Charleston, South Carolina, after the bombardment.
Meeting Street, looking south, showing St. Michael's Church, the Mills house and ruins of the Circular Church
Ilargi: It's about a month ago that David Axelrod, Joe Biden and Laura Tyson did the Sunday morning talk show circuit to talk about a second stimulus plan. Axelrod sort of denied there was one in the cards, Biden said it was too early, and Tyson claimed there was an obvious need for it. As I wrote then, it was a typical "when did you stop beating your wife" in reverse, or a non-denial denial.
The hosts of the shows, especially George Stephanopoulos, are cast as some kind of side-kicks, asking the right questions that will allow the politician to deliver the message, and ignoring the fact that they don't get straight answers to their questions.
At the end of it all, the notion of the second stimulus was planted in the nation’s consciousness, and that was the goal. When, likely in a few months’ time, the topic resurfaces, there will be a recognition factor that will make it go down much more easily. It's how you sell stuff, and how you sell ideas.
This week's Sunday morning shows brought out the big guns, Geithner, Summers, Greenspan. Because they had a big new idea to non-deny deny. Raising taxes.
How do you make that popular, or palatable for that matter? Well, they think they've found a way. They start off going on and on about all the alleged achievements of 6 months of Obama administration. Larry Summers' interview with Bob Schieffer on Face the Nation, if you listen well, is embarrassing. He doesn't answer the questions, he does a monologue. He probably wishes he were with Stephanopoulos, who knows how to read a script. But Larry can talk anyone under the table.
So they paint a picture of an economy that’s doing really well, growth is around the corner, US companies' market caps are up by trillions of dollars, it’s all smooth and upwards from here on in. Except.
Except that the deficit is way too high, and when growth is here, they're going to need to bring it down, or that growth will slip through our fingers again. And how can you bring it down? Unfortunately, there is only one way. Raise taxes. I don't think they want to go for income taxes, it looks like Greenspan was brought in to mention the value added tax idea. They will probably go for that. It can best be made to look like a fair way to raise taxes. Then again, it won't do much by itself. Tax revenues across the board are down so much that raising levels all over the place is necessary just to run in place.
Still, whatever it's going to be, taxes will be raised. My bet is it’ll happen later this year. You see, what is not said or even implied is that the budget deficit that necessitates the tax raises is primarily the result of bail-out programs for banks. Now, those banks show better balance sheets, no matter how fake they are. And it's time to start paying for those bail-outs. Which pay for the bankers' bonuses.
Oh, and the underlying partly hidden unemployment message is that the country will keep losing jobs for at the very least the next 12 months. They present it as an almost afterthought, since hosanna on the horizon takes first place, and as long as people believe that mantra, they're confident it will drown out the bad stuff. They don't mention a percentage, but I will. 12 more months of rising unemployment, their words, not mine, will bring it to a rate of 12-13%, if not more. All it takes is an 0.2% monthly increase. Which, by the way, will lead to the need for new and added extensions of benefits for the at least 1.5 million people that will run out of all of them.
And you know how that will be paid for? That's right, higher taxes. They're a done deal. The decisions have been made. Now they have to be sold.
Since posts were getting later all the time, I skipped the August 2 date and moved straight to August 3
White House Points to Economic Revival
Top economic officials of the Obama administration gave upbeat assessments of the American economy on Sunday, asserting that the recession was bottoming out and predicting that the flagging gross domestic product would round the corner into positive territory before the end of the year. “Six months ago, when the president took office, we were talking about whether recession would become depression,” Lawrence H. Summers, the White House’s top economic adviser, said on CBS’s “Face the Nation.” “Today, we are talking about when recession is going to end.”
Timothy F. Geithner, the Secretary of the Treasury, gave a similar rosy analysis on ABC’s “This Week,” after the host George Stephanopoulos had reeled off a list of hopeful indicators, including an 11 percent spike in home sale in June, a 1.5 percent reduction in jobless claims and a second-quarter drop in the G.D.P. of only 1 percent. Mr. Geithner said that there is a broad consensus among private-sector economists that the economy should see “positive growth” in the second half of the year. “There are signs that the recession is easing,” he said.
He pointed out that American confidence is marred by high unemployment — at almost 10 percent. Nevertheless, he said, growth in production should mean that the pace of job losses should slow further. He said that the administration is considering asking Congress for an extension of unemployment benefits as 1.5 million jobless Americans exhaust their benefits in coming months. Christina D. Romer, chairwoman of the President’s Council of Economic Advisers, also predicted growth in production by the end of this year and said that the Obama administration’s pledge to create 3.5 million jobs should be realized by the end of next year.
Speaking on CNN’s “State of the Union,” she added this caveat: “The slowdown is certainly slowing down, but we still have a long way to go before we hit bottom. Certainly it’s going to be a long hard slog getting out of this.” Indeed, Mr. Geither and Mr. Summers soft-pedaled the possibility that taxes would have to be raised to close a more than $1 trillion deficit that they said would impede a sustained recovery, but they refused to rule out such tax increases. “It’s never a good idea to absolutely rule things out,” said Mr. Summers, who also appeared on NBC’s “Meet the Press.”
While not explicitly calling for increased taxes, Alan Greenspan, the former chairman of the Federal Reserve, said on Sunday that a value-added tax or sales tax would be preferable because it “raises revenue without significantly impact the economy.” Also appearing on “This Week,” Mr. Greenspan echoed the optimistic remarks of the Obama administration officials, saying said that the idea of economic “collapse is now off the table.” While the economy was “teetering for a while,” he said, “I’m pretty sure we’ve already seen the bottom.”
A strong sign of this turnaround and consumers’ willingness to spend, he said, was the enthusiastic response to the so-called “cash for clunkers” program that gave Americans cash incentives to turn in cars rated as fuel guzzlers for more efficient new cars. “If the clunker program had been put in place six months ago it would have been a dud,” he said But he expressed a concern about whether home prices would stabilize and the impact another wave of falling prices might have on a resurgent economy.
There was a good deal more skepticism about the health of the economy from Republican legislators on Sunday, who also remained critical of the president’s overhaul of the health-care system.
Mike Pence, a Republican Congressman from Indiana, said on “Fox News Sunday” that while he hopes “the recession is leveling off,” he doubted it had anything to do with the Obama administration’s stimulus bill, which was approved in February.
“We’ve lost two million jobs since the stimulus bill was passed,” he said. “And I think what we’re seeing in the economy now is the inherent resilience of the American economy and the American people. And while those numbers are encouraging, what we ought to be doing is pursuing the kind of broad-based prescription for recovery and stimulating this economy that has always worked, which is fiscal discipline in Washington, D.C. and tax relief for working families, small businesses and family farms.”
Senator Jim DeMint, a South Carolina Republican, predicted that a House plan to raise taxes on top-earners in order to finance health care would end up hurting less wealthy Americans as well. “Well, half of the so-called rich are small businesses that create 70 or 80 percent of the jobs in this country, and it’s a real jobs killer,” he said on Fox.
But Charles B. Rangel, the New York Democrat who heads the House Ways and Means Committee, denied Mr. DeMint’s assertion, saying “under our statistics, 96 percent of small businesses would not be hurt by this tax.” “It’s less than 1 percent of the wealthiest people in the United States that would be taxed, and that’s at a 1 percent tax,” he said.
Treasury Secretary Timothy Geithner On This Week With George Stephanopoulos
click to open video in new window
Transcript:
STEPHANOPOULOS: A lot of good news out there this week, but the bad news is, the consumers are still real scared. Even though their income went up, the spending went way down. What more can the administration do, if anything, to encourage the spending to go back up?
GEITHNER: George, you are right that there are signs the recession is easing. And if you think about where we were at the end of last year -- we had an economy in freefall, a financial system on the verge of collapse. And the actions that this administration has taken have been very effective in helping stabilize conditions, help repair the financial system, bring down the costs of credit...
STEPHANOPOULOS: We've (inaudible) a bottom?
GEITHNER: But I think we have a ways to go. I want to emphasize the basic realities. Unemployment is still very high in this country. We need to make Americans more confident about their future...
STEPHANOPOULOS: How do you do that, though?
GEITHNER: And I think -- I think you need to do it through just by making sure people understand we are going to do what's necessary to bring growth back on track. We're going to stick with this until Americans are more confident in their future, businesses have access to credit, families are going to be able to put their kids through college. That's going to be the ultimate test of our (inaudible). And the policies the administration put in place working with the Congress were designed to provide very substantial support to make sure we get through this.
STEPHANOPOULOS: You mentioned the big problem of unemployment, and we're still nowhere near the kind of growth that it would take to create jobs. More than 2.5 percent growth to start to create jobs. I know the administration has thought that's not going to come until next year, but some private economists now say it could happen in the second or third quarter of this year. They look at these numbers and see that. Do you have any reason to believe they're right?
GEITHNER: Well, I think you're right to say that the broad consensus of private forecasters is you're going to see positive growth in the second half of this year, and expect that to continue.
STEPHANOPOULOS: A growth at the 2.5 percent level?
GEITHNER: Not clear yet, but you need growth before you get people -- businesses to start creating jobs again, and that's what we're going to be very focused on doing.
STEPHANOPOULOS: So should Americans expect that more jobs are going to start getting created this year, or not?
GEITHNER: I think you're going to see -- what you're going to see first is growth turn positive. And then you're going to see the pace of job losses slow materially for the -- they have already slowed significantly, as you said. They're going to slow materially further. But again, most private forecasters -- and let's use their judgment -- suggest you're going to see unemployment start to come down maybe beginning in the second half of next year.
STEPHANOPOULOS: And what about the flip side? What are the chances that we're actually going to see a second dip later this year?
GEITHNER: I think that's something we're very focused on. Again, we need recovery to be built on private demand, private spending, businesses taking a chance again in the American economy, putting investments to work, starting to rebuild their employment base. That's the ultimate test for recovery. And the very important thing for us is to make sure we're sticking with this until we're very confident we have a strong, private sector-led recovery in place.
STEPHANOPOULOS: And what are you looking at that would give you some cause of concern that we could slip back?
GEITHNER: Well, I don't think you can make that -- see that risk now. Again, and the stimulus program and what we've done in the financial sector are designed to have a sustained impact, again, because the damage we had done to our economy was so great, it was just going to take a long, sustained effort.
STEPHANOPOULOS: And that means unemployment, as you said, pretty high, at least through the rest of this year. At the same time we're seeing reports said up to 1.5 million people could be losing their unemployment benefits by the end of this year. Does that mean that the administration is going to have to look at extending unemployment benefits again?
GEITHNER: I think that's something the administration and Congress are going to look very carefully at as we get closer to the end of this year. And that's going to be one important thing to look at.
STEPHANOPOULOS: We already know that a million-and-a-half people are going to lose their benefits, don't we?
GEITHNER: Yes. Again, I think the most important thing we need to make sure people understand is working with the Congress, we're going to make sure we do enough to bring this economy back. But, you know, our job is not just to repair the damage done to this economy, bring growth back, we need to make sure that we're making the kind of investments that are going to build a more productive economy, gains of growth more broadly shared. And that's why it's so important, as we focus on recovery, we're making investments in health care reform, in education, in infrastructure, fixing our financial system, the kind of things we're working on right now.
STEPHANOPOULOS: I did want to get to that. And as we pull out of the recession, the other big worry going forward is deficits. You heard that from the Chinese this week. Our next guest, Alan Greenspan, has warned this as well. And Senator Charles Grassley, the Republican ranking member of the Senate Finance Committee has cited CBO estimates, Congressional Budget Office estimates, that your budget will add $9 trillion to the national debt over the next decade.
(BEGIN VIDEO CLIP) SEN. CHARLES GRASSLEY (R-IA), RANKING MEMBER, FINANCE COMMITTEE: Our debt, as a percentage of the economy, will grow in excess of 80 percent, a level also that has not been seen since this country was in World War II. (END VIDEO CLIP)
STEPHANOPOULOS: That is a very, very high level. And I know you believe that passing health care is essential to getting the deficit under control, but independent analysts also say that even with that, you're going to have to find new government revenues. The former deputy treasury secretary, Roger Altman, said: "It is no longer a matter of whether tax revenues must increase, but how." Is he right?
GEITHNER: George it is absolutely right and very important for everyone to understand that we will not get this economy back on track, recovery will be not strong and sustained, unless we are -- can convince the American people that we're going to have the will to bring these deficits down once recovery is firmly established. Remember, we inherited a $1.3 trillion deficit. The cumulative consequences of policies this country pursued over the last eight years left us with $6 trillion more debt than we would have had by making a bunch of commitments to cut taxes and add to spending. Without paying for those, we are not going to be able to afford to do that. And it is very important people understand.
Our first priority now, though, is to get this economy back on track, make sure this financial system is repaired. Without that, we're not going to get our deficits under control. And the necessary path to fiscal responsibility, the necessary path to getting this country living within our means again is not just health care reform, to bring down those costs, but we're going to do a range of other things. And that's going to be a very difficult challenge to this country. We can do this, it just requires the will to act.
STEPHANOPOULOS: Including new revenues?
GEITHNER: Well, we're going to have to look at -- we're going to have to do what is necessary. Remember the critical thing is people understand that when we have recovery established, led by the private sector, and we have to bring these down, deficits down very dramatically. We have to bring them down to a level where the amount we're borrowing from the world is stable at a reasonable level. And that's going to require some very hard choices. And we're going to have to try to do that in a way that does not add to the -- unfairly to the burdens that the average American already faces.
STEPHANOPOULOS: But that's the dilemma...
GEITHNER: That is the dilemma.
STEPHANOPOULOS: ... isn't it? Because even when you look at health care reform again, I know you believe it's going to bend the cost curve over time, but the Congressional Budget Office says at best the health care reform plans out there are going to be deficit-neutral over the next 10 years. So to bring the deficits down there's not enough money in the discretionary budget. We all know that. That means more revenues. The president has said that taxes won't go up for any Americans earning under $250,000. But it doesn't appear he's going to be able to keep that promise if you're going to bring the deficits down.
GEITHNER: George, again, we can't make these judgments yet about exactly what it's going to take and how we're going to get there. But the very important thing, and no one is going to care about this more than the president of the United States, is for people to understand that we do not have a choice as a country. That if we want an economy that's going to grow in the future, people have to understand we have to bring those deficits down. And it's going to be difficult, hard for us to do. And the path to that is through health care reform. But that's necessary but not sufficient. We're going to do some other things as well.
STEPHANOPOULOS: So revenues are on the table as well?
GEITHNER: Again, we're not at the point yet where we're going to make a judgment about what it's going to take. But the important thing...
STEPHANOPOULOS: But you're not ruling it out. You can't rule it out.
GEITHNER: Well, I think that what the country needs to do is understand we're going to have to do what it takes. We're going to do what's necessary.
STEPHANOPOULOS: Let me ask you about health care. The negotiations seemed to stall out in the Senate. They're going to try to come back by September 15th. The House committees have all passed the bill. One of the things that Senator Grassley, we just saw, is asking about is that he says he wants some assurances, some guarantees, really, that whatever deal, if they strike a deal -- bipartisan deal in the Senate Finance Committee, it's going to hold all the way through the process: the Senate floor, the House floor, the Conference Committee. Can the administration give him that assurance?
GEITHNER: I think that's what every legislator wants. They want that to degree of confidence.
STEPHANOPOULOS: They're not going to get it, though?
GEITHNER: You know, we want to have an outcome that meets these core principles that the president laid out, which is we want to make sure that we're doing something that's going to reduce the growth in costs over the long term, expand access, improve the quality of care, do that in a fiscally responsible way that does not increase unduly the burden on average Americans today. That's the basic test. And we're going to try to make sure that we achieve that with the broadest consensus as possible.
STEPHANOPOULOS: You want a broad consensus, but Senator Grassley, his colleague Senator Enzi are saying they need those assurances. They can't get them?
GEITHNER: Well, you can't, you know -- we want to make sure we get this done, and we're going to -- as the president said, we're going to look at anything reasonable consistent with those principles that's going to get this done.
STEPHANOPOULOS: Why not do it (ph) through consensus? The president said he wants a bipartisan bill, if possible, but do you believe it is possible if necessary to get meaningful health care reform with Democrats only?
GEITHNER: George, I think that, again, this is a big, consequential reform for the country. And as many people observed, ideally you want to do this with as broad a base of consensus as possible. But people on the Hill are going to have to make that choice, do they want to help shape this and be part of it, or do they want this country, the United States of America, to go another several decades without doing what every other serious country has done, which is to give their citizens access to basic quality care.
STEPHANOPOULOS: But if the Republicans can't come to an agreement with the Democrats, are the Democrats and the White House willing to go it alone?
GEITHNER: George, again, we're going to try to get this done on the best possible terms consistent with those principles. Can't tell you what it's going to take, but you see what the president is trying to do.
STEPHANOPOULOS: Let me ask you about the TARP. The TARP inspector general, Neil Barofsky, has criticized your department for not being transparent. He's also said that the taxpayers can be on the hook for up to $23 trillion in liabilities. I know you dispute that figure, but what can you tell us about where the TARP stands right now, and how much of the $700 billion that has been appropriated taxpayers can expect to get back?
GEITHNER: Let me just emphasize what's important to Mr. Barofsky and the other oversight panels and to the president and to the secretary of the treasury, is we want to make sure we have the highest level of transparency on these programs, and we are doing everything we need to make sure that they are delivering the benefits they need with as little risk of fraud as possible. And he has made a number of reforms we've adopted, a very helpful role in shaping these programs, and we are committed to do everything necessary to achieve that. Now, the program itself -- we're in a much better position than I thought we were going to be, frankly, if you just look back four months ago, three months ago or six months ago. The financial system today is more stable. The cost of credit -- credit is more available. Cost of credit is down significantly. Broad concern about the collapse of the financial system has receded dramatically, and that is very, very, very important to the prospects of... (CROSSTALK)
STEPHANOPOULOS: We're not going to see a collapse, are we?
GEITHNER: No, not at all. That's not going to happen. It's absolutely preventable, and again, there's much more confidence today than we've seen the last I think even in a year, in the basic stability of the U.S. financial system, and that is a very, very important accomplishment. And we have done that -- when I was here four months ago, we had roughly $40 billion of authority left in the TARP. Today we have roughly $130 billion, in partly because we have been very successful in having private capital come back into this financial system. And we've had more than $70 billion...
STEPHANOPOULOS: Paid back.
GEITHNER: ... come back into the government. And that money goes directly to reduce our debt.
STEPHANOPOULOS: How much more are you expecting to be paid back?
GEITHNER: Can't tell, but substantial additional sums will come back. And we are getting -- we've already earned about $6 billion for the taxpayer on those investments, and you know, this program is delivering very important improvements in availability of credit, which is the ultimate test.
STEPHANOPOULOS: So it's going in the right direction, it's going up. Can you say now with certainty that you're not going to have to come back to the Congress for more money?
GEITHNER: We do not plan to ask for more money, and I think it's quite unlikely that we do. But the important thing, George, as you just said, is that people need to understand that we will do what is necessary to make sure that viable businesses, families that have been very conservative (ph) and prudent have access to credit at reasonable terms. That's the basic purpose of these programs, and we're going to do what's necessary to achieve that.
STEPHANOPOULOS: The issue of executive compensation for those banks, a lot of them are trying to get out from under the TARP restriction because they want to get out from the compensation restrictions. The House passed a bill on Friday to give shareholders more rights to vote on executive compensation, also the SEC more power. The Republicans in the House were very critical. Take a look.
(BEGIN VIDEO CLIP) (UNKNOWN): This bill continues the Democrat majority's tendency to go to the default solution for every problem -- create a government bureaucracy to make decisions better left to private citizens. (END VIDEO CLIP)
STEPHANOPOULOS: Is the government getting too involved?
GEITHNER: Absolutely not. And I think that really, everybody understands that we cannot have our financial system go back to the practices that brought this economy to the brink of collapse.
STEPHANOPOULOS: Do you think that's happening?
GEITHNER: No, I don't think we're at that point yet, but it is going to take fundamental reform of our financial system. Compensation reforms are an important part of that, but we need to go beyond that. And that's why the president has moved so early in this administration to propose very far-reaching reforms to provide much stronger protection for consumers and deliver a more stable financial system and give us better tools to manage future crises. And the broader fundamental reforms to protect consumers, create a more stable system are absolutely important, one of the president's top legislative priorities this year. And I think, ultimately, you're going to find very broad-based support for those reforms.
STEPHANOPOULOS: OK, Mr. Secretary, thanks very much for your time today.
GEITHNER: Good to see you.
Larry Summers On Face The Nation
Transcript:
ANNOUNCER: FACE THE NATION with CBS News chief Washington correspondent Bob Schieffer. And now from CBS News in Washington, Bob Schieffer.
BOB SCHIEFFER: And we begin this morning with Larry Summers. Mister Summers, thank you for joining us. In an ABC interview recorded yesterday, Treasury Secretary Geithner told George Stephanopoulos the smaller federal deficit is vital to sustaining an economic recovery. He said doing that is going to require what he called hard choices. He was asked directly whether he would rule out new taxes and he said the country must understand the administration will do, in his words, "what is necessary." Was he laying the groundwork here for a new round of taxes?
