the country's financial system from a global credit crisis.

The improved deficit forecast may help Obama politically as he tries to overcome opposition from fiscally conservative Democrats and others opposed to the $1 trillion price tag for his healthcare overhaul. But it may not comfort investors looking for evidence that the United States is controlling spending or generating higher revenues due to a healthier economy. The government officials said spending this fiscal year would total $3.653 trillion and revenues would be $2.074 trillion. The decline in the size of the deficit, from an estimate of $1.84 trillion in May, would peg it at 11.2 percent of U.S. gross domestic product, the officials said.

Investors are worried that record budget deficits will need to be funded by issuing massive amounts of government bonds, which could drive up long-term interest rates and undermine a sustainable economic recovery. Obama has vowed to halve the deficit by the end of his four-year term, but he says massive government spending is needed now to end the country's worst recession since the Great Depression of the 1930s."

A Comment: Well, it's a real comfort to know that the government doesn't believe it will need to borrow more money to bail out the criminal banksters. I feel better already. My question to the Fine Public Servants in Washington is this: When will you do something to help the American PEOPLE? Every state in the Union is facing massive deficits, forcing cuts in services and layoffs of hundreds of thousands of employees. The social consequences of that are horrifying- homelessness, poverty, children and the elderly literally going hungry- and all the focus has been on the financial institutions that were "too big to fail", and "essential to our economy." Essential to who, Mr. Congressman? The wealthy parasites, your benefactors?

How about we try another idea? After World War II the Marshall Plan was created to fund the re-construction of Europe. How about a domestic version of that, to rebuild all the damage caused by the criminal actions of the financial institutions? A $700 billion domestic "Marshall Plan" for the states and people of this country, not the swinish filth of Wall Street. Use it to balance state budgets, pay to restore social services cuts, make life a little easier for the 300 million of us who aren't rich? People would become employed again, they'd be able to spend again, tax revenues would rise, the economy would stabilize and grow as demand for goods and services increases- a win-win for all involved. So exactly WHY aren't we doing this, Mr. President of Change? How about it, Mr. Senator, why don't you stop kissing the ass of your financial Masters long enough to do something for the people? Or, maybe we 300 million just don't count... until it's time to pay the bills.
- CoyotePrime

Economist Paul Krugman, "Bandits on the Northeast Corridor?"

"Bandits on the Northeast Corridor? Hmm. On the Acela. We were held outside Newark because of “trespassers” on the tracks, and we’re now being held outside Philadelphia because of “police activity.”

Have the bandits starting raiding down from the hills?"
- Paul Krugman,

How ironically funny. Little does Mr. Krugman realize how close to being literally true that is...

The Mogambo Guru, "An Overdue Collapse of Money"

"An Overdue Collapse of Money"
by The Mogambo Guru

"The 'Economist' magazine had the Buttonwood blog titled "Law of Easy Money", which immediately gets your hopes up that there is such a thing as "easy money", which actually exists (just ask Connecticut's Senator Chris Dodd!), but unfortunately not for guys like you and me who don't have the political power and grease to extort money and skim taxpayers, which is gratuitously rude and scandalous, I agree, but which only shows the depth of my contempt for the huge, huge, cancerously huge, ridiculously and dangerously incompetent, ignorant and stupid system of governments in America, as exemplified by the despicable Congress and the even more despicable Senator Dodd.

But it turns out that "Law of Easy Money" was just a clever play on words, and was the story of how John Law talked France's king, Louis XIV, who had borrowed and spent France to bankruptcy, into letting him start a bank and force everyone to pay their taxes with a new kind of paper money that Mr. Law's bank would create and, soon enough, loaning more gigantic supplies of paper money to finance the development of the king's colonies in the New World, a fiasco now known as the Mississippi Bubble, an economic bubble where everybody got wiped out financially, the country was ruined and the aristocracy had their heads chopped off, which I am sure was not in the prospectus or brochure that the king got from Mr. Law.

However, the essay is not about how the French in the 18th century were a bunch of buttheads who didn't know any better, or how we are a bigger bunch of buttheads who should have known better in the 20th century, or even about how we are going to suffer in the 21st century for knowing better but not acting better, but about, as the subhead says, "A 300-year-old example of quantitative easing."

Of course, if you had to read 'A Tale of Two Cities' in high school where all you learned was that it opens with the immortal line "It was the best of times, it was the worst of times", or if you have ever seen a movie on TV about the French Revolution, you know it ends Very, Very Badly (VVB).

The blog admits that "the parallels with today are not exact", which is true in that we seem to dress a lot worse in the ruffled-shirt and hat-with-feathery-plumes department, a grim sartorial fact which is not mentioned, but two differences which are mentioned are "Law's system took just four years to collapse; today's fiat money regime has been running for nearly 40 years", and "the growth in money supply has been less excessive this time."

