Friday, August 08, 2008

Systemic Paralysis

Usury, to be clear about it, is rich people taking advantage of poor people by lending them money on terms that are sure to make them fail - William Greid

It is often argued that times were a lot harder in the old days but this statement is far from true. Such an assumption rather tends to reflect on a poor existential knowledge and the superstition that a lack of control over the world events is beyond one's own reach. Like any other species, humans get used to their own (predatory) environment and deal with it accordingly. Many dangers have become so familiar to the point to appear rather harmless. And then there is this infamous cultural thinking that "good will prevail" anyway. While lies always get exposed eventually, truth carries in its wake a series of painful realizations. It has always been a jungle out there and in this time and place, something has radically changed the fabric of society; something so insidious that goes far beyond 'greed' and which is so deeply entrenched that is repellent to the mind to even think of doing something about it. To put it bluntly, if something were done, chaos would occur instantly and of course nobody really wants this to happen. This is the main reason why we'll have to wait until the system auto-destructs completely in order to finally envision the possible end of the tunnel and real solutions.

Although we've heard a lot about predatory lending lately, not enough about predatory borrowing was said and nothing at all about 'predatory rumors' without which the mania could never have existed. The 'buzz' is a major component that glued everything together and mesmerized everybody, even those who couldn't afford a piece of the American Dream. It is only when one realizes this, that the blame game is exposed for what it truly is. Back to reality: a study from the Center for Economic Policy & Research in Washington, DC. projected that the bust will most likely wipe out two decades of family-earned wealth. Who cares to listen now?

Let's not kid ourselves: debt-laden economies allow 'the powers-that-be' (TPTB) to pull the plug whenever they want - either by restricting credit lines or just waiting until the consumer can no longer borrow. So now, the Middle Class is 'On the edge' completely unaware of how it got there. As so far the price tag stands at $100TN!. Alas the long overdue 'triggering event' that will cause a worldwide systemic paralysis is kind of unpredictable because of an esoteric element called 'confidence' delaying the final blow. This raises a very taunting question: as it turns out that the rich countries are the most indebted, with America at the top of the pyramid, we have to wonder what happened since the Truth In Lending Act (passed in 1968) designed to protect against flawed and corrupt lending practices? Considering that every boom is credit induced, we must ponder the efficiency of the laws drafted by our policy makers as 8,500 U.S. banks are threatened today. Ellen Brown, an attorney practicing civil litigation in L.A and who has investigated the deception of 'fractional banking' for many years, sees a tsunami of litigations on the horizon:

The total equity of the top 100 U.S. banks stood at $800 billion at the end of the third quarter of 2007. Banking losses are currently expected to rise by as much as $450 billion, enough to wipe out more than half of the banks’ capital bases and leave many of them insolvent...

Instead of succumbing to capitalism bashing, how about assimilating that financial illiteracy translates into monetary cannibalism? Meredith Whitney, a star bank analyst, warned last year - and still does today - that the 'incestuous' behavior between the banks and the credit-rating agencies during the housing boom will have a prolonged impact. In fact, she predicts a very deep recession.

Signs of distress are everywhere; even countries like Iceland and Ireland, long believed very stable are on the brink. In a short period of time, The Royal Bank of Scotland and Fortis Bank have released grim assessments that have finally done 'gloom and doom contrarians' and 'perma bears' justice. While the stock market's volatility increases daily, two mortgage giants guaranteed by the state (i.e: taxpayers), Fannie Mae and Freddie Mac, would need a (taxpayers) bailout. Both lenders have on their track records nearly 50% of the nation's mortgages. For several decades, many believed in this too good to be true Hollywood Story. Sorry for the hard landing, back to reality: If this is not a housing cartel, what is it? Unfortunately, there isn't any mystery when one knows that deep-pocketed lobbyists have spent $200M to buy influence among all political stripes. For what... a $5 trillion mess?.