LAWRENCE SUMMERS (Director, National Economic Council): No, not at all. He was explaining what's been the President's policy. The President recognizes that his first job was to rescue the economy, that what he inherited was an economy with a trillion-dollar-plus deficit and an economy that was in freefall and people talking about depression. And he had to change that. And I think we have and the statistics we have seen confirm that. People aren't talking about whether the recession is going to turn into a depression; they are talking about when it's going to end.
BOB SCHIEFFER (overlapping): Well, did you--
LAWRENCE SUMMERS: And that's a real accomplish--that's a real accomplishment for these policies. But we also recognized--and this is something the President's also talked about--that in addition to rescuing the economy we have to rebuild it on a much stronger foundation so we don't have the kind of problems that brought this acc--expansion to an end that led to the mess we have suffered for the last two years. And crucial to that is getting the federal deficit under control. And that's going to involve difficult--
BOB SCHIEFFER (overlapping): Well, how are you going to get it under control?
LAWRENCE SUMMERS: --difficult and challenging steps. Look, the first and most important thing for getting the federal deficit under control is substantial reform of the health care system and that's why the President's started there. He has done something that actually is new. If you look at when Medicare was put in, if you look at the George Bush's prescription drug benefit, if you look at the Iraq war, if you look at the tax cuts, if you look at the Reagan tax cuts, we've done major things in this country without paying for them.
No one is arguing with the President's central premise, and it's an important leadership of the President, that anything we do in health care is going to be paid for itself as judged by the nonpartisan independent scorekeepers.
BOB SCHIEFFER (overlapping): Well, let me--
LAWRENCE SUMMERS: But the President's actually going to go further than that, because he is also insisting that we enact a set of measures that are not the kind that you can really do a bean count on and score precisely, but which we know will have effects over time, things like encouraging preventive medicine--
BOB SCHIEFFER (overlapping): Let me--
LAWRENCE SUMMERS: --things like encouraging cost-effectiveness research. So health care is the first sort of ground zero of our efforts to contain the deficit.
BOB SCHIEFFER (overlapping): I'm going to ask you about that in just a second, but let me just go back to this just to make sure. You don't see another round of tax increases coming?
LAWRENCE SUMMERS: Tax increases. Look, let--let's understand where we have been. Let's understand that the President put in place, as part of the stimulus bill, as part of the economic recovery act, a measure he had campaigned on, the making work pay tax act that's reducing taxes by eight hundred dollars for working--for working families. That's where the--that's where the focus is. We are going to keep working to strengthen the foundation--
BOB SCHIEFFER (overlapping): No--no tax increases for middle-income Americans?
LAWRENCE SUMMERS: --foundation of this economy. There's a lot--oh, there's a lot that can happen over time. But the priority right now, and so it's never a good idea to absolutely rule things--rule things out no matter what.
BOB SCHIEFFER: Okay.
LAWRENCE SUMMERS: But what the President has been completely clear on is that he is not going to pursue any of his priorities--not health care, not energy, nothing in ways that are primarily burdening middle-class families. That is something that's not going to happen.
BOB SCHIEFFER: All right. The recession--is it over? I mean this cover of Newsweek magazine; it says "The recession is over." But there's a little asterisk that said "Good luck surviving the recovery." Is the recession over? Has it bottomed out, Mister Summers?
LAWRENCE SUMMERS: Most--most forecasters are now looking at growth and output in the GDP over the second half of this year. They are looking for it because they see that inventories are way down and business is going to build them up because they see some increase in car and housing sales, because they know that the recovery act is going to gain force. But they also recognize, as we do, that it's going to take time before gains in output--you will never get gains in employment without gains in output. But even as output increases it's going to take time before the number of jobs starts--starts to grow. So--
BOB SCHIEFFER (overlapping): But--
LAWRENCE SUMMERS: --we can't be satisfied with where we are and the economy is not going to be back to normal for quite sometime. Our problems weren't made in a month or a year and they are not going to be fixed in a month or a year.
BOB SCHIEFFER (overlapping): But do you--do you--
LAWRENCE SUMMERS: But I come back to this--we used to be--six months ago when the President took office we were talking about whether recession would become depression.
BOB SCHIEFFER: Mm-Hm.
LAWRENCE SUMMERS: Today, we are talking about when recession is going to end. That is a tribute to the strength of the policies that have been put in place and the expectation that they're going to have growing impact.
BOB SCHIEFFER: So, does that mean it's bottomed out?
LAWRENCE SUMMERS: Out? You know, you--you--you want to reduce these things to things that are very simple. Output is likely to start increasing. The number of jobs probably has not yet bottomed out because experience suggests that it lags.
BOB SCHIEFFER (overlapping): Well, that's always the lagging indicator.
LAWRENCE SUMMERS: But we're certainly closer--but we're certainly much closer to the point where it bottoms out than we were.
BOB SCHIEFFER: Okay.
LAWRENCE SUMMERS: And the crucial, necessary condition for getting jobs growing and expectation that output will grow.
BOB SCHIEFFER (overlapping): Are you going to have to extend the employment benefits?
LAWRENCE SUMMERS: We're going to--we did extend unemployment benefits-
BOB SCHIEFFER (overlapping): Or you going to have to extend them again?
LAWRENCE SUMMERS: --in a way that was hugely important in the--in the stimulus act and we're going to work with Congress to make sure that the unemployment insurance benefits that are necessary for the American people are maintained.
BOB SCHIEFFER: Okay. The stimulus package. A lot of people say it hasn't had much impact lately. I know you make the case that--that it has made an impact. But do you think it is going to take one more stimulus package to get this economy going? I mean to really get it coming back?
LAWRENCE SUMMERS: I think the--I think the stimulus has had a significant impact. You know, tens of thousands of teachers and cops across the country. Fifty-three billion dollars delivered to American families, three thousand projects underway. That--the calculation suggests that its impact is only going to increase. That we are also seeing two hundred mortgages have already been relieved. It's going to be five hundred thousand by November 1st. So I think we are on the right track. We have got a lot left to execute. That's where our focus is going to be and we think it's going to have a gathering--a gathering impact that builds on the impact it's already had.
BOB SCHIEFFER: But do you think you might have to boost it a little more? I mean, maybe some tax cuts for small businesses or other things of that nature?
LAWRENCE SUMMERS: Right now we are focused on carrying through and executing the program we have--we've put in place. We--we just took a small but significant step in the last couple of days, Bob, the so-called Cash for Clunkers--
BOB SCHIEFFER (overlapping): Yep.
LAWRENCE SUMMERS: --program has actually been far more successful than people expected, both in terms of the number of car sales it's generated and I should say in terms of theenvironmental benefit. The new cars people are buying are much more fuel efficient, a thousand dollars a year more fuel efficient than the cars they're--than the cars they're trading in. Congress has just--the House--
BOB SCHIEFFER (overlapping): Okay.
LAWRENCE SUMMERS: --has voted to increase the funding. So there are adjustments of that kind, but basically we are on the right track and we need to keep going on this strategy. And really the priority is going to shift to giving long run confidence. Andthat's why the health-care bill that will give long runs greater confidence that the federal budget is under control, that employer's costs are under control. That's going to be really a crucial priority in the fall.
BOB SCHIEFFER: All right. We have to let it go there. Thank you so much for being with us, Mister Summers.
LAWRENCE SUMMERS: Thank you.
Former Fed Chair Alan Greenspan On This Week With George Stephanopoulos
click to open video in new window
Transcript:
STEPHANOPOULOS: Now, for another perspective on the economy, let's bring in former Fed chairman Alan Greenspan. When he joined us last September, his view could not have been more sobering. (BEGIN VIDEO CLIP)
GREENSPAN: This is a once-in-a-half-century, probably once-in-a-century type of event.
STEPHANOPOULOS: Is it the worst you've ever seen in your career?
GREENSPAN: Oh, by far. There's no question that this is in the process of outstripping anything I've seen. And it still is not resolved and it still has a way to go. (END VIDEO CLIP)
STEPHANOPOULOS: And Alan Greenspan joins us again now. Welcome back.
GREENSPAN: (OFF-MIKE)
STEPHANOPOULOS: So, last September, a once-in-a-century event, the worst you'd ever seen. Is it over?
GREENSPAN: Not quite, but we're getting very close. The -- as the Treasury secretary just mentioned, there's been a very significant improvement in the financial system. And it's been the financial system where the problems have been...
STEPHANOPOULOS: And collapse isn't going to happen?
GREENSPAN: Collapse, I think, is now off the table. We were teetering for awhile, but I do think that the TARP program, for example, was very helpful in shoring up the capitals, that stock of banks and the like. And not an insignificant event is the $3.5 trillion increase in the stock market value of American corporations. Because there are capital gains and they flow out throughout the system, and you could see their impact in the credit markets and in the equity markets.
STEPHANOPOULOS: How about the broader economy? Have we hit a bottom, and are we going to see a bounce?
GREENSPAN: Well, I'm pretty sure we've already seen the bottom. In fact, if you look at the weekly production figures for various different industries, it's clear that we've turned, perhaps in the middle of last month, the middle of July. And indeed you're seeing a major increase in assemblies in auto and trucks before the clunker issue even arose.
STEPHANOPOULOS: Has it helped?
GREENSPAN: Well, obviously, it's helped. It's an interesting issue. I mean, I have qualms about the concept, but there is no doubt that that very extraordinary response is a very important indicator that the state of confidence in the economy is beginning to pick up. If we had been -- the clunker program had been put in place six months ago, it would have probably been a dud.
STEPHANOPOULOS: Well, that's interesting because, you know, you also saw, about five months ago, the administration also putting out a credit for first-time homebuyers. Has that made a difference?
GREENSPAN: I think it has, but the problems in homebuilding and home sales and mainly home prices is much broader than that. In fact, the way I would define it is that, unless home prices stabilize within, say, maybe, 5 percent down from here, we're going to run into some...
STEPHANOPOULOS: Well, the Case-Shiller has shown that they probably have stabilized some.
GREENSPAN: Well, they have stabilized temporarily. And the problem with the data on home prices is they're very difficult to measure in their regional data. It is possible. I don't think it's going to happen, but I do think it is possible that we could get a second wave down. But the important issue is, if we don't -- and I think the probability is that we won't, that we are close to stabilization. Under those conditions, you will begin to get a very significant change in the underlying confidence in the consumer area.
STEPHANOPOULOS: And then you might see that in the consumer area; you might see that in the stock markets. So that is the -- is the trigger, possibly -- you say it's unlikely -- that that could be the trigger to a second dip?
GREENSPAN: If you get another dip and a renewed decline in prices, we're going to run into an acceleration of a number of homes that are mortgaged and are underwater; that is that the value of the properties are less than the debt. If that happens -- and, clearly, looking at the structure of where debt and values, it would, if, for example, home prices fell by 10 percent or more, that would create a major acceleration in foreclosures. And I think it could be a factor... (CROSSTALK)
STEPHANOPOULOS: On the other side, what's your best estimate right now of when we're going to see that kind of economic growth that can create jobs, above 2.5 percent, 3 percent, 3.5 percent?
GREENSPAN: Well, first of all, let me just say this, that the unemployment rate is going to continue to rise, but more slowly than it's been. We'll continue to have job loss, but that's slowing as well. It strikes me that we may very well have 2.5 percent in the current quarter, and the reason is that there's been such an extraordinarily high level of inventory liquidation that the production levels are well under consumption. And as that slows down -- as it has to, I mean, you can't go below zero on inventories -- production moves up, and that could be quite significant. So I wouldn't put out of the question that... (CROSSTALK)
STEPHANOPOULOS: So you're fairly optimistic right now.
GREENSPAN: I'm short-term optimistic, but with many caveats. The home price issue will be a critical one, and then, as you heard me quoted on earlier, the deficits...
STEPHANOPOULOS: That's what I want to press you on, because you watched Secretary Geithner there. He says the administration takes it seriously, they're going to do what it takes. Two questions on that. Do you believe that this health care reform that is now being debated is part of the solution to deficits? And number two, must new revenues be on the table?
GREENSPAN: I would say yes to both. That there is no question that the core of the problem on the long-term deficit is Medicare specifically, and health care more generally, in the sense that it affects revenues. This is an issue which, remember, existed at the beginning of the year. In fact, Medicare at that point was only half-funded. And you can't get around the fact that when you have this big shift in the baby boomers retiring that things fundamentally change. And my view is that we have to attack both the original shortfall and make sure we fund whatever new initiatives that occur in the health care area. It's not adequate to be strictly revenue-neutral, because there's a lot more to be done to get... (CROSSTALK)
STEPHANOPOULOS: So the plans on the table don't go far enough, in your view?
GREENSPAN: That's my view, and in fact, I think that -- I thought the secretary's remarks were, frankly, quite well balanced, and I think that is the strategy of the administration. But what he didn't spell out, which he can't actually, at this particular stage, is that very significant additional actions are going to be required to make certain that the deficit does not... (CROSSTALK)
STEPHANOPOULOS: That means control of Medicare, control of Medicaid, control of Social Security, but also we're going to have to see some kind of broad-based revenues. Roger Altman, who I quoted, the former secretary -- the former deputy treasury secretary, says that the real answer in the long term has to be that we move towards the value-added tax or sales tax.
GREENSPAN: I don't like a value-added tax, but I agree with Roger. I think that there is a fairly significant probability that the least worst solution to the problem will end up to be a value-added tax, because it's the only thing that raises revenue in significant quantities without significantly impacting on the economy.
STEPHANOPOULOS: You said you were cautiously optimistic just a couple of minutes ago. One of your predecessors at the Fed, William Chesney Martin, 1951 to 1970, said the Fed chairman's job is to take away the punch bowl just when the party is getting started. He of course was referring to raising interest rates to combat inflation. Are we anywhere close to that point, where that's going to have to be considered?
GREENSPAN: No, but remember that there's an awful lot of liquidity, latent liquidity in the system, and at some point, that is going to have to be sopped up. And what that means is higher interest rates from the Federal Reserve. Now, that's not immediate, but it's out there in the intermediate future, because as this economy picks up -- assuming that it does -- and as I said, there is an outside possibility it may be a little faster than we expect -- then the Federal Reserve is going to have to rein in credit and raise rates. They know how to do it very well... (CROSSTALK)
STEPHANOPOULOS: The Fed chairman says we have a couple of years. Is that about right?
GREENSPAN: I hope they have a couple of years. I don't think they do.
STEPHANOPOULOS: Mr. Chairman, thanks very much for your time today.
GREENSPAN: My pleasure.
Romer: Economy hasn't hit the bottom
White House economic adviser Christina Romer said the economy has not hit bottom. “The slowdown is certainly slowing down, but we still have a ways to go before we hit bottom,” Romer said in an interview on CNN’s State of the Union. “Certainly it’s going to be a long, hard slog getting out of this.” Romer also said that she anticipates positive GDP growth by the end of the year, and she stuck by the Obama administration’s promise to save or create 3.5 million jobs – something she said will happen by the end of 2010.
The White House is also working to further extend unemployment benefits, saying: “It is absolutely something that we’re working with Congress to do.” But, unlike some of her administration counterparts, Romer would not affirmatively say she believes President Obama will sign a health care bill this year. “We are going to do absolutely everything we can,” she said. The only woman on Obama’s economic team, Romer disputed the notion that it’s tougher for her to get her voice heard amid Larry Summers and Treasury Secretary Timothy Geithner.
“The economic team has a lot of strong personalities,” she said. “I’m actually one of them. I’m right up there with the boys.” Of Summers and Geithner, she added: “I do sometimes have to interrupt them because they do both like to talk.” Romer also offered her own clarification of Vice President Biden’s claim a few weeks ago that the administration “misread how bad the economy was.” “In terms of the Vice President’s statement, the way I would put it was not so much that we had misread the information that we had but that lots of information was coming in,” Romer said. “You’re getting that information and processing it as well as you can.”
Yep, The Bailout Was Based On A Big Fat Lie
Sophisticated people have a hard time understanding popular outrage about the banking bailout. Indeed, the TARP watchdog Neil Barofsky's complaints that most TARP dollars were used to increase capital cushions and pay bonuses rather than increase lending strikes many as a silly complaint. Of course banks needed to recapitalize themselves before they could start lending, the sophisticates say.
In fact, some people insist on claiming that the purpose was always a recapitalization of the banks. That might be true. But it certainly was not what the American people were told over and over again. They were told, unequivocally, that the bailout would increase lending.
- When he first explained that the TARP would be used for capital injections, then Treasury Secretary Hank Paulson said the purpose of the program was to get banks to “deploy, not hoard, their capital.”
- When Tim Geithner went before the Senate for his confirmation hearings, he said: "If confirmed, I will carry out the reforms that President Obama and I believe are needed in this program. This program must promote the stability of the financial system and increase lending."
In response to this the defenders of the bailout tend to make a few very slippery replies. The first response is often to claim that the bailout has increased lending above what it would have been without the bailout. This is a surprising counter-factual and question begging argument for which there is no evidence. The only real reply is: oh yeah, buddy? How do you know what lending levels would have been without the bailout? You cannot simply assume that lending has increased in order to prove that the bailout increased lending.
The second response, recently raised by Derek Thompson at the Atlantic, is that banks would be lending more but the economy isn't really demanding more lending because we're in a recession. This has the ring of truth, but it's only the ring of a half truth. If we didn't need more bank lending, then why did we bail out the banks for the purpose of increasing bank lending? This response actually undermines the entire public rationale for the bailout.
The reason the public rationale focused on lending was that the policy makers wanted to be able to claims they were attemtping to the economy rather saving banks. That is, they wanted to pretend they were not simply recapitalizing firms that should have been shut down.
Corus Bankshares Inc. on cusp of crisis
It sounded like a desirable place to live: a 21-story luxury condominium project with 275 residential units, a spa, private club and a rooftop terrace with pool overlooking the Strip in Las Vegas. Called Streamline Tower, it was one of about a dozen big-ticket projects that Corus Bankshares Inc., a lender headquartered 1,700 miles away in Chicago, financed there over the past five years. But in April, Streamline Tower LLC filed for bankruptcy, having sold only 27 units, and what at one time seemed like a solid bet stung Corus as the sole bank financing the project's $123.1 million construction loan.
Corus, owed $108.2 million for that 2006 loan and bogged down by other condominium construction and conversion credits gone bad, has told investors that its auditor has warned that the bank could fail. A June 18 deadline imposed by regulators for Corus to raise capital has long passed, and many believe it's only a matter of time before the Federal Deposit Insurance Corp. seizes the lender, which on Friday warned that it was "critically undercapitalized."
But a major hurdle for the federal regulator is that $7.07 billion-asset Corus, with only 14 offices in the Chicago area, has operated more like a real estate investment company than a traditional bank. As a result, bankers like John Kanas, chief executive of BankUnited, believe the FDIC would have a tough time finding banks eager to swallow Corus whole. "There's no franchise value to the bank at all," he said, citing its limited branch network, a reliance on high-cost deposits and an unsustainable business model.
"It was a bank created around the asset side of the balance sheet: 'Let's go make a lot of loans and figure out a way to fund them later,' instead of a bank that had a valuable franchise of deposit collection and was looking for a place to put those deposits," Kanas said. Ben Shapiro, a Belongia Shapiro & Hynes lawyer and former chief legal counsel for the FDIC in the Midwest, said, "The fact that there is so much uncertainty about the bank's loans, as well as its relatively large size, makes it less certain that another bank would bid for Corus."
Some believe it might make sense for real estate firms or private-equity funds to make a play for Corus' troubled assets because investments in distressed real estate might pay off in a year or two as the market rebounds. Many private-equity firms and other investment funds are flush with cash and have expressed interest in buying failed insured banks. The FDIC, on the one hand, wants to preserve its insurance fund and would like to find investors to take failed banks off its hands, but it also wants to ensure that the failed banks' new owners don't create more problems down the road.
On July 2 the FDIC proposed requiring that private firms investing in a failed bank maintain a Tier 1 leverage ratio, or capital as a percentage of average total assets, of 15 percent for three years. Currently a bank is considered well-capitalized if it has a 5 percent leverage ratio. The private-equity industry immediately cried foul, saying the proposed guidance would deter future private investments in capital-starved banks. The FDIC comment period expires Aug. 10 but has already had an impact.
"We've been looking at a lot of banks, but if anything our appetite is less because we were hoping regulations would get lightened, not tightened," said an executive at an alternative investment firm who asked to not be identified. Wilbur Ross of WL Ross & Co., one of the BankUnited investors, said in a letter to the FDIC: "The substance of the financial proposals is to impose such discriminatory burdens that private capital will no longer bid in the FDIC auctions of failed banks."
BankUnited's Kanas believes that the FDIC eventually will create a structure welcoming to private capital in the bidding for failed banks, and that's a good thing. He doesn't want "a bunch of cowboy private-equity firms to pull off a bad deal and get into trouble." If that happens, he said it would close off bank deals for "good private-equity investors and managers in the future." Kanas in 2006 sold his North Fork Bancorporation and then re-emerged in May to lead a private-equity consortium that invested $900 million into the collapsed $12.8 billion-asset BankUnited in Coral Gables, Fla., in an FDIC-assisted deal.
"Everybody's waiting to see what the new rules are," said Kanas, who heads the 86-branch BankUnited and is a partner in the bank's investor group that also includes Blackstone Group, Carlyle Group and Centerbridge Partners. If the FDIC sticks with the 15 percent rule and other requirements, then "private equity will probably just take a pass, and that would be terrible because the banking industry needs fresh capital," he said.
