• Tim Knight from...
    10/21/2014 - 18:16
    Want to live near the 0.1% and their problems? May I present to you 258 Middlefield Road, Palo Alto, California, which is located within walking distance from my house and is a mere $1,800,000 (well...

Guest Post

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Guest Post: Global Trade Fragility





Yesterday I got my new iPad. Yeah, I bought one like millions of other suckers. Apple can take my dollars and recycle them buying treasury bills and so partially fund, at least for a short while, America’s unsustainable debt position. But really, I bought one to enjoy the twilight of the miraculous system of global trade. An iPad is the cumulative culmination of millions of hours of work, as well as resources and manufacturing processes across the globe. It incorporates tellurium, indium, cobalt, gallium, and manganese mined in Africa. Neodymium mined in China. Plastics forged out of Saudi Crude. Aluminium mined in Brazil. Memory manufactured in Korea, semiconductors forged in Germany, glass made in the United States. And gallons and gallons of oil to ship all the resources and components around the world, ’til they are finally assembled in China, and shipped once again around the world to the consumer. And of course, that manufacturing process stands upon the shoulders of centuries of scientific research, and years of product development, testing, and marketing. It is a huge mesh of processes.

 
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Guest Post: We [Don’t] Take Care of Our Own





“Wherever this flag’s flown we [don’t] take care of our own” No, Americans, singularly among people of the so-called First World, don’t take care of their own. Half of America is in poverty, and few among the other half care or much give a damn about the situation, resorting to blaming it all on a lamentably greedy “one-percent.” They prefer not to look in the mirror, naked… knowing full well how ugly they look in their obesity, exhibiting both, layers of fat and lack of cojones.... Sergeant Bales, assuming he is found to be the only soldier involved in the recent massacre in Afghanistan, will not be paying for the horrific incident, whether innocent or guilty of such a crime; such determination in military justice likely to take many years. The Pentagon’s convenient refracting transparency will make sure that such is the case. That brings us to the question of who the criminals are. Well, the criminals can be seen when we look ourselves in the mirror: the criminals are simply us. Not the President, nor Congress, nor the bemedaled pit-bulls staffing the Pentagon… they are simply the hangmen we choose to carry our criminal acts. The criminals are us who allow ourselves to be governed by a warmongering, elitist gang serving special interests and not the people, the commons. If we lack the conscience and compassion to take care of our own, should anyone expect us to take care of others… walk around the world imparting social justice? Yes, Boss, we are, unfortunately, ignoring the words in your song at our own peril.

 
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Guest Post: Caution - Falling Currencies





Eventually, people will discover that they cannot save in terms of dollars (those who don’t figure it out will be rendered economically irrelevant as their wealth is removed from their hands). Savings is a necessary prerequisite for investment. Investment is necessary for companies to grow, to develop new technologies, products, and markets. Growth is necessary to hire new workers. As existing companies achieve higher productivity of labor, and do not need as many workers to perform the same work, they lay off unneeded people. In a free market, the unemployed would quickly be hired by growing companies that expand and develop new businesses. But today’s structurally high unemployment can be traced back to Friedman’s quack prescription (among other government interference). Weakening the currency not only discourages savings, it also weakens businesses who have to keep the currency on their balance sheet and who have to import some of their inputs. When a currency loses value, then all who hold it incur a loss. It is not possible to employ workers and run a business in a country without holding significant amounts of its currency. Currency debasement therefore imposes constant losses on enterprises that try to operate in such an environment.

 
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Guest Post: Lost Principles And Social Destruction





As I look out past the near horizon of this time, and this nation, I see considerable potential for a revitalization of that which is best in humanity.  I see a population that strives for independence.  I see a return to the entrepreneurial spirit of discovery.  I see unhindered freedom of thought and action feeding a fire of creativity that inspires us to unimaginable heights.  I see new expression given license not just by the masses, but by structures of a government which truly follows the will of the common man, and not the will of an elite few.  I see America breathing full, eyes wide open and alive. However, this potential future would have to come at a considerable cost. America has so strayed from its founding roots that it now hungers; starving for lack of nutrients from its natural soil.  As with all other catastrophic societies of the past, we have been manipulated and conned into overlooking and over-rationalizing astonishing injustice and in some cases, unmitigated evil.  I frankly don’t know what else to call it.  There are some acts of malevolence that go beyond human weakness and inadequacy and reach into realms of calculation that are so cold, so soulless, there is simply no other way to describe them.  These actions and attitudes tend to run rampant in dying nations but are rarely singled out and criticized by those in the midst of the great fall.  Each begins with the loss of particular principles and inherent morals that are normally prized under more healthy circumstances, but are despised in times of chaos and uncertainty.

