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The Dallas Fed Reminds That The Economy Is Doing Much Worse Than In The Administration's Worst Nightmare

Tyler Durden's picture


The Dallas Fed has released an economic paper titled "Keynes' Wet Dream"... just joking - the real titles is - "Can The Nation Stimulate Its Way to Prosperity" in which the author concludes wisely: "While the overall weight of the evidence suggests the stimulus plan has provided a short-term boost, it’s unclear exactly how large this boost has been. What is clear is that stimulus funds have exacerbated near-term fiscal imbalances." Mm hmm. More taxpayer capital well-spent. Yet in the paper is contained the following chart which we hadn't seen in a while, and which says all one needs to know about not only the real benefits from the stimulus (as opposed to those limited strictly to Wall Street), but also is the best grade card of the Obama administration's economic "prowess" to date.

This is how the Fed explains this damning divergence:

Compared with no stimulus, the stimulus plan in 2009 alone was expected to increase GDP by 1 to 3 percentage points, raise payroll employment by 500,000 to 1 million jobs and lower the unemployment rate by half a percentage point. At first glance, it doesn’t appear the stimulus achieved these  objectives.

In the year after the plan’s passage, the labor market continued to hemorrhage jobs and unemployment climbed above 10 percent. Indeed, the  unemployment rate is now higher than it was expected to be without the stimulus plan—and has been every month since the plan’s passage (Chart 5). This seems inconsistent with official estimates of the plan’s performance. The first quarterly report, including data through September 2009, found that the plan had created or saved about 1 million jobs and boosted GDP 2 to 3 percentage points in the second and third quarters.2 Subsequent analysis from the Council of Economic Advisers and several private forecasting firms found even more favorable results, seeing the stimulus on track to save or create the 3.5 million jobs that were originally forecast for the 2009–10 period. How can this be?

The key proviso is this: what might have been. Simply put, there’s no way to know how badly the economy would have performed in the absence of fiscal stimulus and no way to prove how many jobs would have existed without stimulus.

And that's the whole point - all assumptions about "alternate worlds" hypotheses are always flawed, starting at the very top, with the guarantee that the world would have ended if the TBTFs were left to fail. Newsflash - it wouldn't, and the economic situation would likely have been far better now, had we taken the bitter pill at the proper time two years ago, reset the system, and started afresh. Instead we are now preparing the latest stimulus which is Obama funding the digging of holes all across the country (soon to be used as a terminal repository for worthless US currency).

h/t Joel


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Thu, 08/12/2010 - 12:38 | 517949 VK
VK's picture

That figure should be adjusted for em-pop and the participation rate. Wonder what effect a more realistic 14pc+ figure would do for Keynesians?

Thu, 08/12/2010 - 12:38 | 517950 Greater Fool
Greater Fool's picture

'[A]ll assumptions about "alternate worlds" hypotheses are always flawed,...and the economic situation would likely have been far better now, had we taken the bitter pill at the proper time two years ago, reset the system, and started afresh.'

Pot, I have a kettle you need to meet....

Thu, 08/12/2010 - 12:48 | 517967 mark mchugh
mark mchugh's picture

no you di'nt

Sun, 08/15/2010 - 11:32 | 522393 rwe2late
rwe2late's picture

Greater Fool,

You are correct to question the validity of ALL such macro-prognostications.

The further from the here and now,

the farther into the future,

the more the variables and happenstance,

the greater are miscalculations and bias magnified.

Nonetheless, some authorities, despite obvious human existential limitations, maintain a conviction of infallibility regarding their godlike predictions as to the future (or past hypothetical) course of events.

Unfortunately, from such unwavering conviction about macro history is derived the willingness and the excuses to commit all sorts of mass atrocities and injustices in the here and now. From arbitrary imprisonment and torture, to pre-emptive wars, mass starvation, or mass suffering, it’s all done for the “future good”.

Perhaps a little more humility is in order.

The economic “stimulus” policies of our government have made unemployment worse even by the standard of the government’s own employment goal. That is indeed, ridiculously pathetic.

But should we have ever believed those who claimed to know what’s bad now is good for the future?

Should we have ever believed those who claimed that public borrowing to subsidize billionaires and mega-banks would improve the economic lot of us all?

Should we have ever believed that starting wars now best prevents future wars?

Should we have ever believed that garrisoning the planet and increasing investments in unproductive military activities safeguards our future?

And should we now believe those who insist that draconian cutbacks in social spending will improve our future?

And should we also ignore that the nation’s total municipal budget shortfall is hardly one month’s budgeted spending on wars and militarism?

In short, are our troubles essentially self-imposed?

Are we too ready to believe the charlatans who claim the worse tasting their medicine, and the higher the price, the better for us in the “long run”

(when we will all eventually of course, be dead)?

Thu, 08/12/2010 - 12:42 | 517951 Racer
Racer's picture

I nearly choked with laughter when I saw that chart..

It would be funny if it wasn't so seriously bad for those affected.

And it proves just how WRONG these idiots, who are throwing more money at the banksters, are


Thu, 08/12/2010 - 12:44 | 517958 Mitchman
Mitchman's picture

The best part is the authors of the chart!

