False Hope, Pocket Change

I was struck by the fact that today is day 66 of the Obamanation. Cynically, 666 springs quickly to mind. So, where are we two months into the Devil's inspired leadership?

The government is engrossed in borrowing our way out of debt - a feat which requires a public education in mathematics to even contemplate. The government is likewise nationalizing everything it can get it's hands on - another course of action that requires a lapse of reason to consider. Plans continue apace to nationalize our health care system and to impose a steep carbon tax on energy usage.

Obama's lies are a false hope. All we'll have to show for his Presidency is pocket change

Niemoller Redux, Take Two...

When the feds came to nationalize AIG, I was silent because they weren't my insurer.

When the feds came to nationalize the top banks, I was silent because I didn't care about Wall Street.

When the feds came to nationalize American automakers, I was silent because I drove a Japanese car.

When the feds came to drive health insurers out of business with a government-run plan, I was silent because I paid out of pocket anyway.

Now they've nationalized everything, doling out only what they say we need, and I am just a worker ant for the state whose job is to stay silent.

-- Perry Eidelbus

The Root of All Evil

Don't be distracted by the sideshows. At the core, the "bailout" is nothing more than the bankers consolidating wealth and transferring liability to the people.

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."

-- Lord Acton

Declaring War Under False Pretenses

Much is still made of the fact that Bush invaded Iraq looking for non-existent weapons of mass destruction. There's some validity to this argument, but the past is the past.

Nowadays, more should be made of the Marxist Kenyan who invaded America without ever proving his eligibility to be president...

Cultural Marxism

"Political correctness is cultural Marxism... ...this is Animal Farm!"

-- Andrew Breitbart

If you don't know the meaning of "four legs good, two legs better" you'd best read a little George Orwell tonight...

St. Patrick's Day is now "potato day"

The War on Terror is now an "overseas contingency operation"

Acts of terrorism are now "man caused disasters"

Rememeber This Day...

...as today is the day that the Fed began monetizing the debt. Up until now, when someone bought a treasury note, they did so with existing fake dollars. In other words, no new money is created. As of now, that's out the window: the Fed will be buying treasuries and they will be creating new dollars to fund the purchases. Every dollar spent on this will be a newly created dollar. This is a broad expansion of the money supply, which generally means inflation. Serious inflation.

That could happen here, in the near future. Think Weimar Germany, or Mugabe's Zimbabwe. Keep in mind, though, that at this point this is just another desperate attempt to prop things up. The deflationary vacuum remain in charge, and nature abhors such a vacuum! We may end up retracing the steps Japan took over the last 15 years, in which no amount of tinkering could restart the economy, and in which a vast amount of newly created money also failed to ignite inflation. They still coast along in the doldrums, and probably will for many more years.

Methinks honest money and limited government could have been the solution to all this mischief, but I'm told that any such notions of legitimacy are outdated and unfashionable...

Change

"As nightfall does not come all at once, neither does oppression. In both instances there is a twilight when everything remains seemingly unchanged. And it is in such a twilight that we all must be most aware of change in the air - however slight - lest we become unwitting victims of the darkness."

-- Justice William O. Douglas

It's obvious things aren't right with the world. There's an undercurrent of fear wherever one goes these days, but most people aren't equipped to understand what's really happening. They need eyes to see and ears to hear, but they've been robbed of these faculties by public education. In this transitional time, many still cling to the illusion that life can be normal again someday.

If you understand what's actually taking place, this thin veneer of normailty is surreal and the illusion that life could be normal again is laughable. Sure, we still go to work and get paid. There's still gas at the pump and food at the supermarket. We can still afford these things, so things must be okay, right??

The old arrangement is coming apart, and the Constitution hangs by a thread. Under the banner of hope and change, our new leadership is shredding the fabric of America and smirking while they do it! We're witnessing a bold, determined and thus far successful effort to eliminate Liberty (an arrangement that produces plenty and ease) and replace it with Marxism (a arrangement that produces shortage and hardship).

Under the guise of repairing the financial crisis that it helped create, the government is nationalizing every private business it can and is also enslaving every one of us through massive debt. The result will be fewer jobs, punishing taxes and little if any potential for future growth.

Under the guise of providing medical care for all, the government plans to take over our entire health care system. The result will be low quality, high costs and widespread rationing. (Ask any veteran how this works...)

Under the guise of food safety the government intends to seize complete control of food production and distribution. The result will be shortages, rationing and a frightening new era of government power - an era in which food is a weapon and only those who toe the line will eat.

Under the guise of "fairness" the government wants to tax steal from those who produce in order to spend more on government programs. The result will be more government, fewer jobs, a weaker economy and less for all of us.

Under the absurd notion that we have responsibility to protect Mexico from it's own corruption and violence, our government hopes to further restrict our Second Amendment rights. An increasing number of good Americans are weary of giving ground on this issue and the result next time it's tried may be civil war.

Note the operative words here: "take over" - "seize" - "nationalize" - "power" - "restrict"...

This is not the map the Founders gave us. In this brave new world, Liberty is always the wrong answer and dissent is quite unwelcome. Those who disagree with any part of this new course down the road to serfdom are now officially defined as domestic terrorists, and our taxes funded the "study" that supports this lie!

We're living in the twilight Douglas referred to. Right here, right now. We live a "normal" daily life while America as we know it is being dismantled before our eyes. We have transitioned from Liberty to indifference and then corruption. We're through all that and have moved into the last possible phase before collapse - unadulterated evil.