About half a dozen private-equity and real estate firms have been mentioned as possible bidders for Corus assets. Among them are Related Group and Lubert Adler, which last year announced a $1 billion investment vehicle to buy mortgages and property from other developers, lenders and property owners. "The majority of the interest has been voiced by real-estate-related entities," said Michael Goldsmith, managing director and commercial real estate head for BBK, a business consulting firm. "I heard Lubert Adler was looking at it, and they're very sophisticated real estate investors."
At least one Chicago-area banker, who asked not to be identified, believes the more-likely scenario will have the FDIC arranging for a traditional bank to buy Corus' deposits and branches, and non-banks to acquire the assets, including loans and foreclosed properties. "They're enormous loans and very complicated, and I don't think any bank wants to take them on even with FDIC guarantees," the banker said. Corus, which has 103 commercial real estate loan commitments totaling $5.37 billion, had $499.1 million in foreclosed real estate on its books as of March 31. It also has $2 billion in non-performing loans and $1.3 billion in "potential" problem loans.
In Ft. Lauderdale, for example, Corus and the developers of Trump International Hotel & Tower are at the center of a lawsuit seeking class-action status on behalf of those who bought condo hotel units during the preconstruction phase of the still-unfinished project.
"My guess is that the swirl of uncertainty and pending litigation make this a relatively unattractive property in Corus' portfolio from the standpoint of potential bidders, assuming it goes to auction," said Jared Beck, a Miami lawyer representing the currently nine named plaintiffs. Any entity that assumes Corus' loan will need to make good on "broken promises made to buyers during the South Florida real estate boom." Even Corus' deposits are not all that attractive.
Non- Illinois residents supplied 56 percent of its $7.1 billion in retail deposits, attracted to above-average interest rates, promoted over the Internet, that are among the highest in the nation. FDIC auctions in which one entity buys assets and another buys deposits are unusual, but they do happen. On July 17, for example, BankFirst of Sioux Falls, S.D., was closed by the FDIC. One bank assumed all the deposits, and another bank acquired the bulk of the loans.
On Wednesday the FDIC said it was open to the idea of selling failed banks in pieces. Kanas doesn't rule out someone who might surface, tempted to bid on Corus with a generous helping of FDIC assistance. "But it's entirely possible no one will bid on Corus and the FDIC will have to run it under a conservatorship, which would be terrible.
Dealers warned off Cash for Clunkers
Despite the Obama administration's promises that any Clunker deals written this weekend would be honored, the National Automobile Dealers Association is advising its members to play it safe and not close any more deals until the program's fate is clearer. "Regarding auto sales this weekend, one possible alternative is for dealers to take deposits in lieu of consummated sales with an eye toward legislative success next week," NADA spokesman Charles Cyrill wrote in an e-mail.
The House of Representatives allocated $2 billion more on Friday to continue the program after it apparently burned through its original $1 billion budget in the week since its official July 24 start date. The measure faces opposition in the Senate, however. "We could have a legislative conclusion very quickly with the promise of more money for the program," Cyrill said later by telephone. Until that's settled, he said, the dealers' organization is recommending that dealers proceed with caution.
Sunday, the Obama administration expressed optimism that the Senate will extend the program, but warned it would be suspended at midweek without new funding. "This has been a wildly popular program and given new life to auto dealers," Transportation Secretary Ray LaHood said on an interview on C-SPAN. "This has worked very, very well." LaHood said the administration anticipates members to follow the House, althought questions emerged Sunday of a possible Republican attempt to block the extension outright.
Under the plan as enacted, vehicles purchased after July 1 will be eligible for refund vouchers worth $3,500 to $4,500 on traded-in gas guzzlers. The trade-in vehicle has to get a combined city and highway fuel economy rating of 18 miles per gallon or less. Since the rules of the program require dealers to render traded-in vehicles permanently inoperable before applying for their rebates, dealers whose applications are not honored could be left with no money and no vehicle to sell. The program aims to help the struggling auto industry by taking inefficient cars off the road and spurring new sales.
China's stimulus-fueled stock boom alarms Beijing
The middle-aged crowd in the packed Guosen Securities office jostle around buzzing printers that spit out receipts for their share buys, hoping to cash in on China's stimulus-fueled stock market boom. "The central government has to fulfill their promise of 8 percent economic growth," said Wu Jun, 62, a retired civil servant who invested part of his life savings of 50,000 yuan ($7,300) and lives on a 2,000 yuan-a-month ($290 a month) pension. "They'll come up with measures to keep the market in good shape."
But while investors expect the market—up more than 80 percent this year—to keep rising, Chinese leaders are alarmed. They worry that too much of the $1 trillion lending binge by state banks that paid for China's nascent revival was diverted into stocks and real estate, raising the danger of a boom and bust cycle and higher inflation less than two years after an earlier stock market bubble burst.
Beijing is trying to tighten credit controls without derailing the economic revival or causing a market crash—a risky path at a time when Chinese leaders say a recovery is not firmly established. "It's a very serious threat. The Chinese government is walking a tightrope," said Mark Williams, Asia economist for Capital Economics in London. "There is the question of what happens if they rein in lending, because there is really no strong evidence that private sector demand is picking up."
Any hiccup in China's recovery could dent its rising demand for imported industrial raw materials and consumer goods, damaging hopes it might lead the global economy out of its worst downturn since the 1930s. China's growth accelerated in the latest quarter to 7.9 percent over a year earlier while the United States and Europe struggle with recession. The surge was driven by Beijing's 4 trillion yuan ($586 billion) plan to insulate China by pumping up domestic demand with heavy spending on building highways and other public works.
But the growth—up from 6.1 percent in the previous quarter—highlighted China's continued reliance on stimulus spending. The big gains were in construction and other stimulus-fueled areas, while retail spending and other private sector activity lagged. Bank credit soared to a record 7.1 trillion yuan ($1.1 trillion) in the first half of the year and the rate of lending is accelerating. Loans in June expanded to more than double the May level at 1.5 trillion yuan ($220 billion).
Economists say as much as 15 percent or 1 trillion yuan ($145 billion) of that money has been diverted into stocks and real estate despite government rules that say banks should lend only for productive investment. The Finance Ministry says it found some companies played the market with money borrowed for stimulus projects. It gave no details but Chinese companies frequently are accused of violating China's already lax financial controls by diverting money from borrowing or their core business into stocks in hopes of making a quick profit when the market is rising.
The benchmark Shanghai Composite Index has risen more than 15 percent in the past month alone. It hit a 13-month high of 3,266.43 on Tuesday, up 88 percent for the year, before falling back slightly on concern that official efforts to control credit might choke off the flow of money into the market. "Above 3,000 points, the benchmark index is just in the process of blowing a bigger and bigger bubble," said Wen Lijun, an analyst for Nanjing Securities. "It is just excessive liquidity and no other reason."
Thousands of investors have jumped into the market. The number of new trading accounts soared to a weekly record of 108,932 last week, according to the Securities Depository and Clearing Corp., an arm of China's two stock exchanges. The corporation did not report a total for the number of individual Chinese investors but said they owned 127.8 million trading accounts as of the end of June—the equivalent of one for every 10 of China's 1.3 billion people.
The government is trying to put the brakes on lending without knocking down stock prices. China's bank regulator spooked investors last week by issuing a statement reminding institutions not to finance speculation. But after that caused the market to plunge by 5 percent, the central bank issued its own statement promising investors its "relaxed monetary policy" would continue.
The bank said it would use "market tools"—a reference to interest rate hikes to cool borrowing and bond sales to soak up money—to regulate credit, instead of abruptly cutting it off with administrative controls. Banks have been told to curtail credit for the second half of the year and make sure borrowers put money into productive investments, according to Chinese news reports. They say 10 lenders, including Bank of China Ltd., the country's No. 2 commercial lender, were ordered to buy 100 billion yuan ($14 billion) in government bonds to curb their credit growth.
China is still recovering from its last market bust that saw prices plunge by 70 percent after hitting a peak in October 2007. That wiped out thousands of investors, some of whom had mortgaged their homes to play the market. "The equity market has been for a big roller coaster ride over the past 18 months and the last thing we need is another rapid run up in prices followed by another collapse," said Williams. "The development of China's financial sector is one of the pressing needs for the economy as it grows."
The central bank is warning that reckless lending also could ignite politically sensitive inflation and leave banks with a hangover of bad debts. Consumer prices fell in June for the fifth straight month, but the central bank says there is a "possibility of a rebound" in inflation in the second half. Wang Zhijun, a 58-year-old retiree, calls himself a market veteran and says he lost more than 10,000 yuan ($1,400) in the last stock plunge. He said he is more cautious this time but exuded optimism about the market benchmark's continued rise.
"Maybe next year it can go as high as 8,000 points," or more than double the current level, Wang said as he joined the throng in Guosen Securities. A friend standing nearby said that was unlikely, and Wang shot back, "5,000 at least."
Do Not Be Fooled, Another Major Economic Collapse Could Be Coming Sooner Than Many Think
by Robert McHugh
Stocks Markets world-wide are in a Grand Supercycle degree wave {IV} Bear Market. This is a huge Bear Market, meaning either in terms of time, or in terms of decline, it will be one for the ages. We believe it will be relatively short in time, but deep in decline. This Bear Market can take shape as one of three patterns, a massive sideways Triangle, a Flat, or a catastrophic Zig-zag. If it is a Triangle, it will be a pattern of five supercycle waves, and the low price has been reached on March 6th, 2009. That is the best case scenario. However, our fear is that we are going to get a Zig-zag pattern, with a potential downside target close to zero. Maybe zero to 1,000 in the Industrials, and zero to 100 in the S&P 500. Here is what we see:Stocks are in the final wave of the eye of a hurricane of a Bear Market. The eye is the calm before the second half of a terrible storm. Once this spring/summer rally finishes, we expect a severe stock market decline again. That decline should be the end of the Bear Market that started in late 2007. This Bear Market is a Grand Supercycle Bear Market, one for the ages. The first part of the storm was wave (A) down, which lasted from October 2007 to March 2009. The Second of three parts, the eye, wave (B) up, started on March 6th, and this rally could last several more months. Wave (B)'s top could arrive around the 11,000 to 11,500ish area for the Dow Industrials. The third and likely final part will be wave (C) down, and will hurt.
Back in the Great Depression of 1929 through the 1930's, we saw a similar Zig-zag pattern. There was a crash in 1929, followed by a nice rally, but then the most devastating part of the market collapse followed into the 1930's. That Bear Market was a Supercycle degree wave (IV). The current Bear Market is one degree larger, which means it should be worse. There is great risk to the status quo political structure of governments internationally should this Bear Market follow the Zig-zag pattern. That is why gold is an attractive component investment for diversified conservative portfolios, as it has been considered a monetary equivalent throughout the ages, surviving the rise and fall of fiat currencies of nation state powers.
Fundamentals are a mess at this time in the U.S. economy, regardless of all the hoopla nonsense we hear from the mainstream financial press, who hope to jawbone this economy to health, so their ratings rise. Truth is, we have close to a 10 percent admitted unemployment at this time, with the actual rate much higher if you include discouraged workers no longer seeking employment. Unemployment will get worse. A lot of good folks are collecting severances or unemployment checks, which have expiration dates. This means consumer spending, which accounts for 70 percent of GDP, is not going to rise much any time soon. Comparative corporate earnings reports that we hear "beat expectations" are beating pathetic expectations, not robust expectations. A lot of the earnings improvements are due to labor cost savings from downsizing, not growth.
Health insurance has been the topic dujour the past few weeks. From the Secretary of Health and Human Resources' own lips, the United States is now spending $2.5 trillion on health care, about 17 percent of GDP. So where are we headed? Will 50 percent of all jobs in America eventually be either in the healthcare industry or the government? That is no framework for a prosperous nation.
Commercial Real Estate is facing a looming credit crisis as lenders will be reluctant, or not have the liquidity, to lend for new projects. Loan renewals are at risk of being rejected.
The point is, risks remain high.
The above chart shows the Supercycle Degree wave (IV) decline that kicked off the Great Depression of the 1930's. The point we want to make here is that the initial crash was merely wave A down of an A-down, B-up, C-down move that lasted in full about three and a half years.
Wave A down lasted about three months, from September 1929 through November 1929. Wave B-up corrected half the decline from Wave A down, and lasted about six months into April 1930.
At that point, it was a critical error to assume the worst was over. In fact, it was far from over. A catastrophic Wave C-down started in April 1930 and lasted into the summer of 1932. That two plus year decline was destined to wipe out more than the crash did, and take prices down to the point where the total damage from wave (IV) was 90 percent from its wave (III) peak in 1929.
The economy then was stuck in the throes of the Depression for the rest of the decade, only to be pulled out by the onset of World War II in the early 1940s, all the associated spending that war required.
The point here is we cannot be fooled by this Grand Supercycle degree wave (IV) that started in October 2007. Wave (A)-down is over, and Wave (B)-up is underway. However, a catastrophic Wave (C)-down is coming, just like one did in 1930 through 1932.
As a note: Most Depressions throughout history led to massive wars. The Depression of the 1850s led to the Civil War. We can only hope that will not be the case this time.
The above chart is a closer look at the big picture. The "Sell" signal in our long-term PTI signal warns that there is substantial downside coming. This fits with early 2009's development where both Industrials and the S&P 500 fell decisively below their 2002 lows, confirming we are in Grand Supercycle wave {IV} down.
If Grand Supercycle wave {IV} down forms a Zig-zag pattern, it means time-wise, the Grand Supercycle wave could be short relative to other Grand Supercycle degree waves, however price-wise the decline will be dramatic, and therefore worthy of Grand Supercycle degree status. Above, we show the Zig-zag scenario. Under this scenario, a multi-month bottom occurred in March 2009, Wave (A) down. Wave (B) up is underway. This rally should consist of three waves, A-up, B-down, C-up within wave (B)-up. Wave C-up of (B) up is underway.
The bad news is, that once this wave (B) rally finishes, maybe by late 2009, a nasty decline will follow, the third leg of the Bear Market, wave (C) down.
We have found huge Head & Shoulders Top patterns in formation for the U.S. Dow Industrials, the U.S. Russell 2000 small cap index, Germany's DAX, Japan's Tokyo NIKK, and Australia's SPASX200. These patterns are not yet confirmed, but will be with declines below the horizontal necklines shown in these charts, requiring a 30 percent drop from here. Once/if those necklines have been broken, there is a high probability that the downside targets will be approached. Those downside targets are close to zero, believe it or not. This is horrific if in fact these patterns confirm.
These patterns add to the body of evidence that a catastrophic wave (C) down is coming later in 2009 into 2010. These patterns, if confirmed, mean the Zig-zag scenario will likely unfold. This tells us that catastrophic wave (C) down will have world-wide impact, and most likely be accompanied by terrifying news events. What those events would be are anyone's guess at this point.
We can only hope these patterns will not be confirmed, that we will not see prices fall 30 percent from here. But, honestly, these patterns are forming well, and there is great risk we will see 30 percent declines.
If we study the quality of the Head & Shoulders pattern shown above for the Dow Industrials, at first glance you may say it is slanted right, and the left shoulder is too wide in comparison to the right shoulder, so the pattern is lacking the prototypical formation. But, if you go to the technical analysis textbooks out there, you will actually see that a slanted formation leaning to the right, with a right shoulder that is weaker than the left is actually the more textbook perfect formation for a topping pattern. You see both patterns where the neckline is horizontal, and where it leans down and to the right. What would not be as probable is if the neckline leaned upward to the right. But that is not what is occurring here. Prices will tend to follow the declining neckline. So, in conclusion, this pattern development is ominous.MAKE SURE YOU HAVE SUFFICIENT CASH, GOLD, AND OTHER ESSENTIALS FOR THE CHAOS THAT COULD BE COMING.
There are now some studies suggesting that the total bailout of the U.S. economy may exceed $20 trillion. That is about one and a half times one year's GDP. Criticism of the recent Central Planner Bailout programs is that they are failing to trickle money down to households, as spending plans are being effectuated too slowly, and fall short of meeting the average household's needs. Seriously, does anyone see much in the way of infrastructure spending going on? Is there any resultant non-government job growth from the Central Planners' bailout plans? The major problem with the Central Planners' stimulus programs is they simply have replaced bad assets in a handful of large corporations with cash from the Fed or Treasury. This is essentially keeping large institutions alive, but not getting money into the hands of small businesses or consumers. A $13 trillion tax rebate program would instantly revive this economy, a refund of three years income taxes to every household, with a minimum payment of $50,000. Half the rebate should be required to pay back debt, which would clean up credit markets, and restore capital levels, asset quality, and liquidity of lenders. It is a no brainer, but political agendas and power grabs will dismiss this common sense solution.
If the Central Planners exercise a massive income tax rebate to all households soon, we believe that the catastrophic market decline the charts included herein portend could be avoided, and a best case scenario sideways Triangle for the Grand Supercycle {IV} Bear Market would be more likely. If they do not, the probability of a catastrophic wave (C) down event is higher than anyone should be comfortable with.
California Is Still Not Out of Its Budget Hole
California has avoided fiscal reality for so long it’s fitting that the state legislature reverted to subterfuge last week while voting for its third budget deal in nine months.
Part of the latest deal—which depends in equal part on real cuts and accounting gimmicks to close a $26 billion gap—was a proposal to raise revenue by allowing new oil drilling off of existing platforms near Santa Barbara. It was a move that had been endorsed by that county’s own board of supervisors last year. But environmentalists and 43% of voters remain fiercely opposed, according to a new poll by the Public Policy Institute of California.
The measure cleared the State Senate a week ago Friday and moved over to the Assembly. There Democratic Assembly Speaker Karen Bass admitted she couldn’t find enough votes for the oil-drilling lease. Thanks to the environmental lobby, it mustered only three Democratic votes and was defeated 43 to 28 with nine abstentions. Then things got weird. A motion to expunge the vote from the public record was made by Democratic floor leader Alberto Torrico and was approved by voice vote. It disappeared from the public record as if it had been erased, in an effort to hide their decision from voters.
“George Orwell would be proud,” GOP Assemblyman Chuck DeVore, who authored the drilling provision, told the newsletter Capitol Weekly. “It sure went down the memory hole, didn’t it?” Only one tape of the proceedings—CalChannel (the state’s version of C-SPAN)—still exists to prove it happened. This vote scrubbing is symbolic of the lengths to which California’s leaders went to paper over the state’s deficit. Some $1.2 billion of the money “saved” in the budget deal comes from simply shifting the day state workers get paid by one day into the next fiscal year.
Cities and counties will sue to declare the state’s $3.2 billion raid on their property tax revenue unconstitutional, and they might well win in court. And the state could likely see another $6 billion to $8 billion deficit open up as early as October, forcing a new budget Band-Aid. No wonder the new Public Policy poll finds only 28% of voters are happy with the job done by GOP Gov. Arnold Schwarzenegger. He’s tied with New York’s Democratic Gov. David Paterson for the nation’s worst rating. The California legislature’s approval rating is even lower: 17%.
Everyone agrees something has to be done to repair California’s boom-and-bust tax system, which is dependent on personal income taxes for over half of its budget. Just 144,000 wealthy families, or 1% of taxpayers, provide half of the income tax revenue under the state’s steeply progressive tax rates, which top off at 10.3%. Revenue surges in boom times and crashes during downturns, leading to recurring spending binges that are followed by deficit hangovers.
But agreement on the problem doesn’t mean consensus on a solution. Mr. Schwarzenegger decided this week to call the legislature into special session in September. The goal: to consider the recommendations of a 14-member commission appointed by him and Assembly Speaker Bass. He says he will demand that the legislature “immediately consider the commission’s recommendations as soon as they are submitted.”
The commission has reached consensus that the state needs a simpler, less-onerous tax code. Curt Pringle, the mayor of Anaheim and a commission member, says there is “a growing sense we aren’t at the bottom of revenue losses so we must make structural changes to convince people to stay and create jobs.” But key disagreements remain, especially on how much the state should move toward a flatter income tax with only two rates, or if corporate and sales taxes should be scrapped in favor of a new business receipts tax.
The hour is late. Until the 1980s, Californians got richer faster than the rest of the nation did. But in 2007 alone, 260,000 people moved to other states with more opportunity. The Tax Foundation says only New York and New Jersey have worse business tax climates.
There are signs California voters are ready for some tough choices. After the legislature passed a huge $12.5 billion tax increase last February to plug the state’s last budget gap, it put six measures before the voters. Proposition 1A, which would have extended the tax hikes by two years, failed by an almost 2-to-1 margin. All four of the other fiscal measures also failed. Only a measure prohibiting pay raises for state officials in deficit years won approval.
Some business and labor groups say a constitutional convention is necessary to sweep away restrictions such as the requirement that a state budget muster two-thirds support in the legislature. But giving legislators more maneuvering room isn’t the answer. A partial solution—in addition to tax reform—might be modeled after Colorado’s successful Taxpayer Bill of Rights. That measure limited the growth of government to increases in inflation and population growth, rebated all extra revenue back to the taxpayers, and required a referendum on all tax and fee hikes.
