On More Stimulus Spending – by Dr. Ron Paul

http://stockmarketchartanalyst.blogspot.com/



Faced with continuing economic decline and an impending election, the administration, predictably, is entertaining the idea of another stimulus package. To explain why the last one didn't work, adherents to the Keynesian economic philosophy are claiming that they actually did work – it just looks like they didn't because we don't realize how much worse off we would be right now without trillions of dollars of public spending. The last administration bought into Keynesianism just as much as this one does, unfortunately. Until we have leaders who understand that debt is not the way to prosperity, there will be no stopping runaway government spending.

While it is nice to hear about business tax breaks, the positive results of these tax cuts will be dwarfed by its negative effects. First of all, $200 billion or so in temporary tax cuts and credits to businesses are nothing compared to the $3.8 trillion in tax hikes that will hit the economy like a ton of bricks on January 1, 2011 if the Bush tax cuts are not extended by Congress.

Second of all, businesses are reluctant to hire and invest, not because they are looking for temporary credits, but because of future uncertainty; they simply don't know what the government is going to do next and how future government policies will affect decisions they make now. What new costs and regulations will be placed on them with healthcare reform and financial services reform? Will Congress convene a lame-duck session this winter to pass cap-and-trade and other destructive legislation? What will the cost of compliance be for hiring new employees, and will that force them to simply lay off anyone they hire now? Worse, will the government come up with fines or additional costs if businesses have to lay people off in the future? Right now, the safest thing for businesses to do is nothing. Until we regain respect for the rule of law and remove some of this uncertainty, I'm afraid none of these temporary promises, made right before an election, will do much towards any economic improvement.

The other glaring problem with this proposed stimulus package is that it couples tax cuts with spending increases, which makes no sense when we are already heavily indebted to foreign countries. We should be cutting taxes and slashing government spending dramatically. The private sector simply cannot bear the burden of our engorged public sector. In fact, one reason earlier stimulus programs did not result in any private sector growth is because large amounts went to the public sector. Indeed, the spending that the administration is now proposing arguably constitutes a bailout of the public sector and various union allies of the administration.

This administration is falling into the same dangerous trap we fell into during the Great Depression, as did the Germans leading into their hyperinflation of the 1920's. The temptation is to do something, anything, proactive to attempt to stimulate the economy, but history has shown us that governments cannot spend their way into prosperity. The best thing government could do is get back to its Constitutional limitations and let the economy stabilize, heal and recover without the crushing burden of government holding it back.

http://www.thedailybell.com/1375/Ron-Paul-On-More-Stimulus-Spending.html

Are We Going the Way of Rome?...

http://stockmarketchartanalyst.blogspot.com/2010/06/are-we-going-way-of-rome.html

By Lawrence W. Reed

There's an old story worth retelling about a band of wild hogs which lived along a river in a secluded area of Georgia. These hogs were a stubborn, ornery, independent bunch. They had survived floods, fires, freezes, droughts, hunters, dogs, and everything else. No one thought they could ever be captured.

One day a stranger came into town not far from where the hogs lived and went into the general store. He asked the storekeeper, "Where can I find the hogs? I want to capture them." The storekeeper laughed at such a claim but pointed in the general direction. The stranger left with his one-horse wagon, an ax, and a few sacks of corn.

Two months later he returned, went back to the store, and asked for help to bring the hogs out. He said he had them all penned up in the woods. People were amazed and came from miles around to hear him tell the story of how he did it.

"The first thing I did," the stranger said, "was to clear a small area of the woods with my ax. Then I put some corn in the center of the clearing. At first, none of the hogs would take the corn. Then after a few days, some of the young ones would come out, snatch some corn, and then scamper back into the underbrush. Then the older ones began taking the corn, probably figuring that if they didn't get it, some of the other ones would. Soon they were all eating the corn. They stopped grubbing for acorns and roots on their own.

"About that time, I started building a fence around the clearing, a little higher each day. At the right moment, I built a trap door and sprung it. Naturally, they squealed and hollered when they knew I had them, but I can pen any animal on the face of the earth if I can first get him to depend on me for a free handout!"

The moral to that story happens to be the connecting link between the course of ancient Rome and the path which America has been taking for much of the last century.

Roman civilization began many centuries ago. In those early days, Roman society was basically agricultural, made up of small farmers and shepherds. By the second century bc, large-scale businesses made their appearance. Italy became urbanized. Immigration soared as people from many lands were attracted by the vibrant growth and great opportunities the Roman economy offered. This growing prosperity was made possible by a general climate of free enterprise, limited government, and respect for private property. Merchants and entrepreneurs were admired and emulated. Commerce and trade flourished and large investments were commonplace.

It is certainly true that slavery existed within Rome's sphere of influence. That's deplorable from any standpoint, of course. But to be fair to the Romans, it must be said that slavery was far more common and far more brutal in the rest of the world in those days.

Remarkable Achievements:

Historians still talk today about the remarkable achievements Rome made in sanitation, transportation, the arts, public parks, banking, architecture, education, and administration. The city even had mass production of some consumer items and a stock market. With low taxes and low tariffs, free trade and private property, Rome became the center of the world's wealth.

At one time, the political and military power of Rome dominated Europe and the Mediterranean. Roman roads facilitated speed of travel and communication to a degree that would not be surpassed until the development of the railroad, the steamship, and the telegraph in the 19th century. Roman law and justice enabled the traveler to journey throughout the empire with a considerable degree of safety. "The benefits of the Pax Romana [the peace of Rome]", says Arther Ferrill in "The Fall of the Roman Empire," "included the development of one of man's most impressive codes of law and an administrative system that met the needs of men of varied languages, ethnic backgrounds and cultural traditions. The poet Virgil was not far wrong in claiming that his nation ruled the world in peace and justice."

All this disappeared, however, by the fifth century ad, and when it was gone, Europe was plunged into darkness and despair, slavery and poverty. In the space of 700 years, explains Max Shapiro in his book, "The Penniless Billionaires," "the Appian Way, where Roman legions had frequently paraded in celebration of victory, was clogged with rubble and weeds. Wild dogs roamed through the ruins of the Forum, in search of food. And the 60,000 souls who inhabited the desolate place which had once been called the Eternal City now referred to it as `the great cow pasture.'"

Why did Rome decline and fall? The record is abundantly clear on this point. Rome fell because of a fundamental change in ideas on the part of the Roman people-ideas that relate primarily to personal responsibility and the source of personal income. In the early days of greatness, to a considerable degree, each Roman regarded himself as the chief source of income. Each individual looked to himself-what he could acquire voluntarily in the marketplace-as the source of his livelihood. Rome's decline began when large numbers of citizens discovered another source of income: the political process or, the state.

When Romans abandoned self-responsibility and self-reliance and began to vote themselves benefits, to use government to rob Peter to pay Paul, to put their hands into other people's pockets, and to envy and covet the productive and their wealth, they set into motion Kershner's First Law: "When a self-governing people confer upon their government the power to take from some and give to others, the process will not stop until the last bone of the last taxpayer is picked bare."

The legalized plunder of the Roman welfare state was undoubtedly sanctioned by people who wished to do good. As Henry David Thoreau once said, "If I knew for certain that a man was coming to my house to do me good, I would run for my life." Another person coined the phrase, "The road to hell is paved with good intentions." Nothing but evil can come from a society bent upon coercion, the confiscation of property, and the degradation of the productive.

Early in the process, a politician named Clodius ran for the office of tribune on a "free wheat for the masses" platform and won. Candidates for office began spending huge sums to win public favor and then plundered the population afterwards to pay their campaign debts.

When Julius Caesar came to power in 48 bc, he found 320,000 persons on government grain relief. Temporarily slowing the welfare state bandwagon, he ordered the welfare rolls cut to 200,000. Within a half-century, the rolls were back up to well over 300,000.

Government Bread:

A real landmark in the course of events came in the year 274 ad. Emperor Aurelian, wishing to provide cradle-to-grave care for the citizenry, declared the right to relief to be hereditary. Those whose parents received government benefits were entitled as a matter of right to benefits as well. Aurelian gave welfare recipients government-baked bread (instead of the old practice of giving them wheat and letting them bake their own bread) and added free salt, pork, and olive oil. Not surprisingly, the ranks of the unproductive grew fatter, and the ranks of the productive grew thinner.

Surely, many Romans opposed the welfare state and held fast to the old virtues of work, thrift, and self-reliance. Just as surely, some of these sturdy people gave in and began to feed at the public trough in the belief that if they didn't get it, somebody else would. That attitude only hastened the slide into bankruptcy.

The central government also assumed the responsibility of providing the people with entertainment. Elaborate circuses and gladiator duels were staged to keep the people happy. The equivalent of a hundred million dollars per year in the city of Rome alone is one modern historian's estimate of what was poured out on the games. These days, many Americans think that by virtue of being artists they are entitled to grants from the federal government at other people's expense. If handouts for the arts constitute a legitimate function of government, by what possible rationale can just about any other handout be resisted?

In Rome, the emperors were buying support with the people's money. After all, government can give only what it first takes. The emperors, in dishing out all these goodies, were in a position to manipulate public opinion. As Alexander Hamilton observed, "Control of a man's subsistence is control of a man's will."

By the second century ad, many cities had spent themselves deeply into debt. Beginning with the emperor Hadrian, municipalities which got themselves into financial difficulties lost their independence as the central government placed them under the authority of imperial curators. Local authority was increasingly replaced by the power of the central government.

Taxes & Regulations:

Civil wars and conflict of all sorts increased as faction fought against faction to seize control of the huge state apparatus and all its public loot. Of 27 emperors or would-be emperors between 180 and 285 ad, all but two met violent deaths.

High taxes and burdensome regulations were the order of the day. Business enterprise was called upon to support the growing body of public parasites.

By the time of Emperor Antoninus Pius, who ruled from 138 to 161 ad, the Roman bureaucracy was as all-embracing as that of modern times. The historian Trever wrote that by the third century, "the relentless system of taxation, requisition, and compulsory labor was administered by an army of military bureaucrats . . . . Everywhere were the ubiquitous personal agents of the emperors to spy out any remotest case of attempted strikes or evasion of taxes."

