Saturday, October 31, 2009

Thwarted Again!

“Gentleman, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families and that will be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out.”

-Andrew Jackson

Let's face it, you knew, by hook or by crook, that the move to audit The Federal Reserve Bank
would founder, and lo and behold, it has. Ron Paul, an early proponent of the initiative, and perhaps its most dedicated and staunch defender, has announced that the legislation in question has been gutted. A quick review of the article at the link will confirm his assertion. I really don't know what is worse, the evisceration of the aforesaid legislation, or the inevitable prating twaddle one will have to endure from some number of elected officials and main stream media stooges that substantial progress has been achieved in the area of bank regulation and reigning in The Federal Reserve.

The sad truth is that the will of "We The People" has, once again, been treated with barely concealed disdain, all because the protection racket that consists of the Fed and its biggest member banks has perfected the art of legislative obedience via the time honored mechanisms of bribery and/or fear. Bravo!

Let's face it, The Federal Reserve cartel and the big banks have the U.S. Congress in much the same state as a cowed beast of burden. It's positively perverse, and this latest failure by The House of Representatives- with special thanks to Mel Watt, and, of course, Barney Frank- to forcefully assert its basic Constitutional right, reinforces my view that the only way forward for the American people, should we have the fortitude to take it, is one that involves "radical" measures. Change, let alone revolutionary change, will not come about without walking on the lawn my fellow citizens. If you need any guidance regarding direction, I refer you here, once more.

Wednesday, October 28, 2009

Government Fails Again!

The Volatility Blog is turning out to be a real find. Once again, it has exposed another fetid instance of government abdication of responsibility masquerading as worthy and effective legislative initiative. The action of The House Financial Services Committee, under the errant and feckless stewardship of Barney Frank, is precisely the sort of horrid performance that argues in favor of effecting a complete turnover of the Federal Legislature, arguably the most toxic public body operating in the United States today.

The purpose of government is to act as an ombudsman for the citizenry, a bulwark against the incessant predation by the private sector on the public. One almost imagines this latest example of our law makers in action as a textbook case of how a key government body (mal) functions inside a failed state as former Assistant Secretary of The Treasury, Paul Craig Roberts, asserts we are.

Monday, October 26, 2009

The Federal Reserve and Conspiracy.

Recently the financial blog Zero Hedge asserted that The Federal Reserve Bank has engaged in manipulation of the stock market. For some of us this is already accepted, and no great pains need be taken to prove the thesis. However, economist Edward Harrison of the financial blog nakedcapitalism took issue with Zero Hedge's claims as he felt the piece contained insufficient evidence and contained an unappealing tone of conspiracy. In fairness to Mr. Harrison, it must be said that the article had nothing in the way of hard evidence to support any specific, or for that matter, any general claim of market manipulation by The Federal Reserve. What was very clear in the comments section of Mr. Harrison's piece, and of perhaps the greatest interest in the entire discussion, was how strongly people feel about the idea of conspiracy. The following was my contribution to the main topics of debate:

Let’s cut to the chase. We know there is a PPT, more properly referred to as The Presidents Working Group on Financial Markets. At the same time, even though we are armed with that knowledge, the opaqueness of the institutions in question, and the timidity, if not cowardice, of those who might remove the veil of secrecy surrounding the workings of these institutions, make it well nigh impossible that manipulation of the kind under discussion will ever be traced to its source. Auditing the Fed will probably not uncover all that they have engaged in (good, bad, and illegal) to date, but it is a legislative initiative whose passage I believe is imperative.

As for conspiracy theories, one has two choices. One can subscribe to the sensible view, as many do, that some of the worst events in our recent (and not so recent) past are nothing more than the result of incompetent and bumbling officialdom, OR you can hew to the notion that powerful interests do not come by their power by chance-which is another way of saying they are competent- and are supremely interested in maintaining their advantage. And, perhaps, most importantly, not only do powerful interests not play by the rules, but generally they have contempt for them and act accordingly.

