There are times when I'd like to share something with you but my Voice in the Garden site does not seem the appropriate place, thus, this blog.

There are experiences, thoughts, views... and for anyone lurking/waiting to pounce (as has occurred on several occasions), please do not attempt to turn what I post into a political statement. This is NOT a political site, but IS about occurrences, reality, and personal opinion concerning what I see in the world around me and my family. There are many excellent writers whose works "speak" to me, and I shall include some of them. At times it may be
something I think you would enjoy or simply whatever ails you (me).

Thursday, January 27, 2011

The Big Squeeze: Predicting the Effects of Savings Extortion and Abuse of the Middle Class

Guest post by Charles Hugh Smith from Of Two Minds

The Big Squeeze: Predicting the Effects of Savings Extortion and Abuse of the Middle Class (Essay by
Zeus Yiamouyiannis, Ph.D., copyright January, 2011 )

January 27, 2011

I am pleased to present a uniquely clear-sighted three-part series by frequent contributor Zeus Y. on the consequences of our corrupt financial-political Status Quo being exploited by a rapacious Financial Elite.

Part I: Oligarchy Becomes Anarchy


By now it should be clear even to the most optimistic observer that the global financial system has given itself over to systemic lawlessness. Once international banks were effectively allowed to print their own money in an unregulated “shadow” system and have it redeemed full value by national taxpayers, the charade was over. The only thing left, at this point, given the full cooperation of governments and an eerie world-wide non-enforcement of law, is for banks, like a cancer to savage and consume every concrete store of non-counterfeit productivity and asset value.

Not only have governments from China to the United States committed themselves to a chess game meant to eke out relative advantages on a sinking ship, but they have positively rewarded those who are speeding the collapse. A simple, cannibalistic economic rule now persists until a new system emerges: Economic manipulation, destruction, and extortion are simply more profitable, far more profitable, than good old fashion value creation. Disaster capitalism will be pursued full force.

Whether a country is communist or capitalist, authoritarian or marginally democratic, no longer matters. Citizens globally have been made to be the pawns and patsies of a universal financial Ponzi scheme that can only end in carnage. Who cares if this insures debt peonage for the world and likely mass austerity, suffering, and shortages. There’s a buck to be made! Who cares if my own children will be choking on the garbage I spewed into the financial air and water system. I’m rich!

When morality, reason, and sovereignty collapse together, we are left with outright anarchy, in everything but name. This is a reality so uncomfortable that hundreds of trillions dollars more of citizen retirement savings and other assets are likely to be tragically liquidated trying to regain stability and finance the “lean times” in the hopes of the promised upturn.

Act I: Oligarchy Becomes Anarchy

This anarchy and its suicidal impulse was brought to a head, but by no means started with, the collapse of Lehman Brothers and Bear Stearns. These crises did however confirm that the gatekeepers had become one and the same with the barbarians at the gate.

The same story kept repeating itself and was easily predicted by the news accounts of single “rogue” traders damaging storied banks in England, France, and other countries in the past decades: The techno-nouveau riche found vulnerabilities in the “civilized” corruption and racketeering of the establishment banks. These vulnerabilities expanded and softened as banks adopted unfettered gambling as a way to produce huge profits. When gambling didn’t pay, scapegoats were identified and jailed, the sins of the system were larded on those individuals, and nothing changed systemically.

Later, young guns armed with razor wits and high-powered computers saw that they could guarantee for themselves multi-billion dollar profits by not only betting on collapse but aiding and abetting (and even sometimes directly causing) a crash of the very banks they worked for or dealt with. Supported by a profit-by-any-means mentality, they simply took market manipulation to the next logical level, and a Pandora’s box of financial ills was loosed on to the world.

Consider Lehman Brothers. As detailed in Danny Schechter’s movie Plunder, Lehman Brothers was brought down by a spate of naked short selling simultaneously coupled with exotic very short-term anonymous short positions worth hundreds of millions of dollars. One can conclude with high probability given the established dynamic that those who engineered this and profited enormously from it were former employees or colleagues of said employees who migrated to hedge funds.

