Fascism With a Human Face

As I have touched on previously the ugly reality is that we are living in a neo-fascist state. Sure we still have the illusions free speech and free elections. But do we really?


Just look at the choices we have for President in the upcoming elections. With the exception of Dr. Paul if one were to do a blind comparison among them all you would be had pressed to say who was who and who belonged to what party.

There is a reason for this of course and that is that as in the classical definition of fascism the corporations and the state have merged into a single amorphous entity. The corporations hire the lobbyists to write the bills that they then send to their bought and paid for politicians who pass them into law and then the corporations just go about their business of pillaging the economy and the citizens and everything is nice and “legal.” Just like in Fascist Italy and Nazi Germany. Don’t ask questions of morality the politicians and the courts and the media will only ask that you consider if it is “legal.”

Anyone who thinks that the MSM functions as anything other than Ministry of Propaganda for the neo-fascist state is either not paying attention, woefully ignorant, sadly deluded or to be quite frank, just plain stupid.

So the point in time is rapidly approaching wherein a lot of people are going to have to ask themselves; can this be changed? Can we stand and fight the machine? Or; Do we just hunker down and try and hide from the eye of Sauron or perhaps even flee the country?

How many of us can become capital “A” Anonymous and fight them and hope for continuing victories as was recently achieved in the take down of the proposed SOPA and PIPA legislation? Knowing full well that the state is actively engaged in hunting them down and will have no mercy when and if they find them. How many of us can really become little ”a” anonymous and have the means to effectively hide from the government with enough land and or resources to sustain ourselves and hopefully stay outside their reach or concern? In either case, probably not to many of us. The only remaining alternatives will be to either become a cog in the machine of the corporate government or simply go along with the corruption and fraud and hope that it doesn’t target us specifically.

We are making the transition into what Fabian socialist H.G. Wells called “fascism with a human face.” How long until it devolves into what as George Orwell so succinctly put it “imagine a jack boot stomping on a human face.” No one can tell but have no doubt it will move in that direction.

The reason that this neo-fascist state gets away with this slow one-by-one usurpation of our rights and property is that they have made issues of economics and government so complex that for the vast majority of people when they come up their eyes just glass over and the subject changes to who will win the Super Bowl or the latest season of Survivor or whatever other mindless distraction, put forth deliberately by the same propaganda outlets, so that we don’t become involved with the outcome of our own fates at the hands of the corporatocracy.

The Department of Homeland Security and their increasingly thuggish TSA have grown into some sort Imperial Praetorian Guard, concerned not with protecting the citizens but only with protecting the power of the state. How soon until like those of ancient Rome they start to “remove” even elected officials who question their authority? Just today a sitting US Senator who has been outspoken in his criticism of the TSA was detained for refusing a “pat down” at an airport in his own state of Tennessee. This is not the politically correct theater of the absurd, this is barefaced tyranny.

How long will people continue to wallow in their normalcy bias, thinking that a choice between an Obama or a Romney or a Gingrich is actually a choice? Or simply closing our eyes to the ugly truth and concerning ourselves with nothing but the flickering images on our new HD TVs until one day we wake up and find that all our rights and liberties and property have been stolen from us in the name of “state security” and we wonder out loud “How did this happen?” or ask “Why didn’t the talking heads on TV tell us this was happening?” Or will we wait until the latest and greatest HDTV comes equipped with a web cam and microphone so the Ministry of Truth can watch us as we watch their propaganda. Why not just line up at the courts and all of us change our names to Winston Smith and be done with it?

Of course by the time that the realization of the truth begins to dawn for most it will be too late to “petition the government for redress of grievances” because that right will be gone as well. And all of us who tried to warn the public, who begged and pleaded and cajoled until we were blue in the face will have all either “gone Galt” (members of Congress talking about setting up a “Reasonable Profits Board” draws not even a stiffeled yawn from any of the candidates or the MSM) or disappeared into some FEMA camp, held under indefinite detention, just as the NDAA now says is “legal.”

It’s all to frightening and all too real. It might be 28 years late but 1984 is here.

Now Would Not Be The Time To Celebrate or Relax.

As last week progressed to its conclusion the pressures on Congress from the public and from actual Internet operators to drop any and all so-called internet piracy legislation became too great for them to withstand. SOPA and PIPA as constructed were too little too late. Even the tempting bribes from Wall Street and Hollywood were not enough to overcome their fear of an enraged public and a new and powerful free press. Any court rulings that bloggers are not “real” journalist were exposed as acts of desperation, empty of any real authority and outside the realities of the Internet world.


The Justice Department’s move at the end of the week to take down a major filesharing operation brought a swift reaction from Anonymous and legions of other hackers that shut down entertainment and government webs sites with denial of service attacks. The word no doubt came down from the corporations and the bureaucracy that they could not withstand the attacks, and the call to retreat was sounded. The Feds and their bureaucrats have clearly underestimated how much people love the Internet and the free flow of information it provides that is outside the ability of government and the major media corporations to control. Sure there are a lot of kooky conspiracy theories out there and there will always be those who fall for them. Just look at government and media propaganda, it flourishes and survives in the exact same way. All the suckers notwithstanding there are a lot more people out there with a lot more healthy skepticism and plain old common sense than they get credit for who can see past the bunkum whatever the source.

And that is the point. The numbers of people are growing who no longer are willing to be spoon fed crap, who have come to the realization that there is a truth, a reality, beyond that of government and media managed propaganda. Concurrent with this growth in numbers is a growing realization that government is not the beneficent father it would have us believe it is. SOPA and PIPA can then in fact be seen for what they were, desperate attempts to stem this rising tide.

The words of Thomas Jefferson have come back to haunt the powers that be; “When government fears the people you have liberty, when the people fear the government you have tyranny.”

This is not to say that the power or determination of the statists has been broken. The power of the Internet may have already grown to large for the cage the government wanted to put it in. Yet have no doubt, like in a bad Hollywood movie, the monster will rise from its grave and government will try to construct a newer and bigger cage and find a more surreptitious way of putting it in place. The corruption of the corporatist state has become absolute. It will not simply give up to the “will of the people,” like a wounded animal it will strike back in some new more vicious totalitarian way. A new or manufactured crisis will come along demonstrating the need to bring “certain elements” under control for reasons of “state security” and if the 1st Amendment and freedom of expression become collateral damage well that’s just too bad. It will all be for our own good and protection of course.

Perhaps than it is true that there are two types of people in the world, the ones who want to be left alone to pursue there own happiness free of interference from others and government and those sociopaths who see controlling others and restricting their freedoms as the path to power and wealth. Hopefully as long as the desire for freedom remains a part of our genetic makeup and as long as there are a lot more of the former (and at least a few of them willing to put up the good fight) than the latter, then there is still hope that the next generation will know the freedoms we and past generations have known and in many cases fought to pass on to them.

The Chance Encounter and the Self-inflicted Wound

A friend of mine (you know who you are) once told me that what he liked about my presentations was that I seemed to have a “good command of the English language.” For a writer there can be no higher complement. I may or may not have told them that one of the beauties of the English language was in its character of adopting words that can distill the more seemingly complex ideas into a couple three syllables. Take one of President Reagan’s favorite admonishments for example; “Government isn’t the solution, government is the problem.” Until just the other day I did not know that there was a single term to cover this situation: iatrogenic. A disease caused by the diagnosis or treatment of a physician.

A more absolutely appropriate term for our systemic economic decline I could not imagine. Kind of like leeches and bleeding are analogous to politicians and bankers. Even a small child can understand that tearing a bandage off quickly is less painful than a long slow peeling away. Our politicians and bankers may be simpletons but that doesn’t mean they understand simple truths, or if they do, they don’t want the voting public to recognize them. Heaven forbid that the public might then come to the realization that politicians and bankers are not simply useless but actually destructive to the welfare of the individual and the nation as a whole. (Well at least the current batch of them anyway.)

Keeping in mind that most politicians (at the national level anyway) are the puppets of the financial elites that fund their campaigns, if there is anything a politician can’t stand it is to be perceived as “doing nothing.” Being seen as “taking action” or “fixing a problem” is their reason for existence, the food upon which their ever-expanding egos feed, that and tax dollars of course.

So that in essence is how we got to where we are today. Liken some small displacement in the economy unto a scrape on the arm, left alone a scab will form, the injury heal itself and in time would be long forgotten. Like how a new invention or technology changes the way we do something and results in some businesses going belly up while other new ones come into existence. (Who uses 5” or 3” floppy discs anymore now that we have thumb drives and re-writeable CDs?)

But that is not how government, politicians and their evil spawn the bureaucrats operate. When confronted with a scab it cannot be left alone to heal by some natural course, it must be portrayed as a “potential crisis.” And of course government must intervene in any “crisis”. So then the scab gets picked at and torn off and some government salve get slathered on at twice or more the cost of leaving it alone in the first place and at the same time tending to make the initial germ of infection immune to the natural process of healing, the market correcting itself. Now with a big government bandage covering the problem it is pronounced as “fixed” or at least “under repair” while it continues to fester under the surface only to reemerge at a later date or spread to someplace else and re-emerge as a “new” crisis in need of even more government intervention.

So with each new out break the problems grow worse than the previous ones, requiring (in the politicians and bureaucrats minds) even greater government “solutions” which are always, always, always, more government bureaucracy, spending, taxation and debt.