Thu, 08/12/2010 - 12:48 | 517971 Cognitive Dissonance
Cognitive Dissonance's picture

Yeah but the trend is your friend. :>)

Right up until it isn't anymore.

Thu, 08/12/2010 - 12:52 | 517978 Mitchman
Mitchman's picture

I had an old boss who used to say "If you can't point to the numbers, point to the trend!"

Thu, 08/12/2010 - 13:06 | 518011 Walt Whitman
Walt Whitman's picture

To top it off...

I read after Romer's departure from Team Obama, that she was being considered for the top spot at the San Fran Fed.

Destruction "...from California to the New York Island" as the song goes.

Thu, 08/12/2010 - 16:05 | 518516 Problem Is
Problem Is's picture

" the gulf stream waters"

LOL Walt!

Thu, 08/12/2010 - 16:27 | 518564 leftcoastfool
leftcoastfool's picture

...(In) this land the slaves are you and me...

Thu, 08/12/2010 - 12:46 | 517965 Cookie
Cookie's picture


Thu, 08/12/2010 - 13:11 | 518023 breezer1
breezer1's picture

obama is the idiot. they need an idiot in charge so they can steal the world.

Thu, 08/12/2010 - 14:59 | 518353 traderjoe
traderjoe's picture

He's no idiot. Great book deal, great job, eternal fame (or infamy), huge speech fees for decades, etc. 

He's a very smart shill for his corporate bosses. Playing his hand well. Doesn't mean it works well for you or the rest of us. 

I do get the sense every now and then that they really are frustrated their policies aren't working. Which would be idiocy, because they weren't designed to work for anyone but the bankers. 

Thu, 08/12/2010 - 18:12 | 518790 New_Meat
New_Meat's picture

maybe bosses of the corporate bosses, n'est ce pas?

- Ned

Thu, 08/12/2010 - 13:24 | 518059 Ripped Chunk
Ripped Chunk's picture

Like a bunch of lying little kids. They know they will be caught but they have to lie. It's a compulsion.

Only compulsive liars run for political office. All candidates are narcissistic sociopaths. Lying is one of their many undesirable traits. 

Thu, 08/12/2010 - 14:28 | 518267 DaveyJones
DaveyJones's picture

"At first glance, it doesn’t appear the stimulus achieved these  objectives...

but if you keep staring at the chart for sixty seconds, then look at a blank wall, the color bars will change and you will see job growth  

Thu, 08/12/2010 - 12:46 | 517963 ShankyS
ShankyS's picture

Newsflash - it wouldn't, and the economic situation would likely have
been far better now, had we taken the bitter pill at the proper time two
years ago, reset the system, and started afresh.

Amen to that brother.




Thu, 08/12/2010 - 12:57 | 517991 DB Cooper
DB Cooper's picture

If we'd have taken the bitter pill then we would not have needed any new FinReg - the survivors would certainly know to regulate themselves, and the suffering would have fallen with those that caused the problem instead of the rest of us.

Thu, 08/12/2010 - 12:47 | 517966 Cognitive Dissonance
Cognitive Dissonance's picture

Overheard in the Fed hallway during a whispered conversation between Timmy and Bernanke:

"Someone needs to stick an annulus up the Dallas Fed's butt and shut them up."

Thu, 08/12/2010 - 14:56 | 518348 hangemhigh
hangemhigh's picture

"Someone needs to stick an annulus up the Dallas Fed's butt and shut them up."

magic eight ball says go long covert probing sessions on the mother ship............


Thu, 08/12/2010 - 12:49 | 517972 Thomas
Thomas's picture

I hope Christina Romer is brighter than she looks.

Thu, 08/12/2010 - 13:08 | 518014 Commander Cody
Commander Cody's picture

And so what does bright look like chauvanist?

Sun, 08/15/2010 - 23:43 | 523377 Thomas
Thomas's picture

So if I said, "I hope Bush is brighter than he looks" you would call me a chauvinist also, or are only guys allowed to look like nitwits. Speaking of looking like a nitwit...

Thu, 08/12/2010 - 13:10 | 518016 Monkey Craig
Monkey Craig's picture

i don't trust fat pigs like Romer or Summers

Thu, 08/12/2010 - 13:34 | 518097 Commander Cody
Commander Cody's picture

How about trim ones like Geithner?  He's OK?  Hank "the shank" Paulson?

Thu, 08/12/2010 - 13:49 | 518141 CosmoJoe
CosmoJoe's picture


Thu, 08/12/2010 - 15:06 | 518370 hangemhigh
hangemhigh's picture

i don't trust fat pigs like Romer or Summers

How about trim ones like Geithner?  He's OK?  Hank "the shank" Paulson?

fat, skinny......those values don't compute.  all that matter is that mission ready replicants be of recent manufacture and equipped with easily programmable chip assemblies in place .............  

Thu, 08/12/2010 - 18:13 | 518794 New_Meat
New_Meat's picture

monkey, you can trust me, I'm not fat yet.

and I'm not like the others ;-)

- Ned

Thu, 08/12/2010 - 12:50 | 517974 SimpleSimon
SimpleSimon's picture

Three highly 'stimulated' persons, Ben, Obama and Geithner, have been spotted in Dallas today enquiring for the whereabouts of the author of this paper....they want to make a direct deposit.