All that is necessary for this evil to triumph is for good men to do nothing. It's up to us to try to write a different ending. It may not be possible, but we need to try...

In the Mood (to Quote...)

So here's another:

"Guard with jealous attention the public liberty. Suspect everyone who approaches that jewel. Unfortunately, nothing will preserve it but downright force. Whenever you give up that force, you are inevitably ruined". -- Patrick Henry

While You Were Sleeping

The flick by that name was kinda cute. This national debt ticker is a horror film...

Yesterday's debt (3-19-09) 8:00 AM MST $60,740,446,000,000

Today's debt (3-20-09) 8:00 AM MST $60.748,748.000.000

That's new debt of $8.3 Billion a day, $249 Billion a month, $2.9 Trillion a year...

More on Central Banking

As criticism of the Federal Reserve - our nation's central bank - increases daily, we have only to look into our own past to discover all sorts of American leaders who knew this was a bad idea.

Here's one: "Banking institutions are more dangerous to our liberties than standing armies . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered." Thomas Jefferson

And another: "Whoever controls the volume of money in any country is absolute master of all industry and commerce."
-- James A. Garfield"

See? We really did have honest Presidents, once upon a time!

Lines in the Sand...

A good number of conversations these days eventually turn to lines in the sand. I always try to convey that there are many things a person could suffer that are far worse than fighting or death, as this great quote illuminates:

"War is an ugly thing but not the ugliest of things; the decayed and degraded state of moral and patriotic feelings which thinks that nothing is worth war is much worse.

A man who has nothing for which he is willing to fight, nothing which is more important than his own personal safety, is a miserable creature and has no chance of being free unless made and kept so by the exertions of better men than himself."

-- John Stuart Mill

Richard Feynman on the Deficit

Shortly after I figured out that the Federal Reserve wasn't federal and didn't have any reserves, I concluded that the true laws of economics were essentially laws of physics. In the economics parallel to the laws of thermodynamics, you can't actually create money out of thin air. Sure, you can fake it, but there isn't anything of actual value there and your creation will ultimately collapse. Thinking that way, I was charmed when I stumbled on this quote from physicist Richard Feynman:

"There are 10^11 stars in the galaxy. That used to be a huge number, but it's only a hundred billion. It's less than the national deficit!

We used to call them astronomical numbers. Now we should call them economical numbers."

Feynman is one of my heroes. Among my most prized books are his lectures on physics. He was the "Joe Lunchbucket" of the elite theoretical physicists. When the space shuttle Challenger's solid rocket booster failed, Feynman ended up on the Rogers Commission investigating the accident. At one point he sent someone out out of the room for a c-clamp which he tightened onto a sample of the seal. He dropped this assembly into his glass of ice water, let it chill for a few minutes and then showed everyone how the seal lost it's flexibility and resilience at low temperatures.

It's a sign of true genius when the brightest guy in the room comes up with a demonstration so simple that even the politicians get it. He was a real thorn in the side of the bureaucrats, saying - among other things - that "NASA had overestimated the reliability of the shuttle to the point of fantasy" and "reality must take precedence over public relations, for nature cannot be fooled."

Feynman's wry humor and penchant for simple demonstration would have been a real hit in this age of you tube. One has to love this way of criticizing government spending. Sure, the numbers seem rather quaint at this point, and Feynman himself would surely mourn how much worse they are now.

Hapless Sock Puppet Geithner Gets a New "Helping Hand"

According to an internal Citigroup memo, Lewis Alexander - Citigroup's chief economist - is leaving for a job at the Treasury Department. An unnamed government official says Mr. Alexander will be a ventriloquist counselor to Treasury Secretary Timothy Geithner.

Alexander has very special insights on the economy - in an early 2007 interview he had this to say about the housing bubble: "I think that's not going to spill over more broadly into the economy, and so I think we're going to have a normal kind of housing cycle that's going to last through the middle of this year"

This is just swell: Obama is bringing the Jim Jones stock tank and ladle to Washington. Wanna bet Alexander's next in line if Geithner can't hold on to the job?

It's going to be an interesting summer.

Shooting Up With Play Dough

In a single day, the economy has mainlined another trillion - give or take - by virtue of the FED's commitment to purchase long-term treasuries and mortgage backed securities. As a result, the FED's balance sheet will grow to over $3 trillion after already doubling since last year.

This desperation play comes after conventional manipulations (there's a term to reflect on!) like lowering key interest rates to zero failed to halt the slide. The stock market reacted enthusiastically, demonstrating once again that smoke, mirrors and emotion are the only forces producing gains in this climate.

This is beyond the pale. It's the creation of another trillion out of thin air, and is nothing more than an addicted parent robbing its own children for a fix.

Uber-inflation awaits. I never thought I'd say so, but I miss the days when the economy was merely a house of cards...

Obama Just HAS to be Meddling With Someone's Guns...

...so why not commercial pilots?

As I wrote in a newsletter shortly after 9/11 "the solution to air piracy is simple - arm the pilots! They're the ideal group to be carrying guns. Many are ex-military and are already acquainted with weapons. Many more are recreational shooters. They're all above average in intelligence, eye to hand co-ordination, motivation and learning ability. In other words, they're a shooting instructor's dream class! Let's arm them, train them and then show them shooting well on TV..."

Well, the government did go on - grudgingly - to allow armed pilots, but not without forcing them through inane bureaucratic hurdles. Now, the tyrant Obama has diverted funds away from this program, and that money will instead be used to harass the very same pilots being disarmed.

Read it and weep.