In fact, a similar law called the “Gann Limit” worked to keep California’s balance sheet stable. But in 1990, GOP Gov. George Deukmejian teamed up with unions to narrowly pass a measure that rewrote the spending formulas, effectively emasculating the limit. Voters were left with the illusion they still had a curb on spending when they didn’t. Whatever is done, everyone from bondholders to wealthy Californians eyeing the exit doors need to see the state start to get serious about tax reform, spending limits and stifling regulations. “There’re lots of ideas,” says Joel Kotkin of Chapman University. “But they all must start with California stopping policies that seem determined to wage war against its own economy.”
Tories must have the courage to reinstall Glass-Steagall divide
How do we prevent a repeat of the "sub-prime" fiasco? What regulatory changes are needed to reduce the chances of another systemic meltdown – and the crushing blow that deals to the broader economy? What's incredible about this crisis is that it was largely self-imposed. It is the direct result of our hubris and greed – in particular, the Western world's determination to pump up a series of debt-fuelled asset price bubbles, and the failure of regulators and politicians to prevent that, despite the lessons from history.
The irony is that we live in a golden age of global commerce. In recent decades, Asia's resurgence, the collapse of the Soviet Union, improved communications and, above all, the spread of liberal economic ideas, have generated an awe-inspiring leap forward. By mid-2007, when "sub-prime" burst from the shadows, the volume of physical world trade was three-times higher than in 1991. International trade generates wealth, helps cut poverty and, lest we forget, makes different parts of the world less likely to go to war with one other. It binds humanity together – and ever more cross-border commerce is crucial to support a fast-growing global population. But the sub-prime crisis, and the related economic fallout, means all that's now under threat.
Over the last 18 months, as the credit-crunch noose has tightened, global trade volumes have been throttled, falling 20pc. Across the world, as unemployment rises, protectionism looms. The damage is truly global, as countries impose ever more trade barriers as myopic politicians panic and pander to domestic vested interests. The Doha "trade round", if completed, would rip down barriers to international commerce, locking in another decade of burgeoning world trade. On the brink of success when "sub-prime" hit, the negotiations are now gridlocked – further from success than they've ever been since starting in 2001.
This financial crisis, and the strain it's placing on domestic economies, has prompted such a protectionist backlash that we now face the outright failure of a multilateral trade deal for the first time since the 1930s – with all the lost wealth and escalating international tension that would bring. So, the question of how we fix the Western world's financial system is important. It goes way beyond the scandal of the huge bonuses still being dished out by banks dependent on taxpayer finance – however galling that may be. It matters far more than domestic politics, too – however grotesque the spectacle of Gordon Brown clinging to power as the rest of us scream for a general election.
For, in my view, the UK has a unique role to play. Along with the US, this country is the epicentre of "sub-prime". A lot of the regulatory failure, and the financial culture which caused it, emanated from here. That's why, for better or worse, what we do to address the issues raised by "sub-prime" is being widely watched. Yet our regulatory response has been risible. The main reason credit remains scarce and our economy on its knees is that UK banks still have not "fessed up" their losses. The failure of our politicians to make this happen, their cowardice in not insisting bail-out cash was conditional on forensic external audits and a bank purge, has been a cardinal error. Similarly, despite the UK's welter of financial expertise, we've also failed dismally to develop a coherent regulatory model.
For many years, this column has criticised Labour's "tripartite structure". Splitting responsibilities between the Bank of England, Treasury and Brown's Financial Services Authority, was always going to mean issues fell between the floorboards. In fact, Brown made the regulatory system ineffective on purpose – so he could unleash, and bask in the glory of, a debt-fuelled boom. So I applaud the Tories' recent proposal to return banking supervision to the Bank of England – where it belongs. But I despair at HM Opposition's determination to now "scrap" the FSA altogether. This decision has been driven by a desire for a "political top-line", rather than shrewd analysis. The FSA has many faults, but getting rid of it would be a costly, spiteful mistake.
The FSA's current regulatory remit goes way beyond the banks. It should continue overseeing insurers, pension funds and so on. This kind of sub-sectoral regulation is beyond the Bank's expertise. The FSA should also build on its work protecting the interests of retail customers. The most important thing, though, is that the FSA becomes a subsidiary of the Bank, releasing it from the Treasury's whip hand. The previous split didn't work not because the FSA existed per se, but because its senior staff knew their masters were sitting in Whitehall.
That meant, by definition, the FSA turned a blind eye when banks pursued expansionary policies it knew the Treasury wanted. This lax, politically-motivated approach to bank regulation flew in the face of the Bank's mandate to maintain low inflation and "financial stability". No wonder there was turf war and a lack of information-sharing with Threadneedle Street. So maintain the FSA but make it an offshoot of the Bank of England. That's the best way to better regulate the UK's entire financial system – and help prevent future systemic crises. Don't just scrap the FSA root-and-branch to prove how "hard" you are. That's policy vandalism.
If the FSA has been an area where the Tories' policy response has been too heavy-handed, in a more important area they've been far too timid. "It isn't sensible," Mervyn King recently stated, "to allow large banks to combine high street retail banking with risky investment banking strategies, and then provide an implicit state guarantee". The Bank Governor's words echoed around the world. He was calling for a return of "Glass-Steagall" and, in doing so, was taking on the big universal banks of Wall Street and the City.
Named after the two Senators who introduced it, Glass-Steagall was the centrepiece of America's regulatory response to the 1929 Wall Street crash. It built a firewall between commercial banks (that take deposits) and investment banks (which pursue higher-risk investments). For more than 60 years Glass-Steagall kept such institutions separate. Why? To stop bonus-fuelled investment bankers getting their hands on taxpayer-backed deposits, levering up by borrowing against those deposits, then using them to gamble recklessly. If such bets work, the banks win big. If not, taxpayers foot the bill.
That's what has happened since Wall Street convinced Bill Clinton's government to repeal Glass-Steagall in the late 1990s. The same "fusing" of commercial and investment banking then happened in the City too. No other single act did more to cause this crisis. If readers think such technical issues are remote, remember that it's because these universal banks become so big, and were able to take crazy risks with ordinary households' deposits, that "sub-prime" sparked a fiscal crisis too. The UK has now spent a £1,200bn bailing out its banks – precisely because they're "too big to fail" and ordinary voters' cash has been at stake.
This column has long called for a new Glass-Steagall. Credible people now agree. Mervyn King has been joined by Vince Cable, Nigel Lawson and Paul Volcker. Last week, the Treasury Select Committee produced a report on the new regulatory landscape. The annex was full of testimony from experts on the separation of investment and commercial banking, but the words "Glass-Steagall" didn't appear.
The Tories say they "see the arguments" for the re-introduction of this crucial regulatory divide. But they "don't want to introduce it unilaterally". Were the Tories to take this step, the world would notice. By leading the charge towards a new global Glass-Steagall, an incoming Tory government could do much to restore London's name as a centre of regulatory excellence. But it won't happen. Today's politicians are far more interested in securing banks' campaign donations than they are in preventing future systemic collapse.
Propping up final salary pension schemes 'will create poverty'
Workers with generous final salary pensions must give up at least 10% of their benefits if Britain is to avoid sleepwalking into a two-tier pension scheme with growing numbers of people living in poverty in old age, the president of the institute of actuaries said yesterday. According to Ronnie Bowie, one of the pension industry's most senior experts, there needs to be a shift in thinking about pensions, away from short-term cost savings to a broader review of the support offered by employers to all staff.
At the moment, employers are devoting most of their time and effort to protecting the benefits built up by workers in final-salary schemes. Britain's biggest employers have pumped billions into the schemes. Bowie said that despite these efforts, schemes continued to run huge deficits, which were expected to get worse over the next 20 years. The effect of propping up final-salary schemes in the private and public sectors, generally paying two-thirds of a worker's last pay cheque as a retirement income, was to deny younger workers and people outside such schemes a decent pension. "If we could wind back the clock, it would be better if all these schemes could be based on career average earnings and not final salary.
Career average schemes have little effect on the incomes of the low paid and offer a fairer reward. They would also be more affordable for employers to run. But that didn't happen." Tory shadow pensions spokeswoman Theresa May has signalled that an incoming Conservative government would encourage hybrid schemes that share the costs of increases in life expectancy or falls in investment returns between employers and staff. The government refused to allow reforms to occupational schemes, giving them greater flexibility, to be included in last year's pension act.
Bowie said that while reforms affecting future pension contributions would be helpful, the crunch for occupational schemes would arrive in 2030 when all of the baby-boomer generation was in retirement. "If companies could share inflation-proofing on benefits, that would allow around 30% of costs to be shared," he said. "That would reduce the risk costs would soar, but it is not the same as reducing costs to more manageable levels." While a spate of scheme closures means that fewer than 2.5m workers currently pay into final-salary schemes, more than 18m workers rely on at least some guaranteed pension to form part of their retirement income.
Employees' accrued rights are protected under UK law, dating back to a 1993 pensions act, according to pension lawyer Robin Ellison. He said the government would need to overturn that act, but even then rights would most likely be protected under human rights legislation. Bowie said: "I think there is a degree of inevitability about this because I'm not sure there is anything the government can do now. It is unlikely people with these benefits will give them up, but without it companies will need to put more and more vital funds into these schemes and workers outside the schemes will suffer."
Icelandic bank chief in £500 million of hot water
There's little sympathy in Reykjavik for the financial decline of Gudmundsson clan. Just over six months ago, Björgólfur Gudmundsson was the chairman of a multinational bank, owner of West Ham United Football Club and listed as a billionaire on Forbes' Rich List. This weekend he has been declared bankrupt with debts of almost £500m (96bn Icelandic krona), far outstripping any personal insolvency ever seen in the UK. Mr Gudmundsson's liabilities are even greater than the £405m debts that weighed down Kevin Maxwell, son of Robert Maxwell, who is Britain's biggest bankrupt.
The Icelandic tycoon, who made his money through a Russian brewing business, was the biggest shareholder in Landsbanki, which failed last October leaving 300,000 British savers unable to access their money in its Icesave accounts. Iceland still owes the British government £2.1bn in compensation. "I now face almost complete lack of income as I am no longer in the employment of the aforementioned companies and earn now just the minimum wage," Mr Gudmundsson wrote in a letter to judges.
However, his son, Björgólfur Thor Björgólfsson, who was even richer than his father, has not been declared bankrupt. He is still in control of Novator, the investment company that owns a number of European telecoms businesses and is the biggest shareholder in the pharmaceuticals empire Actavis. The news comes as the administrators of Landsbanki, the bank that Mr Gudmundsson chaired, appointed forensic accountants to scrutinise its accounts and transactions in the two years before it collapsed. Landsbanki, along with Kaupthing and Glitnir banks, is already the subject of an investigation into "suspicions of criminal activity" in the Icelandic banking system.
A spokesman for the administration committee of Landsbanki said the appointment was standard procedure.
"If there is anything unusual found, it will be referred to the special prosecutor," he said. Public feeling has not been on Mr Gudmundsson's side since the banking collapse – and it is not the first time that he has been unwelcome in Iceland. His vast wealth originally came from shipping, but in the 1990s he was convicted of five minor bookkeeping offences carrying a 12-month suspended prison sentence. He had denied 450 charges relating to the 1985 collapse of a shipping company, Hafskip, and suggested that they were politically motivated. After this episode, Mr Gudmundsson left for Russia where he founded the Avion brewery in St Petersburg. Avion was sold for $400m to Heineken, the drinks giant.
On his return to Iceland, Mr Gudmundsson was well-placed to take over Iceland's oldest bank, Landsbanki. He was a close associate of senior politicians when it was privatised in the early 2000s. Along with his son, his financial interests included pharmaceuticals, shipping, publishing, aviation, financial services and telecoms. Landsbanki expanded at an astonishing rate, taking over the venerable British Heritable Bank, which specialised in property, and opening an internet operation, Icesave, in the UK and the Netherlands. Icesave offered unbeatable interest rates several percentage points above their British equivalents – attracting hundreds of thousands of savers within a couple of years.
But Mr Gumundsson's wealth started to unravel last September when XL Airlines, the budget carrier, went bust, stranding British tourists abroad. He had sold the airline to its management but personally underwrote their loan with Landsbanki. Just a few weeks later, the entire Icelandic banking system was seized by the government and put into administration, including Landsbanki. It was not simply the credit crisis, but the complex arrangement of holdings and cross-holdings among Iceland's financial elite that brought down the tiny nation's system. Mr Gudmundsson's 45pc stake in Landsbanki, held through his family's holding company, was entirely wiped out and he had to leave the board.
Straumur, the investment bank in which he had a 32pc stake, followed Landsbanki into administration shortly after, taking with it the well-known British broker Teathers. Earlier this year, he was forced to put West Ham up for sale and the club was acquired by asset management group CB Holding for a reported £100m last month. Public sentiment in Iceland has intensified against the country's only two billionaires: red paint has been daubed across the family's Reykjavik residence. The family also courted controversy last month by asking for half of their debts with one of the Icelandic banks to be written off.
It transpired that they had originally borrowed the money to buy their stake in Landsbanki from another of the banks, Kaupthing, with an outstanding 6bn Icelandic krona to pay. MPs opposed their request on the grounds of their contribution to the failure of the banks. "I almost choked when I saw that the write-off in question concerns debt carried by the Björgólfur father and son," said Gylfi Magnusson, the minister of business affairs, at the time.
Italy maintains, defends gold tax plans
Italy's government left plans to tax notional capital gains on gold reserves unchanged on Saturday and defended them as respectful of central bank independence despite the European Central Bank's concerns. Prime Minister Silvio Berlusconi wants to introduce the tax as part of measures to shore up public finances but the ECB says they infringe the Bank of Italy's independence and violate rules on central bank financing of the public sector.
Italy's Senate on Saturday gave final approval to a law that includes the plan to levy a 6 percent tax on notional capital gains on gold reserves, with a ceiling of 300 million euros. The Italian cabinet, which met for 10 minutes after the Senate vote, modified parts of that law through a new decree that revises measures related to a tax amnesty and energy networks, but left the gold tax plan untouched.
'The (norm) cannot be applied without a 'non-impedimental', i.e., favourable opinion of the ECB and the express consent of the Bank of Italy,' Berlusconi said in a statement. 'So it's evident that, in letter and spirit, the norm is fully respectful of the institutional and financial independence of the Bank of Italy and fully coherent with principles of the Treaty and the European central bank system.'
The government had previously said it is seeking a way to apply the tax with Italian and European central bank consent, spurring expectations the law would have been modified Saturday to assuage their concerns.
Irish court refuses to protect real estate empire
Freah shock waves ripped through Ireland’s beleaguered property sector last night as one of the country’s largest developers was refused protection in the High Court. Reclusive billionaire Liam Carroll failed to have an examiner appointed to six of his companies as Judge Peter Kelly delivered a damning verdict on proposed survival plans as "fanciful" and "lacking in reality". The decision came as Taoiseach Brian Cowen moved to insist the looming National Assets Management Agency (NAMA) was not a €90 billion "gamble".
Mr Carroll’s Zoe Developments group, which owes eight banks €1.27bn, was given a stay pending a Supreme Court hearing next Tuesday, but the judge said even this was granted "with misgivings". In a damning commentary, Mr Justice Kelly said he could not agree the companies involved had a reasonable prospect of survival, as the arguments their fortunes could be turned around "bordered on the fanciful". He dismissed claims of a bounce-back which suggested the companies could turn a €1bn deficit into a €300 million surplus within three years.
The move intensified the political firestorm over NAMA, as the Taoiseach insisted there was no alternative to the proposed "bad bank" soaking up €90bn worth of toxic land deals if financial institutions were to be able free up credit lines to businesses again. "There’s a huge risk existing for the Irish economy were we not to take this step and initiative. "The purpose here is not to initiate a gamble. The assumption that there are no present existent risks is a very wrong understanding of the situation," Mr Cowen said. Fine Gael and Labour again questioned the viability of the scheme, saying it would be a bad deal for the taxpayer.
However, the Greens stressed Environment Minister John Gormley would be able to insist that the amount quoted by the valuation panel – which decides how much was paid by the State to take on the deals – be marked down if the development involved was bought on the basis of questionable zoning. Ruling on the Zoe petition, Mr Justice Kelly noted the survival plan involved "extraordinary" forbearance by the group’s banker creditors in agreeing to a two-year moratorium on interest payments and effectively refraining from calling in massive loans.
The judge noted such patience was "remarkably absent" when the banks were dealing with smaller borrowers. The petition for protection was brought after four companies within the group were presented with demands from Dutch-based ACC Bank for the repayment of €136m. Mr Justice Kelly said the companies owed an extraordinary sum of money and were made up of "Byzantine complexities" as he noted that ACC had "broken ranks" with other institutions and demanded repayment.
I'm Loosing My Cool Folks
The Bastards Never Die
by Joe Bageant (With Running Commentary by Screaming Man)
A Short History of Why We Eat Oil, Can't Smoke Pot and Assault Weapons Are So Expensive in Our Hour of Need ...
Well, for starters, the above title is a damned lie, since this little screed is not a history. It's just rumination on the tilting point at which Americans started the slide into the deepest sort of cultivated consumer consciousness -- which is to say our corporate managed engorgement and swinedom at the service of the rich.
Very rich families and corporatists, to whom, as in earlier articles, we shall refer to as "the bastards," have always been with us. Even Tom Jefferson thought periodic revolution against wealth and authority was desirable to keep these bastards in check. Which implies that he figured they would inevitably get us by the throat down on the floor from time to time.
But the bastards scared the hell out of later presidents too. Abe Lincoln feared the large corporations born of business profiteering during the U.S. Civil War -- the military industrial complex of the day -- easily constituted the greatest threat to the American republic. Being president and all, he couldn't call them what they were, and settled for the term "money power," and predicted that, "money power will … work upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."
And as everyone knows, Dwight Eisenhower famously feared the same military-industrial complex was busy taking over the nation. What we never hear about though, is that Eisenhower's definition of the complex included among the bastards, not only the military defense industry corporations, but also right alongside them the news media and the university and private research establishments.
If nothing else can be said for the bastards, we must admit they do plan far ahead, (or seemed to anyway, before the latest meltdown) even if only to screw us blind, which is usually the case. Since the early robber baron era of John D. Rockefeller's Standard Oil, just after the turn of the century, the bastards understood that the key to national domination was oil -- creating an economic culture based on petroleum -- and planned toward that end.
Big corps su ch as E.I. DuPont had invested heavily in the oil industry since the turn of the century, and especially since the 1930s creating synthetic materials such as plastics, in which the public was decidedly uninterested in buying. Then World War II came along, creating big demand for synthetics such as nylon for parachutes, tires, tents, ropes. DuPont and similar bastards had drawn a royal flush.
SCREAMING MAN HERE!: RIGHT! IT'S THE ONLY SURE RACKET. ASK ICE MAN CHENEY. YOU MAKE STUFF, SELL IT TO THE PENTAGON MOB AND RAM THE PRICE CLEAR UP THEIR ASSES. THEN THEY BLOW THE STUFF UP, INCENERATE IT, AND COME BACK FOR MORE AT DOUBLE THE PRICE BECAUSE NOW THERE'S A SHORTAGE! FOR A FAST DEPENDABLE BUCK, YOU CAN'T BEAT INDUSTRIAL SCALE WARFARE WITH A GODDAMNED STICK!
(Ahem!)
Unfortunately all good things end, no matter how bloody profitable. But those super-expanded wartime corporations that had cranked out planes and tanks were not going to downsize just because we had run out of Dresdens to bomb. They intended to remain dominant and even expand. With the war drawing to a close, and with fewer burning jeep tires on the battlefields and fewer parachutes left dangling in the trees of Belgium, American citizens were going to have to eat the slack. The bastards would have to stuff'em fuller than a Christmas goose; make them eat petroleum based synthetics, if it came down to that. Which it eventually did of course, in the form of petrochemical agriculture, food dyes, etc.
SCREAMING MAN: YOU GOTTA A FUCKING PROBLEM WITH NUMBER TWO RED DYE OR SOMETHING, ASSHOLE? DON'T BULLSHIT THESE PEOPLE, YOU FLAMING OLD FRAUD! I'VE SEEN YOU EAT A WHOLE BOX OF PINK HO-HOS BEHIND A BOTTLE OF JAY DEE AND SOME COLUMBIAN BUD! AM I GONNA HAVE TO TAKE MY NEEDLE NOSED PLIERS TO YOUR LYING ASS?
Plastics, heralded as durable and everlasting (and today lamented for the same reason) eventually gobbled up nearly every other material market, in the from of jewelry, dashboards, dishes, clothing, napkin rings, perfume bottles, knickknacks, flooring and carpeting, resin building materials, vinyl raincoats and boots, molded furniture, radio sets … America was remade in the image of open chain hydrocarbons.
That nine tenths of what was produced and marketed was unnecessary, and downright shitty did not go unnoticed by the American public, which had been deeply distrustful of plastics and synthetics from the time they were first ballyhooed at the 1933 Chicago World's Fair. People were just not buying the sales job. But the combination of wartime shortage frustrations and massive industrial public relations delivered the one-two punch, and the consumer knuckled under.