Thu, 08/12/2010 - 12:50 | 517975 Lucky Guesst
Lucky Guesst's picture

Yes, but many jobs will be created and the deficit will be cut drastically once the healthcare bill takes effect. Wizard!

Thu, 08/12/2010 - 15:19 | 518410 Lucky Guesst
Lucky Guesst's picture


I was being sarcastic so TAKE IT BACK!

You just couldn't tell I was doing my Nancy Pelosi imitation because you couldn't see my eyes bugging out or my my big head wobbling on my skinny neck.


Thu, 08/12/2010 - 16:11 | 518523 Problem Is
Problem Is's picture

Health Care Saves Jobs
If your proctologist does not run over 12 pedestrians on the way to work...

Did he save 12 jobs?

Thu, 08/12/2010 - 16:28 | 518568's picture

If your proctologist does not run over 12 pedestrians on the way to work...

Ah, the ASSMAN.

Thu, 08/12/2010 - 12:53 | 517979 ShankyS
ShankyS's picture

Instead we are now preparing the latest stimulus which is Obama funding
the digging of holes all across the country (soon to be used as a
terminal repository for worthless US currency).

Uh, didn't Iran beat us to the punch on that one?

Fri, 08/13/2010 - 01:01 | 519350 StychoKiller
StychoKiller's picture

I miss Bahgdad Bob -- he would've had something brilliant to say about all of this.

Thu, 08/12/2010 - 12:55 | 517980 American Dreams
American Dreams's picture

Yes and good ole' stained pig chin Romer did such a good job on this report that she is next in line to head the San Fran Fed.  Brilliant!!


there be no shelter here

Thu, 08/12/2010 - 12:52 | 517981 RSDallas
RSDallas's picture

The only thing we can accurately ass-u-me here is that the FED, Treasury and our lawmakers have made an ass out of you and me. 

Thu, 08/12/2010 - 12:52 | 517982 mortpiedra
mortpiedra's picture

Keynes wrote in 'Inflation as a Method of Taxation':

"A Government can pay its way … by printing paper money.  That is to say, it can by this means secure the command of real resources—resources just as real as those obtained by taxation.  The method is reprobated, but its efficiency cannot be disputed.  A Government can live by this means when it can live by no other.  This is the form of taxing the people which it is most difficult to evade and which even the weakest Government can enforce when it can enforce nothing else.

“On whom has the tax fallen?  Clearly on the holders of the original notes … The burden of the tax is well spread, cannot be evaded, costs nothing to collect, and falls, in a rough sort of way, in proportion to the wealth of the victim.  No wonder its superficial advantages have attracted Ministers of Finance.

“Experience shows that the public generally is very slow to grasp the situation and embrace the remedy….  But sooner or later the second phase sets in.  The public discover, in effect, that it is the holders of notes who suffer taxation and defray the expenses of government, and they begin to change their habits and economise in the holding of notes….  The public try to protect themselves in this way when they have convinced by experience that their money is always falling in value and that every holder of it loses.

“It is common to speak as though, when a Government pays its way by inflation, the people of the country avoid taxation.  That is not so….  The same arguments which I have here applied to the note issue can be extended, with a few modifications, to all the forms of internal Government debt….  What a Government spends, the public pay for.  There is no such thing as an uncovered deficit,” (Italics added)


Out of Dyning of Money by Jens O. Parsson (1974)

Thu, 08/12/2010 - 13:58 | 518162 John_Coltrane
John_Coltrane's picture

Great quote which illustrates just how great and insightful a thinker Keynes really was.  Its his so-called followers like Krugman who are complete idiots.   In the 20th century only Hayek can rival him for contributions to economic ideas.  Hayek's most trenchant insight was of course, debt=serfdom, and that all central planners and "experts" use debt to take away freedom and enslave the masses.  So far, so good, on that plan.

Thu, 08/12/2010 - 15:02 | 518363 traderjoe
traderjoe's picture

In the glib cable news/reality TV world, it would be relatively easy to hijack a 'famous' economist and boil their theories down into a conveniently self-serving thought-process: print and spend as much as a government wants. 

Thu, 08/12/2010 - 12:53 | 517984 Gully Foyle
Gully Foyle's picture

President Camacho: Now I understand everyone's shit's emotional right now. But I've got a 3 point plan that's going to fix EVERYTHING.
Congressman #1: Break it down, Camacho!
President Camacho: Number 1: We've got this guy Not Sure. Number 2: He's got a higher IQ than ANY MAN ALIVE. and Number 3: He's going to fix EVERYTHING.

Thu, 08/12/2010 - 13:17 | 518041 Biggvs
Biggvs's picture

Just watched Idiocracy last night. Funny flick.

Thu, 08/12/2010 - 13:33 | 518088 IE
IE's picture

It's got Electrolytes!

Thu, 08/12/2010 - 13:31 | 518089 IE
IE's picture

Agreed... fantastic. 

Thu, 08/12/2010 - 17:09 | 518662 RichardENixon
RichardENixon's picture

Mike Judge is doing some new Beavis and  Butthead I hear.