Why I'm a Gun Owner

Here's one popular line of thinking:

"One man with a gun can control 100 without one"
-- Vladimir Lenin, dictator

"Political power grows out of the barrel of a gun"
-- Mao Tse-tung, dictator

"History teaches that all conquerors who have allowed their subject races to carry arms prepared their own downfall"
-- Adolph Hitler, dictator

"So it's not surprising then that they get bitter, they cling to guns or religion"
-- Barack Obama, dictator, showing his contempt for the First and Second Amendment

Such attitudes are the mark of tyrants. Here's another way of thinking, which maturity and wisdom prefers:

"No king or civil power can take away nature's birthright of self defense from any man or community of men"
-- Samuel Rutherford, theologian

"When a government betrays the people by amassing too much power and becoming tyrannical, the people have no choice but to exercise their original right of self-defense, to fight the government"
-- Alexander Hamilton

The ultimate authority resides in the people, and that if the government got too powerful and overstepped it's authority, then the people would develop plans of resistance and resort to arms."
-- James Madison

"all men... ...are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty... ...whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it"
-- The Bill of Rights

The Bill of Rights is a moral statement. It protects unalienable human rights that by definition predate, supersede and outlive any system of government instituted by man. This is the meaning of Liberty!

Tea Party!

National Plans for Tea Parties are afoot.

On 1 April 2009 everyone is asked to send a tea bag to the resident at 1600 Penna. On 15 April (the real April Fool's Day!) there are "tea party" rallies scheduled throughout the land.

I generally don't bother with protests because the beltway bandits and their bankster bosses couldn't care less. In fact, they welcome the expenditure of our energy on empty symbolic gestures. Meanwhile, the rape of America will proceed until we put a stop to it. From the behavior we're seeing out of Washington we can conclude they won't even consider stopping what they're doing unless they're forced to.

Tea bags won't do it. (In fact, the socialist set rather likes tea...)

Having said that, I like this tea party idea. It's perfectly relevant to the problem at hand. The critters we elect to represent us go to Washington and pass 1000 page bills without even pretending to read them. Both parties do it, and both parties know the outcome before they act.

When they don't bother to read what they vote on, they cannot claim to represent us - and it's time we stopped allowing them to pretend otherwise! The system is broken. It's hopelessly corrupt. We have taxation without representation all over again, and it's provable beyond any rational doubt.

Mailing in a tea bag won't cost you much. This protest is going to happen with or without us, and it needs to be big - big enough the media can't ignore it. Millions of teabags are just the ticket. If the DC post office is overwhelmed with planeloads of tea bags the word will get out! (I would suggest addressing the envelope to "President Obama" and then crossing the "P" out. That'll send two messages for the price of one!)

Also, attending the rally nearest you sounds like a pretty good idea. It's on April 15th, when the media always shows the late filers live, driving past the post office after dark. If the tea party protest peacefully spills over the Capital lawn, into the street and down the road, it'll make the evening news for sure. Regardless of their sympathies, the media just won't be able to resist covering the filers and the protesters on the same night!

These protests need to be orderly events just like Dan's Bake Sale - a phenomenon of the early Rush Limbaugh days that took place just north of me in Fort Collins, Colorado. That entire event came off peacefully, and when the crowd parted, all that remained was trash piled neatly by the overflowing trash cans. No muss, no fuss, no bad behavior and no arrests. That's how true conservatives conduct themselves. (This will be another stark contrast to the chaotic protest and litter that accompanied the Democratic National Convention here in Denver last year, and we can easily dredge up pictures to show the difference.)

April 15th falls on a Wednesday. It's just a month away, so get planning. Request a day off right now if you need to. I'd suggest that instead of carrying a sign, dressing like George Washington and wearing a replica flintlock would be appropriate formal dress for such an event. Barring costume, slinging a full-size toy rifle (like the ones the rifle teams drill with) may be just the ticket. Put your sign (if any) on a dowel stuck down the barrel. (Teabags are a fine reminder, but we need to let them know in no uncertain terms where they'll soon end up if they don't stop pushing - and a picture is still worth a thousand words!

It would be a good idea to find a spokesman for each group, and to distribute talking points nationwide. We need present a united front, and to let the elites know that we won't be heading home feeling good about ourselves on the 15th. The 15th is just the wake-up call - the notice that we've had it and that we'll be watching them closely the next morning to see if they get the hint or if we need to move matters to the next level.

Let's set about creating a shortage of tea bags, toy guns and George Washington wigs to go along with the shortage of real rifles! Then we can tip the media about the tea bag and wig shortage as well!

The Proper Response to Assaults on Liberty

Americans have backed up far enough. Our power-hungry government has long since given up any moral authority to govern us, and continues relentlessly in America's destruction and our enslavement. The Liberty left us at this point is nowhere near the Liberty Americans started out with. We've lost enough! My "line in the sand" is drawn, and I stand firmly in front of it. I will not retreat another inch, and neither should you!

Here's a great example of this mindset, from the similarly difficult times that led to the Founding of the USA: "Stand your ground. Don't fire unless fired upon, but if they mean to have a war, let it begin here." --Captain John Parker at Lexington Green, 19 April 1775

And another: "If the federal government shall over pass the just bounds of it's authority the people must take such measures to redress the injury done to the Constitution" --Alexander Hamilton

Who, indeed?

"Who could impose such socialistic confiscatory rates?" -- Senator William E. Borah, Idaho, shilling for the income tax and deriding the possibility that income tax rates could someday reach as much as 20%. Here's the rest of the quote: "and how could Congress, the Representatives of the American People, be so lacking in fairness, justice and patriotism?"