Another writer, W. G. Hardy, said several years ago that in later Rome, "what the soldiers or the barbarians spared, the emperors took in taxes." The crushing cost of the military, the top-heavy bureaucracy, and the public programs taxed the middle class out of existence.

Clearly, the state gradually became the prime source of income for an increasing number of Romans. The high taxes needed to finance this drove business into bankruptcy and then nationalization. Whole sectors of the economy came under government domination in this manner. The first industry in Rome to be taken over was transportation-shipping in particular. Interestingly, the first industry in America to suffer comprehensive control was also transportation-specifically, railroads.

Emperor Nero may have been the original architect of urban renewal legislation. In the 10th year of his reign (64 ad), a great fire left more than half of Rome in ashes. It was rumored then, and many historians now believe, that Nero had ordered the conflagration to be lighted to clear the ground for a rebuilding of the city.

Nero is said by Gaius Suetonius in "De Vitae Caesarum" to have once rubbed his hands together and declared, "Let us tax and tax again! Let us see to it that no one owns anything!" That reminds this author of Harry Hopkins' famous allusion to the welfare state during the Roosevelt years: "tax and tax, spend and spend, elect and elect."

In 91 ad, the government became deeply involved in the business of agriculture. Emperor Domitian, to reduce the production and raise the price of wine, ordered the destruction of half the provincial vineyards.

As the old virtue of self-reliance gave way to political redistribution of income, priests, teachers, and intellectuals extolled the virtues of the almighty emperor, the provider of all things. The interests of the individual were considered a distant second to the interests of the emperor and his legions. A spiritual vacuum ensued, which was filled partly by the rise of cults and partly by worship of the emperor. The latter reached its zenith under Emperor Diocletian in 285 ad. No one could approach him without prostrating himself on the ground and kissing the hem of his garment. Formerly, the proud, free citizens of Rome had refused to render such servile adoration to any of their magistrates and rulers.

Natural Disasters:

The Roman Empire, amid this sickening spectacle of moral decay, fell victim to an unfortunate series of natural disasters and plagues. Earthquakes, volcanoes, and harsh storms caused great damage. By 200 ad at least one-fourth of the population of the whole empire, both civilian and military, had perished by a plague brought from the East. A later one, from 252 to 267, was nearly as bad. A morally righteous and strong people might have recovered and rebuilt, but these disasters only reinforced the growing despair of a desperate people. The fabric of Roman society was rotting away under the influence of government paternalism, bureaucracy, and spiritual malaise.

Cheapened Money:

Rome also suffered from the bane of all welfare states-inflation. The massive demands on the government to spend for everything created pressures for the multiplication of money. The Roman coin, the denarius, was cheapened and debased by one emperor after another to help pay for the expensive programs. Once almost pure silver, the denarius by 268 ad was little more than a piece of junk containing only .02 percent silver. American dimes, quarters, and half dollars, incidentally, contained 90 percent silver as recently as 1964; today, they contain no silver at all.

Flooding the economy with all this new and cheapened money had predictable results: prices skyrocketed; savings were eroded, and the people became angry and frustrated. Businessmen were often blamed for the rising prices even as government continued its spendthrift ways.

The easy money policies produced periodic crises in the economy. The panic of 86 ad and a severe economic contraction of a few years later are examples. The government responded by imposing penalties for trading in gold, especially for exporting it, much as Franklin Roosevelt did in 1933.

Demanding relief from economic disorder, the people of Rome cried out for a strongman. He arrived in the person of Diocletian who, in the year 301, imposed his famous "Edict of 301." This law established a system of comprehensive wage and price controls, to be enforced by a penalty of death. The chaos that followed inspired the contemporary historian Lactantius to write in 314: "After the many oppressions which he put into practice had brought a general dearth upon the empire, he then set himself to regulate the prices of all vendible things. There was much bloodshed upon very slight and trifling accounts, and the people brought provisions no more to market, since they could not get a reasonable price for them; and this increased the dearth so much that at last after many had died by it, the law itself was laid aside."

From Welfarism to Despotism:

Diocletian also ordered that all offices, trades, and professions, in so far as possible, were to be made hereditary. Young men were forced to carry on in the trade of their fathers. There was no escape from this regimentation. The welfare state had become a despotism.

This tyrant left his mark on history in other ways, too. It was during his reign that fully half the men of the Empire were on the government payroll. Not only did he impose across-the-board wage and price controls in relative peacetime, but he also resigned from office, in the year 305. Nearly 17 centuries later, Richard Nixon would become the first American president to impose peacetime wage and price controls and also our first chief executive to resign from office.

All this robbery and tyranny by the state was a reflection of the breakdown of moral law in Roman society. The people had lost all respect for the sanctity of private property. This author is reminded of the New York City blackout of 1977, when all it took was for the lights to go out for hundreds to go on a looting spree.

The Christians were the last to resist the tyranny of the Roman welfare state. Until 313 ad, they had been persecuted because of their faith and their unwillingness to worship the emperor. Under Diocletian, Christians were cast into dungeons, thrown to the wild beasts in the amphitheater, and put to early death by every other mode of torture that ingenious cruelty could devise. In this year, Emperor Constantine granted them toleration in exchange for their acquiescence to his authority.

Constantine himself professed Christianity but his personal morality belied his word. Within three years of his announced conversion, he put a nephew to death, drowned his wife in a bath, and murdered his son.

Meanwhile, Constantine showered the Church with land, gifts, and patronage at taxpayer expense. Thus corrupted, the Church lost its old simplicity and high moral standards. It, too, had jumped aboard the gravy train.

In the year 380, a sadly perverted Christianity became the official state religion under Emperor Theodosius. Rome's decline was like a falling rock from this point on.

Foreign Policy:

In another arena, the foreign policy of Rome in the third, fourth, and fifth centuries had become one of weakness and appeasement. Politicians, too busy buying votes at home with pie-in-the-sky programs, ignored the Empire's defense. Barbarian "converts," whose loyalty was still suspect, were even permitted to hold important posts in the Roman military establishment.

In 410, Alaric the Goth and his primitive Germanic tribesmen assaulted the city and sacked its treasures. For three days, Rome was plundered. Palaces and temples were stripped and Roman citizens were raped and killed by the thousands. The once-proud Roman army, which had always repelled the barbarians before, now wilted in the face of opposition. Why risk life and limb to defend a corrupt and decaying society?

The end came rather anti-climactically in 476, when the German chieftain Odoacer pushed aside the last Roman emperor, Romulus Augustulus, and installed himself as the new authority.

Some might say that Rome fell because of the attack by these foreigners. Such a claim overlooks what the Romans had done to themselves. When the Vandals, Goths, Huns, and others reached Rome, many citizens actually welcomed them in the belief that anything was better than their own tax collectors and regulators. It is more accurate to say that Rome committed suicide. Like the wild hogs, Romans first lost their freedom, and then they lost their lives.

History does seem to have an uncanny knack of repeating itself now and then. America, by elevating government power at the expense of individual responsibility, has made some of the same mistakes that Rome made centuries ago. In a famous statement, philosopher George Santayana warned that those who ignore history are condemned to repeat it.

No one reading this, however, should despair for the future. The growing intrusiveness of government in America is not inevitable; it is not something beyond the control of the American people. It is, rather, the consequence of faulty ideas, which can change if only this message is carried forth by those who cherish liberty. Indeed, there are very promising indications that the intellectual battles these days are being won-often decisively won-by the friends of freedom and limited government, not by those who foolishly seek to put government in the driver's seat.

Most people who cherish freedom oppose the welfare state for moral, philosophical, spiritual, and economic reasons. We would do well to add another reason: the lessons of history!

As we work to restore and preserve those ideas and institutions which made our nation both free and great,

let's keep these words in mind:

The penalty men pay for indifference to public affairs is to be ruled by evil men. -Plato

All that is necessary for evil to triumph is for good men to do nothing. -Edmund Burke

The hottest places in Hell are reserved for those who-in a period of moral crisis-maintain neutrality. -Dante

http://www.citizensforaconstitutionalrepublic.com/reed9-1-01.html

My God, Is There A Rule Of Law? by Karl Denninger:

http://stockmarketchartanalyst.blogspot.com/2010/06/my-god-is-there-rule-of-law-by-karl.html

Posted at 08:37 - Monday, June 7. 2010

It may not be here in the US, but this could be a start! ( http://tinyurl.com/38quko9 )
(Warning: In German!)

Interestingly enough, Der Spiegel, which usually has an English version of most articles, doesn't have one of this entry I can find. I was therefore forced to Google Translate it - take a read. ( http://tinyurl.com/2crovme )

The keys to this are the allegation that the "greek bailout" is unlawful under the Lisbon Treaty (no really?)

The government has responded (big surprise - NOT!) that if an injunction issues the result would be a self-fulfilling default and cites that "EU countries could be vulnerable."

No, really? I thought that was what you called it when you didn't have the money to pay your bills!

That of course isn't the point of the complaint. The complaint rests (properly, in my opinion) on the premise that the so-called "boom" in many parts of Europe was financed with German capital, which was effectively appropriated under false pretenses.

Gee, where have we seen this before? Banksters lying and cheating (cough-liar loans-cough!) and trading in derivatives without any money behind them (cough-AIG-cough!) and when the smoke clears suddenly the national governments are told "hand over hundreds of billions right now or the puppy dies!"

Uh huh...

G20 governments are increasingly coming to the realization that "borrow and spend" doesn't - and can't - work in the intermediate and longer term. Despite the bleating of Geithner at the G20 meeting he got nowhere trying to jawbone people into more Keynesian-style games.

We blew $4 trillion in the United States over the last two years and change and got nothing for it, and as a consequence we are stuck with the debt and haven't solved the problem. $4 trillion, of course, is about 30% of GDP, and this "support" has amounted to roughly 11% of GDP over the last three years.