Or perhaps they were just worn down by indu stry PR, which enlisted the help of trusted figures such as Frank Capra and Walt Disney, among others, along with in-school industry propaganda for the next generation: "Our story of the miracle of plastics starts with an oil well in a faraway place by the Persian Gulf … "
AND IT GODDAMNED WELL IS GONNA END THERE TOO! IN ABOUT 15 MINUTES, IF IT HASN'T ALREADY! DOES ANYBODY REALIZE THE NUMBER OF SARAH PALIN BLOW-UP DOLLS SHIPPED TO THE TROOPS IN IRAQ? IF THAT'S THE KIND OF ARMY WE'RE SENDING TO KILL OFF THE PALM VERMIN, THEN WE'RE GONERS ALREADY!
As I was saying, the bastards not only created an economy by and for themselves, based on the black sticky stuff, they also built a civilization. From the tallest building right down to the petrochemical soaked dirt in which the food supply is grown, and all along the chain through processing and plastic packaging and distribution, The black stuff was cheap and it was plentiful, so long as the bastards were willing to buy off the top dog sheiks like ibn Saud, who would in turn keep the dusky peasantry in line through good old perennials such as beheadings and public stonings.
SCREAMING MAN MISSES THOSE POST 9/11 BEHEADING VIDEOS, DON'T YOU? IT WAS SO EASY TO TELL WHO AMERICA'S ENEMIES WERE THEN. BUT AT LEAST WE'VE STILL GOT BEN BERNANKE AND BILL GATES.
During the 1940s AND '50S while ibn Saud was fathering some 60 children by 22 wives in Arabia and dishing out corporeal punishment to the far flung wretches of his kingdom, here at home the corporations were doing their own hit jobs on the this nation's peasantry -- the farmers. Petroleum based synthetics, with legislative help, wiped out one quarter of the domestic cotton market in the first few years following the war, along with flax for linen, and hemp fiber, replacing them with ugly but profitable synthetic nylon and polymer textiles. Not to mention replacement of literally hundreds of farm produced natural organic materials for medicines, cosmetics, milk by products such as casein for glues and paints, with synthetic petro-based commodities, all of which were mercilessly hammered into the populace as "miracles of modern science."
Kings may croak, but cash lives forever
The fact that the bastards were corporate entities made them more powerful than any robber baron's best wet dream, because their power and reach extended beyond human mortality. Deathless corporations and trusts replaced the mortal thieves such as Rockefeller and Morgan; and despite the advent of income taxes, capital continued to aggregate in the bastards' coffers, particularly financial bastards, at what was seen then as an unimaginable scale. "Money for nothin' and chicks for free ..."
Powered entirely by balance sheets, and existing for the sole le purpose of wealth accumulation, parting with any assets was antithetical to their very purpose. Not to mention the logic of the wealth based stockholders. The majority of assets were held by elite, whose main accomplishment was then and still is coming from families that commandeered some substantial portion of the public medium of exchange in order to derive more wealth.
WHOA THERE FATSO! WHOSE FAMILY ARE WE TALKING ABOUT HERE? PARIS HILTON'S? OR MAYBE ALICE WALTON'S? PARIS HILTON HAS EARNED EVERY JEWEL ENCRUSTED THONG IN HER CLOSET! FROM TUSH TO TITTIES, WE'VE SEEN EVERYTHING PARIS HILTON HAS TO OFFER. AND IT'S WORTH A FEW BILLION TO KEEP HER IN CIRCULATION. GIVES THE MEN OF THIS MISERABLE WORKHOUSE NATION SOMETHING TO BELIEVE IN. SOMETHING TANGIBLE. SOMETHING THEY CAN ACTUALLY SEE AND WHACK OFF TO.
HER DIRTY FLICK, "1 NIGHT IN PARIS" WAS A GIFT TO ALL MANKIND. LET THE LESBIANS FIND THEIR OWN PARIS HILTON … BUT ALICE WALTON? SCREAMING MAN WOULDN'T FUCK HER WITH YOUR WHANG, BUSTER! THAT MISERABLE DRUNKEN BITCH RAN DOWN AND KILLED A FIFTY YEAR OLD WOMAN IN TEXAS. WHAT'D SHE GET? A $925 FINE! SHE HAS 20 BILLION DOLLARS AND GETS OFF FOR LESS THAN A THOU. AND WHAT DOES ALICE GIVE US? CHINK MADE FLIPFLOPS AND GODDAMNED PLASTIC PATIO CHAIR S THAT BUCKLE LIKE OBAMA AT A BAILOUT PARTY! GIVE THE SCREAMING MAN PARIS HILTON ANY DAY. NOW, FATSO … YOU WERE SAYING?
Hell, I can't remember. Oh yes, the bastards. Once you are born into the Royal Court of the Kingdom of Bastardy and are issued your caviar spoon, no further effort is required to amass capital. You simply keep on withholding capital from those who had create it -- the working masses -- keep captive the economic lifeblood upon which all others depend. Observe, for instance, the banking industry's present refusal to unass any money for credit, despite the hundreds of billions handed to them as a taxpayers' gift, a bailout AFTER they'd ripped off their shareholders and customers, and looted their own institutions from the inside.
UPSET ARE YOU, FATSO? LET THE SCREAMER TELL YOU HOW IT REALLY IS. IT WAS ALL AN ACT. THE FED WAS JUST PRINTING AND HANDING OUT WORTHLESS WALLPAPER -- WHICH THE BANKING BASTARDS, WITH ALL DUE APLOMB, WILL PAY BACK IN KIND. THEN THE BASTARDS WILL BE DECLARED SOLVENT, FAT AND HEALTHY AS A BUNCH OF PARK BEARS. MEANWHILE, YOU GODDAMNED PEASANTS WILL CONTINUE TO ANGUISH OVER THE BAILOUTS LONG AFTER THE REAL RIP-OFF IS IN. THE ONE YOU NEVER SAW AND CAN'T EVEN WRAP YOUR SORRY POINTED FUCKING HEADS AROUND.
THE REAL DOUGH IS SPREAD ACROSS DUBAI, MONACO, LONDON, AND FOR SAFETY'S SAKE, BEIJING. WHILE YOU ANGUISH, PAT E OF UNBORN VEAL CALF IS BEING SERVED TO THE REAL BASTARDS UP ON THE 50th FLOOR. THEY POUR ANOTHER GLASS OF 1999 PERRIER-JOUET, AND CHORTLE AT THE DISMEMBERMENT OF A NO-TALENT HACK LIKE BERNIE MADOFF. THAT HAPLESS SMALLTIME JEW GREASEBALL WHO CAME INTO THE GAME WITH $5,000 IN PENNY STOCKS THAT HE BOUGHT WITH MONEY HE MADE INSTALLING SPRINKLERS.
NEVER A REAL PLAYER LIKE US, EVEN WITH HIS BULLSHIT WALL STREET TITLES. JUST A DUMB FUCK FROM QUEENS WHO DIDN'T KNOW WHEN TO QUIT A SCAM. LET THE SERFS GNAW AT HIM. KEEPS 'EM BUSY AND OUT OF OUR HAIR. LOOK, THEY'VE PULLED ONE OF HIS ARMS OUT OF ITS SOCKET. CHRIST, NOW THEY'VE RUINED LUNCH." THAT'S WHAT'S REALLY GOING ON, FATSO.
The bastards. Why have they lasted this long? Purely on their own merits, most American corporations probably would not have survived the 1930s. By then our wildly fluctuating economy was already demonstrating the folly of overly concentrated capital and power. What was needed, said the big players who'd wrecked the economy with their uncontrolled speculation and greed, was, lo and beshit, a controlled economy! One even more controlled by corporations. Problem was, the only entity capable of such control was the government.
And unfortunately, the Constitution of the United States was founded on a separation of business and state to the same degree as that of church and state. If the bastards were to run the economy, if Americans were going to be pistol whipped down the road to "prosperity through unprecedented consumption," then government authority by Constitutional law would be necessary.
As a 1937 shareholder's report of the E.I. DuPont Company "the revenue-raising power of government [taxation] must be converted into "an instrument for forcing acceptance of sudden new ideas" and a "social reorganization." Uh oh! Just whose sudden new ideas? And what kind of social reorganization? The report stated bluntly that to realize further extensive profit from its wartime investments, the U.S. government "must be the primary tool." While their plans to use the government were put into the shareholder's report, they were never publicly discussed.
FDR saves the bastards' bacon
The chance to pull it off came ironically or maybe not so ironically, with Roosevelt's New Deal. FDR was, contrary to the subsequent hagiography that has grown up around his grave, was first and foremost a capitalist and was determined to save capitalism. Given his affluent background and times, he, like everyone else, could not imagine anything but capitalism as the nation's economic system. Yet nowhere in the Constitution is capitalism specified as America's preferred economic system.
His lifelong circle of friends and associates consisted entirely of the elites of family and corporate wealth, which meant that it also included some of his enemies. But together they created a host of "emergency legislation," in much the same fashion as 911 let George W. Bush get away with so much under the excuse of a national threat. Even allowing for the resistance of some wealthy elites, FDR favored the bastards' plans toward a thoroughly corporatized national economy.
The Supreme Court, however, a stickler for details such as the U.S. Constitution, did not see things Roosy's way. It would take a rewriting of the U.S. Constitution for the government to crawl into bed with the corporations. So every piece of legislation FDR and his cohorts created got snagged in Supreme Court and just kept piling up.
The key for FDR and the Princes of Bastardy turned out to be taxation. To control society means to control individual behavior. The Constitution prohibits that, except for those few powers granted in the Constitution, such as the coinage of money or declaring war. Throughout the 1930s the public watched FDR and the corporatists duke it out with the Supreme Court. While the public was engaged in the debate over FDR's threatened stacking of the court, FDR and the bastards managed to accomplish their agenda in controlling opposing social behavior -- taxing it to death. The government is granted the power to tax by god! And=2 0the Roosevelt era saw the art of behavior modification through taxation perfected.
Now in changing American social behavior through taxation there are two rules. The first tax must be a very logical one. And the second must be one created of whole cloth, a manufactured one to counter a manufactured threat. So after the Supreme Court knuckled under to FDR's threat to divide up the judicial limelight by appointing more justices, a more compliant court happily passed a $200 tax on machine guns -- the equivalent of $3,000 today -- the same tax, incidentally, that allowed the ATF (Alcohol, Tobacco and Firearms division) and the FBI to invade the Branch Davidians at Waco.
It was unconstitutional as hell. But the court understood public relations. What kind of deranged fucker needed a machine gun anyway? Well, there was There was John Dillinger (whose penis was 14 inches long, according to folk legend of the day, which was either threatening, or vastly intriguing, depending upon one's sex or moral perspective on life).
There was Seymour "Blue Jaws" Magoon, Bonnie and Clyde, Pittsburg Phil, Baby Face Nelson, Al Capone, Bummy Davis. And if there was any further doubt, there was also the fact that the members of Murder Incorporated were Jewish, Italian or Irish. Ah ha! More proof to the then-majority Anglo Americans of naked immigrant depravity. So two hundred bucks per tommy gun it would be under the 1937 Machine Gun Tax Act.
The second tax the court upheld was the 1937 Marijuana Tax Act. Most Americans had never heard the word marijuana. The tax act had adopted a little known Mexican street term as a name in order to demonize it, and differentiate it from the thousands of acres of government hemp being grown for naval ropes, etc. Never mind that in the entire previous year only a couple of pounds of the stuff were seized by border police.
A $200 an ounce tax had worked on machine guns, so a $200 tax per ounce was placed on hemp cultivation without permit, and no permits were issued. And so as an added bonus -- or maybe intentionally -- the synthetic fiber industry and the plastics industry saw its most threatening long term competitor, hemp, eliminated.
And for the first time in the history of the United States the bastards could use the government to tell farmers what seeds they could put into the earth. In short order by way of the New Deal, through various agricultural acts, corporatists, through government policy, had control over the land even though they did not own it. The chief competitors to industrial food giants and synthetics industry, the small farmer producers of thousands of natural goods and raw materials, were eventually taxed or regulated out of existence.
At the same time, subsidies for big-time agri-biz producers started snowballing. A nation of consumers of synthetics was cultivated in the next generation. The result we see around us,20obese Americans willingly wearing the bastards' brands on acrylic clothing … and guzzling synthetic soft drinks, Americans who've never once considered that the pizza crusts they gnaw at start out with a grain crop called wheat.
Ten thousand years of agriculture was synthesized into money. The soil-to-city chain of small farms, villages, and towns to the great city markets was destroyed. Those ever more profitable compressed gobs of humanity in the cities and suburbs could be cultivated for maximum productivity and profit as the bastards increased their domination of the needs hierarchy. If you made a movie of this, swapping out the humans for some sort of large intelligent rodent or insect, and left everything else as it really is in American life, people would call it chilling science fiction.
Long story short: The bastards won. This distillation of how they won, this little piece of feral scholarship, is sure to be disputed by hairsplitting pinheads in political science and history departments. The "Oh but …" crowd. Which is OK with me. Everybody needs a job, I suppose. But that's the view from here in the cheap seats among the non-players, the fuckees in the great fuck-the-proles game of bastard politics and ever bigger money. Call this a pulp comic summary of post war history. It's not a very damned funny history. Maybe that's why we choose not to remember it. Here in the United States of Amnesia. We cannot retain what happened last week, much less history. But I'm trying here folks. I really am.
SCREAMING MAN: BULLSHIT FOLKS! DON'T BELIEVE A WORD FROM THIS GODDAMNED BEER SOAKED, REDNECK WHO CAN'T SPELL AND THINKS HE'S A GENIUS BECAUSE HE KNOWS HOW TO BRING UP WIKIPEDIA ON HIS BROWSER. IF AND WHEN HE'S SOBER ENOUGH. THE SCREAMING MAN HAS BEEN TRAPPED INSIDE BAGEANT'S BLOATED, DISEASED CARCASS FOR SIXTY TWO YEARS, AND THE SCREAMER CAN TELL YA THIS: IF BRAINS WERE DYNAMITE BAGEANT WOULDN'T HAVE ENOUGH POWER TO BLOW OFF A GOOD FART. YOU'VE JUST WASTED TWENTY FUCKING MINUTES OF COMPANY TIME. NOW GO TAKE UP SOMETHING USEFUL, LIKE NARCOTICS. FOR CHRISSAKE GET A LIFE!
128 comments:
Just wait Ilargi. There is absolutely no way that TPTB will be able to pull off a tax increase on people at this point and sustain some severe political damage. Taxes, at this point in time, are politically explosive. Unfortunately, it will be necessary to help to keep the deficits from exploding. However, with the rate of debt growth getting exponential, this seems more like a method of delaying the inevitable. America is going to have to repudiate debt or sink trying. If Obama thinks he will be able to do this and win in 2012 he is sorely mistaken. Oh, and the Democrats would take a severe beating in 2010. Tons of job losses and increases in taxation? Yeh, recipe for success there Barack.
Oh, "Alan Greenspan, the former chairman of the Federal Reserve, said on Sunday that a value-added tax or sales tax would be preferable because it “raises revenue without significantly impact the economy.”"
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Good luck with this since, salaries are declining and people are paying down debt and spending less. These guys seem hell bent on doing whatever it takes to depress the economy even further.
I posted this just after Illargi got the new post up. I don't want to beat a dead horse here, but feel then need to say this.
I also want to clarify something. Greenpa also would never say that capitalism is better than communism. He sees the failing of any system created anf run by people.
Here's what I posted:
Lurker here,
Greenpa's asleep.
I'm up working on some writing and getting a kick out of the thread.
He probably wouldn't respond to any of this anyway, just find it funny.
I will say that it seems like a lot of people misunderstood his comment and humor.
Greenpa has worked extensively in China, I won't explain what he does because as , Robert Rubin said, it will expose some of his real work.
However Greenpa respects the Chinese and sees them for what they are. When he said that they're better off, he was stating it from a Chinese, not American perspective. One of his partners in China survived the Cultural Revolution as one of the kids sent to the country to forget his schooling and relearn life. He is now back in academia in China and will always state that China is better off under Communism that it would have been if the Warlords had won and been able to give the country over to the western powers like Africa had been.
Greenpa wasn't saying that communism is better than capitalism. He'd never say or think that, he was just saying that China did what was best for China even if there were missteps and pain along the way. They are better off than if the warlords kept power.
I shudder to think of what could have happened if China failed to maintain autonomy after WWII.
Spice that is not what he said. He said:
" Where has a planned economy communist system led to better lives?"
China, rather obviously. Go and see. Perfect? hell no, and they know it. Better than ours? Oh, yeah, if you're actually honest.
-----------------------------------
We can argue over semantics but he said what he said. Now, for the record, I am extremely bullish ion China. They are most definitely better off than they were with during prior periods, no question. I too deeply admire the Chinese. I admire their discipline and maturity as a people. Their drive and strong work ethic. We here in the states could learn a lot from them. Especially in the areas of productivity and saving, etc. However, that was not the argument, so it is a red -herring. Thus, I will not address it any further. Now, if you want to argue that China's centrally planned economy of the Mao era was better for the Chinese overall, then have it. The record does show that China had severe agricultural problems and widespread economic stagnation. That is not moving forward to me, because a good portion (majority?) of the population was not well off at all. However, this will be my last post on this, this is becoming boring and repetitive. It is, as you put it, beating a horse to death.
I should be balanced and add that Mao's time in power did provide some positive benefits to the people, though on balance there were some very serious problems in the economy with a central planning orientation. These benefits were:
- increasing literacy
- increasing life expectancy
This said, I done here. As I said, have at it.
The Chinese certainly were better off under central planning. I am going to have to side with RR on this one.
http://hawaiireporter.com/story.aspx?1c1d76bb-290c-447b-82dd-e295ff0d3d59
From the time I wrote my book on China's Bloody Century, I have held to these democide totals for Mao:
Civil War-Sino-Japanese War 1923-1949 = 3,466,000 murdered
Rule over China (PRC) 1949-1987 = 35,236,000 murdered
However, some other scholars and researchers had put the PRC total as from 60,000,000 to a high 70,000,000. Asked why my total is so low by comparison, I've responded that I did not include the China's Great Famine 1958-1961. From my study of what was written on this in English, I believed that:
* (1) the famine was due to the Great Leap Forward when Mao tried to catch up with the West in producing iron and steel;
* (2) the factorization of agriculture, forcing virtually all peasants to give up their land, livestock, tools, and homes to live in regimented communes;
* (3) the exuberant over reporting of agricultural production by commune and district managers for fear of the consequences of not meeting their quotas;
* (4) the consequent belief of high communist officials that excess food was being produced and could be exported without starving the peasants;
* (5) but, reports from traveling high officials indicated that peasants might be starving in certain localities;
* (6) an investigative team was sent out from Beijing, and reported back that there was mass starvation;
* (7) and then the CCP stopped exporting food and began to import what was needed to stop the famine.
Thus, I believed that Mao's policies were responsible for the famine, but he was misled about it, and finally when he found out, he stopped it and changed his policies. Therefore, I argued, this was not a democide. Others, however, have so counted it, but I thought this was a sloppy application of the concepts of mass murder, genocide, or politicide (virtually no one used the concept of democide). They were right and I was wrong.
From the biography of Mao, which I trust (for those who might question it, look at the hundreds of interviews Chang and Halliday conducted with communist cadre and former high officials, and the extensive bibliography) I can now say that yes, Mao's policies caused the famine. He knew about it from the beginning. He didn't care! Literally. And he tried to take more food from the people to pay for his lust for international power, but was overruled by a meeting of 7,000 top Communist Party members.
So, the famine was intentional. What was its human cost? I had estimated that 27,000,000 Chinese starved to death or died from associated diseases. Others estimated the toll to be as high as 40,000,000. Chang and Halliday put it at 38,000,000, and given their sources, I will accept that.
Now, I have to change all the world democide totals that populate my websites, blogs, and publications.
The total for the communist democide before and after Mao took over the mainland is thus 3,446,000 + 35,226,000 + 38,000,000 = 76,692,000, or to round off, 77,000,000 murdered. This is now in line with the 65 million toll estimated for China in the Black Book of Communism, and Chang and Halliday's estimate of "well over 70 million."
This exceeds the 61,911,000 murdered by the Soviet Union 1917-1987, with Hitler far behind at 20,946,000 wiped out 1933-1945.
For perspective on Mao's most bloody rule, all wars 1900-1987 cost in combat dead 34,021,000 -- including WWI and II, Vietnam, Korea, and the Mexican and Russian Revolutions. Mao alone murdered over twice as many as were killed in combat in all these wars.
Now, my overall totals for world democide 1900-1999 must also be changed. I now estimate it to be 212,000,000 murdered, of which communist regimes murdered about 148,000,000. Also, compare this to combat dead. Communists overall have murdered four times those killed in combat, while globally the democide toll was over six times that number.
Cripes. Can we call it quits on this argument and move on to bashing the pending tax increases? China is a rising empire. They are, IMHO, going to be able to exert a lot more influence on the world than the United States. If you are able to, align your business with them. They are ascending, we are descending.
China is done.
PS, Robert Rubin: You won.
Did Alan Greenspan really say that VAT does not impact the economy? I'm sure that our Canadian hosts never factor GST into their buying decisions. All taxes change behavior.
1:59 - This was not about "winning". At any rate it is finished.