These players were insider enough to be privy to accounting tricks and frauds, the Repo 105 scams and so forth, being perpetrated by Lehman Brothers. They knew that Lehman Brothers was hiding gargantuan losses and skating on an illusory margin, so they devised a way to push them off the cliff by naked short selling and entrepreneurially betting on their own success. Why not teach the old farts a thing or two about their own game and laugh all the way to the proverbial bank.

With the repeal of Glass-Steagall and the collapse of the walls between conventional banking, investment banking, investment rating systems, and government regulation, the financier class had completed its nefarious project, a fungible two-tiered economic system “unhinging” finances from concrete reality, productivity, and value creation.

On one hand, a shadow banking system created hundreds of trillions of dollars of

Magnetar saw an opportunity to profit from this inequality under the law by lobbying banks to construct highly rated junk investment portfolios and then betting against those portfolios many times over. So you have the young amoral renegade side of the elite sparring with the crooked establishment side in what amounts to them as one big galactic video game. When they lose, they always have another life. When they win, they take home the money and the title. Someone else pays.

It has to be noted that there is no personal stake in this game. Naked short selling, for instance, is phantom selling, selling shares you don’t actually own. Phantom buying, which is what is currently propping up the stock market, is using Fed-funneled money to buy up your own stocks. Risk has been removed from the system. There is only liability, profit, and power. Those of power and size taking great “risks” can leverage those risks into an extortion demand: “take our liabilities off our books, allow us to valuate them for as much as we want, and/or hide them for as long as we like or we’ll blow up the system.” Governments, with the exception of Iceland, said, “Please, financial terrorist, don’t do that. We’ll do anything you ask.”

If free market capitalism existed and worked these banks would have been allowed to collapse, their losses eaten by bond and stock holders, and civil and criminal charges filed against institutions and individuals. However, to do so would have exposed the rot and common criminality in the interlinked global system. Accountability would have indicted the people and connections behind the curtain, so the entire anarchic enterprise has to be covered up and its costs shifted to taxpayers, in a vicious downward cycle, which only accelerates rapaciousness and irrational incentives and punishes savings and responsibility.

Savings interest rates have been near zero for years, lower than inflation. Unemployment is high and people are liquidating their assets to pay for their costs of living. In addition, their future earnings and children’s savings being charged in advance for the multi-trillion dollar malfeasance of banks. Pensions are being looted and/or liquidated along with other real assets.

The major U.S. banks, on the other hand, reported within quarters of the crash they created, that they were able to go through an entire quarter without a single losing trading day. That is pretty easy to do when so-called toxic assets are offloaded to the Federal Reserve for 100 cents on the dollar and when banks receive hundreds of billions of 0% interest rate money and turn around and buy Treasury bonds with 3% interest, “paying” taxpayers back with interest earned on the debt these same banks caused.

No violations are too egregious or too pervasive for the Department of Justice or the SEC to ignore, no infraction too obvious or ridiculous to be covered up. These offices weakly go after the penny ante “bad apples” and keep a bubble system propped up and hopped up on its own version of financial adrenalin. A short laundry list of the most tragicomic examples:

Fraudclosure: hundreds of thousands of mortgages being processed by robosigners, recorded and shifted around electronically, and their paper trails neglected or destroyed, contrary to even the most basic commerce and property laws. Not a single significant prosecution yet.

Exchanges selling shares in precious metals without even having close to the reserves in physical metal to back up and JP Morgan’s “alleged”

Mortgage insurers simply not paying their obligations.

Multiple insurance on the same properties paid out in multipliers above the actual value of the property.

Verified cases of houses being "foreclosed" upon that were already bought with cash.

Same property sold to different owners.

Extorted “marked to model” FASB standards fraud.

With no effective reserve requirements, leverage limits, or accounting standards, institutions with power can simply make up any amount they choose. The above examples show how rampantly institutional entitlement has evolved to claim and sell any property they choose, and valuate and sell any instrument they conjure up.

Power is all about access, and evidence shows where the current power resides. National governments in full collusion and cooperation with gigantic international financial corporations, have opened the floodgates of access to the “little people’s” wealth through bailouts, Fed policy, and quantitative easing, and clanged shut the castle door of the financial elite by allowing them to establish the value of thei r own assets and to concoct, rate, and sell almost any financial asset or instrument with no accountability, transparency, or enforcement.