We can either recognize that this won't work (just as it didn't in 2003 - all it did was create asset bubbles) and stop it, taking the pain we tried to defer (and added to) or we can take the risk of a complete detonation in the weeks and months ahead. Europe and the rest of the G20 appear to have woken up and decided that the Keynes-cum-idiocy is in fact idiocy, irrespective of the foolhardy and even criminally-insane bleating by Geithner and the Obama Administration.

The game, my friends, is afoot...

http://market-ticker.org/archives/2379-My-God,-Is-There-A-Rule-Of-Law.html

Why U.S. Debt Matters to You:

http://money.cnn.com/2010/06/03/news/economy/U.S._debt_impact/index.htm

By Jeanne Sahadi, Senior Writer June 3, 2010: 11:38 AM ET

NEW YORK (CNNMoney.com) -- Letting U.S. debt grow unabated is often framed as an unforgivable burden to heap on one's grandchildren.

But there are plenty of reasons today's parents might be concerned for themselves and their kids.

If Congress doesn't craft a plan to address long-term fiscal shortfalls after the economy recovers, potential problems could arise sooner rather than later, debt experts say.

Slower economic growth: After examining data from dozens of countries over the past two centuries, economists Carmen Reinhart and Kenneth Rogoff found a connection between high debt and reduced economic growth. Specifically, they found that when a nation's gross debt reaches 90% of its economy, it often loses about one percentage point of growth a year.

U.S. gross debt -- currently $13 trillion -- will hit the 90% threshold this year. Gross debt includes money owed to those who hold U.S. bonds and money owed to government trust funds such as Social Security.

Reinhart has said the relationship between high debt and low growth is "self-feeding." Low growth ravishes government revenue and increases the need to borrow. More borrowing builds debt. Higher debt increases pressure to tighten fiscal policies in order to reduce the risk that investors lose confidence in the country. But tighter policies can slow economic growth.

One percentage point lower growth may not seem huge. But it's equal to roughly a third of the average annual GDP forecast over the next decade.

And slower growth can reduce the number of jobs created, which in turn can hold down household incomes.

High interest payments: Interest rates are still very low and may continue to be as the debt crisis in Europe makes the United States a more attractive safe haven for investors.

That means the government can borrow on the cheap right now. But rates will rise as the world economy recovers. By 2020, annual interest owed on U.S. debt will approach $1 trillion, or roughly 21% of projected federal revenue for that year, according to Congressional Budget Office estimates.

Interest rates may rise further than expected if credit rating agencies or investors start to doubt U.S. resolve to rein in the growth in debt. And that would jack up the cost of borrowing for businesses and consumers.

Ironically, some debt experts would almost prefer that rates rise so there will be more urgency to deal with the debt situation. It might hurt, but not as much as if rates stay very low for a long time -- planting the seeds for the next credit bubble and bust when U.S. debt levels are that much higher.

Less government support: The more debt the government accrues, the more it will pay in interest and the less it will have to spend on the basic services Americans expect from their government.

Spending for everything from education to infrastructure and defense could be compromised. And, many argue, not being able to make strategic investments in these areas can weaken the country competitively.

Also, the government will be hamstrung in responding to emergencies such as natural or man-made disasters, terrorist attacks or future economic downturns.

Inflation: There don't appear to be any official signs of inflation brewing today. But throughout U.S. history, high levels of debt have usually brought high rates of inflation, Reinhart and Rogoff found.

Some economists -- including Kansas City Federal Reserve Bank President Thomas Hoenig -- have said they are concerned about what could happen if the United States faces a debt crisis. In such a case, the Federal Reserve may cave to political pressure to let inflation rise, which reduces the real value of the country's debt but also devalues people's savings and income.

Harsh choices: No one can say when or even if a debt crisis will occur. But lawmakers will tempt fate if they wait too long to address the imbalances on the U.S. balance sheet, fiscal experts say.

Fiscal experts believe it's entirely possible that, absent action, the United States would experience a debt crisis within the next 10 to 20 years.

"Most believe it would happen much sooner than 20 years," said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. Many believe it could happen within the next five to 10 years, she said.

And waiting too long would force lawmakers to make much more draconian and abrupt changes than they would otherwise.

Experts are increasingly convinced that Congress won't act until a true crisis is on the U.S. doorstep -- for two reasons. The first is the sharp partisan divide. The second is that no politician likes to run on promises to implement difficult and unpopular measures.

So until there's sufficient public support for debt reduction, don't expect to see much political will for it.

"Like the proverbial frog that fails to jump out of the soup pot as the temperature slowly rises, Americans seem terrifyingly unwilling to act until the pain of debt can no longer be ignored," Syracuse University professor Len Burman wrote in a recent essay. "As the frog learns in its final moments, by then, it's too late."

Slouching Toward Despotism:

http://jessescrossroadscafe.blogspot.com/2010/05/guest-post-slouching-towards-despotism.html

by Keith Hazelton May 27, 2010

Benjamin Franklin, when asked at the conclusion of the Constitutional Convention in 1787 what that assembly had created, purportedly responded, “A republic, if you can keep it,” which seems likely given his remarks to Convention members on that September day immediately prior to their vote on the proposed Constitution in its original form.

Often, but on far more occasions in the last three years, we are reminded of a portion of those remarks. Dr. Franklin, given his age (81) and health, asked to have his commentary read to delegates preceding what he hoped would be a unanimous vote in favor of a nonetheless flawed agreement.

“In these sentiments, Sir, I agree to this Constitution with all its faults, if they are such; because I think a general Government necessary for us, and there is no form of Government but what may be a blessing to the people if well administered, and believe farther that this is likely to be well administered for a course of years, (but) can only end in Despotism, as other forms have done before it, when the people shall become so corrupted as to need despotic Government, being incapable of any other.”

And the question we keep pondering is, “Are we there yet?” Are we merely slouching toward despotism, or have we arrived? Are we already so corrupt so as to need despotic government, what with Vampire Squids and corporate/union-bought elections and Congressional bystanders and regulatory capture and Systemically Important Too Big To Fail and Gulf of Mexico oil well disasters?

(Despotism, by the way, describes a form of government by which a single entity rules with absolute and unlimited power, and may be expressed by an individual as an autocracy or through a group as an oligarchy according to Wikipedia, the world's leading source of made-up information, which is good enough for us.)

In previous posts we have observed the growing and discernible disconnect between several types of government-reported economic data such as Retail Sales and actual state sales tax collections, and the Employment Situation and withholding tax collections. Others also have made solid cases for these disconnects between statistical theory and economic reality and it occurs to me that, far from being isolated or random events, they are evidence of much more disconcerting forces at work.

Fudging on unemployment numbers or "rounding up" retail sales reports may seem like minor infractions, and many of these government data reports have been manipulated for years, maybe half a century, but they represent a pattern of conscious, calculated design of "don't worry, be happy, the government's in charge, nothing to see here, so move along."

The Bureau of Labor Statistics (BLS), for example, estimates who is working and who is not, but conveniently excludes millions of people from its composition of the unemployment rate who are not working but neither deeming them “unemployed” because they are “marginally attached” to the workforce or are “discouraged” by a lack of job prospects and no longer are looking for employment (2.3 million as of March 2010 plus another 3.4 million “persons who currently want a job,” who also aren’t counted as unemployed).

Side note: You are well aware, of course, the Social Security Administration probably could tell us monthly almost exactly how many people really are working, not working, working part time, self-employed, and so on based on its receipts of tax withholdings from employers. It is beyond the pale to imagine SSA could not furnish a version of the monthly Employment Situation that would be far more reliable by orders of magnitude than the guesses of the BLS.

As to why government statistical agencies may be reporting "happy" numbers, well, you know the answer to that...government statistics are lying's fifth circle of hell, just a shade better than Campaign Promises.

How about the major changes to the Producer Price Index and the Consumer Price Index which were made in the 1980s and 1990s to greatly reduce reported inflation numbers as a means of containing the cost of living adjustments (COLAs) for Social Security recipients, as John Williams at ShadowStats extensively has reported for years?

Or the March 2010 Monthly Treasury Statement, which understated the true government deficit last month by including a $117 billion collection described as “proprietary receipts from the public” by the Treasury, likely TARP repayments but not defined as such. Or the December 2009 Monthly Treasury Statement in which $45 billion extracted from the nation’s banks as a 13-quarter advance FDIC premium also was shown as a “negative outlay” which creates a significant understatement of the true FY2010 deficit picture (so far, $162 billion this fiscal year, which will understate our true deficit by about 10 percent).

Or the “New” General Motors wasting millions of (tax) dollars for print and television ads to promote a fictitious narrative that it has “repaid” government loans of $8.1 billion (to the U.S and Canada) “plus interest” five years early when in fact SIGTARP, the Special Inspector General of the Troubled Asset Relief Plan Neil Barofsky, told Congress and Fox News that GM did no such thing, that the loan “repayment” did not come the old fashioned way from sales and earnings but from a "cash advance" on another TARP facility which both governments will count as additions to their already significant equity positions. Nothing in those ads mentions the many tens of billions of taxpayer dollars borrowed from China which flowed into General Motors and Chrysler pre-bankruptcy which never will be repaid.

And now the New GM wants to create another automobile financing company, or buy back its former GMAC/Ally unit which itself has received nearly $20 billion of government Too Big To Fail largesse, so it may become even more profitable by returning to sub-prime auto and everything-else lending and have a happy IPO later this year, because as everyone knows, including the New GM's management, there's precious little profit in building cars no one wants and few can afford. "As a dog returns to its vomit, so a fool repeats his folly," (Proverbs 26:11) as Jesse's Cafe Americain recently observed.

How about the seeming inability to legislate any significant financial reform in the wake of the worst economic crisis in 80 years, a crisis which, mind you, needed fewer than eight years to erupt once the last shred of restraint – Glass-Steagall – was forcibly removed at the end of 1999 by those who, coincidentally (paging Messrs. Rubin and Summers), have profited so handsomely from its demise.