1:58 - If by finished you mean they are tired of purchasing US junk debt, then yes you are correct. If by finished you mean politically or economically. Then no. China has a high savings rate, a productive capacity, huge reserves (tied to its savings) and is generally an ascendant empire. So, no, I think they are quite far from finished. If people here are smart, they will start aligning their business interests with the Chinese.
If people here were smart, they would shun business models or investment strategies that involve other countries, including China. Those days are over.
China's growth is over.
Basing you business model on a functioning US economy is perhaps the most foolhardy venture possible. Let's see:
1) Severely eroded productive capacity
2) Debt
3) Self-entitled populace
China’s government has focused on manufacturing at all cost. So consumed with cheap exports, low wages is all that could be offered to most of the working class. The things they manufacture are rarely enjoyed or owned. Not to mention, in their haste to become a manufacturing power, they have stripped their land and environment to dangerous levels. The Gobi Desert, is spreading to the tune of 19,000 square miles annually. One quarter of the massive country is now desert.
China's exports have been sinking. Down almost 45%. Do you think this will ever recover? Do you think that they will start peddling their plastic shit in Africa? Venezuela? Iran?
I agree with the previous poster anon 2:19. They are pretty stupid basing their model on the US. And even dumber for continuing to buy all that bad debt.
Woman found carrying new strain of HIV from gorillas
I suspect that it is only a matter of time before this virus gets it right.
Ilargi, I enjoyed the YouTube rant from Charlie. Is he one of your readers?
If you are, Charlie, I sound a lot like you, mate. Only I come at it from a long-haired, left-wing, past-middle-age perspective. And I probably seem unhinged like you do in the video to the people I rant to, the ones who haven't been paying attention. Anyone running around with their hair on fire (whatever its length), when all appears calm around them, usually does.
When people whose politics are as different as Charlie's and mine are on the same wavelength, something's rotten in Denmark...
Bukko - Something is rotten alright, but I think we are going to have to replace the "Denmark" part.
It did not bother me to hear arguments against Greenpa's statement (which I suspect he worded a bit hurriedly) but given my past appreciation of hie very thoughtful and astute comments, I know he understands China very well from experience, and was sorry to hear some of the short rude comments.
Of course the Mao years were full of terror, war, and failures of all sorts. But how the Chinese, today, manage to keep well over a billion people in some sort of good order is amazing to me.
Balance is needed, all over the world, but certainly here in the rapidly failing states. None of the "isms" are well balanced.
I was fortunate to be off-line for the last 15 hours and did not have to read the China brouhaha in real time, particularly the comments of Robert the Usurper. Spice appears to be Greenpa's significant other, and she made a very telling point. Which is that the most important thing about China's development was its ability not to go down sub-Sahara Africa's path by preventing neocolonial usurpation of its resources. And that if the Warlords had won the civil war after WWII, that is the path it would have followed. I think the other point Greenpa is making is that the plight of the typical Chinese person is better now than it was in say 1900, and this would not have been the case if the Warlords had won.
As to the success of neoliberal "capitalism" which has totally devolved into a Mussolini style crony fascism in the USA, I think one must wait another 10 years before a proper evaluation. Charlmers Johnson and Dmitri Orlov, from different perspectives, both conclude that the Soviet Union and the American Empire fatally wounded each other. The Soviets caught the bullet through the brain while the USA was gut shot involving a lot of bleeding and whimpering prior to shuffling off the mortal coil. Orlov also makes a very valid point, summarized clearly in his recent appearance on Mad Max, that the average person is far better off **in a total economic collapse** in a planned economy than a so-called free market one. He explains why.
The Jehovah Witness guy came by a couple of days ago. He wanted to leave his literature with me. I told him that I was very familiar with it, I subscribe to very different views, and that if he insisted, it would just go promptly into the garbage, which would be a no-win situation for anyone.
Good lesson for me to apply to this comment site and our new libertarian free market brethren. And the trash on my Mac doesn't even pollute the planet. Viva el Friedman. Viva el Pinochet!
Sorry, I have to get my sorry ass out of Paradise and cannot participate in an endless discussion on this. Carry on.
“Locally owned businesses currently generate half of the private economy, in terms of output and jobs. Add in other place-based institutions—nonprofits, co-ops, and the public secto—and we’re talking about 58 percent of all economic activity. So in a well-functioning financial system, we would invest roughly 58 percent of our retirement funds in place-based enterprises.”
Put Your Money Where Your Life Is
Re Stoneleigh's predictions about a Wall Street crash
From a comment yesterday. Stoneleigh has never predicted October as the most probable time that it would occur. She has generalized to very late summer to early winter. October as the most probable month was me. Just keeping the record straight.
Re problems with leveraged short ETF's. I am still looking into it. Rapier is the one who most strongly supports the long term problem issue.
Just read an article on Asia Times about the mega embassy the US is building in Islamabad. Jeez, where's the money coming from?Apparently what is in the big boxes being brought in by America is a secret kept even from the Pakistani gov't. Now that is having leverage! How does the average Pakistani feel about this development?
I, as a Canadian, sure wouldn't welcome a foreign base being constructed in Canada!
Ilargi --
Have you revised your predicted unemployment rate or will it reach 25% at a later date?
Well, Ilargi has been saying all along that this is a political crisis from the get go, and there is nothing like excessive taxation when it comes to enraging the masses in the USA. It's there in our history, ingrained in our collective DNA (think the Boston Tea Party or California's proposition 13). Combine the new taxes with the steep economic decline that Stoneleigh has been predicting and the widespread public anger at the government's support of the elite through its bank bailouts and you have all the conditions for a perfect political storm.
China may be "done "for this cycle,but their history is one of "getting through" hard times relatively intact...and have for the last several thousand years.Emperors come and go but the peasant soldiers on....Though they seem to have bet the farm on being the manufacturing base of the world,with all that entails.Something I have pointed out before was that some of our powers that be deliberately move our manufacturing base to china...in fact subsidized it...when "polluting"industries began to feel the pinch of environmental regs.
The chinese have poisoned their lands,and rivers ,and caused untold suffering in their population due to the sicknesses from these endeavors.
I dont know if it was planned...but if I knew that the entire basis of my manufacturing processes relied on a material that would begin to run out in 25 years,I would look to begin the change over by selling what I had for what I could get...and concentrate on my own infrastructure...with a lead eye on relatively "clean" technologies that required little in the way of "material"but heavy on brainpower.
This would kill the idea the Chinese are the master of long term thinking...Look at now...they have the heavy PETROLEUM based industries which are starting to see shock waves from reasource depletion
While it might get rough here for awhile,we have not soiled our nest with the industries that were based in the reasource-rich past
We have one hellava lot of refined metal laying around...and a lot more "local"raw material in north America.Re-building north south east and west would provide a lot of employment..and the transport we will so desperately need
Here in Oregon,we have lots of empty tilt-panel structures,easily modifies to any configuration,low cost ,fire/flood/proof...educated ,skilled,workforce and a "green"attitude.Hell,even the Chinese have moved solar fabrication facilities here[down by Eugene}
I have no illusions about the grimness of the immediate future.The next ten years will not be fun,for that matter ,it may take 20 for the "reset"to run it course.But I do have faith in the people.At some point,they will say "enough" "BAST'A" "NO MAS" and things will change.
Th trick will be to live through it...
snuffy
ca,
I was merely following the words of Geithner and Summers there, and extrapolating their predictions of rising unemployment for at least another year. If you take a low-end estimated average increase of 0.2% monthly over that period, you end up with 12-13%, since it adds at least 2.4% to the 9.5% last reported.
What Geithner says is this:"you're going to see unemployment start to come down maybe beginning in the second half of next year.". That's real cautiously opaque, it could be December 2010 along those lines, which would get you over 13% with that low estimate.
Still, this is based on their prediction of economic growth of as much as 2,5% later this year. That they combine the increase in growth with the one in job losses without batting an eye is remarkable in itself.
But I think the growth number will not be there, other than completely faked perhaps, and very short-lived, while unemployment will rise much faster than the White House cares to admit -in figures- today.
Note that Mike Shedlock in his latest prediction, 10,8% in 2010, is far more optimistic than what Geithner and Summers seem to admit to. The fact that they do so without providing a number enables them to deliver a really dark message without attracting too much attention to it for the moment.
I think we're in for a huge PR positivism blitz campaign over the next two months, they'll squeeze out what they can, enough even to raise some taxes without too much protest. It's all in the context.
Come October, I find it much harder to see the campaign continue. There's nothing real about a GDP propped up with government borrowing; that has a short shelf-life.
Rubin, you're Pollyanna times ten.
Grow up.
Smell the Java.
You're ruled by thugs and goons, not politicians.
If they want to put their boot to your throat , they will, that simple.
Look around dude, Goldman Sucks has high frequency trading computers installed of the floor of the NYSE intercepting your pitiful little trades before they're executed so they can front run the entire exchange.
Nobody is stopping that sonny boy because they are God as far as little folk like you are concerned.
No one is even investigating this with an aim to actually stop it or prosecute.
What does that tell you Rubin?
Can you connect the fecking dots?
The naivete that you wear on your sleeve is clownish.
You actually think you live in a 'democracy'.
hahaha
Get a life, sport.
Ilargi,I've noticed your increased focus on how " the message" is delivered. I had noticed sychronicity in the message, " The recession is over. " It was delivered on the same day world-wide to western nations from Canada to Australia. Orchestrated?
A global message delivery?
From yesterday's blog:
I just travelled by cruise ship from England to NYC.
The majority of people on board were English and Americans. The majority of the English and Americans were hugely overweight and many obese - some in wheelchairs. The other Europeans were mostly of normal weight. The ship has some more formal sit down restaurants but also has 4 buffets serving food (day and night): In observing what people put on their plates (as a nutritionist I love observing these things!), the majority of the vastly overweight people piled on the meat on their plates - breakfast included mounds of meat and eggs - bacon, sausage etc. Lunch was the same - piles of meat. Dinner - piles of meat.
Not only is the meat filled with hormones (which contributes to making people fat) but it is common knowledge now (even the New York Time has written exposes on it and the US government says cut way back on meat products) that meat contributes to Cancer, Diabetes, High blood pressure and Cholesterol and a host of degenerative diseases. The cruelty involved in the way animals are raised and slaughtered is an entirely different subject.
Those that think that meat is a healthy choice are in denial of the facts AND support the eating of meat because they simply like the way it tastes and want to continue to indulge themselves (without concern how the animal ended up on their plate or the consequences on their own health).
AND incidentally, Dr. Atkins died of a massive heart attack. His supporters tried to cover it up by saying he slipped on the sidewalk.
The truth is out there regarding what constitutes a healthy diet and I have yet to meet an overweight vegetarian or vegan, the majority of which eat carbs).
carpe diem
@carpe diem,
Having lived in Italy half my life I can say that the Italians by and large are a lot thinner than Americans. They also eat meat. Bistecche alla fiorentina, salumi, cotellete alla milanese, prosciutto crudo e cotto, the list goes on and on, and yet they are not obese like the people you see regularly in the States. I think America's problem with obesity has to do with the sheer size of the portions you're served. Go to a restaurant in Italy and one in the States and you'll see what I mean. In the USA food is literally heaped on top of your plate.
The Ministry of Propaganda is still peddling fake unemployment numbers to the sheeple like low grade smack cut with soap powder. They're not only poisonous lies, they're lethal lies.
This diversion tactic is going to kill millions of extra Proles in the not to distant future who might have been able to use some of their last resources, physical and mental, to prepare themselves for the crash.
What ever crappy figures drip out of their filthy pie holes at the MoP about unemployment, just double them.
Next December, conservatively estimated at 13%, will really be 26%. Right up there with the Great Depression. An the ball hasn't even got started rollin, rollin, rollin.
What if the fake numbers go to say 20%, means the real deal is at 40%.
At some point, anything out of the central government will have zero credibility.
That's were anarchy makes it's stage debut. Anarchy and panic and the herd running for the non existent exits.
There are no 'exits' folks. They have been chained shut.
And the bulls in the arena will be up in the seats charging and trampling the 'spectators'.
Automatic Earth Breaks Its Compass
Sure, sure, it was a week-end peppered with traitorous media bull-shit slanted toward inventive taxes as a weak sister remedy waiting in the wings when critters from congress stumble back to D.C. later this month.
Thats reason enough I guess to include 3 gov't shills' extended remarks regarding the ongoing theft of our nations wealth; and the embarrassing drool other western world economies exhibit; followed by no less than bagenet's attempt at a return to the busom of progressive blogostan after a two year dalliance with inbreds 4 jesus. The short leash joe was on has been transformed into a dialogue with himself wherein all our favorite four letter words magically reappear to excite the unwashed, and with a sigh of relief, mention of the deity goes missing........ just like joe did when he hauled ass to belize to cozy down with the conch chowder crowd back when. Welcome back to recovering alcoholics anonymous, joe. You're still a sold out SOB.
The one diamond in the rough that picts my interest was 'charlie' I'm Loosing My Cool Folks / crabbydogtrix
Whats the upshot? 1. Its sum sum summertime. 2. After several decades of eat, eat, eat, grow, grow, grow, the collective monstrosity known as the united snakes, has fallen in a heap. Something like one in three americanos being of such girth they are friendless, helpless, and shunned by all but burger flippers and wally world employees.
3. Half of who's left are either fully employed, retired or about to be, and still wear two or three hats as in 'bought into the system' and can't afford to open their trap or rock the boat. 4. What - 30 million citizens take sides in a contest over
possible solutions to an 80 year cyclic downturn.... that is inevitable, characterized by blind greed, while unfolding in a society totally lacking in community, or any sense of cooperation. We wonder why despair is rampant.
Thanks TAE.
From what I read, USA obesity comes in part from the consumption of high fructose corn syrup.
Read NEANDERTHIN by Ray Audette.
Anon @1:26,
Why post anonymously, while linking to work that has your name on it anyway? ;)
I agree with you as to the value of Jung Chang's work. Her book Wild Swans: Three Daughters of China is a must-read as far as I'm concerned. Her account of the Mao years is deeply chilling.
The link to the above video I posted is just one of many videos where people are angry and fed up. There's been quite a surge of anti-establishment videos recently. The anger can be seen and felt on blog boards everywhere.
Whether it's right wing sites or left wing. There is a growing sense of anger. Stoneleigh you mentioned that Obama might not last the full term and I think that if the market does tank the way you have suggested, his fall might come way sooner then we think. Imagine the DOW at near Zero like the grandsuper cycle article suggested?
Chaos is going to be unleashed :(
What can we really do to protect ourselves? 98%+ of the population is not even prepared for these sort of things, so is it worthwhile to prepare even? Grim stuff. I've been having a sick feeling for the past few days realizing that this might be the last peaceful August I know :(
Ilargi: "The hosts of the shows, especially George Stephanopoulos, are cast as some kind of side-kicks, asking the right questions that will allow the politician to deliver the message, and ignoring the fact that they don't get straight answers to their questions."
Wow. I knew this was true, but I was still surprised at how extensive the toady journalism was.
Gilbert & Sullivan rule! I was humming this one before I finished reading the first "interview"
From "The Mikado", which is about the inanities perpetrated by bureaucracies;
as the irreconcilable opponents bow repeatedly to each other:
"And I am right!
And you are right!
And everything is quite correct!"
I'd thought about sending in a suggestion about changing the date, that is, skipping a day, Ilargi, but I never got around to that. I was unsure just how the time zones were the same or different {ours doesn't have daylight savings -- we are on the same time all year} but it seemed from the time tags on comments that our time zone is the same at least in summer. To the point: I faithfully read the site no matter when the post appears and even if the site cuts back to once a week {like Kunstler} it still has enormous value and I will continue to study the texts.
I find much more utility in reading this blog and developing some minor degree of skepticism about some of the collected readings and even some of the Ilargi and Stoneleigh statements than I would find in ever reading the MSM or {horreurs}ever watching the TV broadcasts and plainly not believing a single word. Certainly that would be an immense waste of time.
If they raise taxes during this downturn, we'll throw their corporate clone butts out of office and elect a different set of corporate clones.
In 2012, the Republican Party may well be sending the deficit to new heights while raising taxes, instead of the Democratic Party.
If we don't get an apology and flowers, we're going to dump these abusers and jump into a different abusive relationship with the other party.
No one wants to face the fact that "non-discretionary spending", aka Medicare, Social Security, etc., are about to become discretionary.
Even at a 100% tax rate, if such a thing could be done, the debt is too large to pay off.
We will default. The only question is when.
After this tax increase, expect talk to turn to cutting things once thought uncuttable... if there is even a "system" intact at that point.
P.S. We will have political theater this fall or winter. I don't know what form this distraction will take but there will be an excuse, probably in the form of war, for whatever crash comes.
George Staphylococcus is a form of media infection, not a real 'journalist, what ever that might mean.
He is a pretender, a poser, a wannabe commentator tart in drag as 'one of the Big Girls' at the Ministry of Propaganda.
To call him a shill is too kind, let's face it, he's a media dildo.
He works for Corporatists.
Corporatists are organized crime in a nutshell.
The modern corporation is organized exactly like a mafia, because it is a mafia.
The modern corporation is not organized like a consensus democracy. It's organized like a dictatorship. It's organized like a two-bit tin pisspot banana republic.
The modern corporation has as little regard for any and all laws as gangsters do.
That's why they are one and the same.
Corporatism not an ideology or a 'political' party, despite the 'ism' at the end of their name.
They are a form of thievery, a form of parasite, like a tick or a flea or a tape worm. It's who they are by nature.
Corporatists have no soul. When you meet one face to face and look into their cold dead eyes, the Void is all that greets you.
Corporatists as they exist in the present Reality Based Community are not humans. They're the mythical zombies and vampires come to life.
Entities like George Staphylococcus are sock puppets who have Corporatists slimy little reptilian appendages inserted up their derrieres that have to reach all the up to their faces to animate their features.
Media whores like George the Staph need to be injected with a huge dose of antibiotic.
It's comin' George, put a post-it note on your calender.
READ MY LIPS...
"GEITHNER: Well, I think that what the country needs to do is understand we're going to have to do what it takes. We're going to do what's necessary."
The sad fact is, in a more sane political and economic system we might indeed need to utilize a sizable tax load for the proper purposes.
But for these corrupt people, institutions, and corporations... ?
Tar yes, taxes, no
John Hemingway @ 10 something.
I live in Europe so I am well aware of what they eat and portion size. You missed the point and obviously love the taste of meat yourself.
I hope you are not an enviromentalist as you cannot be a meat eating enviromentalist without being a complete hypocrite.
Consumption of meat is attributed to Cancer (colon cancer big one), high blood pressure, high cholesterol, chronic degenerative diseases all of which the thinner European counterparts are NOT immune to.
I'm going to drop the subject now lest Illargi protesteth the subject matter.
cd
From the Polka Dot Gallows-
Our penchant for entertaining events in the Midwest continues-
STOCKBRIDGE, Wis. - Four Wisconsin women are accused of tying up and assaulting a married man after allegedly finding out he was romantically involved with each of them.
The women are each charged with being party to false imprisonment, a felony with a maximum prison term of six years. One is charged with fourth-degree sexual assault.
Calumet County prosecutors say 48-year-old Therese A. Ziemann of Menasha lured the man to a Stockbridge motel last Thursday. Prosecutors say she was soon joined by 43-year-old Michelle Belliveau of Neenah; 43-year-old Wendy L. Sewell of Kaukauna; and the man's wife.
Authorities say Ziemann punched the man in the face and glued his penis to his stomach.
The Associated Press is not naming the victim's wife to protect the man's identity as a victim of sexual assault.
The women are free on $200 cash bails.
Information from: WBAY-TV, http://www.wbay.com and The Post-Crescent, http://www.postcrescent.com
------------------------------
$200 bail! Apparently the judge is amused, too.
That one fact, that even if all the income of every American citizen were taxed at 100%, it wouldn't be enough to close the debt gap.
That is one scary Rubicon that has been crossed.
And you're right Greyzone, the lie is so huge at this point that only a war or epidemic, or both, will cover the tracks.
Get a flu kit ready at the very least. And if everyone gets 'quarantined' in a general lockdown, make sure you have a source of clean water. You can go a lot further than you think without food but not water.
The 'authorities' could also throw in a 'bank holiday' and a ME war to extinguish access to gas and oil products just to complete the 'total paralysis' of the populous scenario.
Consumption of meat leads to... fantastic meals. Don't deny your incisors their reason for existence.
SEX in all its complexity marches on.
@ greenpa
Super Glue has many uses!
Could be a commercial in there somewhere.
Don't leave home without it!
READ MY LIPS - AGAIN!
4 "significant others" is about 3 too many!
@cd
the French eat meat, pate fois gras, etc, drink, smoke and are quite healthy. How do you explain it? Environmentalist, me? Well, I used to go dove and quail hunting with my father when I was young and technically speaking we were out in the wild;-)
Max K has a funny rant today.
The Financial Crisis was a Hoax. The global casino is open again.
my favorite snippet:
"It’s all good, bro. Goldman Sachs and the other cruel sisters of syphilitic lending are reporting huge profits and bonuses...the bubble machine is whipping up cash like cotton candy machines at the end of an endless pier stretched over an ocean of easy credit, pay check loans and Cash for Clunkers...."
hahaha
we are so screwed
Re: midwest events at 12.22: I've been stabbed for less egregious offences.
snuffy wrote "But I do have faith in the people.At some point,they will say "enough" "BAST'A" "NO MAS" and things will change.
