This cartoon is important for it cuts to the truth of what is going on! EASY CREDIT is destroying America’s government and our joint powers! NOT high interest rates. Easy credit! Mad Magazine’s cartoonist was a genius. Clark and Jacob’s cartoon sums up the situation perfectly and incidentally, set the stage for Volcker to raise interest rates rapidly to kill this inflation! Indeed, when I saw the cartoon, a lightbulb flashed in my head. I saw this cartoon long, long ago! And absorbed it and it became part of my worldview! This is probably one of the reasons why I have written often in the past, ‘Easy credit always leads to bankruptcy!’ Isn’t this funny? Bravo to a comic book for hitting the nail right on the head.
U.S. Taxpayers Risk $9.7 Trillion on Bailouts as Senate Votes
The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.
The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed.The total already tapped has decreased about 1 percent since November, mostly because foreign central banks are using fewer dollars in currency-exchange agreements called swaps. The Senate is to vote early this week on a stimulus package totaling at least $780 billion that President Barack Obama says is needed to avert a deeper recession. That measure would need to be reconciled with an $819 billion plan the House approved last month….
“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?
All things must balance. This is the iron law of Libra, the Lady with the Scales, i.e., the Scorpion’s Claws. Why is this? We look around all of Nature and we see the same thing: everything has to be in balance. There can’t be an infinite number of anything. Anything doubling in size on a rapid or even slow timescale, always suddenly not just stops but collapses. This is because such systems are unsustainable in the real world. You can’t have infinite numbers of anything because this destabilizes all other systems, even distant ones.
For example, let’s take oxygen: the planet didn’t have any ‘oxygen’ which is actually just one of several elements of our atmosphere. Once, there was virtually no oxygen in our atmosphere. Then, life forms evolved that could take the energy of the sun and then spit out the excess atoms from the recombination process which is the miracle of evolution. Prior to the mutation of the single celled creatures which swarmed in the primeval oceans, none of them produced oxygen as a by-product. But the revolutionary new cellular formation caused a massive explosion in population. For a while there, they utterly dominated all the planet’s water systems to the point, they utterly changed the atmosphere.
Then, the gigantic population collapsed around half a billion years ago. It then reached a ‘stead state’ relative to the rest of the environment. Since we know that all populations that grow, collapse, we have to understand that all human systems do the same. One of the saddest things on earth is how we cannot accept this. To my mind, the main and maybe only reason for making graphs of economic systems is to do one thing: to detect signs of rapid growth and then set up barriers to prevent this!
For these are what we call ‘bubbles.’ So, if the ‘value’ of real estate in some place suddenly takes off, this is a bad sign, not a good sign. If an entire nation’s real estate takes off, this is a very bad sign. If an entire planet’s real estate takes off, this is a hideous, bad sign! In the past, the accumulation of data across the planet was imperfect. But thanks to modern communication and technology as well as computer systems, we can compute and track a host of systems simultaneously and in turn, detect bubbles better.
Instead of working, this failed! Why is that?
Simple! Intelligent people knew there was not only a California bubble but a global bubble long ago. We did debate its potential collapse. I called that one pretty well, I think. But much of the mainstream spend most of their energy denying there was any bubble. The darker work, connecting the global bubble to the Bank of Japan, is not done, yet. It has barely begun. Japan had an immense bubble at home from 1988-1991. Coming out of the ruins of this massive collapse, they instituted a temporary zero-interest system which is called ZIRP. This system meant, the Bank of Japan could lend infinite money forever. They promised, this deadly system was temporary, to fix the mess caused by the bubble collapsing.
Instead, it became the new steady-state. Only it is unsustainable by its very nature. Even resorting to it for a year is highly dangerous. The Japanese solved this riddle by simply killing domestic lending to consumers while lending at zero percent to other banks in other countries and venues. So this ZIRP lending didn’t stay in the form of yen but became euros and dollars. Both of which shot up in value against the yen.
The US eagerly use this ZIRP lending to increase our debts. Our national debt rose from around $2.5 trillion to over $10 trillion. Then, using the new US ZIRP system, we just doubled it! Yes, we doubled it in one year. Again, another sign of impending collapse due to inherent instabilities of a system that grew too fast. Below are two older articles I wrote about all this:
World stock markets shot through the roof on wishful thinking that the US public will have access to 0% financing and thus, be able to buy, buy, buy more stuff. I shall disabuse everyone of this notion. It isn’t going to happen.
But first, I have to address a philosophical issue today: the central bankers are destroying banking in their looney game of trying to control economies via interest rates! The role of bankers is rather simple: they have to balance the creation of credit with reserves and savings! They don’t sit down and say, ‘Should we make the economy hotter?’ They shouldn’t decide, unilaterally, ‘We should cool the economy, it is growing too fast.’
They have one job: to preserve the reserves and to grow it so it keeps up with credit creation.
This is what has failed! This is why all banking is now collapsing! This is a total failure of the entire philosophy of the concept of central banking! The ebb and flow of interest rates is due to trade issues and wars. And the only role the bankers have in all this is to raise the rate’s basis whenever they notice that someone is borrowing too much and is becoming a credit risk.