Thu, 08/12/2010 - 14:59 | 518357 OldTrooper
OldTrooper's picture

And here's deep-cover video straight from the most recent Fed meeting:

Thu, 08/12/2010 - 12:53 | 517986 ptoemmes
ptoemmes's picture

Re the comment "...and the economic situation would likely have been far better now, had we taken the bitter pill at the proper time two years ago..."

So true and Karl Denninger - for one of many - has argued that a bitter pill needed to be taken as far back as 2001, but no - the housing bubble was blown among other things.

Of course one could argue that the root of the rot in today's financial-economic system is from still further back - it's been a slow rot at times.

All that aside someone or something is gonna force us to swallow a big ole bitter pill one day (soon) only that "cure" may choke us to death.



Thu, 08/12/2010 - 12:58 | 517994 truont
truont's picture

What is clear is that stimulus funds have exacerbated near-term fiscal imbalances.

Wow!  The Regional FEDs have been taking a lot of pot-shots at the Central FED and USCONgress. 

Welcome aboard the USS Sanity, Dallas FED!

Thu, 08/12/2010 - 13:12 | 518027 Walt Whitman
Walt Whitman's picture

Damn the torpedoes!!

Thu, 08/12/2010 - 14:03 | 518179 Assetman
Assetman's picture

Yeah... what I find interesting is that the Fed is openly taking potshots at FISCAL policy, and not doing enough of their own critical self-examination on the MONETARY side.

In terms of unemployment, I'd hazard to guess that FISCAL stimulus policy has likely has more of a net positive effect on unemployment and LESS of an effect on asset imbalances-- than the effects of our Fed's MONETARY policy.  The problem with fiscal stimulus was that is was TEMPORARY.

ZIRP appears to have helped the banking system, yet not helped much with loan growth and money velocity-- and I haven't seen evidence of QE doing a damn thing, except for distoring the prices for risk assets.

Why not the Dallas FED go do more in-depth research on THAT, and get back to us?

Thu, 08/12/2010 - 14:44 | 518325 DaveyJones
DaveyJones's picture

they'd do a "critical self examination," but they don't know what that is 

Thu, 08/12/2010 - 15:01 | 518364 OldTrooper
OldTrooper's picture

They thought they made a mistake once, but turns out they were wrong.

Thu, 08/12/2010 - 13:04 | 518002 LePetomane
LePetomane's picture

Too late. Wallstreet got its bailout so everything on the planet and it's dog gets two.



Thu, 08/12/2010 - 13:05 | 518004 Amsterdammer
Amsterdammer's picture

To recall Bill Black's 'Why is HBO championing Bush's Financial wrecking

team ? Wrecking team 2.0 plain in your face

Thu, 08/12/2010 - 13:04 | 518006 bada boom
bada boom's picture

No wonder why Christina resigned. 

I wouldn't want my name on that chart. Funny how its on there, blame her...

Thu, 08/12/2010 - 13:28 | 518071 sbenard
sbenard's picture

I hadn't noticed that. Thanks for pointing it out.


And Bernstein is Romer's replacement! With help like that, we're doomed!

Thu, 08/12/2010 - 13:50 | 518145 DonnieD
DonnieD's picture

She's lucky. Other gangs kill you when you try to leave.

Thu, 08/12/2010 - 15:01 | 518361 citizen2084
citizen2084's picture

Good point D - the gang and the govt are no different. Still, what makes you think she quit the gang? Just moving to a new gig working for the same criminals. If she quit,your right, they would kill her.


Thu, 08/12/2010 - 13:05 | 518007 Henry Chinaski
Henry Chinaski's picture

Where are those shovel-ready jobs?  Oh, now I get it.  Before Obama and his gang are done, we will all be digging ditches for a living.

Thu, 08/12/2010 - 13:09 | 518017 Dr. No
Dr. No's picture

Yep.  One to dig the hole, another to fill it in.  Thats two jobs there.

Fri, 08/13/2010 - 01:44 | 519375 RichyRoo
RichyRoo's picture

plus someone to manage the process, a health and safety officer, two counsellors, an efficiency expert and

the ACORN representative to ensure ideological purity on the worksite.

Thu, 08/12/2010 - 13:12 | 518030 Misean
Misean's picture

Graves, man...word's graves not ditches...

Thu, 08/12/2010 - 13:29 | 518078 sbenard
sbenard's picture

Hilarious comment. But we'll all be in mourning soon!

Thu, 08/12/2010 - 14:15 | 518229 Ms. Erable
Ms. Erable's picture

The 'shovel-ready material' hasn't been piled high enough for the administration to notice the stink. Apparently, it's been overpowered by the stench of the proletariat's cake-eating contests.

Thu, 08/12/2010 - 16:19 | 518532 Problem Is
Problem Is's picture

"Where are those shovel-ready jobs?"

Timmay G. needs shovelers every time he opens his mouth at US Treasury... APPLY PRONTO!

Thu, 08/12/2010 - 13:08 | 518015 william the bastard
william the bastard's picture

All gov't data is sandbagged on the first display. Kinda like three card on a box top.