By Zeus Yiamouyiannis, Ph.D., copyright January, 2011

Why States and Cities Going Out of Business

States and cities are in dire financial trouble. (Wall Street Journal) WSJ's David Wessel says thanks to a spend-now-ask-questions-later approach, they only have themselves to blame.

Thursday, January 20, 2011

President Kennedy 50 Years Ago

20 January 1961, President John F. Kennedy's Inaugural Address

... Ask not what your country can do for you - ask what you can do for your country.

Monday, January 17, 2011

When Entertainment Was Entertainment

Bob Hope and James Cagney,
what could you not love about these two amazing performers?

All I can say after that is my calves hurt.

Sunday, January 16, 2011

Fuel Tax By State

If you have ever wondered what portion of the price you pay for gasoline and/or diesel is tax (combined local, state, and federal per gallon), this is the most recent summary report courtesy of API, the American Petroleum Institute.

Thursday, January 13, 2011

Some Food Inflation Facts

Food inflation facts are generally not included in media reporting except to encourage that all is well. If you listen to only the major networks and or the local newspaper, you may not be aware of occurrences around the world. For example, nearly each day this past week I have seen headlines and read articles relating to the rising cost of food and some riots associated with them. I can almost hear someone say, "oh, that won't happen to us." Hopefully not, but we must pay attention to and understand our environment and make plans for what if... our family depends upon us. Yes, we want to focus on the positive, but this situation currently prevails.

The Times of India reports Inflation Is Up 18.32 percent in India, 58.8 percent of that is due to escalating food costs.

Algeria is in turmoil due to rising food costs.

Tunisian youths clash with police in several cities as teachers and lawyers go on strike over high unemployment and food prices.

The U.N. FAO (Food and Agriculture Organization) report: sugar and meat prices are at the highest since its records began in 1990 (twenty years ago); wheat, rice, corn and other cereals prices are at the highest since the 2008 crisis.

And here in the U.S., the USDA (Department of Agriculture) reports tighter grain stocks of corn and soybean. The problems span the globe. Last summer it was drought in Russia and a smaller than expected U.S. corn crop. Floods in Australia are now expected to hurt wheat production, while dry weather in Argentina shrinks the soybean and corn harvest there.

The following graphs from the UN's latest food price index are for your review and need no explanation. Besides, you shop and know what is happening to the cost of food.

Wednesday, January 5, 2011

Vermont C. Royster: A Light On the Road to Damascus

Jesse at Jesse's Café Américain offers...

Vermont C. Royster: A Light On the Road to Damascus

Most people confuse freedom with power.

Freedom is not the ability to do whatever we wish when we wish however we wish, to serve our passions as ends unto themselves, to be rude and demeaning to those who we think are weaker at the moment. This self indulgence is the act of small and mean spirited souls when they yearn to show that they have a little power.

True freedom is to know what is good, what is the right thing to do, and to have the will to do it, even when it goes against our selfish inclinations. It is to free ourselves from fear and all those things that hold us down, which prevent us from finding and fulfilling our part in the great renewal of creation and the triumph of life over death, of being over nothingness.

The most powerful in the eyes are the world are often the most enslaved, victims of basest passions, servants to the most undeserving and meanest of ambitions. With an obeisance they serve and nuture the willfulness that delivers them first up to slavery to themselves, and then to darker powers, and finally into the jaws of self destruction.

The paradox of life is that we hate what we fear, but we eventually become what we hate, because it occupies so much of our energy and mind. It makes a place for itself in our hearts. When the adversary of all goodness intertwines its fingers with ours, he slowly tightens his grip and holds fast, and then we are his.

"When I despair, I remember that all through history the ways of truth and love have always won. There have been tyrants, and murderers, and for a time they can seem invincible, but in the end they always fall. Think of it. Always." Mahatma Gandhi

In Hoc Anno Domini
By Vermont C. Royster
December 24, 1949

When Saul of Tarsus set out on his journey to Damascus the whole of the known world lay in bondage. There was one state, and it was Rome. There was one master for it all, and he was Tiberius Caesar.

Everywhere there was civil order, for the arm of the Roman law was long. Everywhere there was stability, in government and in society, for the centurions saw that it was so.