Below is a graph from the Chicago Board of Trade showing how the interest rate swap game which began less than 20 years ago, is a classic ‘hockey stick’ chart heading rapidly to infinity. Any system that has this appearance on a graph is going to blow up or die. Nothing except for maybe the Universe itself and probably not even that, can go upwards in a hockey stick graph sort of way! THIS IS IMPOSSIBLE. Generally, speaking, when anyone sees ANYTHING IN CREATION doing this, they must either stop it from continuing or run for cover. For death and doom will rapidly stalk onstage and take over. A hockey stick graph is a clear indication we are looking into the maw of Death itself. This is the door to the Outer Darkness. It is fatal. I can’t be more stark about this: IT MEANS GRAVE DANGER.
One of the worst aspects of all the ZIRP-generated hockey stick graph bubbles was the Derivatives bubble. This shot up the most. From less than a billion at the beginning of the Japanese ZIRP lending to over $600 trillion when the whole thing collapsed due to being too big. When Derivatives betting overshot the value of all things owned by humans on earth, it made a sudden reversal.
Back to the headlines: we are nearing the end of possible bail outs. For the bailouts have nearly reproduced the previous debt. When they equal each other, they will collapse together. We can’t add on infinite debt while also running up infinite debts! Namely, the US government budget is now running at well over a trillion a year plus this shadow obligation that is equaling the red ink in DC. If the US government is bankrolling and insuring 100% of our mortgages, this will collapse the government.
Last year, it was 70% of the mortgages. Now, it is nearly total. And the plan is to not only make it total but to keep it there, forever. Again, look at the words I am using: total and forever. Now, these are words describing an unnatural system. Black holes might be total and forever. But even they are doomed to destruction when they get too big. Possibly, this is what caused the Big Bang.
The Obama administration views the private bank as a way to get around the thorny issue of having to determine a price for soured assets such as certain mortgage-backed securities, many of which are illiquid and hard to value. The government has long worried that if it bought toxic assets and paid too much for them, banks would benefit at the expense of taxpayers — while if the price was too low, it would force banks to take further write-downs and exacerbate their woes.
The Treasury’s working theory for the government/private-sector partnership is that investors wouldn’t overpay, because if they did, they’d stand to lose money; but they also wouldn’t underpay, since the selling banks wouldn’t be willing to part with their assets too cheaply.
Bankers and investors cautiously welcomed the idea, saying it could help avoid more large-scale federal intrusions into the financial sector while tackling the bad-asset problem. Brian Sterling, co-head of investment banking for advisory firm Sandler O’Neill Partners, called the idea an “interesting tool” worth exploring.
“We think that anything that helps facilitate taking nonperforming assets off bank balance sheets or putting a ringfence around them is a good thing,” Mr. Sterling said. Some investors expressed concern about joining with the government in such an arrangement if the rules of engagement weren’t guaranteed to remain consistent.
This article is funny! Let’s start with the last: the government and the bankers are already joined at the hip! Mr. Sterling is worried that the population at large might force Congress and the President to work for them, not the bankers. So they want some sort of guarantee that the bankers, not the workers, will be protected.
Second, the business of ‘buying securities’ which are insecure in the extreme is all about the bankers trying to sell useless bonds based on lending money to deadbeats who won’t pay it back. Sensibly, no one wants to buy these IOUs so Uncle Sam will buy them only Uncle Sam is running out of capital. So the lenders who made the bad loans now want to lend money to the US tax payers so we can buy up previous bad loans made by these same bankers. See? Aren’t they sweet?
This is gnome heaven: to make money making money and then, when that collapses, to make even more money making money to the people rescuing the bankers who made bad money! This ‘bad bank’ will be owned by the taxpayers while the bankers get to open a brand new ‘good bank’ and from there, lend to us since we will be very deep in debt and will need to turn over the loans supporting the ‘bad bank’ we were forced to open so the gnomes could get rich, running a brand new ‘new bank.’ I think my head is going to explode.
To do this, the gnomes pay Congress a lot of money and dump tons of loot on the President. This is called ‘bribery’ but is totally legal.
If they do not need the bail-outs, let Morgan and Goldman return the welfare payments.
Perhaps also an explanation is in order of why James Dimon is not prosecuted for violations of Title 18 Section 208 U.S.C. in his role as Director of the New York Federal Bank in approving the J.P. Morgan/Bear Stearns deal.
Neither J.P. Morgan, Goldman Sachs or any other bank will return the TARP monies because the actual values of the Preferred Stock and Warrant packages were 50% lower than what the taxpayers were forced to pay. And the actual values of those packages have dropped considerably in every case since the welfare payments to Goldman, Morgan , Bank of America etc. were made.
In the case of Bank of America and Merrill, the warrants purchased by the Treasury are down over 88% since the bail-out.