That this has gone on for decades now, under both Democrats and Republicans, the simple bumps and scraps of the economic course of life have now grown into a massive infection of government debt and addiction to cheap money. Sadder still this disease has spread to much of the body politic as well as far to many people have stopped being savers for their future and become consumers for today, so much so that they are consuming not just their own income but have so borrowed against future income that the downturn (to use the mildest of possible terms) has put them “underwater” as is the current vernacular.

Are there any solutions? Perhaps there were at some point, but I fear that the infection has spread too far for any quick fix. All this brings me to a chance encounter I had about a week ago. Very often on Friday evenings the wife and I go out for some simple repast and get away from the kitchen, at least for one meal. Sitting down in a local restaurant, nothing fancy mind you, I notice sitting next to us at the next table was Erskine Bowles, President Clinton’s former Chief of Staff and more recently of note as part of the Simpson-Boles Commission tasked by the President to find solutions to the very problem outlined above. Not wanting to be rude I waited until he stood up with his family and was preparing to leave that I introduced myself and remarked how I could not have been more disappointed than he and Senator Simpson over the Administration’s out of hand rejection of the commissions recommendations. He shook my hand and remarked that he was indeed disappointed but that work was still being done at the political level and that some 47 Senators had signed on to the commissions recommendations. Not wanting to further delay his Friday evening with his grandchildren, I thanked him for his work, wished him luck in trying to further the commissions work, expressed my hope that it was not too late to be of any positive effect, and hoped he enjoyed the rest of his evening with his family.

We had an opportunity to do something outside the entrenched political norms, but politicians who saw it as not in their personal or party’s best interest, never mind that it might have been in the nation’s best interest rejected it. So the option to keep kicking the can down the road in vain hope that some miracle might occur to rescue them and the economy was chosen instead.

Sadly I don’t think we are going to get any miracle. I think what we are going to get is another war. Be it limited in nature or a wider conflict I can’t predict. But what I do know from reading history is that when governments become desperate to distract the public from the disasters of their own malfeasance they rattle the war sabers.

Like at the onset of America’s being plunged into an already raging World War II. The predictable consequence of our embargo of scrap metal and oil against Japan, no matter how justified, was that they would lash out militarily, somewhere, somehow. It would appear that we have set a similar course with Iran, only with far more cynical economic and political motives. Our financial and gasoline embargo and Iran’s inability to process more than 50% or so of their own refined petroleum needs has already set Iran on a course of hyper-inflation, with prices, of particularly imported goods rising some 200% to 300% in just the last few weeks.  Such is a risky path of national policy.  Although the Iranian people may be well educated and questioning why their government is pursuing nuclear weapons rather than the greater welfare of its citizens may be the intended goal, the government itself is not rational and hoping they will respond in a rational manner may proove to be a fool’s errand.

But then is this not just another manifestation of the supreme arrogance of politicians and bureaucrats and their puppet masters on Wall Street and in the City of London that they know so much better than the rest of us and that they in their infinite wisdom have everything under control?  Maybe it’s just me but it doesn’t seem to be working out so well thus far.

May God save us all from their hubris.

The Weakness of Modern Repuplicans

I wrote this piece back in 2007 but never published it. It is still as valid today as it was then.


The Weakness of Modern Republicans.

I must say that I have long been dismayed by the Republican Party having falling into a semantic trap laid by the Democrats and the mainstream media. That being the contention that the terms “republic” and “democracy” are somehow indistinguishable in meaning and freely interchangeable.

That such a fallacious claim is not confronted demonstrates that at best, they don’t understand, or at worst, they don’t want the voting public to understand that the American Constitution exists not only to protect us from the tyranny of dictators and kings but to protect us from the dangers presented by the manipulation of democracy by the kind of emotional demagoguery that has become the stock and trade of the Democrat Party. (and all to many Republicans)

By accepting this premise we become trapped into believing that “plurality” is somehow the be all and end all in the formulation and implementation of public policy. Such a notion would have the Founding Fathers spinning in their graves.

The Constitution established our nation as a Republic, not a parliamentary democracy, and for that we should be thankful. This is demonstrated in our “Pledge of Allegiance” and by the fact that our military and elected officials swear loyalty to that Constitution, not to an individual, a political party, or a transitory elected government.

Thomas Jefferson is often held up as the spiritual father of the Democrat party, yet it is this same Jefferson to whom we owe perhaps the greatest debt for the fact that our nation is a Constitutional Republic, not a parliamentary democracy. Jefferson was not present at the Constitutional Convention; he was Minister to France at the time. Upon his return he quickly pointed out that the document as proposed, was deficient in its lack of enumerations as to what the new government would be prohibited from doing, i.e. the need to place strict limitations on the exercise of democracy. Thus we have our Bill of Rights, the first ten amendments to the Constitution. These amendments delineate specific rights that “shall not” be infringed by government regardless of what a democratic majority, elected officials or the public may demand or desire.

Neither did Jefferson raise objections to the manner proscribed for the election of our President, namely the system of the Electoral College. The Founding Fathers clearly recognized that we are not a homogenous nation. Political perspectives, social attitudes and perceptions of what is required of government vary greatly from person to person, State to State and region to region. This is as true today as it was in the 1780’s. Herein lie the foundations of not just the Bill or Rights, the Electoral College system, the Supreme Court and the U.S. Senate, but the Constitution’s philosophical guidance of our nation as a republic rather than a democracy. It is these very institutions that protect us from the tyranny of either the majority of citizens over the minority, of a group of large populous states over the smaller less populous ones or of one region over another.

So it would appear then that the founding “Democrat” better understood the dangers of social democracy than those who would claim to be his inheritors. The wisdom of his insight was quickly borne witness too by the chaos and unbridled bloodletting that came be known as the French Revolution.

It is not a mistake that our Constitution grants greater powers and responsibilities to the Senate than it does to the House of Representatives. No one could rationally argue that the Senate is a wholly democratic institution. Yes its members are elected by voting majorities from each of there respective States and its final decisions are reached by the votes of a majority of its members, but the vote of a Senator from Vermont or Wyoming carries the same weight as the vote of a Senator from California or Texas. So that if examined in terms of representing the populations of those States it is not so democratic after all. It was not intended to be. So it is also with the structure of the Electoral College. Nowhere does the Constitution bind the Electors to the majority of votes cast in their respective States. Nor should they be. They are only bound to vote in accordance to what their conscience tells them is best for the nation as a whole.

Would the Democrats argue that the Senate be done away with because it is “undemocratic?” I think not, for to do so would put their leading spokesman out of a job. It was the Founding Fathers vision the House of Representatives was to be bound to the will of the people, and that the Senate, The Supreme Court and the Electoral College was to be bound to logical discourse and reasoned debate guided only by the need for the preservation of the Constitution.

So then we must ask ourselves what insights and visions led our Founding Fathers to bequeath us such undemocratic institutions? How do they help us preserve our Republic?

For myself, I have no doubts that it was their hope that carefully defined and limited democratic methods would serve us well, and for the most part they have. But they also recognized that in times of crisis or when the nation was closely divided, when inflamed political passions and unreasoned or uninformed opinion and demagoguery might hold sway, there must exist safety valves, vehicles whereby once again a few individuals engaged in logical discourse, reasoned debate, careful examination of law the Constitution and of their own consciences might right the Ship of State and bring the nation back to an even keel. They were right then and they are still right today.

Yet all this said, in speech after speech we here Presidents (past and present) talk of spreading freedom and democracy throughout the world, without any mention of the necessity of defining freedom as structuring individual rights as the supreme tenant of any form of self-government. Fortunately we already have the structures in place, however tenuous they may have become over the years. I can only hope and pray that as the people of Afghanistan and Iraq and the rest of the Middle East build their new structures of government they to understand the meaning of freedom as well.

Sitting on the Edge, Oblivious to What Lay Before Us

“Crisis takes a much longer time coming than you might think, and then it happens much faster than you would have thought.”

Rudiger Dormbusch
Late MIT Economist

So now we have the latest brouhaha over President Ellsworth, I mean Obama, making non-recess recess appointments to the NLRB and some new so-called consumer protection oversight commission. Don’t hold your breath but someone will start bloviating about impeachment before the week is out. No doubt AG Holder, who couldn’t recognize the foul odor of corruption if he was having excrement for breakfast, will pronounce the actions “technically” legal.

This is a joke right? Congress passed the Frank Dodd bill and the CFTC continues to ignore it, i.e. position limits on precious metals and other commodities have still not been put in place even thought the law required that it be done by June of last year. It’s just more meaningless laws and more meaningless bureaucrats, trotted out as distraction, while power continues to be consolidated in the hands of the elite (of both parties) at the top. Meanwhile the blind partisan hacks will be kept busy fighting over a new bone as our liberties are dissolved into a new legislative morass, known as the National Defense Authorization Act.

Congress passes and the President signs this abomination (the NDAA) that more or less scraps half of the Bill of Rights and the media and the politicians yawn. The police state is here and no one seems to care. Hey the Orange Bowl is tonight and the Super Bowl is in a few weeks, what else could possibly matter right?

I’ve never been a Ron Paul fan, he might be right on target on economic and monetary policy but on foreign policy I think he is out of touch with reality, (evil does exist in this world and no matter how hard it gets slapped down, the bitch that bore it is always in heat). But in the longer term if we acquiesce to the slide into a fascist police state here at home, where the police are allowed to write their own warrants and the courts no longer exist as a neutral abettor between the citizen and the power of government, whether or not Iran has the bomb won’t much matter from inside a detention camp.

