Archive for April, 2010

Take a look at Fraudonomics and Fun Fraudonomic Facts by Mark Ames in New York Press.

I’m surprised that these are the first articles I have seen to spell out clearly what’s been obvious to me for a few weeks now after reading tons of material on synthetic CDOs that has come to the surface following the SEC fraud case against Goldman Sachs.  The entire U.S. economy is one big Ponzi scheme. The Financial Crisis destroyed nearly every job that was created since 1999 but to keep the economy from collapsing the U.S. Government had to pump, in one way or another, close to 9 trillion dollars , (to give you an idea how ludicrous a trillion is..there are only..ONLY…100 to 200 billion galaxies in the Universe) into the economy…  America has exported the lion’s share of it’s industrial jobs to Asia. Several U.S. states are on the verge of bankruptcy…  Europe is fraying at the edges and more and more it seems that the Euro might very possibly become a thing of the past

It’s great that markets are rallying and all…but I don’t see any happy endings on the horizon…Lehman’s was the oil rig burning up and sinking and ever since oil has been pouring from the man made whole at the bottom of the ocean of  Big Finance.  They can fight the fire, they can try and contain the slick..but it’s coming to shore and there ain’t much we can do about it.

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Hooray I’ve upgraded my blog so I can post audio.

This is a song about free-riding and the general lackadaisical state of culture in 2006 when the song was written… The forgotten displeasures aren’t so forgotten at the moment, but if some observers are correct Big Finance will be back to its usual tricks within a few months. I sure hope not.


Tearing up the highway with the wind your hair
The only way to travel is to not have a care
You’re free
It’s fair

Didn’t build the road, don’t even know where it goes
Just another passenger who already knows
We’re free
So there

Young rockets red-lining the plains
Forgotten displeasure remains
The sun sets exhaused, in pain.
Why does anything happen?

Sailing past the shifting poles, albedo effect
Blackened pools of water, blackened pools of neglect
We’re free.
It’s fair.

Flight to distant places on a wing and a prayer
Sensational sensations are increasingly rare
We’re free
So there.

Buried in sunsets. Estranged.
Young rockets red-lining the plains
Chasing our homes on the range.
Why does anything happen?

The sun sets in hues of deranged.
Forgotten displeasure’s domain.
Young rockets red-lining the plains.
Why does anything happen?
Anything happens.
Does anything happen?
Everything happens
For you.

Music: Speedhair
Lyrics: Paul Wyndale

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Go Habs Go!

Leave it to the Canadians to defeat Washington!

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From “Out of the Black Hole”, an article by Michael Greenberger, a professor at the University of Maryland School of Law and a former division director at the U.S. Commodity Futures Trading Commission, that appeared on April 26th, 2010 in The American Propect.

“Unregulated OTC derivatives have been at the heart of systemic or near systemic collapses — from the 1994 bankruptcy of Orange County, California; to the collapse of Long Term Capital Management in 1998; to the bankruptcy of Enron in 2001?2002; to the 2008 sub-prime meltdown; and now to an emerging European sovereign-debt crisis in which derivatives were used to disguise the extent of debts taken by nations such as Greece. After each crisis, governments worldwide proclaim that the OTC market must be regulated in the same manner as equity markets, which are dwarfed in value by OTC derivatives. However, Wall Street always deflates those aspirations with aggressive lobbying and campaign contributions. The present financial-reform regulatory effort may be the last chance to prevent the kind of crisis that was dodged in 2008 — a worldwide depression. Wall Street and its allies must be stopped now.

To avoid further systemic and irreparable meltdowns, legislation must be enacted that requires all standardized derivatives to be guaranteed by well-capitalized clearing facilities and traded on fully transparent and well–regulated exchanges. This is what the Obama administration’s June 2009 white paper promised. The president and Congress should be made to stick to that promise, or the world economy will devolve into a black hole with far greater pull than the regulatory black hole that exists for swaps.”

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I must admit the whole European meltdown is happening much quicker than I, a staunch pessimist, would have thought.