The Banking Act of 1933 – Glass-Steagall – was a wonder of simplicity in a simpler era. It set forth in a mere 37 pages of text the safeguards necessary to separate commercial banking from everything else and to ably prevent for 66 years – two full generations – any meaningful implosion of the nation’s financial system. Any search for cause and effect of The Great Recession must begin here. The useless financial reform act – the Dodd act – weighs in at a lobbyist-induced 1,500+ pages, and will do nothing to prevent another financial crisis, nothing to dismantle Too Big Too Fail, nothing to contain derivatives, nothing to audit the Federal Reserve and nothing to curtail abuses in consumer financial practices.

Yet where are the criminal investigations? Where is the FBI? Where are the Congressional inquiries and panels and special prosecutors? Where are the indictments? Where are the perp walks and the jail sentences? Where is the justice, Mr. Holder and your 50 friends among the states? Aside from two former Bears Stearns hedge fund managers in 2007, and a pretend hedge fund manager - Mr. Madoff - in 2009, a weak SEC civil show-case against Goldman Sachs in 2010 and the mostly voluntary, golden-parachute-enabled "retirements" of a handful of TBTF C-level executives, a number of which, John-Thain-like, merely have revolved around the door a couple of times and landed at another lucrative looting opportunity, nothing has happened. Nothing, nada, zero, zip, dick. Nothing. It's breathtaking in its design and execution.

We now are reliably told the TARP program will cost less than $100 billion when all is said and done. Huh? What about the $2 trillion-plus of added government debt which itself adds tens of billions to the annual interest servicing burden, or the $1.5 trillion-plus willed into existence by the Federal Reserve? Who are they kidding?

Or a Health Care Act which, in 2,500 pages manages to spend about another trillion dollars or so and leaves no health insurance company behind, effectively criminalizing, albeit with monetary penalties far less than the cost of individually paid health insurance plans, anyone not otherwise exempted who fails to purchase health care coverage.

It seems to us, after thinking about this topic for some time now, that we have arrived. We have arrived at that point in our civilization in which our government deems it acceptable to obfuscate about things both small and large on the basis that, Jack-Nicholson/Colonel-Jessup-like, we (the rest of us who aren’t lodged in the political/oligarchical castes) “can’t handle the truth.”

And most of the time it would appear they are right, that we – the rest of us – can’t be bothered with such discrepancies and inconsistencies, falsehoods and half-truths. We're too busy trying to keep the house, make the mortgage and auto loan and credit card and student loan payments. We're too focused on our own financial survival to be concerned with what goes on at a national leadership and direction level. And doesn't it just seem a little too convenient for those who wish to plunder the wealth of the nation to keep the other 90 percent of us so strapped with indebtedness and an outdated personal moral conviction that debts should be repaid regardless of their potential to physically and mentally harm one's well being or, heaven forbid, harm one's all-important credit score, when walking away from debt has been an accepted business practice for centuries?

It only seems to matter on those rare occasions when things blow up, and the average, non-voting, non-taxpaying citizen awakens from his or her media-induced stupor to ponder that when the curtain is drawn away, it reveals only humans and not wizards, or that the outgoing tide reveals who has been swimming naked or when the emperor is shown to be undressed. But interest in such matters wanes quickly, and the thirst for change recedes silently into renewed acceptance of the status quo, as we now discover.

Soon, no doubt, when markets resume their upward trajectory and the Dow returns to and surpasses 14,250 (probably by this summer) and oh-don't-worry-about-those-6.5-million-log-term-unemployed-because-they're-just-lazy, much of this unpleasantness of the last three years will be forgotten by those more interested in only good news and Dancing With the Stars and American Idol, and the continued warnings of the Cassandras will be deemed evidence that these are, once again, merely the musings of disaffected social misfits or bad-news-opportunists who deep down must hate America (right up until the point at which the next crisis erupts, and erupt it will).

In fact, our short attention spans are relied upon by the political class of both parties and by the oligarchical class which controls it, as magnificent wealth transfer schemes blossom anew (talk about green shoots...) and the all-so-brief period which has elapsed between the “days away from financial Armageddon” of September 2008 and the "all clear, business as usual" of May 2010 insures, like the watered-down, useless "financial reform" legislation written by financial industry lobbyists which certainly will pass soon, that the laudable goal of making safe our financial system and returning it to the status of handmaiden to legitimate capital-producing and jobs-creating enterprise, will be discarded in exchange for the pretense of life as we knew it, circa 2006.

Only this time, effectively having destroyed the middle class of Boomers, Gen X-ers, Gen Y-ers, Millennials and Echo Boomers, and having bought the complicit silence of the of a near-majority (47% of Americans paid no income tax whatsoever in 2008) in exchange for bread and circuses, and having largely destroyed the previous primary mechanism by which wealth has been stolen and transferred (credit creation and personal indebtedness), the masters of the universe will have to find a new scam, which, at this writing, appears to be sovereign government debt, currencies and commodities, because turning back the calendar to 2006 alone will never recreate the consumer spending/debt orgy of 1982-2006.

In fact we think the oligarchs realize this, and they are redoubling their efforts to pillage as much as possible before the real collapse occurs, even as its seeds already have been sown in this crisis which now appears, by design and deception, to be ending. That collapse draws nigh, and Roubini and Taleb and Ritholtz and Panzer and Jesse and Tyler and Mish and Yves and Charles Hugh Smith and Joe Bageant and many, many others already see it, yet all are being dismissed - again - as those nattering nabobs of negativism who, broken-clock-being-right-twice-a-day-like, were merely “lucky” in guessing about the immediate past crisis as former Fed Chairman Alan Greenspan suggested in a recent television interview.

Tell us Greece is not the "sub-prime" of early 2007; that the US$150 billion "cure" to be soon applied by the EU and IMF is only can-kicking but will allow one and all to congratulate themselves on "containing" an isolated problem and to quickly return to the never-ending cocktail party, that is until the next Greece Fire which spreads to one after another country, including, ultimately, the possibility of the conflagration reaching bond markets in the U.S.

Or that a mere US$1 trillion of bailout/rescue/currency support recently proposed by the Eurozone and the IMF to "shock and awe" financial markets dominated by the recently rescued TBTFs who busily apace bet against the very governments which saved them (except now in Germany), is not merely another stealth rescue of these giant financial institutions which, having been caught with a bit too much Club Med sovereign debt on their books while their own prop traders work hard to destroy its value, now cry out - again - that the risk of their insolvency - again - threatens the global financial and economic systems.

Or that the battling machines of high-frequency trading, which briefly wiped out and then restored a trillion dollars worth of fictitious (paper) wealth in fewer than 15 minutes mid-afternoon May 6th in a dry-run rehearsal of things to come, won't now become even more emboldened and empowered to manipulate financial markets in any manner necessary to insure continued quarters of perfectly profitable trading days.

(May 6th should have been a non-event. We were expressly warned by the Manhattan Assistant US Attorney in a July 2009 court filing, in which it was alleged that a former Goldman Sachs quant trading programmer stole Goldman's "secret proprietary trading code," that "there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways." Well, duh. Doesn't it just seem like someone took this code, or a similar one, out for a test drive earlier this month?)

Soon, perhaps if not already, the wealth transfer will be complete, and a newly impoverished, former middle class will wake up from their recliners to find not only is Dancing With the Stars over, but also is their former debt-fueled way of life as the economy staggers, unemployment escalates, more good jobs are exported and living standards rapidly erode. (Irony alert: Their former U.S. employers, who effectively have downsized and off-shored their way to record profits, will find they have destroyed their own customer base - the former middle class - who no longer can afford their products.)

When 40 million people are receiving food stamps at one end of the economic spectrum (and probably another 20 million eligible according to the Department of Agriculture), and the bulk of financial and real assets have been concentrated into the top 10 percent of the other end of the economic spectrum, nothing good can come of it. So the well-off cohort will remain well-off and will conspire to direct through their agents in government only enough resources to buy the complicity and silence of the bottom 40 percent, like tax breaks, food stamps, health care subsidies and so on, and the soon-to-be-former middle class will be ground into yet lower levels of the economic ladder, such, that when the looting has concluded, we will see a top 10 percent and a bottom 90 percent, much as feudalistic Europe in the centuries of the Dark Ages.

(We strongly recommend two books on the subject, both of which in far more detail and eloquence lay out the symptoms, causes and effects of our slouch toward despotism: Survival +, by Charles Hugh Smith at Of Two Minds, and Deer Hunting With Jesus: Dispatches From America's Class War, by Joe Bageant at Joe Bageant (and whose recent post about the American Hologram Lost on the Fearless Plain also is required reading).

“All lies and jest… Still a man hears what he wants to hear and disregards the rest,” so said Paul Simon, which rings so true more than four decades later. We hear what we want to hear, and, apparently, what we want to hear is that all is back to normal, that all is good, that the wizards have everything under control, and that nothing bad can ever happen again.

So, are we there yet? Have we not already abdicated our responsibilities as citizens and tacitly embraced the despotism of which Franklin predicted 222 years ago, having become so corrupted (contaminated) as to require the despotic government of an oligarchy dedicated to insuring the truth never gets in the way of a good narrative, an enormous disparate accumulation of wealth and a firm grip on the levers of power to ensure the preservation of that wealth?

A few Tea Party primary victories and incumbent "mandatory retirements" aside, nothing will change in Washington as long as the strings of campaign cash and lobbyist perks are being pulled elsewhere. The "outs" who soon will replace some of the "ins" promptly will forget about their mandates from the voters the day they move into their new D.C. offices and townhomes and realize from moment one their only responsibility is to their own rational self-interest of being re-elected in 2012 and 2014 and 2016. Et tu, Barack?

And if Benjamin Franklin is not prescient enough for you, how about the Teacher, in Ecclesiastes, Chapter 1, v.13-18, from about 2,300 years ago:

What a heavy burden God has laid on men! I have seen all the things that are done under the sun; all of them are meaningless, a chasing after the wind. What is twisted cannot be straightened; what is lacking cannot be counted. I thought to myself, "Look, I have grown and increased in wisdom more than anyone who has ruled over Jerusalem before me; I have experienced much of wisdom and knowledge." Then I applied myself to the understanding of wisdom, and also of madness and folly, but I learned that this, too, is a chasing after the wind. For with much wisdom comes much sorrow; the more knowledge, the more grief.