More than a few of us would be well served by looking up just how the British enforced the hated “Stamp Act” and how it led to not just the Revolution but the demands for the inclusion of a Bill of Right into the Constitution in the first place. We best open our eyes and speak up or even that right will be gone as well if Congress passes the SOPA (so-called internet piracy act).

We sit at the edge of the precipice and far to many refuse to see.

Merry Christmas To All!

I know I have been away during this busy holiday season, but I wanted to return if just briefly to wish you all a politically incorrect MERRY CHRISTMAS to you all!  Ihope you all enjoy a warm and plesent holiday with all those close to you. See you all next year.

Gloating Over a Pyric Victory

Only within the Marxist indoctrinated mind can it be conceived that wealth is created by government taxation and budgeting. This is the sad pathetic result of rote learning, teaching what to think rather than how to conduct critical thinking.

It’s not just that the federal government is $15 Trillion in debt and has unfunded liabilities for Social Security, Medicare and Medicaid of another $106 Trillion, never mind that it borrows another $0.40 for every $1.00 it spends. Even if one were to ignore all that, set it aside and not consider it an issue, the states are in awful shape themselves. As I write California, Illinois, New York, Rhode Island among others are bankrupt and having to slash the pensions and benefits of state workers in order to try and bring their budgets into balance.

Furthermore it’s not those big, bad, callus, mean spirited, people hating Republicans that are installing these austerity measures. How deliciously ironic, that it’s the Democrat controlled (in most cases for decades) state governments that are doing it. Doing it to their own unionized public service employee voting base. They have kept themselves in power in these very states for so long by making promise after promise payable from the taxpayer’s purse. Well now the bill is due, the cupboard is bare, the lie is exposed as the vicious ponzi scheme it has always been and there is nobody left to blame but themselves.

Pathetically the left has become so ideologically short sighted that they can’t see the budget crisis in the states as directly analogous to the Euro zone crisis. It is and worse. If the Europeans can’t bailout Greece without bailing out Italy and without bailout Spain and so on, what makes them think the federal government can bailout the states?

As Einstein said the definition of insanity is doing the same thing over and over again and expecting a different result.

In Europe we have the very same groups (egged on by hard core communists) that have been the beneficiaries of state sponsored largess rioting in the streets because the well has run dry. It would be delusional to think we won’t have the same thing occur here as our own crisis due.

When it does, have no doubt the left will find a way to lay blame it all on business and Republicans rather than look into the mirror at their own avarice and greed and have some second thoughts. After all violence and irrational emotionalism is so much more satisfying than self-examination and critical thinking. Mob action is easy; it has no conscience or morality, or sense of personal responsibility.

So how long before the markets and people start to realize that the math is impossible? Not until it's too late. (If it isn’t too late already.)  They'll continue to look away until the consequences of their own lies and delusions have them living in filth.  Then they will desperately look for someone to blame (Jews being the perennial favorites), then comes the begging for a strongman to come in and steal it all back for them.

Meeting Collusion with Cooperation

One could hope that at some point the more intelligent aspects of the “Tea Party” movement and “Occupy Wall Street” people might get their heads together and recognize their common interests and common enemies. If they do, the results could be a rapid evolution of the American political process.

But unless or until each side frees itself from the constraints of “left vs. right” doctrines it won’t happen, or at least not up to the potentials of such a merger.

Both groups recognize, at least to some extent, that the root of the problem is in the open collusion between government elites and financial elites. They even may say it out loud but none has the courage to openly label it for what it is; fascism.

The “OWS” group is to some extent guilty of wanting to throw the baby out with the bath water. Their most strident voices seem to be little more than planted, would be communist college professors, or union activists, openly calling for the destruction of capitalism itself, preaching to a choir of poorly educated followers who couldn’t properly define communism, fascism or capitalism. That’s not to say that I don’t agree with the slogan; “the banks got bailed out, we go sold out.” Rather than thinking outside the constraints of conventional politics they are being led down the path to the left of more government and more dependency while ignoring the violent and deadly excesses of central planning collectivism. Even more dangerously it has allowed anti-Semitism to creep in from the fringes. Again ignoring not so historically distant dangers on that particular poison.

Some of the more active voices among the “TEA” people on the other had seem to completely reject out of hand any concept of a “social compact” between citizen and government, or at the very least feel it has become so bloated and abused that it no longer functions in any positive manner and has become disassociative rather than cohesive to society in general. In this last respect they too are correct. This has lead some of them down the path to the right, where personal initiative and self-reliance thus becomes the be all and end all justification of their argument while ignoring the oft as deadly consequences of greed and unfettered laize-fair capitalism. This is how we get an almost knee-jerk reaction to the actions of the OWS by the TEA defending what they know to be the excesses of the very few on Wall Street with the mistaken attitude of “well at least they are capitalists.”

Meanwhile the OWS compounds the mistake of categorizing the criminal behavior on Wall Street as definitive capitalism by attempting to tar the entire system and its participants with that same brush.

Both sides need to recognize that it’s not a matter of the 99% vs. 1%. It’s more like 99.9% vs. 0.1%. If both sides could come to an understanding that the excesses of big government, as viewed from the Tea Party “right,” and the excesses of Wall Street, as viewed for the “Occupy Wall Street” left are but two side of the same coin, and that the collusion between them is working to keep them divided and more occupied fighting each other rather than addressing the issue of that fascist collusion that is at the heart of the problem. If such an understanding amongst the rank and file of both political sets could be reached then the more distasteful extremist elements, communist and racists, on both ends could be marginalized if not pushed out of the picture. And then something might be accomplished furthering work on those elements where there is agreement rather than expending and wasting energy fighting over those thing where there is not.

Such a combination would not only marginalize the extremists but put the left and right wings of our one party state on notice that their game has been exposed for the fraud that it is and a new paradigm is in play that will make them obsolete almost overnight. The thesis of one side must meet the antithesis of the other and give birth to a new synthesis of political and economic direction. Without it only chaos and violent conflict lays ahead.

Sailing Into Dark and Dangerous Waters or Tonkin Gulf Redux.

If ever there was any question that the super elites of Wall Street and their wholly owned subsidiary know as Congress is a “Ship of Fools,” the recent moves to “punish” China for undervaluing its currency and the CME’s (Chicago Mercantile Exchange) decision to raise margin requirements on copper should remove all doubt.

As has often been stated the last resort of the elites to fend off the repercussions of failed monetary policy is to rattle the war saber. So act one, scene one becomes possibly initiating a trade war with China. The currency bill is clearly a warning to China not to dump US Treasuries. But what does margin requirement on copper futures have to do with a trade war? Quite simply China has liquidity problems of its own. Local industries, finding themselves cut off from domestic credit markets in the face of growing inflation, have been using raw materials stockpiles, particularly copper, as collateral for loans from the international market. So then act one, scene two is the margin increase on copper futures which has the immediate effect of depressing spot market prices and (down by a third in the last few weeks) and simultaneously knocking down the value of the Chinese loans, essentially putting them “under water” as with the US housing bubble. Act one closes with scene three as the Financial Times of London reported today that China’s actual stockpile of copper may me as much as 100% higher than was being officially reported, unleashing even greater volatility in the copper price.

Act Two shifts to the precarious Middle Eastern front and opens with allegations of Iranian involvement in an alleged plot to blow up the Saudi and Israeli Embassies in Washington DC and assassinate the Saudi Ambassador. Most curiously, those cast members from off stage left that were quick to claim the Bush administration trumped up the accusations against Saddam Hussein in order to go to war in Iraq are deafeningly silent about the same possibility being in play here.

While there can be no question that part of the Chinese action in stockpiling raw materials has been to build up their military capacity, there are also growing doubts about the actual strength of the Chinese economy as the central government had to recently do a bank bailout of their own.

It is yet to be scene if Act Three will reveal these actions perhaps driving the two most dangerous regimes in the world right into each other’s arms. Couple China’s growing thirst for energy and need to keep it economy expanding to keep its restive populations appeased with Iran being increasing isolated from open participation in Western markets (along with their own healthy dose of internal discontent) and we have a potential recipe for a situation that can spin out of control on a moments notice, set in motion by a foolish act or increasing instability in financial markets.

Raising Taxes One Page At A Time.

On the one hand the President is fond of saying that he won’t raise taxes on the middle class, on the other hand the Republicans would have you believe that they are adamant about not raising income taxes under the current economic situation. With both the President’s and Congress’s approval ratings abysmally low it would be fair to say that the public has caught on to the game and they’re not buying the story from either side.

While looking through a list of taxes that have been raised a few days ago I came across one at the bottom of the list that made my blood boil. It was a $26 Billion tax on what is know as “Black Liquor.”

So what is Black Liquor and how does putting a $26 Billion tax on it affect the economy, the country and you? No it’s not a tax on Thunderbird or Ripple. The simplistic definition given is that it is a tax on particular type of bio-fuel. Well, yes and no. If the administration is so gung ho on so-called “Green Jobs” why are they leveling a huge tax on a bio-fuel?

Having worked for years for various companies that manufactured and supplied boiler cleaning equipment to the paper industry, black liquor is something I know a little bit about. I can say this in that I have patents for innovations in the design of this equipment.

Anyone who has driven by a large paper mill knows it’s a large, complex if somewhat malodorous operation. Turning wood pulp and rag stock into paper requires chemicals, lots of chemicals, and produces a considerably sized waste stream containing some very nasty and highly toxic by-products. Not the kind of stuff you can bury in a landfill or hold in a waste pond. If they were to leak into the water table the results would be disastrous.