Thu, 08/12/2010 - 13:10 | 518024 spinone
spinone's picture

Hindenburg Omen yesterday?

Thu, 08/12/2010 - 13:40 | 518114 old_turk
old_turk's picture

Iffy.  I don't think so ... give it a couple of months.

It'd have to be confirmed by a second one anyway.

Thu, 08/12/2010 - 18:20 | 518813 Sisyphus
Sisyphus's picture

Do correct me if I am mistaken. But didn't one occur on July 6th, too? So, yesterday's occurrence could be the confirmation?

Thu, 08/12/2010 - 13:12 | 518029 traderjoe
traderjoe's picture

Don't know if this was in the morning news section, but thought interesting:


Thu, 08/12/2010 - 16:21 | 518546 Problem Is
Problem Is's picture

Credit Slips

Excellent blog... read it daily.

Thu, 08/12/2010 - 13:12 | 518032 Miles Kendig
Miles Kendig's picture

Unfortunately whenever the fed tries to dance all it manages to accpmplish is to either step on everyone's toes or do the Stupid Doo Doo Dumb...

Thu, 08/12/2010 - 13:13 | 518035 augmister
augmister's picture

The title of their opus should have been:  "Drinking ourselves to Sobriety!"   You just cannot make s--- like this up!!!

Thu, 08/12/2010 - 13:20 | 518045 sbenard
sbenard's picture

Wow! A cold dose of unvarnished, no-spin, truthul reality from the Dallas Fed. I'll bet the writer won't be very popular at the next FOMC meeting! And I'll be they won't get an invite to the next Mao-decorated Christmas Party at the White House, either!

Thu, 08/12/2010 - 15:17 | 518065 Ripped Chunk
Ripped Chunk's picture

He will be photographed with 3 hookers before the next FOMC meeting, die of a sudden heart attack or be run over by a hit and run.


Thu, 08/12/2010 - 13:26 | 518066 Joe Davola
Joe Davola's picture

That hole is Boss Obama's hole, what's your dirt doin' in it?

Thu, 08/12/2010 - 14:40 | 518307's picture


Thu, 08/12/2010 - 13:26 | 518067 JR
JR's picture

Follow the yellow brick road..  As Nathan Martin said today: “Hey, ‘disinflation’ is a good thing when prices and debt are not supported by income.  It is the central bankers who are hurt by it, but it was they who directly profited from creating this massive and historic credit bubble in the first place.”

MONOPOLY MONEY AND THE INTERNATIONAL BANKING CARTEL  | Damon Vrabel| Council on Renewal | August 12, 2010

The Federal Reserve has been at the top of the news for a long time and it’s getting a lot of attention now as it appears the next down cycle in the depression may be upon us. So what’s the real reason the world listens so intently to an Ivy League bureaucrat like Bernanke? Of course, it has nothing to do with him. It’s who he is accountable to–the international banking cartel:

Bank of America Securities LLC
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Goldman, Sachs & Co.
Jefferies & Company, Inc.
J. P. Morgan Securities Inc.
Morgan Stanley & Co. Inc.

Barclays Capital Inc.
HSBC Securities (USA) Inc.

Credit Suisse Securities (USA) LLC
UBS Securities LLC.

Daiwa Capital Markets America Inc.
Mizuho Securities USA Inc.
Nomura Securities International, Inc.

Deutsche Bank Securities Inc.

BNP Paribas Securities Corp.

RBC Capital Markets Corp.

RBS Securities Inc.

These institutions are the current primary dealers of the Federal Reserve System. They have power over the entire economy, everything in “the market,” very much a non-free market. They sit at the top of the world’s monetary system, currently the Fed’s debt-dollar pyramid, with a governmental license to what has been the most secure capital in the world–US Treasury debt–for a monopoly price that nobody else can get. And when it comes to global finance, the difference between the strongest banks vs. dying banks is just a few basis points in price (cost of capital).

These banks get first dibs on buying the servitude of the US population through the Fed/Treasury auction process. They distribute some of it to subordinate capital for a guaranteed premium, and they park a large amount of it on their own balance sheets as assets upon which they can speculate, trade, and fractionalize to create the rest of the money in the economy and put other countries, companies, and people in even more debt. So these institutions hold a monopoly position that even leviathan Standard Oil never dreamed of: a government-enforced usury license that generates trillions for their premium capital holders and senior employees and allows them to act as imperial armies sucking in more territory around the world as neoliberalism breaks down sovereignty.

This is why the country list above doesn’t mean what some may think. The institutions aren’t national. The list only indicates that the banking establishment has a permanent parasitic stake in those countries to churn their populations under the Fed’s debt system. All of the listed institutions are global in nature. Together with hedge funds and their other buy-side buddies, they have power over nations. Like any corporate institution, banks drive earnings per share (EPS) by expanding and leveraging their balance sheets, which for banks means putting everything else in more debt. So these cartel banks work to expand their territorial control beyond their national borders to put other populations in debt. This is a mathematical requirement of exponential growth enforced by the private capital system. The eventual end state of this dynamic is one integrated, global banking empire. It’s only a matter of time before their collective balance sheets (plus the large Chinese banks now that the cartel is colluding with them) control the rest of the world if people don’t awaken and choose to put a stop to it.