How, indeed. Borah, a "progressive" Republican, was all too comfortable with socialism and knew well what the outcome would be. Later in his Senate career, as Chairman of the Foreign Relations Committee, he gained notoriety for his pro-Soviet stance and his many informal dealings with the communist government that America didn't yet recognize.

More evidence that for a very long time the left wing and the right wing belong to the same bird - a carnivorous totalitarian bird that craps all over the people!

Congrats - You're a Militia Member!

Did you support Ron Paul, Chuck Baldwin or Bob Barr for president? Are you critical of the Federal Reserve? Do you speak out against socialized medicine, the growing debt, domestic spying or any of the many other infringements of our Liberty? Congratulations! According to your own government you're a domestic terrorist - a part of "the modern militia movement"...

State and federal government has been hard at work with it's surplus dollars (!) and abundant spare time marginalizing you as the member of a dangerous fringe movement. Your love for liberty has been officially defined as subversive and you're now officially no better than the neo-nazis. This scholarly study propaganda is the result of a "fusion" of state and federal resources and is being presented to local, state and federal law enforcement as an authoritative assessment of the domestic threats they face.

This makes a long and evident trend official: the police are no longer our friends. Not in any way. It's been easy to see this day coming, to watch the mindest of American law enforcement change so profoundly in my lifetime. They've gone from being civilian law enforcement to being highly militaristic. They've gone from being enforcers of generally reasonable laws to revenue oriented tyrants. Honesty - never a widespread characteristic of law enforcement - is now completely out the window. Where we the people have "imaginary friends" the police have "confidential informants." Almost all drug warrants contain outright fabrications to meet probable cause. As to the militarization of the police, almost every cruiser is now equipped with an assault rifle citizens can't buy, and most small towns have swat teams. The enforcement drones sport military haircuts and refer to us as "civilians"..

After decades of deliberately hiring new officers of only marginal intelligence, the resulting armies of unquestioning robots are now being TRAINED (at taxpayer expense) that your Ron Paul bumper sticker means you're a domestic terrorist!

Columbia Daily Tribune Article

Your tax dollars are being used against you. Deliberately. Your "servants" are being trained into an occupying force to oppress you. You are the enemy.

Now that you're a member of the militia, I sure hope you're "well regulated"...

Keyes: Obama is a Radical Communist

Alan Keyes again, weighing in on President Obama, the law of the land and the destruction thereof:

The Enemy Within

There was a day when the folks who made up our government actually spoke like this:

"I apprehend no danger to our country from a foreign foe ... Our destruction, should it come at all, will be from another quarter. -- From the inattention of the people to the concerns of their government, from their carelessness and negligence, I must confess that I do apprehend some danger. I fear that they may place too implicit a confidence in their public servants, and fail properly to scrutinize their conduct; that in this way they may be made the dupes of designing men, and become the instruments of their own undoing. Make them intelligent, and they will be vigilant; give them the means of detecting the wrong, and they will apply the remedy."
-- Daniel Webster

What's more, the people listened! Those were the good old days!

Neglecting The Second Amendment??

A friend/reader has taken me to task for focusing so much on financial matters and ignoring the Second Amendment. I regularly comment on gun rights and will continue to do so. I make my own position clear. I also link to two of the best gun rights blogs - Sipsey Street Irregulars and Western Rifle Shooters Association. At the end of the day, though, I'm just not a one dimensional kinda guy!

I would point out that private property rights are equally important to Liberty and are currently under even greater attack than our gun rights. All our property (along with our labor) is denominated in the US Dollar, the value of which is being deliberately destroyed before our eyes. In this contrived crisis, private institutions are being nationalized and the public debt is rising to a level that will enslave the nation to the bankers. Jobs are disappearing. Homes are going into foreclosure. The investments of several generations are being wiped out. The total destruction of private wealth over the last few months is measured in trillions of dollars, and said destruction continues apace.

The economic mess is far more complicated, but it can be viewed in exactly the same way we view attacks on the 2nd Amendment: what's happening in the economy is not an accident, and it's ultimately our Liberty that's at stake.

It's my hope that everyone who is vigilant on gun rights would become equally vigilant on property rights! Sorry that there's more than one front in this war, but that was the enemy's choice.

A $192 Billion Deficit...

... sounds like the good old days, doesn't it??

Sorry. That's actually the federal deficit for the month just ended - February 2009.

At this pace the annual deficit will be $2.3 trillion (perhaps a bit more, as February is a short month!) To no one's great surprise, this is more than the $1.75 trillion deficit in the forecast.

I await the outcry...

Scam of the Century???

CNBC is calling the Madoff Ponzi scheme the "scam of the century" and will air a special by that name tonight.

While Madoff certainly "made off" with some money, his little sting pales in comparison to government fraud. Social Security/Medicare in just as much a Ponzi scheme and compounds the harm of fraud with it's forcible extraction of money from all of us. SS/Medicare takes more from us EACH MONTH than Madoff stole in 15 years. (At least Bernie didn't hold a gun to anyone's head!)

In turn, Social Security/Medicare pales when compared to the Federal Reserve. By design, the Fed has robbed us of over 95% of the dollar's purchasing power since it's inception in 1913.

In the realm of private schemes Madoff certainly impresses, but he's at best a distraction from the real crimes taking place in America.

The Rush Limbaugh Flap

Hypocrisy knows no bounds. Forgetting their actions over the previous eight years, the leftists are suddenly quite exercised at the notion that "Rush wants Obama to fail." Of course, that's not what Rush said - he just wants Obama's ideas and policies to fail, in order for America to succeed. Not letting a little truth like that get in the way of a calculated propaganda ploy, they've made Rush the poster boy for the "hated opposition" and the putative leader of the Republican Party.