Indeed, with wisdom comes sorrow, and from more knowledge, more grief. Would, sometimes, that we could empty so much of it from the mush of our remaining gray matter and then we wouldn't have to pretend it's all good, when, in fact, it’s anything but good, as soon, perhaps in a matter of a few short years, we shall see.

We first wrote the following paragraphs in June 2006, long before sub-prime lending, a bursted housing bubble, Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, CitiGroup, Bank of America, JPMorgan Chase, Goldman Sachs, GM, Chrysler, the Federal Reserve, the Treasury Department and The Great Recession began to dominate our lives, when Franklin’s predictions and our inexorable slouch toward despotism first appeared on our radar screen:
The transition from unitary executive to dictator – conservative, benevolent or otherwise – will not happen in the waning months of the current administration, so uniquely manifested by America's First Triumvirate of George Bush, Dick Cheney and, until recently, Karl Rove, but succeeding chief executives may choose overtly to expand further the envelope-pushing and Constitution-trampling of the 43rd President and his neo-conservative command-and-control cabal as the American oligarchy, and the nation, slouches slowly toward despotism.

As such, we will one day awake from our debt-financed, pleasure-induced stupors to find one person or group firmly in charge, answering to no one, especially not Congress, and in complete grasp of the military, the intelligence agencies, the treasury, the Federal Reserve and the financial and judicial systems. It will happen – it is happening – an inch at a time, until the day comes when not only will we, the fun-loving, celebrity-worshipping, civic-duty-abhoring citizens of America, so embrace the notion of despotism, we will think it entirely our own idea.

Are we there yet?...

(Keith Hazelton is an Adjunct Professor of Finance at Oklahoma City University's Meinders School of Business and an Economic Adviser to the Oklahoma Bankers Association. His opinions are his own.)

25 Questions To Ask Anyone Who Is Delusional Enough To Believe That This Economic Recovery Is Real:

http://www.blacklistednews.com/?news_id=8878

If you listen to the mainstream media long enough, you just might be tempted to believe that the United States has emerged from the recession and is now in the middle of a full-fledged economic recovery.

In fact, according to Obama administration officials, the great American economic machine has roared back to life, stronger and more vibrant than ever before. But is that really the case? Of course not. You would have to be delusional to believe that. What did happen was that all of the stimulus packages and government spending and new debt that Obama and the U.S. Congress pumped into the economy bought us a little bit of time. But they have also made our long-term economic problems far worse. The reality is that the U.S. cannot keep supporting an economy on an ocean of red ink forever. At some point the charade is going to come crashing down.

And GDP is not a really good measure of the economic health of a nation. For example, if you would have looked at the growth of GDP in the Weimar republic in the early 1930s, you may have been tempted to think that the German economy was really thriving. German citizens were spending increasingly massive amounts of money. But of course that money was becoming increasingly worthless at the same time as hyperinflation spiralled out of control.

Well, today the purchasing power of our dollar is rapidly eroding as the price of food and other necessities continues to increase. So just because Americans are spending a little bit more money than before really doesn't mean much of anything. As you will see below, there are a whole bunch of other signs that the U.S. economy is in very, very serious trouble.

Any "recovery" that the U.S. economy is experiencing is illusory and will be quite temporary. The entire financial system of the United States is falling apart, and the powers that be can try to patch it up and prop it up for a while, but in the end this thing is going to come crashing down.

But as obvious as that may seem to most of us, there are still quite a few people out there that are absolutely convinced that the U.S. economy will fully recover and will soon be stronger than ever.

So the following are 25 questions to ask anyone who is delusional enough to believe that this economic recovery is real....

#1) In what universe is an economy with 39.68 million Americans on food stamps considered to be a healthy, recovering economy? In fact, the U.S. Department of Agriculture forecasts that enrollment in the food stamp program will exceed 43 million Americans in 2011. Is a rapidly increasing number of Americans on food stamps a good sign or a bad sign for the economy?

#2) According to RealtyTrac, foreclosure filings were reported on 367,056 properties in the month of March. This was an increase of almost 19 percent from February, and it was the highest monthly total since RealtyTrac began issuing its report back in January 2005. So can you please explain again how the U.S. real estate market is getting better?

#3) The Mortgage Bankers Association just announced that more than 10 percent of U.S. homeowners with a mortgage had missed at least one payment in the January-March period. That was a record high and up from 9.1 percent a year ago. Do you think that is an indication that the U.S. housing market is recovering?

#4) How can the U.S. real estate market be considered healthy when, for the first time in modern history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together?

#5) With the U.S. Congress planning to quadruple oil taxes, what do you think that is going to do to the price of gasoline in the United States and how do you think that will affect the U.S. economy?

#6) Do you think that it is a good sign that Arnold Schwarzenegger, the governor of the state of California, says that "terrible cuts" are urgently needed in order to avoid a complete financial disaster in his state?

#7) But it just isn't California that is in trouble. Dozens of U.S. states are in such bad financial shape that they are getting ready for their biggest budget cuts in decades. What do you think all of those budget cuts will do to the economy?

#8) In March, the U.S. trade deficit widened to its highest level since December 2008. Month after month after month we buy much more from the rest of the world than they buy from us. Wealth is draining out of the United States at an unprecedented rate. So is the fact that the gigantic U.S. trade deficit is actually getting bigger a good sign or a bad sign for the U.S. economy?

#9) Considering the fact that the U.S. government is projected to have a 1.6 trillion dollar deficit in 2010, and considering the fact that if you went out and spent one dollar every single second it would take you more than 31,000 years to spend a trillion dollars, how can anyone in their right mind claim that the U.S. economy is getting healthier when we are getting into so much debt?

#10) The U.S. Treasury Department recently announced that the U.S. government suffered a wider-than-expected budget deficit of 82.69 billion dollars in April. So is the fact that the red ink of the U.S. government is actually worse than projected a good sign or a bad sign?

#11) According to one new report, the U.S. national debt will reach 100 percent of GDP by the year 2015. So is that a sign of economic recovery or of economic disaster?

#12) Monstrous amounts of oil continue to gush freely into the Gulf of Mexico, and analysts are already projecting that the seafood and tourism industries along the Gulf coast will be devastated for decades by this unprecedented environmental disaster. In light of those facts, how in the world can anyone project that the U.S. economy will soon be stronger than ever?

#13) The FDIC's list of problem banks recently hit a 17-year high. Do you think that an increasing number of small banks failing is a good sign or a bad sign for the U.S. economy?

#14) The FDIC is backing 8,000 banks that have a total of $13 trillion in assets with a deposit insurance fund that is basically flat broke. So what do you think will happen if a significant number of small banks do start failing?

#15) Existing home sales in the United States jumped 7.6 percent in April. That is the good news. The bad news is that this increase only happened because the deadline to take advantage of the temporary home buyer tax credit (government bribe) was looming. So now that there is no more tax credit for home buyers, what will that do to home sales?

#16) Both Fannie Mae and Freddie Mac recently told the U.S. government that they are going to need even more bailout money. So what does it say about the U.S. economy when the two "pillars" of the U.S. mortgage industry are government-backed financial black holes that the U.S. government has to relentlessly pour money into?

#17) 43 percent of Americans have less than $10,000 saved for retirement. Tens of millions of Americans find themselves just one lawsuit, one really bad traffic accident or one very serious illness away from financial ruin. With so many Americans living on the edge, how can you say that the economy is healthy?

#18) The mayor of Detroit says that the real unemployment rate in his city is somewhere around 50 percent. So can the U.S. really be experiencing an economic recovery when so many are still unemployed in one of America's biggest cities?

#19) Gallup's measure of underemployment hit 20.0% on March 15th. That was up from 19.7% two weeks earlier and 19.5% at the start of the year. Do you think that is a good trend or a bad trend?

#20) One new poll shows that 76 percent of Americans believe that the U.S. economy is still in a recession. So are the vast majority of Americans just stupid or could we still actually be in a recession?

#21) The bottom 40 percent of those living in the United States now collectively own less than 1 percent of the nation’s wealth. So is Barack Obama's mantra that "what is good for Wall Street is good for Main Street" actually true?

#22) Richard Russell, the famous author of the Dow Theory Letters, says that Americans should sell anything they can sell in order to get liquid because of the economic trouble that is coming. Do you think that Richard Russell is delusional or could he possibly have a point?

#23) Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010. In fact, that was almost twice the level of a year earlier. Does that look like a good trend to you?

#24) In March, the price of fresh and dried vegetables in the United States soared 49.3% - the most in 16 years. Is it a sign of a healthy economy when food prices are increasing so dramatically?

#25) 1.41 million Americans filed for personal bankruptcy in 2009 - a 32 percent increase over 2008. Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005. So shouldn't we at least wait until the number of Americans filing for bankruptcy is not setting new all-time records before we even dare whisper the words "economic recovery"?

The Government as Identity Thieves:

Dr. Ron Paul Tuesday, May 18, 2010

http://www.thedailybell.com/1056/Ron-Paul-The-Government-as-Identity-Thieves.html

The spotlight remains on the Greek sovereign debt crisis as the riots continue. The terms of the Greek bailout from the IMF and Eurozone countries remain contentious with citizens on all sides. Europeans hate having their governments throw public money away as much as Americans do. The Greeks are not happy about having their taxes raised while their pensions and salaries are cut. Meanwhile, it is rumored by the Financial Times, AFP and others that Greece may spend more than it saves from austerity measures on arms deals with Germany, France and the US as a potential condition of receiving bailout funds. If true, it is certainly not unprecedented for the global military industrial complex to benefit from deals made by their friends in the central banking community. After all, war is the health of the state. The last thing big government proponents want is for peace to break out in the world.

This free flow of fiat money from around the globe to Greece will not really save Greece as much as it will grant a temporary reprieve to central bankers from the consequences of their mistakes. Sadly, this will come at the expense of the Greek people and taxpayers in Europe and America. Taxpayers are of no consequence to either European or American central bankers. Even the mere desire for complete information on what they are up to in our name is rebuffed, as we saw last week in the Senate with the failure of Senator Vitter's amendment containing my language to fully audit the fed. The hubris of powerful and secretive central bankers seems to know no bounds.