Th trick will be to live through it... ""
I greatly appreciate your writing and am glad to see you do see reasons to be optimistic in the long-term, as do I.
You are very fortunate to have the direct contact with your family history through your grandmother and family writings.
I read Schumacher's "Small is Beautiful" many years ago, and the concept that stayed with me longest was what he termed the "footlooseness" of western societies. I am of primarily French-Canadian ancestry, and have strong connection to the place and community where my ancestors have lived for centuries. I obtain water from a well constructed by my many-times-great grandparents in the 1700s and am today cooking cherries from my great grandparents orchards. Most people no longer have this sense of connection to something outside their own lifespan. I see some hope in the permaculture movements, even though it is completely incompatible with the footlooseness of the past 100 years.
Over the centuries, these communities have survived much chaos, epidemic disease and economic hardship. They have persisted, and some of us have retained the family stories. Most of the young are not interested, but a few keep the flame alive for when needed. They will be needed to make sense of the next decades.
The most important thing anyone can do in the craziness ahead is to try to save a few of the next generation from despair. Even if you have no children of your own it could be as simple as teaching your neighbours kids to use a telescope, how to garden, hunt, play piano, etc. (If they are interested of course...Can lead a horse to water, but can't make him drink)
"When theres no future how can there be sin
Were the flowers in the dustbin
Were the poison in your human machine
Were the future your future"
http://www.youtube.com/watch?v=DQjPGD3svgM
They were posers, but they expressed it well. For this new young generation it will be real.
@ cd, ahimsa
http://women.timesonline.co.uk/tol/life_and_style/women/diet_and_fitness/article6732043.ece
New York Times columnist and bestselling author Mark Bittman has written Food Matters, in which he introduces a “vegan before dinner time” plan that is causing a stir across the Atlantic. “You don’t eat any, or much, in the way of animal products or processed food during the day.
At night you eat what you want,” he explains. “In some ways it’s stricter than veganism in that there’s no junk allowed. In others it’s easier — milk in coffee is acceptable, and breaking the rules occasionally is okay. The basic line is this: no matter how you do it, you [and the planet] will benefit if you eat a higher proportion of plants and a lower proportion of everything else.”
I to read Schumacher many moons ago and remember "footlooseness" mentioned.
I guess 'houseflipping' would fit in nicely with "footlooseness".
No one stays put anymore. A relative told a story years ago about the job resumes he used to see when he hired people for his company. Years ago, most had just a handful of jobs over a decade or so. Then in the late eighties, he noticed the typical applicant had dozen of jobs.
He said that having dozens of jobs was considered to be a sign of instability. Now, it's suppose to be a sign that your 'dynamic'.
haha
Churn in the job and real estate was a 'good' sign.
Living in a community your whole life with a couple jobs somehow became a negative.
Having a sense of place became a negative.
Not being 'dynamic' was a sign you were stagnant.
It was all corporate PR propaganda, the same stuff that encouraged people to buy McMansions they could not afford and take jobs that they did not really enjoy or love.
S&P500 broke through 1000 this morning. Who can now doubt that happy days are here again?
carpe diem said:
"I just travelled by cruise ship from England to NYC.
The majority of people on board were English and Americans. The majority of the English and Americans were hugely overweight and many obese - some in wheelchairs. The other Europeans were mostly of normal weight. The ship has some more formal sit down restaurants but also has 4 buffets serving food (day and night): In observing what people put on their plates (as a nutritionist I love observing these things!), the majority of the vastly overweight people piled on the meat on their plates - breakfast included mounds of meat and eggs - bacon, sausage etc. Lunch was the same - piles of meat. Dinner - piles of meat.
{snip]
AND incidentally, Dr. Atkins died of a massive heart attack. His supporters tried to cover it up by saying he slipped on the sidewalk.
The truth is out there regarding what constitutes a healthy diet and I have yet to meet an overweight vegetarian or vegan, the majority of which eat carbs)."
I hesitate to further fan the flames of the diet discussion, but I think this posting is illustrative in so many ways of what is wrong that it deserves a response. It demonstrates why we have made a colossal mistake in believing that nutrition schools could be trusted to produce good science and capable practitioners who would then guide us in our quest for a healthy diet.
As a first principle, one should base diet recommendations on solid science, not casual observation. But, let's assume for the moment that you actually did an observational study that concluded that overweight people ate more meat than normal weight people. And, from that you have deduced that eating meat caused them to be overweight. This would not be remarkable since much of our nutritional advice has been arrived at through these kinds of studies. The problem is that these kinds of associations derived from observational studies cannot be used to determine causality. In this case, from the observed data, it would be equally valid to assume that the meat-eaters ate meat because they were overweight, not the other way around. While his may sound preposterous at first, I can give you a rational, physiological explanation of why this might actually be the case (I won't do that here because it would take too much time and space). To further understand the way nutritional information has been distorted by poorly done and poorly interpreted science you would really need to read Gary Taubes' book, "Good Calories, Bad Calories".
This nonsense about Atkins having died of a heart attack - even the nutty folks at the PCRM, who fraudulently obtained his autopsy report and started the disinformation campaign, don't go that far. The fact is that he slipped on some ice while walking to his clinic, sustained a severe closed-head injury and died from that a few days later. I know people close to him, including his widow, and the hurt that this nastiness caused them is deplorable. Shame on you for perpetuating it!
Any diet without proper exercise is a recipe for ill health. I'm working on my P-90 woodpile today. Harvesting cucumbers, and beans now. It's been a banner year for lettuce. May lose the entire tomato crop due to late blight brought about by saturated soil conditions, high humidity and cloudy days.
Speaking of banner years, this has been one for rain. Like the Pacific Northwest only New England Coast.
The current tongue and cheek is: The climate's not changing. You're inappropriately dressed.
I've had enough of the diet talk. I'm sorry to see you can't help yourselves.
@ El G
S&P500 broke through 1000 this morning. Who can now doubt that happy days are here again?
Not me! Long live the bull(s*it) market. Here's to inflation, credit, prosperity, sustainability and alternative energy :)
ps - I have been invited for a party at the North Pole, the theme is green shoots on unicorns, to be hosted by Santa Claus and the Easter bunny.
el galenazo,
so you are shorting the S&P today then?
Does anyone have any thoughts as to how long the US$ is going to keep dropping?
Ugh!!
It is frustrating as hell.
I've been reading TAE for 10 months.. slowly building up a knowledge base that was caught off guard 1 year ago... as a result I've been trying to get my wife on board..
I've been trying to move as much money as I can to liquidity.. any short term securities I can.. with some mixed success. I've managed to get some of
our savings in to 3 month t-bills..
But I cannot break through on what 401ks we've accumulated
I am trying to cash out a couple of small 401k roll over funds that have not done well..
My wife refuses to take the tax hit. I try to explain to her I would rather take the tax hit on a fund now, then a negligible tax hit on a negligible fund later.
If i bring up Ilargi or Stoneleigh again to her I think she's going go nuts. she thinks will get bad, but bad to her and bad to me, well we have different views of bad
I am trying to build a lifeboat here.. but I am the only passenger...
Am I alone, those of you attached to someone with your finances and life decisions, have you been able to make any significant how to build a lifeboat headway?
I've been a pretty conservative chap my whole life.. liberal thinking, conservative living, but all of a suden I'm extreme if I want to flip a small 401k into a hard asset.
Whats a guy to do?
@Brunswickian
"Does anyone have any thoughts as to how long the US$ is going to keep dropping?"
Till the stock market falls again. ~Inverse relationship.
@Brunswickian
"Does anyone have any thoughts as to how long the US$ is going to keep dropping?"
This seems believable to me: Shorting the U.S. Dollar: Too Easy to Work?
At least for the next few months. But then the low in 2012, if $ survives that long.
JUST A GUESS FOR ENTERTAINMENT PURPOSES ONLY.
VK @10.42,
Prompted by recent comments here, I'm reading Tainter's Collapse book. His analysis of Roman collapse is sobering, given so many parallels -- not to mention differences like today's leveraging extremes and petroleum dependencies -- hard not to conclude that I&S may in fact be optimistic!
From that perspective, all the recent China comments seem premature -- we may need entirely new standards by which to judge a society's long term success.
98%+ unprepared -- indeed -- and when people like you and Snuffy (likely in the .001% best prepared) speak of being woefully unprepared, it's enough to stop the breath. I sometimes envy Starcade's self-proclaimed position -- at the leading edge!
Mike,
If you can't get out of the 401K then why not try to make the best of it and put those investments into things less affected by a market drop.
While cash may be great, at times, it does not fit every need.
Mike @ 2:32
Your Ugh!! seems a common experience among TAE followers. We're doing the best we can, often on our own.
Even for those who can prepare to some extent, how likely is it that the psychological foundations of friends and family will have any resilience when TSHTF. We may continue to be on our own.
In my family, only my 1929-vintage mom has a vague clue, but even she didn't suffer or learn much from GD1. Brother is an economics teacher, with all savings still in equities. Why would anyone listen to a doomster like me? Happy days will soon return.
So I don't discuss nothin' with nobody!
Anon @ 2:49 PM
I've moved what I can.. I was hoping to use this small 401k fund as a hedge for more liefboat "cash in hand" hard asset planning.
I do think I can convince my wife to move some of it into a 401k money market fund, I guess this is my best of bad options right?
I love TAE, read it faithfully everyday. But I find myself having to gloss over the ugly truth to my wife to avoid the eye rolls.
I loved Stoneleighs top 40 list, printed it out for her.
She read it, and thought, yeah ok, well I am sure things will be get worse, but come on.
You got to hand it to MSM, they imbibe you with this green shoots chatter for months and months, no earth shaking events since last October.. yawn.. things will be just fine...
oye.
The SEC charges BofA with materially false, misleading statements in the Merrill Lynch take-over (Bernanke and Paulson have made quite a few as well, where are their charges?), BofA settles a couple hours later with the SEC for what they must have found in one of the cleaning ladies' youngest kid's piggybank, $33 million, an amount so ridiculously low compared to the charges that we will never see it explained, and Ken Lewis starts addressing his departure, but says it won't come till the bank makes $30 billion annually, which will never happen again.
Welcome to Weird Mondays at the White Street Wall House Channel.
Tune in Friday night for our live coverage of the president having his weekly teachable moment beer on the Oval Office lawn with this week's guests Ron Paul and Ben Bernanke, brought to you as always by the Chinese Tsingtao brewery.
Hello all!
I have been away from the internet for at least a week, so I am just attempting to get back into the swing of things, so sorry if this has been gone over. But I just received an email stating this:
"HSBC is asking their retail clients to move their silver (gold as well) out of the HSBC facility."
First question, has this been addressed here recently that I can go back and read? (I haven't had time to read todays post yet, either)
Second question, what does this mean?
Thanks in advance,
AlphaBeta soup
Mike
"I love TAE, read it faithfully everyday. But I find myself having to gloss over the ugly truth to my wife to avoid the eye rolls."
Yes Mike, me too, but you should remember there is a disclaimer to this site to the effect that it is not for financial advice.
To take one site, that does have more than it's share of the halt and lame, and expect your wife to rejoice does seem a bit of a lot to ask. Maybe read Mish with your wife and Denninger and Jesse and Zero Hedge and Calculated Risk.Of the above I would suggest Jesse's site best for an easy eye as well as intellectual appeal.
Moving to money market was the thing I first did in 2007 but don't take that for advice about what is best for you and your 401 as I too am a Canadian another outlier:)
-same anon- (2:49)
Anon @ 3:49 PM
I do read all of the above. But I have never been too interested in making money off the market, just keeping my money safe with a fair return. Now I know better.
Nobody compares to I&S.
I have limited options to move money around, I've had 10 months to try and explain our predicament.
I guess I've done a poor job relaying in words the volumes that I have digested.
You get a few sentences out and you just start frothing in disgust and the insanity of it all.
I think I will have to side with Taizui on this.
Keep my mouth shut and suffer in silence...
Open your mind for a moment and consider the perversity of a Yuan demoninated US bond. Don't tell me it can't happen. Just think about it for a while and see where the thought goes.
Interesting interview with the chief economist at the IEA. It appears that they are ramping up their oil depletion forecasts from 3.7% pa in 2007 to 6.7% pa today. I find that alarming.
http://www.independent.co.uk/news/science/warning-oil-supplies-are-running-out-fast-1766585.html
Also this:
"But the first detailed assessment of more than 800 oil fields in the world, covering three quarters of global reserves, has found that most of the biggest fields have already peaked and that the rate of decline in oil production is now running at nearly twice the pace as calculated just two years ago. On top of this, there is a problem of chronic under-investment by oil-producing countries, a feature that is set to result in an "oil crunch" within the next five years which will jeopardise any hope of a recovery from the present global economic recession, he said."
I know it's nothing new for TAE regulars but it is interesting to see it now being reported this way in the MSM.
Greyzone,
Re, Yuan denominated bond, you would likely know, but didn't President Carter do something along that line, way back when the world was nearly young?
-same anon-
Meanwhile
Over on TheOilDrum . . . one of the week's more significant news items (http://www.independent.co.uk/news/science/warning-oil-supplies-are-running-out-fast-1766585.html ) was posted up - predawn by the looks of it - and has garnered 188 comments so far. This would have been a significant event,back when you were joint-editors (Econ/Canada).
Don't think PeakOil hitting the MSM on a front page of a serious paper merits a mention?
What's the beef between you?
Can we expect clean news here if old grudges get in the way and if the blog-slant is relentlessly amero-centric?
Maybe it's the horrible Blogger format that's the problem.
Anyway, the whole thing looks stuck.
There's a McDoom-drivethru aspect here that perpetually alarms me. But not to the extent that I would never set foot inside the door ever again, you understand.
The catabolic collapse that you so relentlessly wish wouldn't happen, is probably going to happen. There's a kind of male, orgasmic wish here (amongst your commenters, at least - and possibly yourself) for some kind of shoot-out at the O.K. Corral.
To most people that sounds ghastly. The worst. A crash of gargantuan propotions.
To my wife - who led me here (to TAE and TOD) such a crash would be a preferable outcome . . . for the other 90 per cent of the planet.
The alternative - that proposed by Gail-The-Actuary (bless her cotton socks) and Leanan of TOD, is the miserable catabolic collapse scenario. Whereby greedy grasping humanity does everything in its power to carry on as before - whether it means ripping the guts out of the earth to stuff more coal in the furnace, or stuffing the sky with more foul clouds of smoke.
One way or the other - humanity is not going to go down without fighting - for its Right to Consume and Pollute.
The Armageddon that you conjure up every day, and that all your commenters seem to lap up, is a miserablely monetarily human one. The idea that anything-else on the planet is suffering because of all our folly seems to have eluded them.
They - 90 per cent of the world's creatures - would be better off if we had one of your spectacularly predicticed crashes. Sadly for them, you are probably wrong, and Gail is sadly right : it's going to be a slow and painful descent.
That's without counting the humans, in all this misery.
Mike: "I think I will have to side with Taizui on this.
Keep my mouth shut and suffer in silence..."
Always sensible to agree with Taizui, who is a pretty wise person, as we know. :-)
I think you mentioned more than ONE fund you were trying to convert?
Could you possibly negotiate with your wife" ok, look, honey; we have a disagreement here. A pretty substantive one. Since the money belongs to us both; how about we "hedge" our feelings, and split the way we deal with it? I'll cash out half; and we'll leave your half where it is. Fair?"
It might be better to salvage half than none, or to fracture your partnership. Might even sound like a compromise (always appreciated) if you sell it to your wife right.
Yeesh. Sorry I suggested an earthquake for LA.
"August 3rd, 2009
Four earthquakes hit Mexico’s Gulf of California
Posted: 03:42 PM ET
(CNN) — Four earthquakes — with magnitudes of 5.8, 6.9, 5.0 and 5.9 respectively — struck nearly next to each other in the Gulf of California, between the western Mexican states of Baja California and Sonora, the U.S. Geological Survey reported. There were no immediate reports of damage.
Two earthquakes hit within minutes of each other, just before 11 a.m. Pacific Daylight Time (2 p.m. ET). A third one hit about 30 minutes later and a fourth 10 minutes after that.
All four quakes occurred at a depth of about 6 miles, the USGS reported,"
---------------------------
Quakes that big, that close together, could have produced a substantial shift in fault tensions, way up and down the San Andreas.
@grayzone
“Open your mind for a moment and consider the perversity of a Yuan demoninated US bond. Don't tell me it can't happen. Just think about it for a while and see where the thought goes.”
How about in Yen too?
Don't tell me it can't happen.??! Google “Carter Bonds”.
Shifts the foreign exchange risk back on to the US which has to trade something for Yuan. Might deter further FED monetization of Treasuries. Obvious to all $ is dying.
Buy canned goods I think.
It's really interesting to read the comments following the article in The Independent about IEA and peak oil.
http://news.independentminds.livejournal.com/3609609.html?page=1#comments
They are running about 20:1 in favour of cornicopian/abiotic/denial schools of thought.
Reminds me of the grasshopper and the ant. When TSHTF these are the guys who will be trying to take by force that which others have stocked away in preparation for the coming hard times.
When it is folly to be wise, ignorance is bliss.
Earlier this spring I returned to work in the medical field at a local urgent care.
I am absolutely dumb struck at how little people know about their bodies. People come in and fork over as much as $150 in co-pays to hear they have gastroenteritis; they'd have been sick an hour. One HOUR.
We've had people with significant respiratory problems or in a hypertensive crisis who leave against medical advice rather than go to a larger hospital for further treatment.
One night, a 19 y/o female came in with a complaint of significant abdominal pain. She was still covered under her mom's insurance--no co-pay at all. Also, no apparent disease process. She'd been "sick" for THREE days. Didn't it occur to her to seek medical care prior to that? Or, did it have something to do with her request for a work absence for the following day? (She'd come for treatment at around 3 AM.)
We had one man who brought his young son in with a rash, concerned he had measles. He wouldn't have denied the boy care, but if he waited for 8 hours or so, he'd be able to go to a facility with a lessor co-pay. The boy was in no acute distress. The dad had him pull up his shirt to show us the rash. So we asked, "Was he playing in the woods today? Could he have come into contact with poison ivy?"
The family had never considered such a thing. Scary.
@ Taizui
Regarding Tainter's book
hard not to conclude that I&S may in fact be optimistic!
Indeed, there have been many instances of population die offs across civilizations. The Mayans, Aztecs, Minoans, Myceneans etc were close to being entirely wiped off and infact the South American civilizations went that way!
From that perspective, all the recent China comments seem premature
Indeed, Chinese civilizations tend to periodically fall into the abyss and then rise, the fall as you've read can last centuries.
and when people like you and Snuffy (likely in the .001% best prepared)
I am hardly even ready for this thing, my close family simply can not grasp it. Psychologically I am trying to prepare them but I never realized how powerful the status quo is, rising stock markets across the world makes the message difficult to get across.
Snuff IMO is in a different league in terms of preparation. I am merely languishing.
What truly worries me is a global crash in the oil markets - what happens when the markets seize up next year and global oil output collapses by lets say 50%.
Then we face immediate price rises in gas and food in the face of a deflationary death spiral. If a way is not found to trade oil, then plenty of people are going to starve as it is such a key input.
Jim,
I read every page of comments for that Peak Oil article. We are beyond hope. How can you explain anything to someone that makes a comment like this (re: Global Warming):
"You obviously arent Christians if you believe man can destroy what the Bible says clearly is upheld by the power of God Himself. We cannot destroy this planet. We dont posses the ability. All of you harping about saving something that God Himself is going to consume in fire and remake are wasting your time." -random commenter
Bloody Paradise,
The alternative - that proposed by Gail-The-Actuary (bless her cotton socks) and Leanan of TOD, is the miserable catabolic collapse scenario. Whereby greedy grasping humanity does everything in its power to carry on as before - whether it means ripping the guts out of the earth to stuff more coal in the furnace, or stuffing the sky with more foul clouds of smoke.
I firmly believe that our collapse will be catabolic - I just don't believe it will be slow. IMO the slow phase of catabolic collapse began well over 30 years ago when energy per capita peaked globally. Since then we in the developed world have intensified our efforts to stripmine the rest of the planet for our own benefit and have consumed the resources future generations would have required to maintain anything like our standard of living (high grade ore deposits, mineable phosphates, fossil fuels, etc). Through the global credit bubble we have borrowed both from others spatially and from future generations temporally. We have thoroughly hollowed out our socioeconomic structures to the point where only the outer form remains, while the internal substances has been consumed. This is the essence of catabolism.
One way or the other - humanity is not going to go down without fighting - for its Right to Consume and Pollute.
True, and as it goes down the collapse will pick up momentum, as it is a positive feedback spiral. People will be forced to do the equivalent of eating their seed corn at every step, thereby further undermining a global carrying capacity that will in any case be insufficient once the energy subsidy of fossil fuels ceases to be generally available and/or affordable.
The Armageddon that you conjure up every day, and that all your commenters seem to lap up, is a miserably monetarily human one. The idea that anything-else on the planet is suffering because of all our folly seems to have eluded them. They - 90 per cent of the world's creatures - would be better off if we had one of your spectacularly predicted crashes. Sadly for them, you are probably wrong, and Gail is sadly right: it's going to be a slow and painful descent.