With disposal not an option, the paper companies process these chemicals into a substance called red liquor and then further process it into the black liquor “bio-fuel” that is now subject to being taxed. This is then burned in specially designed units called Recovery boilers, so named because the burning allows the paper makers to “recover” the energy the chemicals contain and use it to generate electricity that is then used in the paper making process or sold into the electrical grid.

I won’t go into the details of the complexities and dangers involved in burning black liquor or red liquor, which is even more complicated, here. But as usual as with any ill-conceived tax policy, the problem is in the unintended consequences.

As a result of this foolishness every kilowatt of electricity sold into the grid by the paper makers just got more expensive. Every piece of paper you use just got more expensive. And every consumer product you buy, from cereal to light bulbs to laundry detergent, if it is packaged in paper or cardboard, it just go more expensive. Your children’s school supplies just got more expensive. Every administrative function in government and in business that requires a piece of paper just – got – more – expensive.

So when you go to the store and buy those things you need and you get angry because it cost more this week than it did last week or last month, now you know why. As you look at that receipt and your blood pressure rises, remember it cost more too and it’s reflected in the total at the bottom. So you might want to take a piece of that now more expensive paper and write a note to the President and your Congressman and let them know how this little known, unadvertised and ill-conceived tax just made your life more difficult and expensive. Let them know that its just this kind foolishness is how we get saddled with ever increasing inflation, and that that is the most pernicious, destructive tax of all.

They Said What? .... Again

Well it looks like the Euro zone gurus are trying to stay ahead of the curve. In last night’s post I speculated that the latest MOPE of the Chinese buying Italian bonds would be shown to be bogus before markets opened on Wednesday. Even with the European market up today, feeding off of yesterdays delusion, the ECB may be preparing for the collapse of yesterday’s MOPE by spreading today’s MOPE. Namely that it’s not the Chinese but the Russians who are going to come to the rescue of the European bond market.

Apparently even this rumor was not deemed enough to inspire the necessary MOPE as within a few hours it was revised to throw possible Brazilian involvement in the mix in hopes of trying to create some perception of a trend.  The half-life on this was pack of lies was made even shorter than expected when the Brazil's Central Bank policy head Mendes met with the press saying that the "Euro is less important in Brazil international reserves", and "Brazil seeks reserve currencies with solid fiscal positions." Oops! Looks like at least one of the prospective victims aren't in the mood to be associated with the Euro debacle even if only in an unsubstantiated rumor.

Seriously “they said what?” After China, then Russia, who’s next, India, Papua New Guinea, or maybe Easter Island? Lord knows they are trying to raise the dead.

They Said What?

With the ever accelerating disaster scenario that is the Euro zone, trying to keep up with rumor/crisis/solution du jure is enough to leave a strong mind with a serious case of confusion (what I call the “they said what?” syndrome) and a weaker one in a state of psychotic dislocation.

Just last Friday the rumor of the day was that Greece could default or withdraw from the Euro over the weekend and that German banks were scrambling to put actions in place to cover the losses the German banks would incur. Oh what I would have given to be a fly on the wall hearing the behind the scene conversations at the G7 meeting in Marseille this weekend. Not so remarkably the public statements were long on hyperbole and short on substance.

By late Sunday the futures on all the major markets were in the red. By the end of trading in Europe all the markets closed down with the French CAC getting hammered down by over 4%, based on concerns of their exposure to Italian Bonds.

It looks like the decision coming out of the G7 meeting was to tell the Greeks with “great firmness” to shut the hell up about possibly defaulting as the bankers had a bigger problem on their hands with the disastrous, nearly bidless Italian Bond auction. With the DJIA continuing to decline the Italians then released a story that they had had discussions with the Chinese requesting they intervene and buy the undesired and undesirable bonds.

Whether the almost immediate reversal in the DJIA, with surprise, surprise financials like BofA and Citi leading the way, was actual investor interest or intervention by the FED is yet to be determined, if at all. If I had to bet on that one I know where I would be putting my money.

Never mind that the Chinese have not even said if they were going to buy any Italian Bonds, the rumor that they might was just the excuse needed for another manipulative intervention. Never mind that they are presently looking at getting burned on the Portuguese and Greek bonds they have already purchased. More MOPE (management of perception economics) was needed and that’s what we got.

With each new rumor/crisis/solution having a half-life shorter than the one before, the Chinese intervention story will probably be shown up as bogus by the time markets open Wednesday if not before. At this point only a fool would speculate what the next round of rumor/crisis/solution/MOPE will be, never mind how absurd it will sound. I can however be pretty sure my first reaction will be “they said what?”

And Now That The President Has Spoken ….

When looked at strictly in terms of tone and delivery the President gave a brilliant speech last night. That was all he really needed to do in order to shore up his political base. For this group little more than something perceived as a brilliant rhetorical flourish is all that is required to perpetuate the swooning and fainting that was the hallmark of the 2008 campaign.


Anyone who watched the speech with any degree of a critical eye, regardless of their political leanings, saw something entirely different. What we saw was in fact little more than the opening salvo of what promises to be a long and arduous political campaign. As with any campaign speech it was long on rhetoric and very short if not devoid of substance. Every time this man speaks he can’t help but further demonstrate his total absence of understanding how economies actually function. The kool-aid drinkers and the naïve may have been impressed, the markets were not. The DJIA dropped 200 points the second the opening bell rang, and as I post this it is down 322 points. All of the global markets, across Asia and Europe are similarly down.

The markets visceral reaction to last night’s speech does not come from anything that was said. The devil is in the details, as the old saying goes, or in this case the complete absence of details. Talking about reforming the tax code is one thing, failing to give any specifics only adds to a perception of a clueless and ineffectual administration. A perception that has so far only been reinforced by failed initiative after failed initiative. (“Shovel ready wasn’t as shovel ready as we thought.”). Talking about “reducing regulation” absent any specifics and then immediately coupling it with insistence on maintaining unspecified “basic protections” rings hollow at best and disingenuous at worst, or more just plain cynical politics as usual.

Where was any mention of allowing companies to repatriate off shore assets and cash without having to pay a huge, confiscatory tax penalty? Where was any mention of policy that would make it easier to exploit our own energy reserves as opposed to extending aid to Brazil and others to help them exploit theirs?

All I heard was a willingness, nay eagerness, to shove another $460 billion down the rabbit hole of ill-prepared and ill-conceived government spending. Much was made about “creating” thousands of jobs in the construction industry, nothing was said about any guarantees that these jobs would go to unemployed Americans and not to the legions of illegal aliens that continue to flood across the border.

It’s pretty clear in my mind at least that this speech was crafted to pump an intellectually shallow base and at the same time guarantee that it will be Dead On Arrival in Congress. Thus providing the President the ammunition he seeks for his opening volley of rhetorical manipulation for the just opening campaign season. He so much as said so in the close of his remarks.

The President was right about one thing the large and growing number of unemployed and those living paycheck to paycheck and wondering if the next one will cover growing energy and food prices can’t afford to wait 14 month until the next election before anything is done. But this speech pretty much guarantees that they are going to have to. The only thing he really cares about them is how easily can whip them up with more empty rhetoric and platitudes and then use them as cannon fodder in the 2012 political wars.

Before the President Speaks

On the eve of the President’s “Jobs Speech” I thought it might be a good time to return to my previous proposal on taxation and job creation. Slightly revised and edited verbiage for clarity but the substance remains the same.


The question of course is what can actually be done to substantively improve the economic situation? Well here’s my 2 cents worth just for starters.

Reform the corporate tax code to create multi-tiered system.

Tier one: If your business income is derived from the manufacture, transport or sales of real physical goods you get taxed on that income at a very low rate. This would apply from top level heavy industry all the way to the bottom where the mom and pop shop is selling gas and potato chips. There should be differentiations within this rate depending upon what percentage of components or raw material goods are derived domestically and what percentage are imported. This would encourage the expansion of on shore business to produce or procure components or raw materials here at home rather than importing them. In other words, a tariff by other means.

Tier two: If your business income is derived from speculation, i.e. just moving money from one pile to another and not actually producing any real goods as exemplified by the FOREX carry trade, commodity speculation, stock and bond trading, you get taxed at a much higher rate and have severe restrictions placed on what are allowable deductable expenses. This would not include the individual who trades within small accounts or their own 401K or IRA to try and make a few extra bucks to put their kids through school or make their retirement a little easier. We’re talking large institutional speculators trading on their own accounts not managing the accounts of individuals below certain threshold levels.

This tier would not apply to transactions wherein these same institutions make loans to businesses engaged in tier one activities or mortgages or car loans and the like, provided they keep those loans on their own books and maintain a real interest and indeed risk in how well those loans perform. The very minute that they bundle those loans into CDOs (collateralized debt obligations) all previous and future income becomes taxed at the tier two rate. If they simply sell those loans to another entity, any profit derived over and above the normal expected rate of return on that loan would be taxed at tier two rates, except in the case where the proceeds of the sale are then used to extend further business and job creating loans.

Tier three: Over a set period of time either phase out and then ban OTC derivative trades and the creation of CDOs or tax and regulate them at such a rate as to make them completely unprofitable. Ban the issuance of CDSs (credit default swaps) to anyone other than the primary risk taker. Ban financial and securities firms from taking out CDSs on the securities they have sold to their customers either directly or indirectly through subsidiary companies.

Don’t hold your breath waiting to hear any of our politicians talking such common sense as long as the revolving door between Wall Street and the Treasury Department remains in operation. Even suggesting it would unleash a pestilence of lobbyists and under the counter campaign contributions to kill it like nothing that has ever been seen.