But everywhere there was something else, too. There was oppression -- for those who were not the friends of Tiberius Caesar. There was the tax gatherer to take the grain from the fields and the flax from the spindle to feed the legions or to fill the hungry treasury from which divine Caesar gave largess to the people. There was the impressor to find recruits for the circuses. There were executioners to quiet those whom the Emperor proscribed. What was a man for but to serve Caesar?

There was the persecution of men who dared think differently, who heard strange voices or read strange manuscripts. There was enslavement of men whose tribes came not from Rome, disdain for those who did not have the familiar visage. And most of all, there was everywhere a contempt for human life. What, to the strong, was one man more or less in a crowded world?

Then, of a sudden, there was a light in the world, and a man from Galilee saying, Render unto Caesar the things which are Caesar's and unto God the things that are God's.

And the voice from Galilee, which would defy Caesar, offered a new Kingdom in which each man could walk upright and bow to none but his God. Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me. And he sent this gospel of the Kingdom of Man into the uttermost ends of the earth.

So the light came into the world and the men who lived in darkness were afraid, and they tried to lower a curtain so that man would still believe salvation lay with the leaders.

But it came to pass for a while in divers places that the truth did set man free, although the men of darkness were offended and they tried to put out the light. The voice said, Haste ye. Walk while you have the light, lest darkness come upon you, for he that walketh in darkness knoweth not whither he goeth.

Along the road to Damascus the light shone brightly. But afterward Paul of Tarsus, too, was sore afraid. He feared that other Caesars, other prophets, might one day persuade men that man was nothing save a servant unto them, that men might yield up their birthright from God for pottage and walk no more in freedom.

Then might it come to pass that darkness would settle again over the lands and there would be a burning of books and men would think only of what they should eat and what they should wear, and would give heed only to new Caesars and to false prophets. Then might it come to pass that men would not look upward to see even a winter's star in the East, and once more, there would be no light at all in the darkness.

And so Paul, the apostle of the Son of Man, spoke to his brethren, the Galatians, the words he would have us remember afterward in each of the years of his Lord:

Stand fast therefore in the liberty wherewith Christ has made us free and be not entangled again with the yoke of bondage.

Tuesday, January 4, 2011

European Nations Begin Seizing Private Pensions

From the Christian Science Monitor:
by Jan Iwanik

Hungary, Poland, and three other nations take over citizens' pension money to make up government budget shortfalls.

Hungarian lawmakers rolled back a 1997 pension reform, allowing the government to effectively seize up to $14 billion in private pension assets to reduce the budget gap while avoiding painful austerity measures.

People’s retirement savings are a convenient source of revenue for governments that don’t want to reduce spending or make privatizations. As most pension schemes in Europe are organised by the state, European ministers of finance have a facilitated access to the savings accumulated there, and it is only logical that they try to get a hold of this money for their own ends. In recent weeks I have noted five such attempts: Three situations concern private personal savings; two others refer to national funds.

The most striking example is Hungary, where last month the government
made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings.

The Bulgarian government has come up with
a similar idea. $300m of private early retirement savings was supposed to be transferred to the state pension scheme. The government gave way after trade unions protested and finally only about 20% of the original plans were implemented.

A slightly less drastic situation is developing in Poland. The government wants to transfer of 1/3 of future contributions from individual retirement accounts to the
state-run social security system. Since this system does not back its liabilities with stocks or even bonds, the money taken away from the savers will go directly to the state treasury and savers will lose about $2.3bn a year. The Polish government is more generous than the Hungarian one, but only because it wants to seize just 1/3 of the future savings and also allows the citizens to keep the money accumulated so far.

The fourth example is Ireland. In 2001, the National Pension Reserve Fund was brought into existence for the purpose of supporting pensions of the Irish people in the years 2025-2050. The scheme was also supposed to provide for the pensions of some public sector employees (mainly university staff). However, in March 2009, the Irish government earmarked €4bn from this fund for rescuing banks. In November 2010, the remaining savings of €2.5bn was seized to support the bailout of the rest of the country.

The final example is France. In November, the French parliament decided to earmark €33bn from the national reserve pension fund FRR to reduce the short-term pension scheme deficit. In this way, the retirement savings intended for the years 2020-2040 will be used earlier, that is in the years 2011-2024, and the government will spend the saved up resources on other purposes.

It looks like although the governments are able to enforce general participation in pension schemes, they do not seem to be the best guardians of the money accumulated there.