I guess we can chalk it up to markets being incapable of waiting. All the articles that I read about the crisis were suggesting that the $45 billion euro bailout package by the IMF and the EMU would allow Greece to hold out for another year at best. Clearly the writing on the wall was so BIG and OBVIOUS that markets decided there was no better time than the present to get the default ball rolling.

Here’s a quote from Naked Capitalism that echos what I have been suggesting for some time. The financial crisis is just getting started:

“So the whole idea that the financial crisis was over is being called into doubt. Recall that the Great Depression nadir was the sovereign debt default phase. And the EU’s erratic responses (obvious hesitancy followed by finesses rather than decisive responses) is going to prove even more detrimental as the Club Med crisis grinds on.”

People are finally starting to pull their heads from the sand (and other dark places) to realize that the World is faced with a monstruous debt crisis, one that never should have been allowed to occur in the first place. It would seem that nothing was learned from The Great Depression. Our governments have been bamboozled by Global Finance. I think that the U.S. political elite deserves a particular concentration of scorn for its irresponsible leadership in these affairs. You can blame the greedy jerks on Wall Street all you want but the ultimate failure has been a political one. American politics, on both sides of the aisle, has allowed itself to be captured by the Military Industrial Complex and Big Finance. Let’s face it, they are one and the same. It is time for the countries of the world to start brushing up their emergency plans. Damage control is what the next 10 to 15 years has in store. I have a very hard time imagining how any kind of normalcy will return until this brewing shitstorm of international idiocy blows over.

I doubt that this Greek crisis is the begining of the end of humanity. After all, the only creature more resilient that people are cockroaches… Even rats wouldn’t survive very long without our staggering amount of waste to feed on. But I deeply feel that this crisis is the beginning of the end of the World as we know it. This is not necessarily a bad thing. Those of us who grew up in the 70s, the dawn of the truly modern age with its computers, television, better living through chemistry, lived in a completely different Universe than our grandparents and even more so than that of our great-grandparents. But to think that the pace at which “innovation” is driving people mad…right fucking mad…can continue without some form of global nervous breakdown is not only wishful thinking but criminally insane. I keep repeating the same point.. The World Wars of the 20th Century were in large part a result of the Enlightenment catching up with itself… The race for economic and intellectual superiority between nations was only understood to be achievalbe through mililtary means. This way of thinking was consistent with human history up to that point but civilzation was not prepared to deal with the genocidal character of mechanized warfare. (more…)

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So this is where we are at. To be clichéd, the more things change the more they stay the same… It’s just that this time around the stakes are much higher. The global economy is dangerously interdependant on finance and IT and the leaders of America and Europe are terrified by the outcome of this current phase of instability…

Too many people are unemployed, there’s too much debt, there are too many insolvent entitlement funds… Furthermore, current economic indicators are based on opaque accounting practices..I was shocked when reminded that mark to market was still supsended on Wall Street which means all financial reporting from the Street is tainted with the foul stench of optimism. The rally doesn’t make sense. I can’t help but think that markets are being goosed for the ultimate cash out before the roller coaster train is set loose, with no brakes and a hole at the bottom of the hill. Never mind Goldman Sachs’ manipulation of the CDO/CDS market. Obama himself was sold by people, including GS, who are hoping he fails. What better scapegoat than the first black president of the U.S. to be blamed for its destruction and with it, the Free World? Who’s shorting the President right now? And more importantly, how are they to gain if they win this bet?

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The World is once again standing uncomfortably close to the edge of the abyss that was so narrowly avoided in 2008 when Lehman’s collapsed. If you don’t have vertigo..you are really not paying attention.

No one knows for sure what will happen when (and it is when) Greece defaults. Will Portugal, Spain and Ireland follow? What will happen to the U.S.?

There’s plenty of speculative reporting out there, just Google a bit and see what you find. Try search terms that include Financial Crisis, Greece, Fallout, United States

Look, I’m no financial expert.. but I have a nose for impending disaster.. My impression is that the people in charge of World affairs haven’t a clue, not even the slightest one, how the hell to get out of this mess, in large part because the leaders of the world are in hawk to financial interests. Oh wait’ we’ve seen this film before haven’t we? It was called the 20th Century.