We have been suckered into believing the fixed pie theory. It’s a fallacy perpetrated by the left and the banks. The money exists, government policy, and in this case tax policy, must be changed to pull it out of speculative none productive applications and into manufacturing and trade where real wealth and jobs are created, the economy expands and the pie gets bigger.

The Game Goes On And The Suckers Buy In

Now that the German Supreme Court has succumbed to the pressure (bribes, threats?) and given tacit approval to Angela Merkle continuing to use German GDP as a piggy bank to prop up the failing Euro, looking at the market reaction one might think that once again “all is right with the world.” Well I for one am not buying it. This is nothing more than markets moving on the delusion du jure, and the HFT algos exploiting this latest MOPE (management of perception economics) to wring yet a few more tons of fiat out of the suckers before the next dose of reality sets in and the downward trend returns. Just when the internal German political reaction sets in remains to be seen, although I suspect it won’t take long.


In the meantime as the equity markets rebound on this so-called “good news” (good for everyone but the German investors, savers and consumers) the bankers get another opportunity to proclaim that "gold is in a bubble" and whack its price down a bit so that as they attempt to cover their huge short overhang on the COMEX and the LBMA they can at least reduce the size of their losses even if that means paying huge cash premiums because they can’t actually deliver the physical goods.

By reducing their short positions, even if only marginally they can put forth more propaganda that the light at the end of the tunnel can be seen and they won’t really get crushed by a short squeeze or a derivative collapse. Once again the “big lie” is in play as they fully well know that that light that they see is the onrushing train of the Hong Kong Metals Exchange. Once this exchange is fully operational in late October it will be 100% backed by physical bullion. If even only a small percentage of those pension funds, hedge funds or mutual funds, never mind private investors holding COMEX or LBMA paper certificates move their holdings to the Hong Kong exchange then the jig is up, game over, they can’t deliver. The COMEX and LBMA default, precious metals derivatives implode and quickly take out all the other derivatives based on whatever Wall Street marked to the value of unicorns fantasy in a massive collapse of confidence.

2011 may well end up making 2008 look like a stroll in the park. Someone might want to invest in some spike strips to put across the runways of whatever private Long Island airstrips the Wall Street tycoons have their Gulfstreams parked at.

Beware the Ides of …….. September?

There is a dirty little secret in the financial world. A secret that might be whispered about behind closed doors but is seldom if ever discussed in the open. That being that each year as the calendar rolls around to September fear (some might argue insanity) begins to grip the hearts and minds of the power elites and knowledgeable historians alike.


You see it’s this period when financial calamities and wars have a nasty tendency to set in. The signals that this may well prove to be one of “those” Septembers have already begun. When the otherwise aloof, stable or independent (choose your own adjective) Swiss begin to succumb to the financial insanity sweeping the rest of Europe and the U.S. you might want to do a little more than scratch your head about it.

You see over the last few months, as the chaos and uncertainty in the Euro zone has metastasized there has been a flight of not just Euros but also U.S. Dollars into the Swiss Franc. Being such a small economy relative to the rest of Europe and the US there simply not enough Swiss Francs to go around, and as a result as when anything in demand becomes scarce, it price goes up. This has caused the Franc to appreciate against the Euro and the Dollar by nearly 40% since June of last year. This in turn has played havoc with Switzerland’s ability to export goods by essentially pricing it out of the market.

In reaction the Swiss have now decided to join the global race to the bottom in currency devaluation. At first they announce that they were going to simply print more Francs to meet the demand, but even that had a minimal effect on its soaring exchange rates. So today it would appear that the Swiss have decided get fit for a straight jacket and announced that the Franc will be fixed at 1.20 Francs to the Euro. Immediately the Franc went over the cliff, falling nearly 8% in a matter of 20 minutes.

But this may be only the beginning. On Wednesday the German Supreme Court is expected to announce its ruling on the Constitutionality of Germany’s further participation in bailing out the PIIGS. The results of local elections coming in across Germany in the last few weeks have pretty well indicated that the population has had enough of Angela Merkle’s policy of using Germany’s economy as the bailout bank for the rest of Europe. The political pressures falling on the court must be tremendous. If they rule that further participation is unconstitutional the EFSF (European Financial Stability Fund) and any further discussions of disbursements to the PIIGS may fall apart within days if not hours. If they rule that it is constitutional and Merkle continues to sacrifice German GDP to the preservation of the Euro political chaos in Germany may be in the cards in the very short term. Just ask yourself; just when has political chaos in Germany ever turned out well for the rest of Europe or indeed the world?

Let’s be honest here, all this chaos in the financial markets, all of it, is the result of politicians and bankers trying to bend the natural forces of markets to their will. Be it fiat currencies, price fixing and/or manipulation, it never works out in the long term. It’s almost a constant recurring theme of history matched with human arrogance and hubris that “this time it will be different”. Well maybe I should take that back a bit. This time will be different, this time the results will be much worse!

All the proponents of a “New Age” have said that man must develop a “collective conscience” to survive in an ever changing and modern world. Well I think they have achieved it, except it’s not a new enlightened consciousness, it’s a collective insanity of thinking that a certain set of people know better than the common sense of the “great unwashed”. The hubris of the powers that be trying to impose their delusions on the rest of the world that they are actually in control of events and that by mere force of will markets and nations and people can be forced into compliance to their will.

Only problem is in spite of the propaganda to the contrary it isn’t working. Aren’t these very same “powers that be” the titans of Wall Street and their wholly owned politicians in Washington? Why then have their vaunted institutions fallen into not just disrepute but near term financial collapse? Aren’t they “Too Big To Fail?” Wasn’t all that TARP money and stimulus spending supposed to save them and us as well? Explain to us please how B of A falling from over $50 a share to under $7.00 a share is a reflection of stability and control. Yes B of A may be an extreme example in the percentage of decline (smells like Lehman Brothers to me) but almost all of the big banks have fallen off over 50% from their highs. How do they then justify paying their executives huge bonuses (with taxpayer dollars no less) when their performance has been so abysmal? How long do they think the people will continue to buy the load of garbage coming out of Washington that they can fix the unfixable just as long as all the rest of us just tighten our belts and do with a “little” less so the banks can survive and continue paying those bonuses?

Now that Swiss Francs, financial stocks or Treasury Bills can no longer be able seen as a “safe haven” against the chaos we just might want to look at what can be expected to happen to gold and silver. It’s almost vertical trajectory over August, in spite of high volatility can hardly be dismissed as “unexpected” or irrational flight into a “barbarous relic.”

Does any sane person think that the banks and politicians here will not react to their defacto “loss of control” exactly as their counterparts in Europe have done? Do they actually think that people here will buy into the meme of less for the people and more for the banks any more than the Europeans have? Well maybe they do, but that is just further demonstration of the depth of their delusions and the heights of their hubris. For them no warnings need be heeded, no events need be seen as precedent, at least not until they have their corporate jets warmed up on the runway and they flee to their extradition free haven of choice and they leave the rest of us to reap the cost of the chaos they have sown.

Another Sucker's Rally Today

Now that the retail investors have been all but driven from the markets and all we have left are the algo driven HFT computers we can expect yet another irrational (if not short lived) rally in the markets today. In part the delusional will interpret the fall of Kaddafi as the harbinger of some new stability for North Africa. The TV pundits have already started with the lollipops and roses meme for the aftermath in Tripoli. I wonder if In-Trade has a bet on how long it will take for it to fall apart into chaos if not outright tribal warfare.

But never mind that, everyone is anticipating the DJIA to be up today following the European markets and a lowering in the gold price on the London markets. The flurry of emails filling my in box on all the supposed “hot buys” has become one of my favorite forms of entertainment. They all can be summed up in one sentence: “This is the bottom you have to buy now or get left behind by a resurging market!” I guess they would have us ignore that each new “rally” has a half life even shorter than the previous one and is followed by an even larger decline. They’re trolling for suckers but I’m not one of them. As far as I’m concerned the fine print disclosure statement, or as they see it “get out of jail free card” is no pass for the criminal nature of this activity of preying upon the scared and uninformed.

If one willingly jumps into a tank full of sharks knowing full well that you might get eaten it’s one thing, but when the sharks are chumming the waters to entice the unwilling and uninformed to jump right into their greedy jaws it’s quite another.

But then it is just this kind of criminal fraud that got us into this mess and not a single one of these rapacious monsters of Wall Street has seen a single day in jail never mind in court, why then should we expect them to change their behavior. The SEC and the CFTC are staffed with former and future employees of the very institution they are allegedly regulating so don’t expect any justice any time soon. And when the pressure does begin to mount you can bet that the worst of them will already have left and be residing in Liechtenstein or someplace else with no extradition treaty and safely out of reach.

And The Next Chapter Unfolds.

Now that it appears the war in Libya is about to wind down there might be a few questions that need asking. Don’t be looking for any answers never mind the questions in you Main Stream Media source.

As background it might be helpful to review a previous posting from May; http://theeveningchronicle.blogspot.com/2011/05/strange-case-of-gold-oil-and-mummar.html.

At present there are at least two other events on the horizon that attention may turn too now that the logistic capabilities of supporting the so-called rebels in Libya can be freed up.

The first and seemingly most immediate would be Syria, with both the President and Secretary of State Clinton issuing demands for President Assad’s resignation. Given the growing tension between Israel and Egypt over the recent attacks in Israel and the unpredictable nature of how the rest of the Arab world would react to a “kinetic action” against Syria in the heart of the region any such action might be more might be biting of more than the Administration is willing to chew. If such an action were to be undertaken it could be almost guaranteed that Syria would launch an attack against Israel in order to try and bring other Arab states and perhaps Iran into the conflict on it’s side. At which point all bets would be off and the conflagration would spin out of control faster than a drunken Lindsey Lohan in a jewelry store.