From such realities are “conspiracies” made. And once one has truly understood and accepted the immortal words of Frederick Douglass, “Power concedes nothing without a demand. It never did and it never will” one realizes that conspiracies, while not necessarily the norm, whatever that is, are far more common than most would like to believe.

Wednesday, October 21, 2009

Hanging Too Good for this Lord.

Try not to choke on your breakfast, lunch, or dinner when you read the enclosed article. Goldman Sachs International's Vice Chairman, Lord Griffiths, has opined that the public must "tolerate the inequality of bonuses as a way to achieve greater prosperity for all." In a world where outrageous and indefensible rubbish is spewed daily by VIPs, this patent, steaming load of horse hockey stands out.

Goldman Sachs, aided and abetted by corrupt and/or cowardly appointed and elected officialdom, stole directly from we taxpayers the same funds that they have since handed out to their employees. Please, tell me, your Lordship, where's the general prosperity in that? All I see is specific prosperity for you and yours to the detriment of me and mine. This makes the putrid nonsense of Ronald Reagan's trickle down economics seem almost reasonable by comparison.

Lies, Lies, and More Lies!

I call your attention to a brilliant piece of analysis of the twisted logic and grotesque style of argument employed by criminals like, in this instance, Goldman Sachs.

Tuesday, October 20, 2009

Save Newsprint Journalism?

I'd rather save the trees. And what journalism did they have in mind? We have so very little worthy of the name, at least of the mainstream sort. A report from The Columbia University School of Journalism argues, among other things, that local news outfits should be given non-profit tax status to keep them alive and running. I suppose that is a reasonable suggestion, we need to know about the quotidian events and happenings in our local communities, but as for the practice of journalism, or more properly, investigative reporting, well, some of the best reporting to be had can be found on the internet, via blogs (gasp) and such, and some of the worst reportage is available in mainstream outfits most of whom are stuck operating with worn out or discredited assumptions in the service of equally dead paradigms. Saving some of these outfits isn't just a waste of time, it's positively counter-productive.

But, as has been pointed out elsewhere, many of the purveyors of "old news" will be saved, not out of a sense of civic mindedness, but because MSM outfits provide such a wonderful front for the powers that be, spewing out party lines (green shoots anyone?) on command. Where else in the world, besides in some of your better totalitarian regimes, can you find the massive disconnect between the functioning of our capital markets and our economy be so under (and badly) reported on as it is in the U.S.A. So, thank you, New York Times, Washington Post, Boston Globe, etc, etc., but putative claims as to your indispensability are much like those made not long ago on behalf of the large Wall Street banks - yes, those same banks that desperately need you to not get to the bottom of their shady operations-highly questionable, if not utterly bogus.

Friday, October 16, 2009

Wake Up Call For Wall Street?

Not bloody likely. Several Hedge fund executives have been arrested by the SEC for insider trading, and the story would have us believe that Wall Street, that uber den of larcenists extraordinaire, will now behave differently as a result. Well, the denizens of The Street may be a bit more careful than usual as they go about their wanton and instinctive thievery, but don't believe for one minute that they are going to curtail their operations because of this headline making arrest. After all, what did the arrest of Madoff accomplish, besides removing him from the scene and shutting his Ponzi pyramid down?

Oh no, the SEC, about as toothless and compromised a regulatory body as one can imagine-now being run by a callow 29 year old from that vampire squid of a firm, Goldman Sachs- isn't going to change the culture of Wall Street for more than a nanosecond. In fact, these high profile arrests will probably be pretty much all they do by way of law enforcement for a while as dollars to doughnuts says this action was driven by a sense that the SEC needed to do something to elevate their lower than a pregnant ant's belly of a reputation as a watchdog against financial system criminality. I am not exaggerating when I assert that the amount of misconduct about the securities landscape is so vast that it could be likened to the air we breathe, which, of course, one scarcely notices because it is omnipresent.