We are not ignoring citizens of other countries or non-human inhabitants. This is very much a multi-faceted and global crisis. Environmental degradation of all kinds will be a huge part of that, and all the more so once people start stripping everything that will burn in order to cook and heat their homes. I don't think a fast crash will be noticeably better for the biota than a slow one would be. There are nearly 7 billion people on this planet that can probably only support less than a billion, and those 7 billion people will pillage everything out of necessity on the way down. Carrying capacity could well end up being better measured in millions than billions by the end of this century. If that happens, non-human vertebrates will have an even harder time.
I am really stuck on preparations and welcome advice.
I live in a small geared to income apt( 400 sq ft) Barely enough territory for me and my cat. I can and am saving cash as cash doesn't take up much space.
Lately I've had the urge to move the bed into the living room and turn the bedroom into storage - items like food, water, medical supplies, survival gear like a stove...
If I did such a thing my children would have me certified as insane. If I did such a thing other tenants or management would eventually know about my hoarding ways. WTSHTF guess whose door they'll knock on first or break down first?
I thought to rent storage but surely the desperate and hungry would go to storage units/garages as low lying fruit.
I cannot count on planning now or help later from my family. I feel quite vulnerable and frustrated that I am not better prepared!
So far Ive saved some money and give energy to creating relationships of goodwill.
Has anyone in our readership overcome similar constraints?
There is another Joe Bageant article on counterpunch.org today. It's titled:
Bad News is Bad for Business
A Yard Sale in Chernobyl
Scandia
Take up camping. ;-)
Water purifiers, cook stoves, blankets, etc are all used when camping!
AlphaBeta soup
Hello Stoneleigh,
There are nearly 7 billion people on this planet that can probably only support less than a billion, and those 7 billion people will pillage everything out of necessity on the way down.
I agree with all you wrote except this. There are way way way more then just 7 billion on the planet. The US alone has some 10 to 20 billion people if you take into account consumption factor and energy slaves.
Consumption factor for the US, UK, Australia, Europe etc is 32 times more per person then the Average African. Each US citizen consumes 70 times more energy then the Average Bangladeshi I believe. So each person in the US is the equivalent of 32-70 poor people.
Hence the US is the most populated country in the world if we are to make an apples to apples comparison with China and India.
The UK has more around two billion people infact if we factor in consumption and Canada is closer to one billion. The fall in living standards is going to be tremendous.
On a side note I do believe that the planet can support 7 billion people easily, we can not support the lifestyles that the West enjoys, they must fall by 97% just to catch up with the poor of the world and then we'll fall some more from there :(
@ Scandia
Take a look at this page, a nice collection of articles, maybe you could find some useful advice.
http://www.lifeaftertheoilcrash.net/Prepare.html
Best to store some of those food packs that can last you a few months and some medicines, water filters etc.
BP - "The Armageddon that you conjure up every day, and that all your commenters seem to lap up, is a miserably monetarily human one. The idea that anything-else on the planet is suffering because of all our folly seems to have eluded them."
I quite disagree! In fact, it is the objective of most of the folks who post here to learn and pass along the necessary information, knowledge, skills, and helpful advice that others need to know, now and in the near term.
Don't blame the messagers for the fact that the message appears to be rather tragic and these conversations summon up painful images in the reader's mind.
I would like to spend my time playing golf and picking my guitar, etc. and live happily ever after. Unfortunately I have to face reality and try to help myself, my family, and those around me.
A good day for the Polka Dot Gallows, anyway.
-------------------------
NEW YORK (CNN) -- A recent college graduate is suing her alma mater for $72,000 -- the full cost of her tuition and then some -- because she cannot find a job.
Trina Thompson has sued her alma mater, Monroe College of New York.
Trina Thompson, 27, of the Bronx, graduated from New York's Monroe College in April with a bachelor of business administration degree in information technology.
On July 24, she filed suit against the college in Bronx Supreme Court, alleging that Monroe's "Office of Career Advancement did not help me with a full-time job placement. I am also suing them because of the stress I have been going through."
-------------------------------
Somebody asked what would happen when those with an inflated sense of entitlement found they weren't actually entitled.
There ya go! Sue the bastids.
So if Monroe College settles the suit on the same scale as BOA settled the suit by the bloody SEC- that means cutesy Trina will come out of with around $4.67. Good for a latte, maybe. I'm sure that will make her happy!
No job; sue the college!
Scandia - "So far Ive saved some money and give energy to creating relationships of goodwill."
IMO those are high priority things to do! Relationships regarding safety too if possible.
Personally, I also put back a little 90% silver coinage, (not gold) just in case. If not needed you can always swap it or sell it about anywhere.
I don't see a sudden crash or catalysm that would happen so fast that you would not have time to make some local decisions, get some storable dry and canned goods, etc.
Good luck!
Taizui.
Compared to 99.95%of the population I am in pretty good shape.
The problem is ,after having spent 10+ years doing the emergency management thing as a nuke,the urge to think,and re-think your position is so ingrained in my though process that its part of me. I don't even think of the process anymore...I automatically think in terms of how everyday decisions will affect my ability to stabilize my environment as things get worse.I see others doing the same.Preparedness is no longer a dirty word ,or a concept that considered "tinfoil".Its now becoming hip to be "secure"I cant tell you how many folks I know,as a professional,or in the stores I frequent,or little cafes I have hung at,who know I am something of a doomer,who have said "its turning out just like you said it would".....Got any ideas on ??
Fortunately most don't know where I live.Which will cut down on some potentially messy scenes...
Other news.Family has decided to all go in on a duplex or tri-plex for housing for elderly grandmother[93]un-employed nieces and daughters+son-in-laws...ect.
This is going to be interesting.
It will make feeding my crew/security easier,anyway.
Taizai,one thing that has stuck in my head over the years is the fact that "luck" at anything is 90% work,and 10%fate.Many say they have no resources to prep with.Bull.knowing its coming is half the battle...another 20% is having a plan A,B.C.Since no battle plan survives contact with the bad guys...have solid backups to your backups.Have you hiked in a area/place that you could turn into a pretty good shelter?.Improvisation can save your ass.2 liter coke jugs make decent emergency water jugs...50lb beans cost 14buck ,50lb rice 25$. 5gal. plastic pails are great for storing beans & rice...At this time of year,all seed outlets are selling this years seed...cheap.Buy lots.store dry &cool
In a urban environment,be a mouse ...is there a place you can secure that would be more secure than your present location?make arrangements .Now!.Got good friends with a good situation,secure ect,...but no preps?,You,and your 400 lb of beans & rice would be a very welcome addition to a crew..
When people say "prepare",it can mean a thousand different things to a thousand different people...Everyone has their strengths..and weakness.This is what tribe is all about.My tribe has some doctors,a periodontist,,a couple of marines,a nurse,a carpenter, a theologian,a top-of the-line mechanic....
Tribe is the old fashioned word for network. As things change,each person in your group can become more ,or less important to the whole.Should it get way bad...several of these folks might shelter with me,or I them.
The time is right now to figure out what to do if/when it gets weird...not after people are stressed out of their minds...
And the most important ingredient...luck...Many say they would rather be lucky than good...I think both is will be needed
later.
snuffy
To Dr. J,
Anyone who bothers to prepare for collapse without preparing for the possibility of two-legged vermin is preparing to fail, with a sentence of death.
If you can't stand the idea of owning weapons and defending what is yours, then you may as well roll over and die when the troubles begin.
Note that I am not advocating initiating force, nor am I advocating not being charitable. But there is a difference between being charitable and being forced by another person to turn over everything you have stored, essentially your life, in exchange for their demands.
Most people do not want to face this. They do not want to look homo sapiens in the eye and admit to what it is or what it can and will do. All the food, water, and supplies in the world will do you no good if another human comes along armed and determined to take it from you unless you are also armed and already mentally prepared to use deadly force.
Failure to cross that mental chasm will lead to additional unnecessary deaths, particularly of the very people who should have survived.
Scandia - Oh! When asked about essential items I usually mention my terrific big Berkey water purifier. I use it every day!
(I am not affiliated with the company ;-) )
http://www.morethanalive.com/BK
Mike
On that question of making money try today's Kunstler blog:
"Whatever else happens, it sure will be interesting to see the public's reaction to Wall Street's announcement of Christmas bonuses. The folks at Rockefeller Center better be thinking about getting a fireproof tree."
I read those guys for information on what's happening not on how to make a boodle. On how I got my wife to look at things was to ask her to print out stuff for me to read (I hate reading a lot on the computer) in the process she has become firmer in my position than I am!:)
---------
Stoneleigh,
First you write in such an optomistic vein, to wit:
I firmly believe that our collapse will be catabolic - I just don't believe it will be slow.
and then you spoil it all by saying:I don't think a fast crash will be noticeably better for the biota than a slow one would be.
Would you care to elaborate on that last part of your position?
-------
VK
And as well, if we could undiscover fire, we might even have a chance on revisiting Eden. (of course, the way the game seems to be rigged, when we arrived we would find Tim Geithner setting up an apple stand and Larry Summers offering us a loan to buy them with).
-same anon-
___________________
Greyzone - Well said. I have to agree even though it is the last thing in the world I would want to face. It is a part of my logistics.
Must Read for those following the healthcare debate
http://tauntermedia.com/2009/07/28/unconscionable-math/
I'd like to pick up some 1 0z silver minted coins soon in some quantity, maybe $10,000. Can anyone recommend a really good site on how to go about this?
el g - try kitco.com. They ship different types including those produced by the Canadian Mint.
El G
Got this link off the Chris Martenson site
http://www.golddealer.com/
Looks like better deals.
Andy Xie
http://www.my1510.cn/article.php?id=e3fc777cdd24720a
A property bubble usually leads to overbuilding. The empty buildings represent permanent losses. Most people would laugh at such a possibility in China. After all, 1.3 billion would need unlimited properties. The reality is quite different. China’s urban living space is 28 square meters per person, quite high by international standard.
China’s urbanization is about 50%. It could rise to 70-75%. Afterwards the rural population would decline on its own due to its high average age. So China’s urban population may rise by another 300 million people. If we assume they all can afford property (a laughable notion at today’s price), Chinese cities may need an additional 8.4 billion square meters. China’s work-in-progress is over 2 billion square meters. There is enough land out there for another 2. The construction industry has production capacity of about 1.5 billion square meters per annum. Absolute oversupply, i.e., there aren’t enough people for all the buildings, could happen quite soon.
When it happens, the consequences are quite severe. Property prices could drop like Japan has experienced in the past two decades, which would destroy the banking system.
He also mentions the stock market bubble fueled by easy money. He reckons October is the month that the market will roll over.
Thanks Dr. J and Todd
Re Todd's golddealer.com link:
The silver 1 oz coins are price as "spot + x cents"
Anyone know exactly where I locate the "spot price" and how it is defined?
VK @ 6:57
Well said!
We Westerners must constantly remind ourselves that the way we eat and the way we live exploits the whole planet.
El G: While I have not purchased from them, research suggests that APMEX is overall the best choice.
El G,
You might want to check out goldline.com.
http://desdemonadespair.blogspot.com/2009/08/weeks-after-bloodshed-american-oil.html
Barely six weeks after dozens of Amazon natives were gunned down in cold blood by the Peruvian Army in the oil town of Bagua for protesting the cozy relationship between Big Oil and the government of President Alan Garcia, I find myself on the banks of the Mother of God River in Salvacion, Peru, wondering if all those folks died in vain.
Any day now, the bulldozers will be moving in as Texas-based Hunt Oil Company – with the full go-ahead of the Peruvian government -- fires its first salvo in its assault against the million-acre pristine rainforest wilderness of the little-known and largely unexplored Amarakaeri Communal Reserve.
By the time you read this, the choppers will probably already be here, womp-womping their way along the very edge of Manu National Park to supply the seismic survey crews whacking their way through the jungle and blowing off explosives to see what riches lie below the surface. The local natives that the “reserve” was created to protect, like so many before them, are getting ready to have their lives irrevocably altered, and are wondering how to react to this invasion.
Also,
http://www.officialwire.com/main.php?action=posted_news&rid=12991&catid=1092
The investments in the upstream oil and gas industry are the most affected due to the credit crisis and the current economic downturn. Most of the suspended or cancelled upstream projects are in the oil sands sector due to the high cost of development. More than 15 projects in the Canadian oil sands have been suspended since late 2008 amounting to more than 1.72 mb/d of oil production capacity. More than 3.5 mb/d of crude oil production capacity that was supposed to come online in the next three years have been postponed, delayed or cancelled due to the financial crisis and the global economic slowdown. Similarly, more than 3.5 mb/d of crude oil production that was expected to come online from 2013 to 2015 has been postponed, delayed or cancelled. Investments in the downstream sector have been relatively less affected than the upstream sector. Nonetheless, some of the refining projects have been delayed as a result of the financial crisis and the weaker outlook in oil product demand.
El G - http://tinyurl.com/mv3gcp
Try Northwest Territorial Mint
El G -
Daily spot at Kitco
http://www.kitco.com/charts/livesilver.html
Mike, in my case spouse is the husband. While he agreed to moving his deferred comp plan containing mutual funds to an IRA CD at credit union, that is it. He, and my whole family, do not believe that the bubble is going to burst. It's all green shoots and recovery is just around the corner.
Last spring I was told not to send any more email because the news was too negative. So I stopped, and absolutely no one discusses the economy at family gatherings.
They are still buying cars and houses and taking exotic vacations. I am the only 'Little Red Hen', though daughter is coming under my wing. (sometimes she reads TAE!).
But one of these days they will be personally affected and coming to us for advice. I sympathize with you, we do what we can now, and be available to help when the bubble bursts.
El Gall- if you ask 10 different dealers what "spot" means, and what it "is", you're likely to get 11 different answers. Basically, it's the current commodity quote; like here
http://money.cnn.com/data/commodities/index.html
Today it's $14.25, or so; up 30¢ today. Maybe. In the last couple months it's been down to $12.25 or so; and up to $14.70ish.
Count on it; however much you nail spot down; when you go to purchase, they'll have a different quote- a little higher than yours.
Incidentally- you nailed my thinking on China- thanks. The phrase "troll grenade" came to mind.
@Anonymous
el galenazo,
"so you are shorting the S&P today then?"
Since you asked:
I did write quite a while ago that I was looking at shorting when the S&P500 hits 1000 or Sept 1, whichever comes first. I have changed my mind over the last couple of weeks to looking at or shortly after Sept. 1. Thinking now maybe 50% Sept. 1 and 50% Sept. 20. Also mulling over percentage breakdown between SDS and SH. I feel that the manic euphoria is peaking but still has a couple of months to go. I think we need shorter days and falling leaves to catalyze the crash :-0
Re silver coin dealers:
Thanks for all the feedback.
Greyzone said:
"If you can't stand the idea of owning weapons and defending what is yours, then you may as well roll over and die when the troubles begin."
Unfortunately, I think you are right. I wonder if people who choose denial as a coping mechanism, do so because they can't bring themselves to confront this inevitability.
International Shipping in desperate straits!
"The truth of the matter is all container carriers are losing money. The big question is, how much cash is available to the company to weather this downturn, and, are the owners willing to use their cash resources to keep a company running."
ZIM rescued (Israeli co.)
http://internationalshippingnews.blogspot.com/
http://www.huffingtonpost.com/2009/08/03/tax-revenues-post-biggest_n_250108.html
The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.
Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.
The last time the government's revenues were this bleak, the year was 1932 in the midst of the Depression.
Greenpa:
Monroe College - I know that place. It started out as Monroe Institute, a secretarial-training trade school, located on the second floor above storefronts on Fordham Road in the Bronx.
Now they advertise themselves as a "college." (They took over a building that once housed an undertaking business.) And they have some advertising budget. Hundreds of subway cars have their ads across their interiors and exteriors.
$70,000 in tuition for a place like that is a scam.
Greyzone said:
"Most people do not want to face this. They do not want to look homo sapiens in the eye and admit to what it is or what it can and will do"
Right you are Greyzone, try this example from the siege of Lenningrad.
"One of Nikolai I. Vavilov's assistants starved to death surrounded by edible seeds so that the seed bank (with more than 200,000 items) would be available to future generations.
or this one you might enjoy, complete with cannibalism:
" Dogs and cats were hunted for food and stories emerged of cannibalism - freshly buried bodies were, according to some, dug up in the night. Gangs of people braved German guns to leave the city and dig up potatoes in fields outside of the city. This actually did bring in some food that was not kept by those who ventured out - the potatoes were handed in to the authorities and then distributed equably. "
-same anon-
NEW YORK, Aug 3 (Reuters) - U.S. Treasury Secretary Timothy Geithner blasted top U.S. regulators in an expletive-laden tirade amid frustration over President Barack Obama's faltering plan to overhaul financial regulation, the Wall Street Journal said on Monday, citing people familiar with the meeting. Geithner told regulators that "enough is enough," the newspaper said, citing one person familiar with the meeting last Friday with Federal Reserve Chairman Ben Bernanke, Securities and Exchange Commission Chairman Mary Schapiro and Federal Deposit Insurance Corp Chairman Sheila Bair.
http://tinyurl.com/mlq8vy
Trouble in Paradise?
To Ahimsa 8.38pm
Thanks again for your wise words.
No way to convince the backward thinkers. It seems only when they come down with a chronic terminal illness do they decide to change their diet. I see this every day at the clinic I run in Europe - and I didn't just study nutrition (in Europe) but also am a Doctor of Naturapathy. I been long aware that Doctors in the US who practice conventional western medicine are the most uninformed, brainwashed, indoctrinated people on earth who are puppets of the pharmaceutical, meat and dairy industries.
By the way - did you find a place in Vermont?
cd
@ bluebird,
same sitch here! my consumption-drugged hubbie won't stop arguing about the recovery just around the corner, and therefore won't follow the plan to prepare. i'm hoarding what little i can on my own, and learning skills on my own. married and lonely as hell.
@ greyzone
how do you outgun the politician-turned-warlord's posse that loots the local armory just before heading over to your place?
Fed Plans to Strengthen Bank Examinations With Teams of Experts
http://tinyurl.com/m6bdur
Another scam in the making.
One of the biggest scams ever pushed onto the public was the higher education poison pill. The costs are silly, and it always comes down to the individual. In my field of biotech I have personally fired ivy league schooled employees for total incompetence. Give me a stae or community college grad that will bite your ankle to learn anytime.
Anyways,
great post ILargi, I look forward to tomorrows post. Thanks for your input over the weekend.
Great post.
"The hosts of the shows, especially George Stephanopoulos, are cast as some kind of side-kicks..."
LOL, ala Larry King and his softballs. Gotta love it.
Of interest: First hour guest, investment advisor Catherine Austin Fitts shared an update on the economy. The middle class is going to be hit by indirect taxes coming from many different directions, including the raising of state and local fees, she warned. Further, we're seeing a kind of "economic warfare," she declared, in which small businesses are being shut down, and capital from Main St. (local communities) is diverted away to Wall St.
http://rapidshare.com/files/263453127/CAF_Aug_02_2009.mp3.html
http://solari.com/
Tax increase? Isn't that what Cap & Trade is all about?
So now that Ilargi has skipped the day, what time will he start posting new primers?
"I've been reading TAE for 10 months.. slowly building up a knowledge base that was caught off guard 1 year ago... as a result I've been trying to get my wife on board.
Mike--I've been at it five years. The first year, she just listened politely--with a little eye rolling. She was listening, thinking, but didn't want to commit. The second year, what got her attention were such things as peak oil reports from the government, such as the GAO report, the Army Corp of Engineers, and so on. Once every couple weeks, or so, I'd e-mail her some report from a "reputable" government source. She wouldn't complain about the e-mails, but I also wouldn't bring it up in conversation. If something unusual came up, I might mention it with just a couple sentences. At first we did small food and money preparations.
After about three years she saw herself losing jobs, money, and so on and the frequency of our planning and actions increased. I would forwards news articles to her and make a comment. This was when I started reading TAE--Ilargi's and Stoneleigh's pithy comments tremendously helped when I framed my own comments in e-mails and verbally. Over time, my track record helped. Her siblings, whom she respects a great deal, would politely listen--but then began to talk about with each other how my predictions seemed to be on target. (None of her side of the family are making any preparations, though, that I can tell.)
When last Sept happened, she was badly shaken, but not surprised and followed news reports closely on her own. Now, we discuss and implement preparations almost daily. In general, I'm about a "year ahead" of her, but she's definitely a partner and I work to respect her pace. Something I wasn't aware of at first, but eventually became clear was how strongly she responds to the tone of my voice. Five years ago I was so startled and shocked by what I was learning that an outraged, frustrated amazement would enter my voice, which would almost immediately make her bristle. She didn't like hearing me struggle with the panic and frustration I was feeling. Today, I always watch my tone when we're discussing news or preparations. Maybe most husbands learned this long ago, but I've been slow. To put it bluntly, I had to "mature" in how I managed and communicated the problem before she became a partner in preparation. ;-)
want know about high fructose corn syrup? check out: kingcorn.net
high fructose corn syrup is bad stuff, it's in most foods consumed. which explains why many americans are obese.
Robert,
Oh please......yes high fructose corn syrup is poison. But it's only part of the picture.
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