With an Administration palpably desperate to find a distraction from the consequences of its disastrous economic policies and with the financial elites equally desperate to keep the ponzi fraud of the markets alive, one Hugo Chavez comes to mind. The parallels between Chavez’s statements about desiring to create a gold backed monetary system for Latin America independent of the collapsing US dollar and Kaddafi’s wanting to create a “Gold Dinar” for settlement of oil contracts is unmistakable and undeniable. Hence the reason you won’t see anything about it in the MSM.

Understanding that the US already has a sizeable military and intelligence logistics presence right next door in Columbia and there already exist tensions along the border over allegations of Columbian and possibly US troops crossing that border in pursuit of Columbian FARC insurgents the table may be already set for the next act in this Orwellian nightmare. Add in huge oil reserves and that the US imports large amounts of it, exclusively to California, and the temptation for the Machiavellians may be too much to pass up.

All this is speculation of course but when and if you here the propaganda machine that Polish err Venezuelan troops have cross the border and that American troops have been killed defending the Reich, err Columbia then maybe you will understand just what fools we are being played for.

The only question then will be whether the American people will be in the streets protesting against being deprived of house, home, jobs and food or reacting to Kabuki Theater in the jungles of Columbia. The powers that be won’t really care which, as either one will allow for further ratcheting up of government control, depriving us of even more liberties in the name of security.

Before the FED, JP Morgan, the B of E, the BIS begin congratulating themselves about shutting down Kaddafi and perhaps securing his 143.8 tons of gold to cover their short positions on the COMEX they might want to first find out how much of that gold is still in Tripoli and how much has already been moved to Caracas.

The Scramble Part Two...

From what I see the process has already begun with the announcement on Friday that Venezuela’s debt paper was being downgraded. Chavez may be right about wanting to escape the "dictatorship of the US dollar" but the man is his own worst enemy when in comes to understanding capital. I guess that's what comes from hanging around with Castro.

The banksters are going to want to get this matter into the courts as quickly as possible, ram it through and wait for gold to go up for all the other intendment reasons so they have to dole out as little as possible of it in whatever "special case" bonds or notes -payable in 10 years of course- to cover any settlements. Throw in the banksters usual "administration fees" and Venezuela is effectively stripped of it's gold.

The only overhanging question I see is if they have the time to put the scenario in place, courts can be frustratingly slow to act and other events accelerating the collapse could outpace their plans. Which then raises the question of war. Given the considerable US military presence right next door in Columbia, no telling what they can cook up. Kill off a couple dozen US soldiers, blame it on Chavez and there you go, the ready-made primary excuse for more uncontrolled printing, war. I here Ben may be backing up the truck loads of lithium grease to lubricate the presses going into hyper drive as we speak!

I can almost hear the propaganda machine at work, “The Polish, err Venezuelan troops crossed the border and attacked our valiant troops defending the Reich, err Columbia. Blah, blah ,blah.

As usual there are bad players on all sides and as usual it’s the troops and innocent civilians who will end up getting it in the neck as the result of the Machiavellian power plays of others.

It’s going to be question of which gets people more riled up first, and who they blame for it; the ongoing financial chaos depriving them of house, home, jobs and food or some cooked up theater of the absurd in the Columbian jungles.

Same Play Different Cast.

In case any of our Republican friends harbored any delusions that Gov. Perry of Texas was going to be any different than any of the other bought and paid for politician, I suggest you check this out.

http://www.zerohedge.com/news/bank-americas-dead-drop-rick-perry-we-will-help-you-out

I don't know who this particular character is but I do know that BofA is in deep trouble and is on the verge of becoming the new Lehman Brothers.  The message is quite clear - you protect our sorry backsides and we'll fill your pockets - same play different cast.  In the meantime gold bounced off $1880.00 on the London market this morning as the European equity markets continue to spiral downward.

Only question for BofA is will they still be around by the time the primaries get here never mind the general election?

The Scramble For Physical Gold May Be About To Begin. Got Physical?

It looks like it might be “game on” in the physical bullion markets, the long anticipated parabolic move upward coming your way courtesy of one Hugo Chavez, the erstwhile dictator of Venezuela. He started Wednesday by announcing that his government will be nationalizing all the gold and silver mining industries. This story alone may well have led to JP Morgan holding off on their usual Thursday raid on precious metals on the COMEX.

Chavez quickly followed up on the move by announcing that he was going to seek repatriation of all of he country’s gold assets, beginning with some 99 tons held by the Bank of England. Venezuela also has requested return of gold deposits held at the BIS in Switzerland and the Federal Reserve Bank of New York. He has also indicated that he going to move Venezuela’s cash reserves out of western banks and into banks in China, Russia and Brazil. The problem for the B of E is that most of it gold holdings have either been leased out or are otherwise encumbered by cash swaps particularly to the aforementioned JP Morgan’s GLD ETF. I can only imagine the panic at the “Morgue” this evening. Blythe Masters and her flying monkeys who control the COMEX have a big problem. Namely the eligible vaults at the COMEX only have some 10.5 tons inventory!

Somehow I don’t think Chaves is going to accept either shares in the GLD or a rubber check from Blythe’s commodity desk.  Neither do I think el Presidente has a snowball’s chance in hell of actually getting his hands on that gold. He is clearly concerned that his wave of nationalizations has spawned a raft of civil actions seeking compensation for the properties seized by his government and that it could lead to the freezing of his overseas accounts. The race will be on to see if sanctions can be put in place and accounts frozen before the logistics of currency transfers and moving physical bullion can be executed.

No matter how this plays out the shorts on the COMEX may be doomed. If Chavez presses his claim neither the B of E nor the Morgue have the physical to deliver. The B of E will be forced to reclaim their swaps putting the short squeeze on the Morgue placing Blythe in the position in having to buy gold on the open market and the price goes ballistic, and both the London Bullion Exchange and the COMEX are faced with default, just the rumor of which will push the price even higher.

If the courts beat Chavez to the punch and freeze Venezuela’s assets before the transfers can take place they risk a third world political backlash, making the justifiable claim of the western banks waging economic warfare to prevent the collapse of their un-backed short positions. This could then in turn unleash another storm of sovereign states demanding the return of their own bullion deposits. Absent any similar legitimate claims for compensation as are held against Venezuela, the end result for B of E, JP Morgan, HSBC and the rest of the shorts on the COMEX will be the same.

My bet is that Blythe Masters and Ruprecht have the plane warmed up on the runway. Only now they might not be as welcomed in Venezuela as they had hoped.

Will The Parasites Begin to Feed on Themselves?

I am, as always quite bemused by the "tax the rich" crowd. It’s kind of like watching a burned out hippie sitting cross legged on the sidewalk, hands on his knees palms up, rocking back and forth and chanting "tax the rich, tax the rich” over and over like it were some Tibetan mantra. They have no concept of the actual numbers we are dealing with. All they know is that their would-be political idols are saying it and its emotionally satisfying to be sticking it to someone else.

Fact is, if the government could take 100% of the income of that top 5% of earners they so loath, it still would not be enough to balance the bloated federal budget. And then what? Come the next tax year that 5% is nowhere to be found to be taxed. They have packed their bags, closed their factories and shops and are gone. Be it to Switzerland or New Zealand or Gault’s Gulch, where ever, it won't matter. Yes maybe they will have to pay high taxes those places as well, but they won't be faced with an insane government capable of neither rational thought or honest decision. Then what will the "tax the rich" crowd do? That top 5% and their 50% of the tax revenue will be gone forever and government spending won't have dropped a dime. So instead of "borrowing" (printing from thin air) 40% of the budget, government will be printing up 80% or 90% of the budget. Ask your "tax the rich" friends just how well they think that will work out. 

Unless you have one of these in your basement you might be in trouble.

What these people don't understand is that the issue is not how much tax the top 5% pays or does not pay, but HOW that top 1/10 of 1%, the super rich, the banking and financial elite, accumulate wealth. As long as they are allowed to continue to accumulate through manipulation of markets rather than generating wealth through production, they will remain being nothing more than a engorged and massive leach attached to the jugular vein of the economy, sapping it’s life blood to pay their outrageous salaries and yearend bonuses. What matters is how Congress has succumbed to the pressure from the Treasury and the banks to grant “most favored nation” status to nations like China and Russia and others not because they have any intention of trading fairly, but because the banks and trading houses take a cut out of each and every currency exchange. Tthis particular bit of detritus is sold to us under the premise that it doesn’t matter that our trading “partners” are putting their self-interest first, the United States must be seen as being “fair” in our dealings with other nation regardless of any detriment to our economy, security and well being as a sovereign state. Excuse me while I roll up my pant legs. It has nothing to do with trade or with fairness; it has everything to do with how much the elites can suck out of each and every transaction. 

And just like with any other parasitic infection as the host grows weaker and less able to sustain the parasites, they begin to feed on each other as well. In the last crisis we had the sacrificing of Bear Sterns and Lehman Brothers, this time it looks like the formerly “all powerful” Bank of America is about to be splayed across the already bloody stone alter. While their banking brothers hold its limbs in anticipation of tearing them off, the High Priest of JP Morgan is set to plunge in the ragged obsidian dagger, cut out its still beating heart. Holding it up before the gasping crowd B of A will be condemned as having been not quite quick enough to hide their fraud in the mortgage mess. The High Priest and his minions will then devour what is left of the corpse, kick a few millions or a billion or two to the government in penance for B of A’s “crimes.” With their own culpability at least for the moment deflected upon B of A, they will then be left, not so surprisingly, even “Too Bigger and Too Fatter To Fail.”