(07/16) ... They’ve stacked their payrolls with top Washington power brokers of all political stripes, including Republican John McCain’s presidential campaign manager, Rick Davis; Democrat Barack Obama’s original vice presidential vetter, Jim Johnson; and scores of others now working for the two rivals for the White House.... more

Global Pirates

Even though a majority of voters are in favor of interventions, they do not grasp that it makes them accomplices of the same predatory behaviors they're rebelling against. It is the best fashion to keep justice from being implemented and to bury lies under the guise of stopping the housing bubble from deflating further, and thus revealing the ugly truth about the boom. The same holds true for class actions and their so-called settlements. Let's not beat around the bush: bailouts and class actions are among the ultimate cons nowadays. It is important to understand the underlying psychological effects here to comprehend why those 'interventions' will not cease tomorrow unless people start waking up. While 'greed' is the main factor at stake motivating actions, if cases were brought fully to justice, litigations would last so long that investors/taxpayers would lose patience and not even be sure to see some of their money back. Time is money - indeed. But wait a minute: weren't we supposed to fighting greed in the first place?

Rationally speaking, and by colluding more or less openly for a so-called greater good, TPTB are seriously undermining the skills and smartness of everybody. What is your own college degree worth when you're misled to believe that TPTB are doing their jobs while working very consistently on destroying the purchasing power, banking on college tuitions which students cannot afford to repay and implementing global trade policies that eventually come home to roost. As the Globalist agenda machine runs like a freight train to nowhere, the United Nations announces that economic shocks may push an additional 16 million people of the Americas into extreme poverty.

While we're at it, it should be useful to mention that honest reporting has drawn the attention of The FDIC lately and the latter plans on paying closer attention to the blogosphere in the future: blogs are out of control, its chairman Sheila Bair declared. If she is really willing to act against whistleblowers, that task may well reveal itself Herculean. She will have to start with shutting down CNBC whose folks already debunked the brand new bailout bill. Rational Bloggers deal merely with the all data available on the net, have developed a very special ability to read between lines released by the mainstream outlets, such as:

220,000 homes repossessed in the second quarter 08
Nearly 1.5 Million Foreclosure Filings in 2008
U.S. banks borrowing $17BN daily from Fed
How Wall Street Wrecked Your Retirement
Dead Stocks Rallying... etc.

But let's close the chapter about the two mortgage monsters: anyone willing to dig a little will find out that Fannie Mae also runs the 'Fannie Mae Foundation, which contributes to local charities, arts and housing organizations, all of which gives Fannie the needed influence. Well, what we see here with the FM Foundation is widespread. Foundations help funnel large sums of money between lobbies and their cheerleaders. Don't even think of contacting one of them if you don't have serious connections: foundations generally don't accept unsolicited projects. Those not implementing such a policy are the most trustworthy.

It is all about 'networking' and admiring influential people who make 'it' happen. So, it goes without saying that something is deeply flawed in the way we view success and power in the broad sense. This takes another dimension when analyzing firms managed by Richard Branson and George Soros, GE and BP, Ford and Shell, Cargill and the Carlyle Group in their role in the Amazonian
deforestation while funding so-called 'green projects' such as biofuels. Another hoax commonly named: The Clean Energy Scam. Actually, and this is appalling, there is a secret World Bank report linking biofuels to the food crisis. What, do you think, would happen if we stopped this insanity overnight? Considering the state of the current global affairs, the answer is utterly simplistic: this would speed up the dreadful domino-effect. As I type this there are signs that the Eurozone is tipping into deeper downturn than America. Talk of an achievement for the single currency, which was created to avoid monetary fluctuations in the first place - remember? An economist at the Royal Bank of Scotland even uses the term 'reverse-decoupling' as Europe sinks harder than the US; led by Spain spiraling into the worst crisis since the Franco dictatorship. Forget about the U.K where it is as bad as in the U.S: this week, a UK study revealed that 36% of citizens would see their cash run out within 11 days. How long would it take in America as the savings rate sank below zero two years ago already?

For how long will we be able to sustain economic fallacies? Well, if you follow the writings of Ambrose Evans- Pritchard, the global economy is at the point of maximum danger and that all its parts may go down together. Will survivalists get the last laugh? The common sense seems to indicate they will, and here is the ultimate proof: since the creation of the Federal Reserve the purchasing power has nose-dived slowly but steadily. Compared to its value in 1913, it is now just a nickel - Welcome to Disney Bank!