An old saying comes to mind: "superior minds are concerned with ideas, average minds are concerned with events and inferior minds are concerned with personalities" Doesn't reflect well on the Dems, does it? In truth, it reflects no better on the Republicans. They display nothing different in the arena of ideas, so Rush and the Repubs don't actually offer any real alternative to Obama. When it comes to government, a choice between bigger and biggest is no choice at all. Rush is (at best) just managed opposition.

Here's the perspective of a guy who actually has some ideas, like sound money, free markets and individual liberty (!):

Redistribution of Wealth is Bad Enough...

...but this redistribution of guilt is even worse!

Did you buy too much house? Did your mortgage adjust? Real estate/mortgage/appraisal/construction "career" in the tank? Sorry, but t's not my fault. It's yours. Bubbles are not wealth, and I'm not supporting you!

No amount of guilt misdirected my way will change my mind, either.

Gaffe of the Year?

And it's only March!

(From foxnews.com)

"Britain's Prime Minister Gordon Brown came into the U.S. He gave President Obama several unique and priceless historical gifts based on the special relationship between the two countries. This is long-standing tradition. This happens all the time.

Brown gave President Obama a couple of things. One was a pen holder fashioned from the HMS Gannet. It is an anti-slavery ship. He then gave a framed commissioning paper from the HMS Resolute, which is the resolute desk in the Oval Office, the sister ship also of the Gannet. And then he also gave a first edition biography of Winston Churchill.

In exchange, President Obama gave Prime Minister Brown 25 classic American DVDs. Yes — I mean, he got that down. He can't even play them because he didn't get the ones that, you know, you can play over in England, because DVDs are printed differently in different regions so he can't even watch them.

And if that weren't enough of a diss to our greatest ally, Great Britain, Obama also gave back a bust of Winston Churchill, which was given to us on 9/11 as a symbol of unity. He said, "No, go ahead. Take it back."

This from an elitist pseudo-sophisticate who professes absolute faith in diplomacy! What a maroon! After eight years of listening to the left call GW a chimp, calling this nut job the monkey he is seems eminently fair and just.

Monetary Policy Finally Explained

Turns out you just make it up as you go - not just the money, but the terminology - everything - just make it up!!!

Melissa Kite in Britain's The UK Telegraph:

ACCORDING to Wikipedia, "quantitative easing" is "the creation of new money out of thin air by a central bank, and its injection into the banking system". The men in pinstripes press a few buttons and tell themselves they have pound stg. 150 billion more than they thought.

This is the banking equivalent of pretending you just found a pound stg. 10 note down the back of the sofa and ordering a pizza to celebrate, on the basis that you won't be able to pay when it arrives but waiting for it will be quite jolly. Only bankers think this is reasonable.

Of course the Q word is just one of dozens of terms in a baffling new lexicon that we are all having to come to grips with. You know you're not in Kansas any more when people are rattling on about credit default swaps, capital structure arbitrage, deposit multiplication, fractional reserve banking and derivative exposure gaps. Actually I made that last one up. I'm getting into the swing of monetary make-believe. I wonder if it isn't possible to converse fluently in "bankspeak" simply by adding a rogue extra syllable to normal words. For example, I'm sure derivitatives, liquididity, redevaluation and de-inflation are terribly clever concepts. If they haven't been invented yet, I'm sure they soon will be.

Uptick!

As I write, the Dow is up over 300 points on the day. That's better than five percent, and some financial pundit has excitedly declared a bottom!

I must ask - are market conditions five percent better than yesterday? Have foreclosures peaked/real estate bottomed? Are employment rates suddenly rising? Is ANY indicator ANYWHERE telling us that the systemic problems have settled out?

It's far from over, folks, and this is just a little bear market rally!

Irrevocable Harm

Irreversible. Permanent. Inescapable.

As I lay in bed last night a frightening aspect of our economic debacle coalesced into words: it's official! We're now officially trapped!

Up until now, all the known bad debt and potential exposure was private. In America that kind of bad debt can be dealt with under the law, as our Constitution contains a provision to wipe the slate of private calamities - it's called bankruptcy.

It's not well understood, but bankruptcy rights are the cornerstone of our free market system. The right to discharge debt is what makes risk-taking possible. This concept replaces the debtor's prisons of the old days, under which risk-taking was a hazardous sport played only by royalty and the insane. Under modern bankruptcy code, any indebted individual and/or business can reorganize into a position of viability or wipe the slate clean and start over.

The Founders understood that wiping the slate clean of bad debts and guaranteeing a clean start was infinitely preferable to ruining people for life. They understood that without a legal means of bankruptcy, few if any would be willing to take risks, to innovate. They tried to ensure that not just each citizen but the nation as a whole would not end up in debtor's prison.

Well, debtor's prison is back, ushered in by our government's subservience to the FED - and we're ALL in it.

By virtue of government "bailouts" the bubble will never burst. Rather than allow bubble valuations to evaporate (thereby allowing the economy to heal) we've just refinanced all the bubble debt into government paper and debt to the FED. There's no legal outlet for eliminating these bad debts now that they've been assumed by the government.

The debt is now secured, and we the people are the collateral.

It's well known that we work for several months each year just to pay for government. It's nearly as well known that the income tax portion of that is entirely consumed by interest on the national debt. Thus, the people of a debtor nation such as ours are at the very least indentured, as we've been for decades. When the nation's debt reaches current proportions, the people are slaves. The bankers and nations who hold our America's paper now OWN us.