If someone incurred debts against you as an individual, without your knowledge or consent, you would call it identity theft. You would call your bank for a full accounting of the debts incurred in your name, and after some verification, those debts would be declared invalid and you would not be held responsible for them. Furthermore, if the culprit was found, they would be prosecuted and sent to jail.

Not so with governments and central banks. Governments that are supposed to be of the people and for the people routinely incur debts against the people. Some governments even borrow money to oppress their citizens, and then expect them to pay for their own oppression with interest. With a fiat monetary system, the sky is the limit for how much debt a government can place on the backs of the people.

We have reached the point in the United States where the debt our government has accumulated against us is mathematically impossible to pay off. Harder times, likely due to a wave of hyperinflation, will eventually find its way to our streets and I am fearful of how Americans will react. My hope is that we will come together peacefully and help each other, and that enough of us will be aware that the blame rests securely on the shoulders of the Federal Reserve and the special interests. They should not be looked to for salvation. They should not be given more power. Rather, they should be stripped of the powers that allowed them to create this mess in the first place.

Resistance to public transparency regarding public debts should be denounced in the strongest of terms, and the central bankers that incurred them should be seen as no better than common identity thieves.

Here Is Why the Fed Cannot Simply Continue to Inflate Its Way Out of Every Financial Crisis That It Creates:

The return on each new dollar of US debt is plummeting to new lows according to figures from the Federal Reserve.

http://jessescrossroadscafe.blogspot.com/2010/05/here-is-why-fed-cannot-simply-inflate.html

The chart below is from the essay, Not Just Another Greek Tragedy by Cornerstone.



I have been watching this chart for the past ten years, as part of the dynamic of the sustainability of the bond and the dollar as the limiting factor on the Fed's ability to expand the money supply.

The ability to expand debt is contingent on the ability to service debt. If the cost of the debt rises over the net income of the country's capital investment, or even gets close to it, the currency issuing entity is trapped in a debt spiral to default without a radical reform.

In other words, if each new dollar of debt costs ten percent in interest, largely paid to external entities, and it generates less than ten cents in domestic product, it is a difficult task to grow your way out of that debt without a default or dramatic restructuring.

So we are not quite there yet. But we are getting rather close on an historic basis. Without the implicit subsidy of the dollar as the world's reserve currency it would be much closer.

As it is now, this chart indicates that stagflation at least, rather than a hyperinflation, is in the cards for the US. But the trend is not promising, and the lack of meaningful reform is devastating.

A 'soft default' through inflation is the choice of those countries that have the latitude to inflate their currencies. Greece, being part of the European Monetary Union, did not. The US is not so constrained, especially since it owns the world's reserve currency.

The economy is out of balance, heavily weighted to a service sector, especially the financial sector which creates no new wealth, but merely transforms and transfers it. With stagnation in the median wage, and an historic imbalance in income distribution skewed to the top few percent, with the banks levying de facto taxation and inefficiency on the economy as a function of that income transfer, there should be little wonder that the growth of real GDP is sluggish in relation to new debt.

Or as Joe Klein so colorfully phrased it, the elite have been strip-mining the middle class in America for the past thirty years.

Along with the 'efficient market hypothesis,' trickle-down economics is also a fallacy. This is why the stimulus program being conducted by the Federal Reserve, in an egregious expansion of its authority to conduct monetary policy, in subsidies and transfer payments to Wall Street is not working to stimulate the real economy. It merely inflates the bonuses of the few, and extends the unsustainable.

So obviously one might say, "The Banks must be restrained, and the financial system reform, and the economy brought back into balance, before there can be any sustained recovery.

The Predatory Partnership of Wall Street and the State:

* April 23, 2010

http://www.oilprice.com/article-the-predatory-partnership-of-wall-street-and-the-state-303.html

The Central State and Financial Plutocracy are bound in a mutually beneficial, highly predatory partnership.

The Mainstream Media is missing the Big Story in the SEC/Goldman Sachs filing: the Central State needs the predatory "too big to fail" investment bankers to churn out the credit, leverage and insider deals the State needs to survive in an era of exponentially rising debt.

There are adverse ethical and financial consequences of this partnership; in the short-term, the rot has been papered over, and simulacrum "reforms" to sooth public anger will be passed. But the partners each depend on the other for their very existence, and threatening one threatens both.

Two long-time contributors recently checked in with insightful commentaries on this issue. We start with Zeus Y.:

I'm sad to say, I find myself agreeing with your comments about gaming the system becoming the system. The WSJ article you cited (An Economy of Liars) uses a libertarian argument to push for deregulation with enforcement of key staples/norms of capitalism. However, if enforcement is captured by the same forces that give rise to crony capitalism, which is an elephant in the room the current "reform" bill fails to address, neither regulation nor de-regulation will matter. Regulation will be ignored because there are no enforcements or consequences. De-regulation will only allow market mechanisms to be more distorted and shrouded. This is what people talk about when they say "regulatory capture."

But when you have "capture of culture" so that norms are so skewed as to bail out the perfidious and punish the responsible, how can one expect healing and growth of the economy? That is what we have now, and taking a pain pill in the form of borrowing or lowering interest rates will not address the underlying disease. Indeed as with taking pain relievers to cover up the pains caused by a devastating disease, you will only ensure your demise. We require not only transparency and accountability but awareness and viable responses about what to do, not only with the fraud and its perpetrators, but the damage they have left in their wake once we turn up the rot.

This is why no one seems interested in real investigation, enforcement, justice, fairness, or even free enterprise at all. They sense the rot and don't want to be pinned with cleaning it up once they are made aware. Our own landlords will not sign on for a free lead test for our house by the county with our two-year old in it, because if they knew, they would have to be responsible and disclose this fact to future renters. They simply will not agree to do it because short-term self-interest is more important than doing the right thing. Short-term self-interest, for them, has become the "right thing." The moral decay is evident, and that is what really makes your assessment uneasingly accurate. If there is one thing we have learned is that people without moral guidance will only see what they are incentivized to see in terms of their short term personal interest.

Without a moral compass, short term, cannabalistic greed presides, and I have not known any economy to thrive on that premise for long. I don't know what form the downfall takes, but until we give a hoot about something greater than our personal fear and comfort we can assure that we keep falling.

Thank you, Zeus. Next up, Harun I. who refers to this chart I recently posted, which shows total credit as a percentage of U.S. GDP exceeds the extremes of World war II.



Here is Harun's commentary:

I couldn't help but wonder how people thought this would turn out? Did they really believe that coming out of college with a student loan the size of a mortgage for an education in basket weaving would leave them discretionary income or a balance sheet that was able to expand much further (I have a family member with $80,000 in student loans for a degree in journalism. She cannot afford the payments with her salary so what does she do? She defers the payments while she runs up more debt going to grad school! Insanity at its finest).

Of course upward mobility is stunted proportionate to the level of debt carried, debt is a claim on future earnings. What did they think would happen when they bought into a monetary system that demands that future demand be brought forward on a compounding basis? Did they not understand that this must come at the expense of future generations?

More to the point, in a sphere of finite resources, who thought or thinks that consumption at an exponential rate and therefore depletion at an exponential rate would leave room for future generations to keep consuming more? Only someone disconnected from reality could think this could continue indefinitely. But that is what mass manias and delusions are all about.

Is it any wonder that the 1% are doing so well? They are the writers of the debt everyone else is buying...and we allow them to do this without a dime of their own capital. As an aside, I am completely confounded that the majority of the retail market buys options when over 80% of options expire worthless. Who do they think is writing the majority of those options? Institutions and the very wealthy are writing those options. And when those options even look like they may produce a loss for the writers the sheer power of their actions protecting those positions makes sure they expire worthless. But the public willingly continues to take the long odds. The masses keep buying the debt and the long odds, do not understand the rules of the game and wonder why they are losing.

Buying a home does not make one wealthy because home equity does not really exist. All of this has been one grand illusion that has turned into a slow motion train wreck as it hits the immovable object of reality. How can it be that a home is the "middle class generator of wealth" when 66% of people retire into poverty and 65% of Americans are homeowners? I know of all the elegant equations but the simple fact is that they are not borne out in reality.

If I sell a stock, bond, or commodity I can take that money and do as I please. I don't have to downsize my standard of living or borrow (encumber future earnings) to get at the equity in those instruments. A house is a peculiar beast in terms of "equity". It either has to be sold and its occupant goes to live in a much smaller dwelling in order to enjoy the "equity", or one must borrow (create a liability) to get at that "equity". Either way the standard of living will decline. Therefore, I find the notion of home "equity" quite absurd.

People in general need to educate themselves on Present Value. They must understand its implications to what their money is worth now and at any point in the future. When they do, a much clearer picture will arise pertaining to debt, interest rates, inflation and "equity".

I would like to see the "too big to fail" institutions fail but when the reality of what that means starts to impact pensions and 401K's, federal, state, and municipal income streams, and it is realized that the government cannot borrow enough to support a destitute population, I think the 99% will sing a different tune.

The more I watch this debacle the more I am convinced that Cheney's "deficits don't matter" comment was not arrogance but candor based upon his understanding of the futility of the situation.

Additional commentary 2

It is essential (in a Ponzi scheme) that there be ever growing amounts of new capital to make payouts. Remember, not too long ago everyone was crooning about growth. Every fraud and swindle was counted as GDP growth, now we are beginning to realize that it was all one big fraud.

Bernanke tells us point blank in his famous helicopter speech that he can "theoretically" make us spend by making it unprofitable to save. Greenspan spoke of the "global savings glut" that caused the bubbles. Pensions, 401K's, sovereign wealth funds are all pools of savings that had to be eaten to keep the debt as money scheme expanding. And with high quality risk exhausted there had to be a way to sell the low quality risk.