Brian Moynihan and Bank of America meet their demise.

Unless and until we break the power of the banks to create the nation's currency as an instrument of debt owed to them, unless and until we stop their interdiction into every conceivable transaction, unless and until the politicians are broken of their addiction to financing their campaigns with these gangsters pocket change, things will not improve, they will only get worse, no matter who gets "elected."  Things are on the decending trend line, get used to it.

Ugly Reality Sets Back In

Simplistic analogies absent causative details are not an answer to anything, just as endless partisan finger pointing are part of the problem not a solution.


The fact remains when the Dems took over Congress in 2006 and the White House in 2008 they thought they had carte blanch to undertake and endless stream of spending in pursuit of their utopian socialist dependency dreams. With their secure super majorities in both houses, they added nearly $5,000,000,000,000 to an already insurmountable debt, made an already dismal unemployment number worse and in essence kicked the crutches out from under an already hobbling economy with a new and endless sea of stealth taxes on business via the cancerous growth of regulations. Many of which exist for no other purposes than to exercise government control and justify the existence of a new raft of Federal bureaucrats.

With all these facts laid squarely at their feet, both the public and the markets reacted. Firstly global markets contracted under a tide of inflation and uncertainty. Secondly the voters (the very same ones who were praised as paragons of wisdom and virtue for putting the Dems in power) resoundingly threw them out of the House and greatly diminished their numbers in the Senate. So now these same voters are subject ridicule and derision as ignorant and partisan because they got slapped in the face by the consequence of their folly of electing these arrogant fools and elected a different bunch of arrogant fools.

The Dems have seen what they thought was going to be decades of dominance (can you hear me Mr. Carville?) snatched away in but an instant, and they are desperately thrashing about to find a scape goat to blame, anyone to blame but themselves for their own folly.

Now the new bunch of arrogant fools have co-operated with the old bunch of arrogant fools and added another $2,400,000,000,000 to the aforementioned insurmountable debt and again the markets react with further contraction and flight to hard assets and we get the same game played again. Both bunches seek to blame anyone but themselves for the consequences of their folly.

So now after the schizophrenic reaction on the DJIA to the FEDs announcement that zero interest rates will continue, money moved out of bonds, where low interest plus inflation means a net loss, and into dividend paying stocks. But then it only took until this morning for the ugly reality to set back in and the markets are again sinking like a stone. Gold is again reaching new highs and has even surpassed platinum in price. The Italian stock market has been shut down in a vain attempt to stem the exit of cash. The Dow again invokes rule 48, for the second day in a row. The Swiss Franc continues to soar against both the Dollar and the Euro.

But fret not the arrogant fools of both parties will continue to delude themselves (and try to convince you of their delusions) that there is a “political solution” to a systemic problem of economic and monetary misalignment. Sadly the partisan hacks on both sides of the aisle will buy into it and make of themselves just as big a bunch of fools as those in Washington.

And Now Back To Our Previously Scheduled Program…. Part Three

Last Thursday was ugly.  Today was even uglier, and predictable. Tuesday may well be chaotic.  The Japanese markets are already down 5%, South Korea’s are down 9-1/2%.  Chinese inflation numbers have come out at 6-1/2%, much hotter than the expected rate of 4-1/2%.  Euro zone futures are already down nearly 2/3 of Monday’s total loss.  US markets may not have time to wait for the FED’s Open Market Committee before reacting.  Helicopter Ben may be forced to release some absurd statement by 7:00 AM in order to try and stem the tide of panic. QE3 to infinity and beyond!  Will it work? I have my doubts, but putting the printing presses into hyper drive is the only card he has left in his hand. Got physical?

And Now Back To Our Previously Scheduled Program.... Part 2

What can I say except that the wheels are coming off.  Gold broke through the $1700.00 mark on the Asian markets this morning.  Both the DAX and STOXX markets in Germany openrd down nearly 20%.  Rumors are swirling that the SocGen bank in France and UniCredit in Italy are on the verge of collapse.  As much as some have decried the S&P down grade of US Treasuries it's psycological impact will be small compared to what will happen when the down grade allmost all Municiple Bonds this morning.  Gee I wonder why it was announced that "Rule 48" will be imposed this morning before the market even opened.

Good Luck!  When tipping points are reached its like Wylie Coyote has finally looked down and realized he has indeed steped off the edge of the cliff.

Gold Reaches $1700.00 (Why I buy gold and silver redux).

With Gold breaching the $1700.00 mark on the opening of the Asian markets on Monday I thought it might be worth re-posting my position on precious metals.  The continued and accelerating deterioration of conditions in the Euro zone combined with the down grade of Treasuries (soon to be followed by a down grade of municiple bonds will only push PMs higer still).  When (not if) gold breaks Sinclair's $1764.00 mark look for the move to go parabolic, and game over for stocks and bonds.

Gold and silver values (not prices) are only a reflection of the rapidly evolving new reality.

There will always be those who will deny that the entire western financial system is F.U.B.A.R. You know the term, denying it, finger pointing or making excuses for how we got here won’t change the facts. There is no intention from any of the politicians or bankers of doing anything to fix the problems at their root cause, OTC derivatives. The European Union has outlawed naked CDSs (credit default swaps) which is at least an indication that they are trying to do something. Whether it will prove too little, too late or not, time will tell. The chances of anything like that happening in the US are absolutely ZERO.

To say it is very late in the game is a gross understatement.

The times of any kind of normal conditions, however you might want to define them, are gone and they’re not coming back any time soon. One needs only look at the FACT that before the crisis of 2008 the Federal Reserve was buying between 10% and 15% of US Treasuries, now they are virtually the only buyer and by this action alone they are consigning the Dollar to its doom.

Only by adjusting our attitudes and actions to this new reality is there any hope for getting to the other side with any semblance of intact wealth and security. This applies at both the individual and societal level

The system has already failed, act accordingly. There are no political champions waiting in the wings with the will or ability to fix it. Even if there were, there exist no means that could be applied that would not in the short term cause an even more severe economic dislocation than we are already faced with. Even if there were some practical solutions left (and there aren’t), neither the banks nor the politicians would allow them to be applied because it would diminish their power.

We have embarked on a third war in the Middle East and it will be impossible to disengage as the chaos spreads. Kind of reminds one of the Uncle Remus story of the Tar-Baby. It is utter madness and no good can come from it. The revolutions and wars in the Middle East are not pro Western and not pro democracy, they are anything but.

Look back at what the price of commodities were 2 years ago and what they are today. By the time we reach the next election they will look like bargains by comparison.

If you are holding physical bullion and food stocks hold on to it as it will be the only insurance you will have and you’re going to need it. Show some pity for those who would deride you for holding insurance, they will be the first victims of their own hubris, but be careful, for as the rug is pulled out from under them they will blame you for their situations and many of them can and will resort to violence.

And Now Back to Our Previously Scheduled Program.

Well now that the debt ceiling debate is over and the Treasury burned through about 60% of the $400 Billion in new boworrowing authority in a single day, it seemed the markets decided to get bact to "the previously scheduled program." While the various partisan pundits busied themselves blaming their respective opposition for todays meltdown on the DJIA,they tend to ignore the fact as bad as it was on Wall Street the situation in the Euro Zone was far, far worse. Not only were all the various borses off nearly as much as the Dow, the soverign bond market virtually shut down. The sell off in Italian bank stocks was so diasterious trading in the largest banks was suspended. No matter how high they push up the yeild on PIIGS bonds there are no buyers to be found. So it looks like ECB will be forced to step in and buy, i.e. print more and more Euros.

With the US markets already skitish after and extended sell off the panic on the trading floors must have been palpable. With about 45 mins. to go until closing those investors that had been hanging on all day hoping for even a small reversal threw in the towel and the market fell another 150 points.

I can't imagine there are many stock brokers or hedge fund managers that are getting much sleep tonight. Far as I'm concerned, serves them right. All that pumping up prices on low trade volumes just came back and bit them on the backsides. It's not like there haven't been those of us warning this would happen.

The Debt Deal and the Addiction of Deficit Spending.

If you listen carefully over all the propagandistic noise coming out of the mouths of the politicians and news pundits you will hear that sharp metallic clanking sound of the debt/deficit can once again being kicked down the road. QE3 is here with a vengeance to the tune $2.8 Trillion!


The debt addicts of Wall Street and at both ends of the Washington Mall now have their fiat fix and will count on their party and news media enablers to try and convince the masses that all will be well, at least until after the next election. As soon as the commodity markets opened in Asia gold prices fell sharply and the Yen and Swiss Franc both fell off against the US Dollar. We can expect the DJIA to recover a good portion of last week’s losses on opening on Monday morning.

The problem with addicts and addiction is that each new fix produces diminishing returns until the point where the addict is cut from his support system of enablers and either cleans up his act or continues to ingest the poison until it kills them.

Clearly at this point that small but growing part of the body politic that seeks to cut off the addicts from the drug of debt have been overcome by the larger body of enablers. They have been told to “get their ass in line” and succumbed to the pressures of the larger mass.