Wednesday, October 14, 2009

Towards a New Banking System. Part 1

As a necessary first step in the process of conceptualizing a new banking system, we would do well to answer a basic question that is generally lost in the shuffle when discussions of the banking system arise, as they so often do these days. Namely, what is the primary purpose of a bank?

Most would agree that a bank’s primary purpose is to act as an intermediary between prospective borrowers and lenders. Certainly banks have other functions, but providing checking accounts and storage facilities for valuables, to name two auxiliary services that banks provide, is of substantially lesser importance than acting as a facilitator/distributor of unspecified sums of credit between borrowers and lenders.

Given that the United States’ economic model is still, at least nominally, capitalistic, albeit with its share of distortions, the function of credit intermediary is clearly a vital one, and yet, how difficult is it to act as a functionary for borrowers and lenders? In truth, it isn’t too terribly difficult, and yet, banks, in the main, operate with some very substantial advantages given their relatively easy task. I am not even referring to the set of massive advantages, which should more accurately be labeled abuses, presently being meted out on behalf of banks, but instead have in mind traditional advantages built into the banking system, advantages that suggest that U.S. banking should more properly be referred to as a franchise/cartel given the dominant manner in which the Federal Reserve System operates.

Precisely what I have in mind with respect to “advantages” is the traditional method by which banking institutions have made profits. Generally, for the prudent banking institution, the “spread trade” where banks borrow short term from one another, or The Federal Reserve itself, at low rates of interest, and lend longer term to the public at higher rates, aka “borrowing short and lending long”, has proven to be the primary means by which the banking franchise has garnered, as it were, its steady and virtually riskless returns.

However, somewhere along the way, approximately in the late 1990s, banking institutions, primarily the outfits with names one is now overly familiar with, became more avaricious than usual, and embarked on a process that led to the destruction of the proverbial goose that laid the golden egg. A discussion of the process by which that occurred is not within the scope of this piece, but suffice it to say that our present banking crisis was sown, with the willing assistance of the political class, by the banks themselves who were no longer satisfied with their traditional very low risk means of profit generation.

In this writer’s view, the banking franchise modus operandi that enables the schema of “borrowing short and lending long” has always been of questionable utility to the society at large, giving as it does a special and arguably unfair advantage to the banks themselves. And now, in light of ongoing egregious abuses by the big banking system, one is impelled to out right challenge their longstanding basic advantage. As a result of bank’s (at least the largest banks) systematic irresponsibility, I argue that the time has come to ask, if not demand, the forfeiture of what was once banking’s core advantage.

My view is that going forward, whatever banking system we have must cheapen the cost of money for the public at the expense of the banking system itself. If there is to continue to be a central bank system of some sort, and my view is that there could be one, but that, at the very least, its present charter would have to be rewritten such that its franchise function is revoked, the public must be able to access credit at something closer to wholesale than retail. In short, there is no justification for any prospective borrower with decent collateral to pay anything but a modest amount over prime.

More Decline And Fall

As the article at the link makes clear, South America is rapidly falling out of the sphere of influence long held by we gringos of Los Estados Unidos. I try not to get in the business of making predictions, but do not be surprised if the collapse of the United States as the worlds hegemonic power is not merely spectacular but far more rapid than one might have supposed.

Monday, October 12, 2009

No Immunity Here!

The U.S. Government loses its already questionable authority to govern with each passing day it seems. Here is yet another example of the sort of government activity that suggests the usual two explanations (wanton incompetence or sinister corruption) for otherwise unfathomable and anger inducing behavior.

Friday, October 9, 2009

Now This is Cognitive Dissonance

In something of a shocker, Barack Obama has been awarded The Nobel Peace Prize. Apparently the decision has been made earlier than usual and is said to have been decided in Obama's favor:

to encourage his initiatives to reduce nuclear arms, ease tensions with the Muslim world and stress diplomacy and cooperation rather than unilateralism.