We already lost most of the value of the bonds and ‘warrants’ we ‘purchased’ thanks to our corrupt Congress and Presidents. And we will lose 100% of this value since the bankers certainly were not going to sell us the good stuff, only the ZIRP-inspired crap. I heartily recommend reading this entire article. Without even going there, readers can see clearly, this writer, John Olagues, is very astute and quite angry. Bravo. He also has good graphs making his points.
Treasury postponing new financial rescue plan announcement to TuesdayA key Obama administration official said Sunday that new, soon-to-be-announced financial measures by the Treasury will include creating incentives for the private sector to invest in troubled banks. “It can’t all be private capital, but with the right kinds of government guarantees and the right kinds of financing, strategic approaches, [Treasury Secretary Timothy] Geithner believes we can bring in substantial private capital,” said Obama’s chief economic advisor Lawrence Summers on Fox News Sunday.
Where is this substantial private capital? Treasuries! Ah! So, it is all parked there and to accommodate it, the government overspent by $9 trillion? Is this what he is talking about? Mr. Summer as well as the slippery tax cheat, Mr. Geithner, both know how to explain this clearly which is why they are avoiding it. When all the ‘private capital’ flows out of Treasuries, what happens next?
The government stops spending? This mysterious ‘private capital’ has to be examined. Where does it come from? China? OPEC? Pirate islands that processed al that Japanese carry trade loot? It certainly is not from industry profits! This is the infamous ‘funny money’ I keep talking about! Most of the ‘private capital’ in the past was nothing but IOUs picked up in Tokyo. Once we guarantee them a hefty profit, they will move their money back into the other parts of the bond market with the understanding that we will eat all losses and they dine on all profits.
Another scheme that may reportedly be expanded is a Federal Reserve program that seeks to encourage the consumer loan market by providing cash infusions to investors purchasing consumer-loan securities.So far, the program — known as the Term Asset-Backed Securities Loan Facility — uses $20 billion in funds from the bank bailout money to contribute to an overall $200 billion program to revitalize the consumer-loan market for credit cards, student loans and automotive loans. The rest of the funds currently come from the Federal Reserve, but both the Fed and the Treasury may later add to the program, reports said.
Credit cards are USURY. Student loans are enslavement. You can’t escape them. If you make no money due to your job you studied for being offshored, you are out of luck. You can’t go bankrupt. You have to pay for the rest of your life. Also notice the last sentence: the Treasury and the Federal Reserve continue to merge with the Treasury being ‘privatized’ rapidly. This way, the Treasury, which hitherto, had to be controlled by rich bastards quitting their jobs at JP Morgan or Goldman Sachs and making no money while controlling the entire system.
They would far rather do this while still running their private banks and earning vast sums of goodies, not the dreck of appearing in Congress and explaining their thefts to bribed Congressmen who have to pretend to be outraged. Once it is privatized, they can install a Bilderberg professor there who will then do the Yale two-step and pretend to be controlling his masters who are pulling his strings. Sounds like the Federal Reserve and how it is manipulated.
So why don’t they offer us what we crave, or, more specifically, why aren’t tax cuts the solution?
The proposed tax cuts reward those who need it least. One of the more expensive provisions is an expansion to five years of the period over which losses can be used to reduce tax payments of profitable years. In other words, if I lost money this year, the package would allow me to reduce my taxes when I do well several years later. But that has value only when I make a profit again, not while I’m struggling to make rent.
Until late last month, included in the proposed package was a $3,000 tax credit for each newly hired employee that similarly missed the mark. Consider: If the employee demanded the money as a signing bonus, it went to someone who had already received a substantial leap in income over being unemployed.
When I’m struggling, a small reduction in costs isn’t going to persuade me to create a new position. At a huge company, that might add up to another job, but for me the choice of whether to create a job rests on only one thing: customer demand….
By sending every taxpayer a $2,000 debit card, the government stimulates spending directly. The card doesn’t get deposited with a bank, a step that greatly reduced the use of last year’s rebate checks for new spending, and with a defined expiration time, perhaps a year, the program could help precisely while other programs get underway.
The American Gift Card could bear a picture of Lady Liberty, since it may be used for whatever taxpayers wish: smarter clothes, dinners out, a weekend away, a new heater. And as gift cards tend to be used in person, they are of particular interest to local businesses.
HAHAHA. Note that Summers wants us to take on all the hazards of banking while the bankers reopen their doors and resume usury levels of lending. This merchant wants Uncle Sam to give us credit cards to use to restart the economy. Santa Claus! Whoopee. I despise the entire Santa frenzy. It unbalances our economy, leads to ridiculous and useless excesses and is annoying as hell to live through every year. Bah, humbug. I sound like my grandfather, who hated Xmas.
Anyway, instead of a ‘gift card’ that will double the US debt, why not just let us access the ZIRP system and pay no interest on loans? HAHAHA. The bankers hate that! ZIRP is only for THEM! They get it so they can leverage their power and buy up all our stuff, on the cheap, and not even have to pay for the loans which come from our future tax revenues! We are the bankers and they are the borrowers! Another utter reversal! All systems, when they go to infinity, collapse and reverse and we just saw this happen.
Only, the looters are still looting. More about that, later.
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