From this day forward, we will work for several months each year to just service government debt. When we're done covering debt obligations, we still need to work to pay all the current-year costs of government such as the millions of direct employees and all the additional millions who receive government benefits. Adding insult to injury, a bit more of our work will then be stolen from us to prop up third-world kleptocrats, study endangered insects, etc., etc., etc.

Only after meeting all these burdens can we provide for ourselves, if we have any time or energy left. Barring the outright economic collapse of America, this debt (and much more like it) will be on our backs forever. So long as it is, we're all slaves. Add to that the wipeout of the baby boom generation's wealth and the government takeover of medical care and it's over - we're an enslaved cradle to grave socialist state. Sure, like the slaves of the past we'll be allowed a few chickens and a small garden, but most of our labor now belongs to our master the FED and it's minions in government.

This mess wasn't a 1929 replay - it was more like 1917 in Moscow, 1933 in Berlin or 1959 in Havana! This was a takeover, and it's practically over with before most of us knew it started.

Goodbye, Liberty! Welcome to the socialist new world order!

Robot In Chief

So a New York Times story is spinning Obama's teleprompter dependency as a virtue! Fancy that! Turns out "articulate" doesn't quite describe the guy: "presidents have been using teleprompters for more than half a century", but "none has relied on them as extensively as Obama"

"Obama uses teleprompters for routine announcements and even for the opening statements of his only press conference so far"

Bradley Blakeman, a former Bush aide, said "he (Obama) is extremely scripted" and that the teleprompter makes him look robotic.

A Marxist robot. Perhaps we're reaching diminishing returns on technology, eh???

Foreclosures - The Next Chapter Begins

It's official: the foreclosure rate is no longer driven primarily by low-quality (subprime) loans. With 48% of such loans at least delinquent they remain a serious factor, but the new driving force is unemployment. States with rapidly deteriorating economies (Texas, Georgia, New York & Louisiana) have contributed greatly to the latest spike in foreclosures.

Nationally, 12% of all homes with a mortgage are now at least one month behind - that's 5.4 million homes, and this is a 20% increase in delinquency from late last year. Adding to this joy, the February '09 jobless numbers will be released about two hours from now...

And Speaking of Congress

The new budget proposal funds their wish to boost spending on themselves by 11%. They need a visitor center. They need 'infrastructure". They need $19 million to renovate seven committee rooms.

This means spending an additional $400 million - a $4.4 Billion total budget for themselves, which does not include the Congressional salaries of $174,000/yr./critter that are paid out of a separate account.

Constitution Be Damned, eh, Sir Edward?

In response to the honorary knighthood just bestowed on Ted Kennedy, I would point out the following tidbit from THE LAW OF OUR LAND:

"No title of nobility shall be granted by the United States: and no person holding any office of profit or trust under them, shall, without the consent of the Congress, accept of any present, emolument, office, or title, of any kind whatever, from any king, prince, or foreign state."

- - U.S. Constitution, Article I, Section 9

So - did Congress give consent to the knighting of The Malignant One? Or, did they just roll over? And speaking of rolling over - why isn't he a convicted felon? He drove drunk, rolled his car off a bridge, then swam away leaving a woman inside the car to drown. Personally, I think the only place his visage belongs is on mug shots and MADD posters - and not because they like him!

(I suppose I could simply title this "Business As Usual")

Another shy statement by Jim Rogers.

"If you ask me, yes, we're going to have another depression in the United States..."

"If you sit there and twiddle along, and believe Mr. Bernanke that everythings is ok, you're going to get hit by a 2x4. It's going to hurt very very badly. I would urge you to be prepared"

"If you ask me, yes, we're going to have another depression in the United States."

"Go become a farmer."

End Game

Here's a great post from Karl Denninger by way of WRSA, which is linked from here. I've written about different parts of this financial mess but here's the best (and hardest hitting) summary I've ever seen.

Denninger: The Challenge Before America

From Karl Denninger:

***
Thursday night, readers of The Ticker are aware, I gave a speech while receiving the AIM 2009 Grassroots award in which I dealt with "The Bezzle" within our modern finance system.

I wish to spend today's Ticker focusing on that concept - what it means for the broader economy - and why it is absolutely critical that our government and regulators put a stop to it - right here and now.

First, some facts - some 2/3rds of all capital in the marketplace, whether in the form of credit or cash, is private. Some of it is owned by people like you and I, some by sovereign funds (e.g. Saudi Princes) and some by large foreign and domestic institutional interests (e.g. Pension funds.)

All of this capital has one thing in common: It cannot be forced to enter or stay in any particular market. It is, in fact, entirely possible for that capital to decide to head straight for "the mattress" (that is, to remain in cash) at any point in time, or to allocate itself in any particular asset class it so chooses.

Policymakers are incapable of replacing this capital with public funds (e.g. "new reserves", TARP or other such silliness.) To put this in proper perspective some numbers are in order - with some $50 trillion in total private and public debt outstanding in the United States the debt base alone involved here is roughly $30 trillion in private capital.

This is why The Fed's and Treasury's "commitment" of some $10 trillion (thus far) in loan guarantees and direct spending has done nothing to stem this crisis - and they can't possibly come up with another $20 trillion without collapsing the bond market and destroying both The Fed and The Government.

Policymakers must realize that there is exactly one - and only one - way out of this mess.

"The Bezzle" must be eradicated.

I fully realize that this is extremely difficult politically, but let's face the facts here.