Psychiatry vs Sound Money

There are no 'free bubbles'. Manias are fed with a multi-level tacit complicity. Everybody is interested in easy money to start with. While bankers and other financial managers are to blame, it is about time to acknowledge the danger of relying on individuals who are supposed to have the all degrees necessary regarded for their well established experience. In economics, there are no moral hazards besides those caused by man. Usury is the root of all evils and this is something that will never be taught at school, unless there is a radical and interllectual wake-up call. If you need an example illustrating the plague of ignorance, let's consider Japan, where the suicide epidemic is tied to an economy under strain. As a result, after a decade of reforms and weak growth many middle-age and elderly men unemployed chose to end their lives. While the Japanese system allows the beneficiaries to collect life insurances in cases of suicide, we shouldn't jump to any fast conclusions. Throughout India, more and more troubled farmers are killing themselves...

AMY GOODMAN: These descriptions of desperation, up to three farmers a day swallow pesticides, hang themselves from trees, drown themselves in rivers, set themselves on fire, or jump down wells, many of them plagued by debt, poor crops and hopelessness? ... (2006/more)

In the Western Empire, we've got counselors to treat and cure mental conditions. When glancing at the market malaise today, we can easily assume why shrinks still have many sunny days ahead. Last May, the USAToday ran an article related to the dire mental stress of many homeowners as they see the value of their home plummeting or have their home foreclosed:

The American Psychological Association (APA) and other mental-health groups are publishing tips on how to handle the emotional stress triggered by the real estate meltdown... "They're depressed, anxious. It's affected marriages, relationships," says Richard Chaifetz, CEO of ComPsych, a Chicago-based employee-assistance firm that is counseling homeowners over mortgage fears. "People tend to catastrophize, and that leads to depression. Suicide rates go up. We see an increase in drinking, outbursts at work, violence toward kids. Before, their houses were like ATMs," as they rose in value. "Now, they feel trapped like a rat in a corner.... Historically, research shows, rates of depression and suicide tend to climb during times of economic tumult..."

But even the top 10% of society is getting hit. Bankers, CEOs of companies, traders, high-end business guys, use secret clinics and nurses. It is estimated that 40,000 people in the U.K. financial sector will be become jobless over the next three years. For this year alone, the bigger picture shows that from Tokyo to London to New York, financial firms will shed more than 83,000 jobs. Wall Street Exodus is causing fear, panic and anger. Unless the PTB start blowing another mother of all the bubbles, jobs will not come back any time soon. To compare, in the wake of the dotcom crash investment banks and brokerage firms laid off nearly 90,000 people. New York City is bracing for the biggest single-year decline in pay on Wall Street in history as bonuses for employees based could shrink by $10 billion or more. There'll be a number of years before Wall Street pays taxes again, Mayor Bloomberg stated a few days ago. This doesn't bode well to say the least: many people will soon discover that they can no longer afford their luxury condos.

The usury deception goes indeed global: the Bank of Korea confirmed that payments using 'plastic' accounted for 57% of total private spending in the first three months of this year. In South Korea, three years ago, a spike of defaults set off a national crisis. Now industry pundits observe similar dangers in Turkey and China, where there are more than 100 million cards. If you do not hear the alarm bells, and sorry if this hurts your ego, you are probably deaf. In a not so distant past, Turkish people were regarding 'Honor Killings' as the only solution to avoid being labeled a debtor. This did not prevent a fierce outcry, in 2006, prompting the country to crack down on credit card marketers. But there too, it doesn't seem that the new rules have helped avoid the inevitable.

We did not listen to our ancestors’ proverb,” Mr. Kaya said. “ ‘Stretch your leg only as far as your blanket (NYT/08/08/08)

So, the one million dollar question now: will you let Wall street handle your pension plan, do you still trust them enough after the mortgage mess and the ensuing hedge fund blowups, busted buyouts, and credit market gridlock - ??? The ran an article (How Wall Street Wrecked Your Retirement) which is truly insightful if you are determined to start your own investigation.

Don't get mad, get educated. Debt based economies always end up losing their 'magical' effect and when they do, culprits are countless. But the root cause is 'usury' and it starts at the very beginning with paying an interest on the banknotes in circulation and creating money out of thin air. The central bankers do not have the money in the first place, they invent it electronically. All of which means that they sell an illusion whose price are the boom and bust cycles, inflation, currency crisis and depressions. This fraudulent concept may appear mind boggling to many but understanding the trick is vital to move toward the betterment of Mankind, enhance prosperity and eradicate wars.