Will they succeed? The Fed system is in transition. The crash of 2008 was the first phase of global capital holders shifting their private capital out of the system so the Fed was forced to add public capital, i.e. your debt, into the system. More of this is likely coming. But does this mean the international banks behind the Fed are dying? No. They’ve simply transferred their bad assets to the public through the Fed and prepared to ramp up operations in Asia, which will be a primary churn center for the 21st century global banking system. Capital assets have been transferred, production assets have been transferred, and the capital holders can transfer much more capital in a short period of time if they so choose.

All the specifics of this coming transition may not be clear, but it is coming unless the global population says no. The banks have set up the ultimate voluntary test. If we continue to say yes by playing along with the banks and the multinational corporations they control, then they will have proven that a global empire ruled by an integrated banking system is preferred and possibly superior to independent countries. But they appear to be failing their own test. Ivy League neoliberalism has been exposed for what it is. The people are now indeed saying no.

Thu, 08/12/2010 - 13:42 | 518121 Maniac Researcher
Maniac Researcher's picture

Have you worked for any of these organizations? Because I have - and I assure you the picture from the inside is even more terrifying.

Thu, 08/12/2010 - 15:05 | 518377 traderjoe
traderjoe's picture

Can you elaborate a bit?

Thu, 08/12/2010 - 15:32 | 518440 Maniac Researcher
Maniac Researcher's picture

I've written a few articles about it -- here's one:


Thu, 08/12/2010 - 16:18 | 518537 OldTrooper
OldTrooper's picture

Nice article.  I had similar experiences, from a different perspective, when I owned a title company in Colorado.  I'm so glad to be doing something different!

Thu, 08/12/2010 - 17:25 | 518689 DaveyJones
DaveyJones's picture

The image of the toilets overflowing is fitting.

Thu, 08/12/2010 - 19:18 | 518958 nmewn
nmewn's picture

Compelling article. Well written and from the heart.

Things have apparently changed quite a bit since my wife was an AVP at a bank in Largo...back in the 80's. I remember her talking to me about the stress that one of the VP's was going through in the Compliance Dept., which drew my eye to this...

"Shortly after I quit I found out that there was a suit filed against The Bank by the Attorney General’s office in response to complaints of redlining (not making mortgages to minority groups in certain areas)."

Perhaps your loan "modifications" showing Pacific Islanders was their undoing? ;-)

Just kidding...good was, in fact, systemic.

From DC (the CRA) to mainstreet (your bank) to Wall Street (securitization & derivatives).

My opinion...if banks were not forced to loan money to people who were un-credtworthy, but knew they did not have to keep those dodgey loans on their books but could unload them onto investors via Wall Street, they would have not been able to lose money in this fashion.

They would have had to find another way to lose money...LOL.

Thanks for sharing.


Thu, 08/12/2010 - 15:34 | 518445 hangemhigh
hangemhigh's picture


if you have credible information about the internals ops of the cirme cartel, tell us more...........

Thu, 08/12/2010 - 15:24 | 518424 Ripped Chunk
Ripped Chunk's picture

+ !!!  Thanks JR. Good source, succinct and to the point.



Thu, 08/12/2010 - 13:30 | 518083 John McCloy
John McCloy's picture

Bill Black on the dangers of the U.S. hiding banking losses. For obvious reasons one of the men with the most credibility and experience was for all intents and purposes ommitted from any financial reform. When they are not listening to honest men such as Mr. Black you have indisputable evidence they not only wish to continue to extend and pretend and debase the currency but never had any intentions of undergoing serious financial reform.^n225,xlf,bac,^dji,c,^gspc,faz

Thu, 08/12/2010 - 14:50 | 518338 DaveyJones
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criminals tend to take more desperate measures as things close in.

Thu, 08/12/2010 - 15:38 | 518454 cougar_w
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And then in the end they find Jesus.

If I were Jesus, that would totally piss me off.

Thu, 08/12/2010 - 15:54 | 518489 Cognitive Dissonance
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You can be my Jesus and strike them down if you wish.

Zapping their asses with lightening is my preferred method but I deferto your great wisdom and final judgement. All I ask is that you act quickly and give me a heads up so I can evacuate 100 miles from the nearest target, just in case fire and brimstone is involved.  :>)

Thu, 08/12/2010 - 18:57 | 518926 cougar_w
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Well iffn I were then I would.

Only I ain't.

But I know someone who is. I'm sending this chick over. Blood thirsty flamethrower with nice tits.

That one's a little sentimental but on other days she's a nightmare. Imagine Fortran walking into GS headquarters and demanding a quart of blood and her 401(k) back. Epic lulz ensue.

Thu, 08/12/2010 - 20:55 | 519021 cougar_w
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Yes, I know, her name is Fortran. She's a machine so it works.