Every "private capital source" that has been enticed into this morass over the last two years has been destroyed, including Warren Buffett (Goldman Sachs and others) and The Saudis (Citigroup among others.)

Then you have Bernie Madoff and Stanford Financial, two alleged frauds that were "known" to the government more than ten years ago and yet were either not investigated or intentionally allowed to continue to operate, robbing people of literal billions of dollars.

Finally, you have AIG which reported a $61.66 billion loss, or $22.95 a share - for a stock trading under two bits. Stripping out capital losses and "accounting issues" you'd still have a loss of $37.9 billion, or $14.17/share. The government has "agreed" to provide another $30 billion to the firm in addition to the previous $150 billion that has been sucked into a black hole. Once again AIG has been deemed "a systemically significant failing institution" that has to be propped up, according to Treasury.

And who were the beneficiaries? Goldman, Merrill, and now overseas banks. Instead of putting the firm into receivership and running down its portfolio over time, forcing the losses to be netted and taken, we are instead rewarding "The Bezzle" by protecting those who did imprudent and even outrageous things with unlimited taxpayer dollars.

Every last one of those "investments" has been wrecked as a direct consequence of "The Bezzle" - that is, our government's refusal to uphold the law and force the truth to be disclosed both publicly and to investors. Our government and its agencies have gone so far as to intentionally mislead in many cases, including claims related to nationalization of banks and respect for capital structures just before people were wiped out in investments that should have had preference.

What's worse, in some cases such as AIGs, not only has "The Bezzle" ripped off private investors it is also ripping off the taxpayers - multiple times - with no indication that we're going to stop this course of action any time soon!

The market no longer sees these "rescues" as positive - it now sees them as what they in fact are: coverups for papering over raw fraud and abuse, and thus when each new "rescue" is announced the market tanks instead of stabilizing.

Fact is that intentional and willful misconduct by our government agencies, both as acts of omission and commission, has resulted in these firms, institutions and nations suffering crippling losses.

These acts of malfeasance and misfeasance in government agencies include (but are not limited to):

- "23A Exemption" letters
- Willful and improper classification of funds (IndyMac) which kept the FDIC from taking enforcement action in a timely fashion
- Willful removal of leverage limits (championed by and granted as a consequence of Henry Paulson's request before he joined Treasury; every one of the 5 firms that has blown up had 2x or more the formerly legal limit)
- Willful removal of bank leverage limits and reserve ratios by The Fed and Congress in permitting "sweeps" along with allowing The Fed authority to set reserve ratios wherever it would like, including to zero.
- Willful failure to police CDS margins and capital adequacy (e.g. AIG and others) thereby leading firms to be deeply insolvent yet continuing to operate as if nothing was wrong - until the cash ran out and we suddenly had a systemic crisis.
- Willful failure to enforce suitability regulations on mortgage lenders, along with intentional preemption of state predatory lending laws.
- Willful blindness related to the blatant and outrageous false statements made by both lenders and borrowers; the essence of "liar loans."
- Willful blindness related to both Madoff and Stanford Financial
- Willful blindness related to ratings agency conflicts of interest, "ratings shopping" and known-flawed ratings models.
- Willful blindness with regards to firms selling securities to customers which they were shorting at the same time - without disclosing this fact to the customer they were marketing to.
- Refusal to take action related to the false statements of executives on the health of their firms on national TV networks such as CNBC, when reliance on those statements led to complete wipeouts (Bear Stearns and Lehman)
- Misleading statements related to the health of Fannie and Freddie made by administration officials, leading to near-total losses for both common and preferred shareholders.
- Most recently, misleading statements related to the intended path for banks and capital adequacy, including Citibank.

These private sources of capital have quite reasonably withdrawn from the marketplace. They will not return until they can be assured that losses they suffer will result only from their own poor investment decisions and not from willful concealment of losses and even fraud by those in whom they invest nor from changes in the rules imposed by fiat from Washington DC. These private capital sources also want to see indictments, prosecutions and imprisonment - along with ejection of the parties responsible in both private enterprise and our government.

This is a serious problem for our capital markets and economy generally as without this private capital we are doomed to a massive economic contraction. Conservatively speaking, assuming our government can actually fund the $9-10 trillion they've promised, which I believe is a pure fantasy (it would represent nearly a tripling of the public float of US Debt!) we would suffer a 30% contraction in GDP over the next 18-24 months.

If they cannot fund those commitments much beyond the $1 trillion already spent, the contraction would be more on the order of 50%.

This would take us back to roughly 1994 levels in GDP terms, looking at constant dollars, a setback of some 15 years.

The damage, however, would be much worse than it appears at first blush, because in conjunction with the expansion in GDP state and local governments, along with government spending, have expanded, expecting that "GDP never goes down" (doesn't that sound familiar to those who believe that "house prices never go down"?)

Were we to contract to a $7 trillion GDP, for example, our current federal budget would reach nearly half of GDP! This would be impossible to sustain as tax revenues would collapse under such a scenario.

We have exactly one opportunity to stop this, and that opportunity is now.

Government simply must stop "The Bezzle" in all parts of our economy and capital markets, and must do so right here, right now, today.

If we fail to demand this as Americans or our government fails to implement this across the board then we will suffer a Depression worse than the 1930s.

This is not conjecture.

It is not a prediction, nor drawn from how I "feel".

This is mathematics; it is a fact that we cannot possibly maintain anything close to our current standard of living unless private capital decides to re-enter our marketplace - a decision that government cannot force.