If we want to understand, very clearly, the rise and fall of the middle class and how debt has affected this, all we need to do is look at the Credit Market Debt as a Percentage GDP you recently posted. The post WW II bull market that ended in 1968 occurred with very low debt levels and the middle class thrived. The 1982 -2000 bull market saw debt levels soar and the middle class lost ground (it took two incomes and high levels of debt to accomplish what once took one income and very low levels of debt).

Two financial WMD's have gone off in less than a decade and from a logarithmic perspective it just looks like a mild consolidation when, in real terms, stocks and bonds have lost more than half their purchasing power and still are not at their historic relative lows. Structurally, debt is proportionately higher that at the start of the Great Depression and getting worse at an increasing rate, unemployment, if recorded properly would be exploding, and government spending (expanding debt) is the only driver of GDP. Fraud is now a way of life, it is SOP.

There is not enough money in the hands of consumers to create the stupendous growth that is required by all the obligations (entitlements) that have been created. It is not a matter of desire, it is a matter of capability. We cannot produce and consume enough at a rate necessary to keep up with exponentially exploding entitlements. CDO and CDS, before they were given legal certainty in the CFMA of 2000, went from about $60 billion to over $600 trillion. Without this explosion of credit money system death would have occurred some time ago. We need the tremendous leverage that only Wall Street can create to keep from this farce from disintegrating rapidly. If not, we have what we have now: an exploding public balance sheet.

In the post industrial age in a country that produces nothing but hands out entitlements to everybody how do you generate returns to satisfy this? Not only is GS necessary to maintain status quo but so are the rest of the TBTF banks. In the end this will fail spectacularly, it has already started. The end game is the Casino Economy where gaming the system is the way to produce returns needed (at least for a time) to maintain our illusory state. Just think, after the greatest credit expansion in history, we are still broke and continuing to lose ground.

Thank you, Harun. Here is a bonus chart of the inflation-adjusted Dow Jones Industrial Average, which shows the Bull Market of the last decade was as illusory as the "prosperity" built on the sand of home equity lines of credit and bogus mortgage-backed securities.

Where is $421.8 Billion That Went Out of the Federal Reserve?

http://www.commodityonline.com/news/Where-is-$4218-bn-that-went-out-of-Fed-Reserve-27410-3-1.html



By Dr Jeffrey Lewis
April 15, 2010

The St. Louis Federal Reserve Bank, which documents the inner workings and balance sheets at the nation's central bank, just released new research and data suggesting that the Federal Reserve lent $421.8 billion – with no one knowing exactly where it went.

Where’s the Money?

Each week, the St. Louis Fed releases data regarding the Federal Reserve's activity and public balance sheets. In ordinary times, this data is usually largely ignored, as the mainstream media has little interest in probing into the “small” $5-10 billion changes in the Total Loans and Leases of Commercial Banks. The week of March 24-31 was different, however, as the Federal Reserve made $421.8 billion in new loans, more than it made in the week following the Fed's big moves to combat the financial crisis in 2008!

Is the Fed Bailing out Greece?

Economists are all but left in the dark on the actual operations behind the scenes, and they have minimal data to investigate other than what the Federal Reserve is willing to release to the public. However, the timeliness of this most recent surge in lending activity suggests that the Federal Reserve may be taking a hand in bailing out foreign nations, or Greece in particular, by shoveling funds through commercial banks.

This wouldn't be the first time a bank was used to bail out foreign debtors. AIG, the leading recipient of TARP funds, was used as a gateway to transfer US taxpayer funds to foreign banks owed money. Of course, the ailing insurance company virtually collapsed nonetheless, but long after the funds were delivered from the US Treasury to foreign institutions.

Pull the Alarms!

Rarely are large monetary policy decisions made without an explanation from the Federal Reserve, and even more rarely are they conducted in just one week. To put the recent lending in perspective, $421.8 billion is more than the total increases in lending throughout 2005. There has never in the history of the Federal Reserve been such a massive increase in total lending. And never should anyone expect that lending of this magnitude would be done without any explanation. To put it simply, there is big money moving, and no one knows where it's going, for better or for worse.

Timing is Everything

The huge jump in lending comes just days after the Federal Reserve ends its operations to buy agency and other US debt, and just a few weeks after the looming European debt crisis emerges. Clearly, the timing couldn't be any more interesting, as the Federal Reserve is either indirectly financing international bailouts or continuing to expand the money supply without any prior knowledge.

Gold and Silver Set to Soar

Either explanation for the gross increase in the money supply is a boon for precious metals, which have experienced an even more impressive month as manipulation comes to light. If the Federal Reserve is acting to bail out foreign nations, or to buy up Treasuries or other Agency debt, it should be clear that inflation is sure to run rampant. Head for the hills – unprecedented monetary policy is taking place without any authorization, explanation, or (from what we can tell) causation.

A Debt Level Great Enough To Threaten The Dollar Rating:

http://www.theinternationalforecaster.com/International_Forecaster_Weekly/A_Debt_Level_Great_Enough_To_Threaten_The_Dollar_Rating

by Bob Chapman
Posted: April 7 2010

Your purchasing power is less and less with every passing day, changes coming to currencies, no end to corruption in government, Wall Street, and banking, US states on the verge of bankruptcy, economic and financial zombies on the old continent, globalization has brought us to the brink of collapse, Interest rate volatility to come soon, US debt far over GDP, property abandoned.

Almost every day in almost any currency your purchasing power in terms of gold is less and less. Thus, these currencies in which you save the fruits of your labor are cheating you out of your savings.

The US dollar is particularly vulnerable because of its staggering debt even though it is the world reserve currency. In fact the debt is so onerous that we believe the quality rating of the dollar could be lowered by the end of the year. Many other currencies face the same dilemma and in the final analysis only gold will be worth what it is today or in the future.

Unless the US government expropriates Americans’ retirement plans they won’t be able to fund their sovereign debt. This situation is exacerbated by continued fiscal deficits of some $1.8 trillion. The administration and the Democratic Party are bound and determined to destroy America financially. Between government, Wall Street and banking America is being destroyed. This did not just happen that way; it was planned that way. When people discover what has been done to them there will probably be a revolution.

Government spends excessively, as free trade and globalization keeps America under a staggering load of unemployment in what has become a corporatist fascist nation controlled by Wall Street and banking and run by Marxists, who for years have operated in the shadows as bureaucrats.

Many American states are on the edge of bankruptcy. Their only hope is massive layoffs and reduced services adding to the already massive unemployment that plagues our nation. The situation is close presently to resembling the 1930s and that is after trillions of dollars created out of thin air permeated the economy. Worse yet, nothing has been done deliberately to solve the problems. One might think the antics of government; banking and Wall Street were deliberate-unfortunately they are. It won’t be long before everything will be nationalized and corporatist fascism will be in full flower.

Corruption in government, Wall Street and banking knows no end. This in addition to the looting of funds for Social Security and Medicare, that the Treasury now must fund, when they cannot even fund current debt without having the Fed buy it with money created out of thin air. Talk about inflation – it is surely on the way. If we use GAAP accounting, not the US government’s cash figures, the deficit is really in the vicinity of $4.5 to $5 trillion, not $1.8 trillion. This, of course, is nothing new and the same lying and secrecy is in force worldwide. All that people have saved worldwide has been stolen from them - they just do not know it yet.

The situation in Europe is so bad that all of Europe is attacking Germany because they save and do not spend enough and their balance of payments surplus is obscene to other spenders not only in the euro zone, but in the entire EU as well. Their thought is Germany should be losers like we are. Then there are the PIIGS who care about little or nothing. We know we lived for years in all of these countries and fully understand where they are coming from. They all wanted socialism and it has doomed them, as has the euro zone and the European Union. They are about to discover socialism and debt are about to destroy them. You have made yourselves into economic and financial zombies. There is no one left to bail you out. Subsidizing everything doesn’t work as they are soon to find out. When Europe and America fail unfortunately they are going to in part take the entire world down with them – no one is going to be spared.

We have an economy in a state of collapse and part of the reason for that is free trade, globalization, offshoring and outsourcing, which since 2000 has cost America some 8 million good quality jobs. Where are you Smoot-Hawley now that we need you? There are many reasons why the American economy is collapsing and free trade, British mercantilism, is one of them.

As we have said for months there is a multilateral change coming in currencies. A massive devaluation of all currencies and a debt settlement between countries. When that happens consumers worldwide will lose 2/3’s of their purchasing power on the final leg down into deflationary depression, which is probably 1-1/2 to 2 years away. Your only protection against such events is holding gold and silver related assets.

Those who have opted for general stock investments since 1998 have come out even if they were lucky and that includes massive market manipulation by our government. Not just failed policies. The creation in August 1988 of the President’s Working Group on Financial Markets” has been a disaster for free markets and a gift to dictators and would be tyrants. The markets are a giant scam and their underpinnings are about to collapse. There has been little or no growth over those years. Real estate bubbles in residential and commercial markets have collapsed and the stock market will soon follow. Hitting you right in the forehead is almost a 4% yield on 10-year T-notes that could well become 5% by yearend, which we predicted late last year. That will put the 30-year fixed rate mortgage at 6-1/4% to 6-1/2%. What do you think that will do to real estate, markets and profits? This is mainly because of sovereign debt that grows exponentially every minute of every day. These pyromaniacs in the White House and Congress add to the conflagration all day every day. The result has been a 25% loss in the S&P since March of 2000, and a loss versus gold of 75%. Gold has risen from $252 to $1,224 and silver from $3.50 to $20.00 with massive government and Fed suppression. Where do you think your money should have been and where your money should be? In gold and silver bullion, coins and shares. Yes, as usual we were crazy and we were right and we are going to continue to be right, because we understand what the Illuminists are up too.

You live in a bankrupt country, along with 18 other major bankrupts, and you will soon learn how you are going to lose everything you have worked a lifetime for. A rise in interest rates of 5% adds $620 billion annually to the US debt in interest alone and that is rising exponentially. The US, nor any government, can survive such debt service.

We are calling inflation, real inflation, not the official variety of 3%, but at 8%. John Williams says on the things you buy every day it is 10%. We should easily see 14-5/8% inflation by the end of the year just as we did 2-1/2 years ago.