Good luck with all that, and like just about everything else in the Obama Presidency, so far, all the warm and fuzzy talk of positive "change" is merely rhetoric. The reality is that military measures not only continue during the Obama Administration, but will likely expand, at least in Afghanistan. Furthermore, no meaningful change in the Bush posture of executive over reach, particularly as it pertains to the secret treatment of suspects in the War on Terror, has occurred. And while I know that Obama has nothing to do with NASA's explosion of a space craft on the moon, if that is indeed what NASA is doing, to this observer, the award of The Noble Peace Prize, in the context of the entire Obama theatre of operations, lends itself to a strong feeling of cognitive dissonance

Monday, October 5, 2009

American Radicals!

Occasionally, usually by accident, as a result of the seemingly endless and futile process of changing channels in search of something fresh, entertaining, and insightful, I happen to catch a few moments of some main stream media talk show whose purpose is to discuss "current events." My general impression of the caliber of thought on display in such shows is that, where the ideas are not trite and fatuous, they are idiotic. For example, last evening, for about two or three minutes, I suffered through the empty headed patter of a platinum blonde twenty something who offered that she didn't care for political radicals like....wait for it....Rush Limbaugh and Keith Olbermann.

The poor youngster further opined that characters such as the two aforementioned titans of radical politics were not good for the country. Somehow I got the distinct feeling that, given the choice, the bubble headed young woman would describe herself as a Republican. But that is neither here nor there, since, putting aside her presumption that she knows what is good for the country, and regardless of what party the young lady aligns herself with, she clearly hasn't the foggiest notion what constitutes political radicalism. Clearly, she was confusing the vitriolic style of Limbaugh and Olbermann (vitriol in the service of generally status quo political positions) with radical politics. In short, hers was a confusion of style over substance, which, when one thinks about it, is only fitting for the metier of television.

Perhaps the most dispiriting aspect of her politely rendered yet ridiculous assertions was that no one bothered to point out to the young airhead that neither Mr. Olbermann nor Mr. Limbaugh are, by any stretch of the imagination, political radicals. Maybe Joy Behar, the show's fifty something host, is as confused as her guest, and believes that Rush Limbaugh more closely resembles the aspect of a young Adolph Hitler, rather then erstwhile Republican power broker Tom Delay. Keith Olbermann would, in such a calculus, be the present day incarnation of, oh, say, Eugene Debs, as opposed to the doppleganger of that triangulating and ubiquitous master of middle of the road politics, Bill Clinton.

The truth is that, save for a few remote corners of the blogosphere, there is almost no radical political energy anywhere to be found in the entire United States. The tea baggers and town hall criers of this past summer were, and are, for the most part, fat, white, and scared old age pensioners, no more radical in spirit than the latest model of SUV being produced by General Motors. The aforesaid retirees were vitriolic as well, but with too few exceptions to mention, their ire was directed at those they felt were about to change the health care game in a way that would undercut their longstanding comfort and security. Fair enough. But that's not radicalism, not by a damn sight. Don't expect to see their like out again in public, unless someone threatens to take away some other entitlement they deem as non negotiable. In the meantime, if you want to hear some radical political ideas, don't bother with messieurs Limbaugh and Olbermann.

Friday, October 2, 2009

Decline in Fall

Presently, the stock market is sucking wind on its way to erasing some or all of the bear market rally that began in earnest in March. At the same time, the U.S. position as global hegemon shows signs of erosion almost on a daily basis. If it is not moves by foreign powers to replace the greenback as the global reserve currency, it is developments like the ones reported at the links below.

The first story is not something I would make too much over, though the abject failure of Chicago's bid to host the Olympics (especially in the context of President Obama's strong support) does at least cause a wrinkle to form on one's brow. More serious and telling, at least to this observer, is the report that the U.S. has been made to cede some measure of control over the internet. It's hard to know what this will mean for you and me, if anything, with respect to access and quality, but I don't think it's too hard to discern what it means for Uncle Sam.

For reasons I can't fathom, links do not seem to be connecting. In short, you may need to resort to cut and paste to read the above articles.