The consequences of an economic Depression of this magnitude are almost too serious to contemplate. They include unemployment topping 20%, an average annual income decrease for Americans of some 30% (for those who remain employed!), a 70-80% decrease in retirement accounts such as IRAs and 401ks and the decimation of both private and public pensions, resulting in a reduction in benefits of 50% or more.

Should government attempt to "replace" that private capital the result will be a bond market collapse. This too is inevitable; into an environment of falling tax receipts (down 15% already) foreign governments and investors would have to be insane to continue purchasing US Treasury debt.

THAT event, should it occur, would result in The Federal Government being forced to contract to 1/3rd of its current size almost literally overnight. The only way to accomplish this would be to entirely eliminate all Social Security, Medicare and Medicaid funding, cut Defense spending by 75%, and cut all remaining discretionary programs by 50%.

Needless to say such an event would be catastrophic for our society - far worse than a "mere" Depression. In fact, that latter outcome has a very high probability of destabilizing our government and political system entirely.

Let me be crystal clear: the very real possibility exists that our government could collapse.

The time to play games and fiddle hoping for a turn in the housing market or some other miracle has passed. Bernanke himself said if the financial system cannot be stabilized our economy will not recover.

He is correct - but our financial system, including both credit and stock markets, cannot stabilize (say much less recover) until and unless private capital re-enters the market.

That simply will not happen until "The Bezzle" is driven out.

We either act now or suffer the consequences - the utter destruction of our middle class, a collapsed stock market with the DOW headed to 3,000 or worse and the S&P 500headed into the 400 or lower range, unemployment topping 20% and GDP falling by 30% or more, complete destruction of both private and state-run pension systems, and a very real possibility that our nation collapses.

Your choice, America.

This is math - not politics.

Put the partisan political crap away - it is not only inappropriate but at this time in our nation's history it is insanely destructive - and instead do the right thing.
***

What if, just as a hypothetical, the objective actually is to destroy America as a prerequisite to establishing a collectivist Utopia?

Wouldn't the implementation of such a plan look very similar to what is happening as we speak?

Alea iacta est.

AIG Disaster

American Insurance Group has posted a record: the largest quarterly loss by any US company in history. $61.7 billion down the drain in Q4 '08.

Today the government pumped in another $30 billion to stave off collapse, bringing the total of the $85 billion bailout to $180 billion so far. Analysts say that a $250 billion total isn't unrealistic (which means 300 or 350 is a realistic total!) - and this for just one company!

This illustrates the profound danger of derivatives to our entire financial system - the total derivatives exposure is enough to wipe out the entire GDP of the industrialized world for the next several years.

Today also marked the first day I've seen the word "Armageddon" in the mainstream press!

Arrrgh!

I Need Permission to Have Rights?

Imagine telling a journalist that they had to undergo a background check before writing an article, and that they had to pass another one for each new article they write.

Imagine telling a journalist that they couldn't carry a camera or recorder without a permit.

Imagine telling a journalist that nobody can buy a newspaper without first passing a background check, and that on a busy weekend it may take hours to perform the check. The police will be dispatched to arrest the buyer if he has an unpaid ticket. Regardless of the outcome of today's check, a new check will be required if anyone wants to buy the paper again tomorrow.

Absurd, you say?

Gun owners know these sensations well, and applying these restrictions to any other right illustrates the abuse we have suffered at the hands of those who wish us disarmed. We've backed up a little too far, if you ask me.

Morally, there is no reason anyone should be forced to seek permission to carry a gun. The right to self-defense is merely an extension of the right to life itself, and in no way is our right to life up for bureaucratic review. In fact, bureaucratic review of our God-given rights is precisely what the Second Amendment empowers us to resist.

Niemoller Redux

Here's a modern-day video version of Reverend Martin Niemoller's poignant poem about life in pre-war Nazi Germany, when various groups of people were being rounded up and sent off to the camps.

Niemoller - himself an anti-Semite - was a Lutheran minister who in a disturbing parallel to many of today's mainstream clergy (who are again quite sympathetic to the socialists) at first actually supported Hitler because he was an anti-communist. As time marched on, the Nazi state turned against religion (as all totalitarian states must, so get ready!) and Niemoller became a thorn in Hitler's side as a leader of a group of clergy who opposed the Nazi's. He was arrested and sent to concentration camps for the duration of the war.

He displayed prominent post-war guilt for the Nazi regime (far more than was necessary given his own suffering at their hands) but appeared to have learned little if anything about human nature, for he also became an ardent pacifist and immersed himself in the peace and anti-nuclear movements. He even paid a visit to to that renowned peacenik Ho Chi Minh during the Vietnam War, a la Jane Fonda.

Niemoller's poem was more than an expression of his own guilt - it was also a stinging criticism of the intellectual class in Germany, who (in another disturbing parallel to modern times) managed - if they were ever unsympathetic at all - to be quite muffled throughout the Nazi regime.

Niemoller's personal moral confusion notwithstanding, it's a great poem. Here's the original:

"In Germany, they came first for the Communists, And I didn’t speak up because I wasn’t a Communist;

And then they came for the trade unionists, And I didn’t speak up because I wasn’t a trade unionist;

And then they came for the Jews, And I didn’t speak up because I wasn’t a Jew;

And then . . . they came for me . . . And by that time there was no one left to speak up."

And the video:

Preparedness Forums Now Active!

TalkSurvival.com is active. It'll be a "work in progress" for the next few days as I fine tune it, but it's ready for your posts right now. I intend this to become a vibrant source of news and preparedness information. Join in and enjoy!