So maybe instead she walks into the basement co-lo at the NYSE to get her 401(k) back and demands a lo-latency network port, no never mind that I'll just rip this -- oof there -- this server out of the rack and use this one here. Oops didn't mean to drop it. No, we do not touch the blue chick's wings, I'll kill you if you do that again. Haha just kidding jeez relax already. Okay hand me that fiber cable like a good boy. Hmm the encryption is lame, I broke this when I was living at the orphanage ... and I'm in. Too easy. This is funny Bill is selling GSEs from the dark pool that slimeball. Let's see ... a few trades for little Fortran should do it ... yes that one looks nice ... and this one, I like that company they have a cute CEO I should ask him out I wonder if he'd date me ... oh and while I'm in here I think I'll fuck around with C just to nuke some of these HFT algos that have neither real nor simulated balls ... hey look at all their lights blinking like that, stupid clockwork ... Okay I'm up the last few milliseconds and ... SELL! Ha I think I just crashed that stack of SPARCs in the next rack, the script kiddies at Morgan should have written in a better no-panic loop. Did they never think they'd meet a faster trader? Christ I've been running a 24 petabyte climate simulation all morning until my boobs are hot enough to cook on and I can still sweep these guys. Your HFT fu is slow like ancient tortoise, punks. Hey where did all this smoke come from? It's clockwork junk, let it burn ... oh and the S&P is down 300 points in the last 2 seconds? i-am-sooo-sorry-not-even. It's all because you messed around with my money, buncha limp pencil necks. Be happy I didn't set off an EMP in the lobby and turn all into molten slag. If you're lucky maybe I'll come back all special just to set you on fire. But now I'm getting some coffee and offloading this climate run before I get a headache. Here's your server back I'll just put it -- oof there -- back in the rack <smack> it's a little crooked but I think <shove> it will still work well enough for those gutless pukes over at GS ... oh and it doesn't need this part <toss> I don't imagine. See all better. Love you! Ta!


Thu, 08/12/2010 - 17:31 | 518696 DaveyJones
DaveyJones's picture

they find Jesus AND an amateur tatoo artist

Thu, 08/12/2010 - 17:52 | 518744 Fred Hayek
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Dennis Miller used to have a great bit in his standup act about this. 

(From Jesus point of view)

"Why can't I get any of the winners?!  When they're on top, I'm fricking nowhere but then when some of 'em fuck it all up, thennnnn they find me!"

Thu, 08/12/2010 - 15:27 | 518433 Ripped Chunk
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I'm sure that there are many in the bankster community that wish Mr. Black were not around anymore. He had a big impact on the crooks as the S&L debacle came to light thanks to his efforts.

We need more heroes like Bill Black.

Thu, 08/12/2010 - 17:53 | 518747 Fred Hayek
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Amen.  +2 Trillion.

Thu, 08/12/2010 - 13:32 | 518086 chrisina
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"And that's the whole point - all assumptions about "alternate worlds" hypotheses are always flawed, starting at the very top, with the guarantee that the world would have ended if the TBTFs were left to fail."

Well said.

But then why do you add :

"Newsflash - it wouldn't, and the economic situation would likely have been far better now, had we taken the bitter pill at the proper time two years ago, reset the system, and started afresh."

Remember? - all assumptions about "alternate worlds" hypotheses are always flawed


Thu, 08/12/2010 - 14:55 | 518346 Broker NotBroke
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It's about time we set up our own "alternate world" this one's broken...

Thu, 08/12/2010 - 15:41 | 518463 cougar_w
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Once the wave function collapses one of the alternates becomes reality. That's good for another 500 years or so.

Only them as has a chair at the tables gets to play, son.

Thu, 08/12/2010 - 18:02 | 518764 seventree
seventree's picture

So is the damn cat finally dead?

If so how high can it bounce?

Thu, 08/12/2010 - 13:34 | 518094 hound dog vigilante
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Thank you, Dallas Fed, for producing this "smoking gun" report.


One gets the impression that there is a growing rift b/t regional Fed leadership and the NYFed/Treasury/DC cabal.

A mutiny from within the Fed is no less plausible than externally-driven accountability/dissolution, imo.


Thu, 08/12/2010 - 18:10 | 518787 OldTrooper
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Interesting point.  The Fed seems so monolithic - but if some of the regional members felt they were getting the shaft... (or not getting the graft)...

Thu, 08/12/2010 - 13:37 | 518104 GlassHammer
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The FED's new motto should be:

"Our predictions are fictitious but the cost are real."

Thu, 08/12/2010 - 15:02 | 518367 Lucky Guesst
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Fed's new motto is clearly

"last one there is a rotten egg"


Dallas Fed is now off the hook when SHTF.

Thu, 08/12/2010 - 14:18 | 518237 Grand Supercycle
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DOW and SP500 bearish megaphone wedge charts continue ...

Thu, 08/12/2010 - 15:17 | 518407 stpioc
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Yes, in the same sentence you bash alternate worlds hypothesis you go on to making one of your own! Wonderfully consistent, LOL

And that's the whole point - all assumptions about "alternate worlds" hypotheses are always flawed, starting at the very top, with theguarantee that the world would have ended if the TBTFs were left to fail. Newsflash - it wouldn't, and the economic situation would likely have been far better now

Thu, 08/12/2010 - 15:24 | 518427 ebworthen
ebworthen's picture

It takes 1,000 lies to cover the first lie.

The first lie was the TBTF bailouts.