The Fed has ended its $1.25 trillion program of buying toxic debt from lenders. We do not know if that is the correct figure, we do not know from whom they were purchased and we do not know what was paid for the MBS, because it is a secret. This purchase has put downward pressure on interest rates for the past 15 months. This is an abnormal procedure and it can be expected that interest rates would move higher. It also means that the fed will now be a seller in the market as the FDIC is attempting to be. If sold these securities will put downward pressure on these bonds and force higher rates in a market that is already subject to crowding out by the treasury. In addition, quantitative easing is being phased out, putting further upward pressure on rates. The Fed if it continues these policies may stem hyperinflation but they run the distinct risk of having deflation run out of control, which could easily drive the economy into deflationary depression. This is a super human feat we do not see being accomplished without major damage, at the least.

Rate volatility is going to increase dramatically, as the Fed works to hold the 10-year T-bill rate below 4%. This is what they did previously at great cost to savers and taxpayers.

As rates climb the dollar carry trade becomes much less attractive and as it is unwound borrowed money is pulled from other investments, such as bonds putting more upward pressure on rates and at the same time downward pressure on stocks, which have been purchased with borrowed money. If the Fed tightens, as they might on Wednesday, yields will move even higher. If that happens those in the carry trade and bonds and shares will see gains evaporate and sales of both bonds and stock will ensue, as the carry trade is unwound. This is what markets are now facing.

This takes us to municipal bonds and particularly California, which has $85 billion in debt, that has to be paid by its citizens, of which about 40% do not pay any taxes. In addition it officially has 12.4% unemployment, which is really about 25% and getting worse daily. This is a state with $1 trillion to $3.5 trillion in unfunded pensions and the world’s 8th largest economy. This is a state that, via federal subsidy, sold “Build America Bonds”, bonds yielding 6.3%, or 2.4%, higher rates than Treasuries. California is on the edge of bankruptcy and their municipal bonds should be sold, as many from other states should be sold as well. States won’t work out of their problems for years.

Last week the Dow rose 0.7%; S&P 1%, the Russell 2000 0.7% and the Nasdaq was unchanged. Banks rose 0.3%; broker/dealers 0.8%; cyclicals 0.8%; transports 1.2%; consumers 1.2%, as utilities fell 1.8%. High tech fell 0.3% as semis gained 1.1% and Internets fell 0.2%. Biotechs fell 0.2%; gold gained $12.00; the HUI rose 6.2% and the USDX fell 0.6% to 81.17.

Two-year Treasury bills rose 6 bps to 1.02%; the 10-year T-notes rose 10 bps to 3.95% and the 10-year German bund fell 7 bps to 3.08%.

The Freddie Mac 30-year fixed rate mortgage rose 9 bps to 5.08%; the 15’s rose 5 bps to 4.39%; one-year ARMs fell 15 bps to 4.05% and jumbos rose 1 bps to 5.83%.

Fed credit declined $7.4 billion. Fed foreign holdings of Treasury, Agency debt rose $7.2 billion to a record of $3.020 trillion. Custody holdings for foreign central banks increased $64.5 billion just year-to-date, and year-on-year 15.7%.

M2 narrow money supply fell $10 billion.

Total money market fund assets fell $30 billion to $2.983 trillion, the first time below $3 trillion since 10/07. Year-to-date it is off $311 billion and year-on-year it is off 22.2%.

Commercial paper fell $5.2 billion, or 20.8% ytd and 24.9% yoy.

America’s debt is now $31 trillion, or 2-1/2 times US GDP. Americans on average only own 11% of their home the remainder is debt. Home prices are headed lower until 2013, so 20% lower prices are a certainty. In some areas homes have already fallen 60% to 75%. This situation will feed on itself for years and bankruptcies and inventory for sale will flourish for years. About 45% of homes have mortgages. We wrote five years ago that the government wants to own and nationalize those homes, so they can control the public.

As we wrote earlier we expect another large stimulus plan soon and the Fed to reverse gears and flood the world with money sometime soon. This should be the last rescue and the result will be hyperinflation followed by collapse and a deflationary depression. This is the last chance to buy gold and silver inexpensively.

If you do not think there was inflation in 2007 and 2008 homeowners insurance rose 24%, in 2008 it rose 31% and again in 2009-10 it rose 31%.

Treasury debt is on the ropes and is about to cause the Illuminists real trouble, along with higher interest rates. Later this year or early next year debt as a percentage will reach 95%. From there on its collapse. How can anyone conceive deficits of more than $10 trillion over the next ten years?

The ISM Non-Manufacturing Index release by the Institute for Supply Management rose in March to 55.4 from 53.0. The index reached the highest level since November of 2007.

The increase to 55.4 was above market expectations of an increase to 53.3. The data shows that the economic activity in the US continues to improve.

More Americans unexpectedly signed contracts in February to buy previously owned homes, signaling government efforts to support the market will start pay off.

The index of purchase agreements, or pending home sales, rose 8.2 percent, the second-biggest gain on record and the largest since October 2001, after a revised 7.8 percent drop in January, the National Association of Realtors announced today in Washington.

Hedge funds that aim to profit from macroeconomic upheavals have had a lacklustre start to 2010, in spite of some of the biggest international monetary crises in more than a decade.

http://www.ft.com/cms/s/0/b8e7ab2e-400f-11df-8d23-00144feabdc0.html?ftcamp=rss - The Greek debt crisis and steep falls in value for both the euro and sterling have failed to translate into noticeable gains for most macro managers, many of whom predicted a stellar year on the back of huge global economic rebalancing.

So-called global macro hedge funds, which specialise in bets on interest rates, sovereign bonds and currencies, have on average lost 1.25 per cent on investments so far this year, according to industry data compiled by Hedge Fund Research, a Chicago-based index compiler.

Many of the hedge fund industry’s biggest names have so far failed to turn market crises to their advantage often in spite of fervent political criticism linking them to damaging market “speculation”.

The 5-foot alligator lurking in the algae-green waters of the community swimming pool was not the worst thing code-enforcement officers have found in recent years at AAA Apartments in Cocoa.

Bathrooms infested with mold. Walls with gaping holes where air conditioners had been ripped out. Garbage and trash strewn about the 52-unit complex. The city began issuing code-violation fines in 2007, back at the beginning of the housing slump, and the apartments' co-owners soon owed the city $1.8 million more than three times the current list price of the property, and enough money to motivate the now-former co-owners to try bribing a code-enforcement officer.

AAA Apartments, now bank-owned, may be an example of things to come. As home foreclosures continue to mount throughout Central Florida, code-enforcement officers say apartments, condominiums and other commercial buildings are being abandoned by their owners and repossessed by banks in growing numbers.

A surprise Fed announcement eclipsed the disappointing March Employment Report on Friday. Yes, it is a disappointment despite the media and permabull spin, because the Street expected March NFP to exceed 200k. One forecast had the job gain at 400k. But only 48k temporary Census workers were recorded. So only 162k NFP were reported.

Birth Death Model jobs are 81k, even though ADP, who actually does a count, showed small business lost 112k jobs. Professional services gained 11,000 jobs, but 40,000 were part-time jobs.

Review and determination by the Board of Governors of the advance and discount rates to be charged by Federal Reserve Banks.

Traders quickly surmised that if the Fed is going to allow public access to an emergency meeting to discuss a possible discount rate hike, the probability is very high that a discount rate will occur soon.

The probable reason for the public airing is to disabuse the notion that the Fed’s secrecy keeps the public in the dark about its operations while it tips coming policy to insiders who profit on the inside info.

Most of the financial media ignored the Fed notice and reported the dollar surged because the jobs report indicated the economy had turned the corner. How is this possible when the number of jobs were below the consensus forecast?

Other financial media types spun the disappointing NFP as good news because it means the Fed cannot hike rates. But the dollar rally contradicts this notion…If anything, SPMs jumped on asset allocation, which will be a temporary boost for stocks. Perhaps the past months’ upward revisions were a factor.

The change in total nonfarm payroll employment for January was revised from -26,000 to +14,000, and the change for February was revised from -36,000 to -14,000.

Once again we see chicanery in the March Employment because the Household Survey shows a gain of 264k jobs but ‘Men 20 years & over’ accounted for a 290k job gain. ‘Women 20 years & over’ LOST 42k jobs. This is absurd.

You might recall that we noted that the January Employment Report recorded a 541k jobs increase in the Household Survey due to an increase of 529k of jobs for ‘Women 20 years & over’, while ‘Men 20 years & over’ LOST 1k jobs. This is impossible!

Now we see the opposite scheme ‘Men 20 years & over’ gained 290k jobs; women lost 42k jobs.

The Household Survey shows an increase of 308,000 jobs, but the BLS did not report this in the preamble to the report. Most of the gain is due to 233,000 gain in ‘Men 20 years and older’. ‘Men 16 year and older’ account for 297,000 of the 308,000 jobs gain in the Household Survey! For February, ‘Women 20 years of age and older’ increased only 11,000.

Wages fell 0.1% (+0.2% expected), a record for the data series; but it only goes back to 2006. Wages should increase before employment increases due to the high cost of benefits.

U6, comprehensive unemployment, increase 0.1 to 16.9% in March. ‘Unemployed for 27 weeks or more’ hit a record 44.1%. Per Alan Abelson, the odds of finding a job sank to 18.7% from Feb’s 20.1%. The Exhaust Rate (people that have exhausted unemployment benefits) hit 54.01% for February.

Gallup Daily tracking finds that 20.3% of the U.S. workforce was underemployed in March. [The 149,268 consumer bankruptcies filed in March represented the highest monthly consumer filing total since Congress overhauled the Bankruptcy Code in 2005.]

For the week ended Wednesday, the Fed’s balance contracted $5.992B due to the sale of $5.103B of MBS. The Fed monetized $1.5B of agencies.

US banks earned $2.5bn last year from an accounting rule that enables them to book gains – known as “Christmas capital” by buying assets at a discount, a new study shows. More than half of all acquisitions of failed banks last year resulted in such gains, according to SNL Financial, which compiled the data.