Money does indeed make the world go round and when it is destroyed through wanton acts of ignorance, the world stops for a moment and then errupts into Anarchy until new monopolies of force carve out equilibrium between nations. To quote Pete Townsend…”Meet the New Boss, Same as the Old Boss.”

Whatever the mechanism, there are way too many people on the planet. It gets a bit of lip service now and again but the issue at stake not just a matter of Maltusian resource management. It is information management. Humanity is overloading from too many people striving for the same thing.. Wealth and Power.. it’s a story as old as the Bible. These conflagrations errupt from the most unexpected direction just when things seem to be getting under control.

If people could be more excellent to each other, all of this crap could probably be avoided. But then I guess life would be boring.

Go Habs Go!

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Gas production via hydrolic fracturing IS coming to Quebec. Whatever the government says about respecting the environment is a load of poutine. There is no clean way to fracture shale deposits. It doesn’t mean we should not do it. But the Quebec Government should at least stop being hypocritical with their postering on energy. If they are serious about exploiting shale gas then they should stop whinging about the Alberta Oil Sands.

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Read how America has become a Banana Republic With No Bananas.

I’ve been wondering for months how come Americans are not marching in the streets with pitchforks and torches, ready to burn down Wall Street.. Apparently that time has come…minus the pitchforks and torches..for now…

After reading “The Sickening Abuse Of Power At The Heart Of Wall Street” from Simon Johnson, chief economist at the IMF from 2007 to 2008,  it is no stretch of the imagination to presume that more protests will follow… It will make the Tea Party seem like small potatoes… America might finally be awakening from its Reaganomics Bushite Induced Coma… but is it too late?

Things I read this weekend  are making it look like the S.E.C. suit against Goldman is the tipping point, the Avalanche control mortar that has set off the entire ridge. Things are moving fast. For weeks there’s been tons of speculation on whether or not the U.S. Senate was going to get bogged down into the same fillibuster blackmail scenario that dragged the Health Bill through lawmaking hell… And then with the flip of an S.E.C. switch, overnight,  it became apparent to the G.O.P. that there was no way they could possibly get away with siding with the banking industry.  So now it seems that a financial regulation bill is on its way and it might even include a break-up the banks amendment.

What is clear is that the Oligarchy is scared.  If Goldman loses it’s legitimacy there is no telling what might happen to it.  Is it really too big to fail?  Or has it become too big to be allowed to exist?

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Today at Naked Capitalism, Yves Smith compares the news that Greece is broke and needs a 45 billion euros bailout (60 billion U.S.) with the collapse of Creditanstalt, an Autsrian bank that collapsed in 1931 when markets thought a sustainable recovery was underway..

“The news about Greece’s bailout has me thinking a lot about Creditanstalt, the Austrian bank which collapsed in 1931. This account bears remembering because we should see the 1929-1933 descent as a two-part episode, with the second part starting in the Spring of 1931 with Creditanstalt.It should be noted that there were a lot of positive economic signs before the Creditanstalt ruined this. The key difference to today is the monetary liquidity and fiscal stimulus, which has buoyed both asset markets and the real economy. But, the situation in Greece makes me think a lot about Creditanstalt.”

She then points to a website that chronicles news from the 1930s to highlight the similarities with that era…

“First, there is the blog site News from 1930 which provides verbatim news from the Wall Street Journal exactly 79 years ago because the September 2008 Lehman bankruptcy roughly corresponds to the October 1929 crash . They have an entry from yesterday with a lot of good data points. The ones I want to highlight are bulleted below. By and large, they are very bullish. Everything is upbeat.”

In a nutshell we’re back to a situtation where just when things seem to be on the mend two years after a critical financial shock a systemically important financial player goes insolvent bringing down Europe and subsequently the U.S. along for the ride.

Check it out. Very interesting, if not unsettling, demonstration of Mark Twain’s insight into the rhymes of the times…

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