Now, the path of 1,000 lies and 1,000 cuts is being followed.

Thu, 08/12/2010 - 15:44 | 518466 cougar_w
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Oh yeah? And you  got a better idea?

j/k. It sucks.

Thu, 08/12/2010 - 15:44 | 518465 Hephasteus
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Of course stimulus doesn't work. It's 12 bankers jacking off in the corner with 4 corporatations. It's not stimulating shit.

Thu, 08/12/2010 - 15:59 | 518499 cougar_w
cougar_w's picture

No actually I'm pretty sure they're really stimulated. I mean like rock-hard all the time Viagra martinis with a twist of Cialis stimulated. So stimulated they can't walk down the sidewalk more than 3 blocks without hiring a hooker for a quickie. Stimulated like a March hare. Pulse-pounding vein-throbbing red-faced bug-eyed 200 systolic pressure anus-clenched stimulated like Lucifer sitting a live nuclear warhead with 8,000 DDD virgins prostrate at his feet begging for it.

However, it won't fix the economy, is what you are saying. Very true, that. Well fuck you loser! And fuck your little economy thing, whatever that was. I am Lucifer of Wall Street and I am stimulated up the wazoo! Suck on it losers if you didn't get any. I got mine, yeah I got yours too and your kids' future in the bargain for eight god-damned generations of kids. Because you suck and I am all powerful. I get the virgins and you get a pimple on your butt. Big L. Now go somewhere and die. There is no room for you on my planet.

PR for the end of the world. They don't care, I think, what any of us thinks.

Thu, 08/12/2010 - 16:17 | 518535 Ripped Chunk
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I have to say, I love it when you talk this way :)

Thu, 08/12/2010 - 19:26 | 518970 nmewn
nmewn's picture

Ahhh yes.

Blankfein did say he was doing ___'s work.

He failed to explain which diety he was working for didn't he ;-)

Thu, 08/12/2010 - 16:15 | 518530 Ripped Chunk
Ripped Chunk's picture

What's this !?!?!?  Mainstream media dissension !?!?!?!?

Apparently it has become time to start letting the Sheeple in on "things"

Thu, 08/12/2010 - 17:20 | 518679 RichardENixon
RichardENixon's picture

It's got to be some kind of trick. Don't fall for it.

Thu, 08/12/2010 - 18:24 | 518828 Ripped Chunk
Ripped Chunk's picture

That would be the wisest thought. Seems unlikely.

Thu, 08/12/2010 - 18:24 | 518827 OldTrooper
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It's a low risk thing, letting the Sheeple have access to this kind of info.  Few will care, fewer still will grasp the import.  The people who do care and understand have known for quite some time what the Fed was up to.

Thu, 08/12/2010 - 17:18 | 518676 RichardENixon
RichardENixon's picture

There's a guy down here in New Orleans who's good at reading chicken entrails, and I've heard he's going into financial planning. I'm thinking I'll give him a try, can't be any worse than the rest of these maniacs.

Fri, 08/13/2010 - 00:05 | 519303 No More Bubbles
No More Bubbles's picture

Yes, that would be a better person to consult for these economic matters.  Far more reliable and with less fluff.  I am consulting a deaf/dumb/blind girl in a "home" nearby.  I give her a pen and put a list of stocks in front of her and she stabs at the page.  The picks have been good.  She even indicates short or long based on how big the dot the pen makes......

Her "work" is dramatically outpeforming CNBS "ANALysts" and all the other Wall St. "experts"..........

Thu, 08/12/2010 - 19:31 | 518977 Insiderman
Insiderman's picture

Boy was that Fed report a simplistic piece of crap.  It didn't even differentiate (much) between spending that increases long-run output and and spending that feeds current consumption.  The feed corn example is flawed because it requires EITHER production or consumption.

Now let's say the government stimulates investment spending rather than current consumption directly.  Not only do we get the benefit of actually improving our lives, but the people who are doing the work get the money for actually DOING SOMETHING that improves our lives.

The Dallas note is still based on MPC and an attribution to the multiplier, probably one of Keynes' greatest fallacies.

Thu, 08/12/2010 - 23:16 | 519247 Ivar Kreuger
Ivar Kreuger's picture

First off, "alternate worlds" hypotheses are the foundation for most critical decision-making process in life. Most decisions involve weighing the outcomes of our actions in future "alternate worlds" at which we can only guess.   "Will smoking kill me," "will investing in the market make me rich or poor?"... etc.  To totally dismiss the validity of arguing about what "would have happened" is narrow-minded.

Secondly, in opposition to many here, I believe the bitter pill in 2008 would not have been better for everyone.  We are in a depression on par with that of the 1930's. Without the 10% juice in GDP for the last two years from the government, we would have been/would still be, printing -11 and -9% GDP numbers. What would the markets look like if that were the case, how bout interest rates.  It would be total devastation.

The international economy would have disintegrated and their would have been global consequences.

I still give this scenario a 99% chance of playing out, Keynes only figured out how to buy time.  So we might as well argue about what "would have happened" to keep our minds sharp, while we wait for the lights to go out.

Fri, 08/13/2010 - 01:59 | 519384 Ruth
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