Just how long the markets will buy into the delusion of politics as usual and some newfound dollar stability will remain to be seen. At some point the realization will set in that this new $2.8 Trillion in debt has no more chance of being repaid than the previous $14.3 Trillion and the markets will reverse once again. What the trigger of that realization will be no one knows. The potentials are seemingly endless. An evitable default in Europe, renewed wars in the Middle East or another unforeseen natural disaster are all within the realm of possibility. Whatever the trigger is, when it happens the shackles of political hubris and fiat addiction will come off the beast of hyperinflation and our economic reality will change almost overnight.

So then I would suggest that we all, especially our politicians, familiarize ourselves with the stories of recovered addicts. They will all tell you that the period of withdrawal is the most horrific and difficult thing they have ever done. But they will also tell you that they came out the other side stronger and better people and with a sense of self-reliance they never knew they had.

The Charade of the Debt Debate

The average American can’t be blamed for thinking that the debt ceiling debate that is monopolizing the news cycle is a crisis in the making. One can hardly turn on the TV or the computer and see anything else at the top of the news columns. It doesn’t matter what source you look at, left, right whatever, they are all playing to the hilt. After all hysteria and fear mongering makes for ratings and advertising dollars.

Growing right along with the media hype is a sense by the American people that government has just grown too big, too incompetent and just plain corrupt, a sense that politicians aren’t just lying to them but they are hiding the truth for their own political ends and desires to get re-elected. This opinion is beginning to cross all political lines and it has the politicians worried. How can they convince voters to re-elect them if ever increasing numbers of voters see them all, Republicans, and Democrats, as self-serving and disinterested it the problems of the average citizen? Politicians, being creatures of habit, of course resort to the partisan gamesmanship that has served them so well for all these years.

Problem is that every time they convince themselves and/or enough public opinion that the latest proposal is the “solution to the problem,” it fails before it even gets started. Hence the source of the paradigm shift in the public’s attitude, and as is to be expected the politicians are the last to recognize it.

Underlying all this are questions that the politicians don’t want to answer, hell they don’t even want them asked! If these questions are acknowledged to exist, the answers and the questions those answers would then generate will expose them for the frauds and wholly owned subsidiaries of Wall Street that they are.

While politicians and pundits on both sides of the aisle bemoan the $14.3 Trillion debt they all ignore the fact that the onetime audit of the FED revealed that it had loaned $16.1 Trillion in funds at near 0% interest to the Too Big To Fail banks and then turned around and hired these same banks to manage the loan portfolios and PAID them another $600 Million for the service! Yet no questions are asked about conflict of interest or hiring foxes to guard the hen house!

So just where did the FED get this $16.1 Trillion? They simply created it up out of thin air; they made a few magical entries on the computer and the assets of the banks in question (the very banks that own the FED) suddenly grew to the point of no longer being insolvent. Why are no questions being asked? Why were the members of the FED board given waiver on conflict of interest because they were personally invested in the very banks they were loaning money to?

So what we have is an unaccountable private monopoly that creates our money, sets interest rates, regulates the banking system in general and makes secret loans with the nation’s currency to whoever they want.

It has more power over the direction of the economy than any other institution. It has no oversight, is responsible to no one but itself and no one, no government body, no court can overrule or overturn its decisions.

How can any citizen, any elected official regard this as just or in any context "American"? Who could be surprised that while by any measure, anemic GDP growth, persistent unemployment numbers, growing debt and deficit, creeping inflation the economy flounders, the banks continue to not just prosper but report increasing profits and pay monumental bonuses to their top executives?

Unless and until structural changes are made to not just the government budget process but more importantly the FED there will be no viable solution to the fiscal and monetary crisis. Until the FED’s power to inflate the currency and steal the wealth of the public to pad the balance sheets of its constitute banks the fleecing will continue.

Any “shared sacrifice” must include the bottom line of the banks. Unless Glass-Stegal is re-instituted their power cannot and will not be broken. The largest holder of US debt paper is not China or any other sovereign power, it is the FED. Its balance sheet has swollen by nearly 200% solely of the accumulation of Treasury Bonds. Through the POMO process the banks have made billions on the growing indebtedness of the Federal Government and no politician or pundit utter a peep of protest. None will even dare question that this has been the very reason for the FED’s existence for all these years. Looking at this chart how could there be any other conclusion?

You want a solution? Audit the FED, declare the US Treasuries on its books as null and void. Declare the Treasuries held by its constituent banks as of a reduced value. Use a re-enacted Glass-Stegal to break up the “Too Big To Fail” banks just as Teddy Roosevelt broke up the oil and steel trusts. Reconstitute the FED along the lines of Alexander Hamilton’s “Bank of the United States” where under it would remain a private bank but with a board containing members appointed by both the Congress and the President and independent of any previous association with the banks. Any such new FED must be subject to periodic public audits and any failure to comply with law subject to not just civil prosecution of the bank but criminal prosecution of it board members.


Well don’t hold your breath, it won’t happen, not as long as the bankers dump their pocket change into the campaign funds of the politicians that would have to enact any such change in law.

Damned If You Do, Damned If You Don’t; The Debt Ceiling Question Answered, And You Won’t Like It.

I’m glad I have a pretty good sense of humor; otherwise all the pontification and debate about raising or not raising the debt ceiling might bring me to either to tears or a state psychosis. The truth being that all the rhetoric and finger pointing is nothing more than a grand illusion, a distraction to provide a naïve public with the boogey man of their particular partisan choice. In the end, the result of either raising or not raising the debt ceiling will be one and the same; the bankers will get the gold and the taxpayers will get the shaft.


If the present state of political deadlock stays in place and there is no “grand agreement,” the value of US debt paper would fall precipitously and the interest rates due will rise inversely. The holders of all this paper (with the exception of the FED of course) would then be between the proverbial rock and a hard place. Should they start to unload their holdings and get whatever cash out of it they can, or hold on and hope that US will somehow figure out a way to make the higher interest payments?

Any decision to sell would require they be both being willing to take and absorb a substantial loss of principle and finding a buyer willing to except the counter party risk in exchange for the potential higher interest draw. Holding on encounters the risks of both potential non-payment of interest, having their asset values fall and their own credit ratings placed in jeopardy.

So just who would be these buyers of last resort, and whom will they end up sticking with the bill in the end? Well that’s not exactly hard to figure out. Our dear friends, the Primary Dealers of the Federal Reserve System are presently sitting on massive “excess reserves” parked in their accounts at the FED. They will use these reserves as collateral to borrow even more created from thin air “magic money” at ¼% from the FED that they will then use to buy these foreign, mutual fund and hedge fund held Treasury bonds at discount prices. They will then turn around and sell these bonds back to the FED for 3% to 4% more than they paid for them. They can then “pay back” the “magic money” loans and deposit these newly created “profits” back into their FED “excess reserve” accounts. They then payout those fat bonuses they have all come to expect and actually think they’ve earned and then shuffle off their pocket change into campaign funds of their favorite corrupt politicians.

If you had doubts about what all the talk of “possible” further quantitative easing (QE3) was about, well there’s your answer. In the end the US taxpayer will get stuck with the bill for the higher interest payments and the bankers’ particular tax bill of choice: Inflation.

Added into this monumental and ongoing pillaging by Wall Street we will get the political chaos of the President then being responsible for deciding what gets cut and how much, to account for the Congress no longer being able to borrow the 40 cents on the dollar that they are now spending. If you think Congress is a bunch bickering, dysfunctional children now, just wait until that mess gets into the appropriation process.

So what then if there is some kind of “agreement” and the debt ceiling gets increased, coupled with spending cuts and/or increased taxes? Well Congress now has an additional $2.6 Trillion to spend on whatever new or old useless programs they can dream up. Whatever cuts in spending do go into place will result in layoffs of government employees and those of various federal contractors as well as their vendors. The politicians will call it “shared sacrifice,” I’d call it trickle down tyranny. Unemployment goes up and federal and state unemployment insurance payments go up. Home foreclosures go up and the housing markets sags even deeper. Welfare and assistance rolls then grow and in the end this little austerity play becomes a zero sum game in terms of Government expenditures.

This $2.6 Trillion that will now be available for spending will have to come from somewhere. Once again our old friend QE3 will rear its ugly head. New verse, same as the last verse. The Treasury Department puts more bonds up for auction; the Primary Dealers once again borrow from the FED at next to nothing and buy the bonds. As is standard procedure under the POMO process they even receive a fee from the Treasury Department for making the purchase. They then turn around and sell these Treasuries back to the FED at a premium over their purchase price. The “magic money” loans get repaid and more “excess reserves” get parked back in their FED accounts. The obscene bonuses get paid out and the politicians get their bribes. Only difference is this time there are fewer indirect bidders, as foreign nations, mutual funds and hedge funds will be much less inclined to bid at the auction. So then the prices will be lower and the interest rates will be higher. The direct bidders, the Primary Dealers, will then take on an even larger percentage of the auction offer and will subsequently make even more money under QE3 than they did under QE2.

Those Primary Dealers that are US branches of European banks will then transfer these newly created profits to their domestic accounts and use them to finance the ongoing bailout of the Euro PIIGS. Once again the US taxpayer will be stuck with the bill for rescuing Europe’s socialist nightmare, the burgeoning interest payments on another $2.6 Trillion in debt and the bankers’ favorite tax; Inflation.

Unless and until people wake up to this tyrannical fraud and realize that there is nothing in our Constitution or any statute of law that says our currency must be a debt instrument issued by a private bank, this game will go on and on until the whole world collapses into a hyper-inflation that will make Weimar Germany look like a tea party. At which point the powers that be will cook up a war that will spin out of control faster than Courtney Love on a crack binge.