 
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Guest Post: Gridlock In DC





The first session of this 112th Congress was spent with Democrats and Republicans at loggerheads over the debt ceiling, taxes, spending cuts, the deficit super committee, appropriations bills and finally the extension of unemployment compensation and a two-month extension of the payroll tax cut. Standard and Poor's downgrade of the United States' federal debt was due in part to all the haggling over how, and actually whether, to reduce the debt. No One Is Willing to Pay the Political Price to Cut Spending This year Obama asked Congress for, and was given, an additional $1.2 trillion of borrowing authority, which will increase the debt limit to $16.4 trillion, just enough to get him past the 2012 election. It could be close, however. If budget projections prove to be overly optimistic, Obama could face another cliffhanger over a further increase in the debt ceiling in the midst of the presidential election in November. How embarrassing to have to say "re-elect me – and by the way, I need to borrow some more money to pay this month's bills."

 
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Guest Post: Humanity Is Rising





Here is where the parasitic 1% have their problem. What they have “sold” the American public as the spirit of the nation is now in direct opposition to reality. In fact, it has become so obviously untrue that the population is waking in drove to the truth and the truth is that we have a utterly corrupt, sociopathic minority running the nation like a giant criminal syndicate for their own power and money. Therein lies their weakness however. They have no philosophy. These guys are actually so twisted that all they think about is how can they keep growing their money and power. Furthermore, they are operating under an exposed playbook of control. Just take a look at Obama’s approval ratings. They are plunging. They are plunging despite fabricated economic numbers and biblical stock market rigging to make things look good. They are plunging because people are waking up and seeing all of this for what it is. A gigantic scam. All the signs I see point to increasing desperation on their part and exponential awakening on the part of the meat of the bell curve. These guys are toast and what we should now be focusing most of our attention on is what kind of society we want when this one collapses. Hopefully the other side of the bell curve can influence the debate for the first times in five thousand years. That is my hope and my vision of the future.

 
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Guest Post: "We Have No Other Choice"





Why do families persist in taking on $100,000 student loans for mostly mediocre educations with mostly mediocre "benefits" in the job market? Because they feel they have no other choice. Why do people persist in mortgaging their future and accepting the yoke of debt-serfdom to own a house? Because they feel they have no other choice, and owning a house has become integral to the "American dream." Why do local state, county and city politicos continue playing absurd budget games, shuffling funds, borrowing from their employees' pension plans to make this year's pension plan contribution and similar threadbare tricks? You guessed it: they have no other choice, lest someone somewhere feel some pain. Why do our Federal "leaders" borrow $1.5 trillion each and every year now, fully 10% of the nation's total output, knowing full well that this level of borrowing will bankrupt the nation? (Don't forget to add in the "supplemental" off-budget borrowing.) You know: they have no other choice, lest someone somewhere feel some pain. So instead they keep the accelerating vehicle pointed straight for the cliff. There are only two end-states to this level of borrowing: hyper-inflation or default. Any other "choice" is mere fantasy.

 
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Guest Post: Time To Revisit An Old Friend





I have suggested for weeks, I suggested in my piece yesterday, that you take some money off the table, sell some of your bullets, and re-deploy. Quantitative Easing is coming to an end and there will be ramifications for the bond markets and, eventually, for the equity markets. The days of free money, newly printed money, are coming to a close as America begins to right itself and as our banking system is mostly out of the woods. The longer end of the curve, hit hard yesterday, is heading to higher yields in my opinion. We will also begin to see inflation creep in for a variety of reasons and I point specifically to the price of gas at the pump which, while no one was looking, has hit its all-time highs this week as each penny of increase adds $1 billion to household spending and gasoline has risen thirty cents in the last month.

 
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Guest Post: The Vampire Squid’s Problems





Smith’s sentiments are appreciated, but actually he is wrong about a fundamental point, at least in today’s business environment. Goldman doesn’t have to give a damn about its clients because the vampire squid has found a much more lucrative way of insuring their bottom line: government largesse.

 
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Guest Post: Money from Nothing - A Primer on Fake Wealth Creation and its Implications (Part 2)





Only in a debt-based money system could debt be curiously cast as an asset. We’ve made “extend and pretend” a quaint phrase for a burgeoning market for financial lying and profiteering aimed toward preventing the collapse of a debt- (or lack-) based system that was already doomed by its initial design to collapse. This primer will detail the major components and basic evolution of fake wealth creation, accelerating debt expansion, hollowing out of the economy, and inevitable financial implosion.