Lest you take any cheer from that, beware that the summation says, "But one lesson from Law's sorry tale endures: attempts to maintain asset prices above their fundamental value are eventually doomed to failure."

And what big failures they are going to be, too, as I gather from The Wall Street Journal reporting that "Much to their dismay, Americans learned last year that they 'owned' Fannie Mae and Freddie Mac. Well, meet their cousin, Ginnie Mae or the Government National Mortgage Association, which will soon join them as a trillion-dollar packager of subprime mortgages." Trillion-dollar!

In case you didn't know, "Ginnie's mission is to bundle, guarantee and then sell mortgages insured by the Federal Housing Administration, which is Uncle Sam's home mortgage shop. Ginnie's growth is a by-product of the FHA's spectacular growth. The FHA now insures $560 billion of mortgages - quadruple the amount in 2006."

Now, the scam has gotten so huge that "Among the FHA, Ginnie, Fannie and Freddie, nearly nine of every 10 new mortgages in America now carry a federal taxpayer guarantee"! Yikes! 90 percent of mortgages!

This probably explains why "Only last week, Ginnie announced that it issued a monthly record of $43 billion in mortgage-backed securities in June", which is pretty astonishing when you multiply $43 billion in one month by 12 months in a year, and I suggest you not do it because the answer will scare you to death.

Not so astonishing, then, is the news that "Ginnie Mae's mortgage exposure is expected to top $1 trillion by the end of next year - or far more than double the dollar amount of 2007."

And all of this money, all these trillions and trillions in new money, must come, directly or indirectly, from the Federal Reserve creating it, which means that A Lot Of New Money (ALONM) is being jammed into the economy, which means (if you are a Junior Mogambo Ranger (JMR)) that the government is acting like irresponsible halfwit scumbags, and doubly so in letting the Federal Reserve do it, and that history has shown that the only thing that is going to save your proletariat butt in the inevitable collapse is gold.

History is not quite as convincing about armored bunkers in one's backyard or the efficacy of sheer firepower against the sustained assault of hordes of desperate, angry, starving people in a decidedly "nothing to lose" mood who are outraged that they were betrayed when they trusted the value of the dollar and the Federal Reserve supposedly maintaining its purchasing power via monetary policy, and they trusted the Congress to handle fiscal policy wisely and who had the power to control the Federal Reserve's handling of monetary policy, but we'll soon see!"

Richard Daughty, AKA the Mogambo Guru, is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it.

Saturday, August 22, 2009

Robert Fulghum

"I believe that imagination is stronger than knowledge,
That myth is more potent than history.
I believe that dreams are more powerful than facts,
That hope always triumphs over experience,
That laughter is the only cure for grief,
And I believe that love is stronger than death."

- Robert Fulghum, "Storyteller's Creed"

Aquila Ka Hecate, "The Silence Deepens"

"The Silence Deepens"
by Aquila Ka Hecate

"Abraxas believes in the existence of demons; Derrick Jensen tells of non-human entities visible in dreams who do not wish us well. I know, however, that the only true evil lives in the hearts and minds of human animals.

Passing a newly-flattened piece of ground – being prepared to become twenty prison cells, or a ‘townhouse complex’ – I feel the grief, but the tears only fall within. Never wetting the scorched and wounded ground itself.

The silence within me, always potential, ever coming-into-being, expands into a sheer waterfall. Here, at my still-point, a mystery: that which never leaves me is full of nothingness. The silence is alive, and presents itself in falling colors as chiffon veils within my core.

One friend longs for her rooted home; another loses a close companion; still another disconnects from his human lover. A fourth rages over wanton destruction of Life– and I…sit. Still, and consumed from within by the silence…deepening.

I wipe the stringy sleep from my puppy’s eyes in the morning, and I – connect. Animal individuated soul to animal individuated soul. His roaring stillness at his core recognizes, and greets mine.

Most human animals cannot reach this point, it seems. Filling their perceived lack with loud laughter, ragged in its lack of truth, they speak at a volume hoping to drown the silence. Which, nevertheless, from the mother, from the planet, from God Herself, from myself, continues to…deepen.

The basic field of Being – the field of Consciousness, of Life Force, of…Love, which they can never feel, caught up, entrapped in their electronic connectors. Facebook. Twitter. Mobile Phones which define their lives. None carrying the precious stillness, but rather a junk-pile of white noise, interference for the soul.

We’ve lost, my friends. Better let go now. And all the while, the Silence gathers force, and... Deepens.

But, before the altar, two candles focused and incense spiraling, grief turns within the silence to connection. With the consciousness, with the life force, with the love. A knot of Gordian proportions has started loosening inside me now - I feel the unbinding, the start of another Shift.

Whole Being dissolving in ecstasy as the deepening silence gathers me home."

Aquila Ka Hecate is an Anarcho-Primitivist Shaman from Johannesburg, South Africa.