 
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Guest Post: How Does FINRA Lose 8 Hours of Testimony? Wall Street’s “Kangaroo Court”





I will admit that having written extensively and aggressively about Wall Street’s self-regulator FINRA over the last three years, I did not think there was anything more I could see that would surprise me. Today I am surprised, shocked, and saddened. For those in our nation who have a semblance of decency and a desire to see due process reflected in legal hearings and financial arbitration, I believe you will be similarly dismayed. The case to which I will refer strikes deep into the core of Wall Street arbitration.  I hope you are sitting down and do not have any sharp objects nearby as Dow Jones’ Al Lewis provides a scathing expose of a FINRA arbitration entitled Broker Bankrupted in Kangaroo Court,

 
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Guest Post: Understanding The New Price Of Oil





In the Spring of 2011, when Libyan oil production -- over 1 million barrels a day (mpd) -- was suddenly taken offline, the world received its first real-time test of the global pricing system for oil since the crash lows of 2009. Oil prices, already at the $85 level for WTIC, bolted above $100, and eventually hit a high near $115 over the following two months. More importantly, however, is that -- save for a brief eight week period in the autumn -- oil prices have stubbornly remained over the $85 pre-Libya level ever since. Even as the debt crisis in Europe has flared. As usual, the mainstream view on the world’s ability to make up for the loss has been wrong. How could the removal of “only” 1.3% of total global production affect the oil price in any prolonged way?, was the universal view of “experts.” Answering that question requires that we modernize, effectively, our understanding of how oil's numerous price discovery mechanisms now operate. The past decade has seen a number of enormous shifts, not only in supply and demand, but in market perceptions about spare capacity. All these were very much at play last year. And, they are at play right now as oil prices rise once again as the global economy tries to strengthen.

 
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Guest Post: Employment Report And The Market





employment-gallupvsbls-031212While the recent employment report will most assuredly give the current Administration plenty to boast about the underlying trends are far more disturbing.   The ongoing structural realities, the fact that many of the jobs that have been destroyed will never return, combined with the demographic shift make the headline number much less important compared with the emerging trends.  Take a look at a recent Gallup Organization poll which polls weekly, rather than one week out of a month with BLS, in regards to the emerging trends of employment.  The most recent poll update shows the trend of the percentage of unemployed rising.   As you can see the Gallup survey tends to lead movements in the BLS poll by about 4 weeks or so.   Therefore, it is highly likely that in the coming month as the massive seasonal adjustments in January and February fade out we will see the unemployment rate rise back towards 8.5%. 

 
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Guest Post: The Audacity of Bonuses At MF Global





In the spirit of George Orwell’s Animal Farm commandment: “all animals are equal, but some animals are more equal then others” comes the galling news that bankruptcy trustee, Louis Freeh, could approve the defunct, MF Global to pay bonuses to certain senior executives. This, despite the fact that nearly $1.6 billion of customer funds remains “missing” or otherwise partially accounted for, yet beyond the reach of those customers, perhaps forever, since before the firm declared bankruptcy on October 31, 2011... The Orwellian nature of finance is spiraling out of control. It was acutely demonstrated during the fall 2008, merge-and-be-bailed period, and subsequently, through mainstream acceptance that “too big to fail” validates the subsidization of reckless banking practices (bail first, ask questions or consider tepid regulation later), and the European debacle. Three wrinkles of audacity underscore the potential MF Global bonus approvals.

 
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Guest Post: Money from Nothing - A Primer On Fake Wealth Creation And Its Implications (Part 1)





What is fraud except creating “value” from nothing and passing it off as something? Frauds interlink and grow upon each other. Our debt-based money system serves as the fraud foundation. In our debt-based money system, debt must grow in order to create money. Therefore, there is no way to pay off aggregate debt with available money. More money must be lent into the system to make the payments for old debts. This causes overall debt to expand as new money for actual people (vs. banks) always arrives at interest and compounds exponentially. This process is called financialization. Financialization: The process of making money from nothing in which debt (i.e. poverty, lack) is paradoxically considered an asset (i.e. wealth, gain). In current financialized economies “wealth expansion” comes from the parasitic taxation of productivity in the form of interest on fiat lending. This interest over time consumes a greater and greater share of resources, assets, labor, and livelihood until nothing is left.

 
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