konane's Blog

Very strongly worded excellent read. 

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Posted by Karl Denninger in Editorial at 09:04

Source The Market Ticker

"The Roof Is On Fire

"The Euro Zone is in serious trouble, and Britain and we are next.

The game's up folks.

Many people talk about us "printing" money.  Indeed, there's a large brokerage that runs advertisements on CNBS with that exact claim, over and over and over.  Ron Paul and Peter Schiff have run this mantra for years.

This chart says something else entirely:

http://market-ticker.org/archives/2336-The-Roof-Is-On-Fire.html

THERE HAS BEEN NO PRINTING GOING ON!

No, what's been happening is worse. 

Worldwide governments have borrowed and spent huge percentages of their GDP in a puerile attempt to protect a criminal class that has looted the public and bribed the legislature - THE BANKS.

There was always a point where this would fail, but it is flatly impossible for anyone to know exactly where it was beforehand.

But mathematically, there was a point where it would fail.

The gamble that Bernanke, Trichet, Obama, Bush, Paulson, Geithner and everyone else in the world took is that we could do this for a short period of time and that in doing so private demand would pick up and return us to "stability."

THESE PEOPLE DID NOT STUDY THE ABOVE CHART, AND THEY'RE F^#KING IDIOTS FOR BELIEVING THAT WHICH WAS TRIED IN 2003-2007, WITH A HIGHER DEBT LOAD THAN WE HAD THEN, WOULD WORK NOW WHEN IT FAILED IN 2003.

Failed?

Yes, FAILED.

O'Neill was on Bloomberg the other day.  He was Bush's Treasury Secretary during part of his first term, until he resigned under pressure from the administration.  Why did he resign in 2002?

BECAUSE HE KNEW THAT WHAT THE BUSH ADMINISTRATION WAS DOING WOULD NOT WORK.

A study he ran in 2002 showed that the United States would be running budget deficits of more than $500 billion going forward, and that to fix it we would have to enact an across-the-board tax increase of more than 60% or radically cut entitlement spending.

We did neither, of course, and Bush pushed through a huge entitlement increase in an attempt to appease Democrats.  It did, but it also created a structural $500 billion budget deficit that we couldn't get rid of.

The remaining years of the "boom" from 2003-2007 were all fueled by fraud.  Unable to generate positive GDP through organic growth and productivity we instead imported 20 million illegal Mexicans (who our current President refuses to send home and seal the border against, even though Calderon, who wants us to legalize them all, arrests and deports more illegal immigrants a year from Mexico than we catch!) and blew a huge housing bubble, giving anyone with a pulse a loan to buy a house irrespective of their ability to pay.

These weren't even mortgages - they were virtually all balloon notes that were never intended to be paid, but instead designed and intended to force the "buyer" to come back in 2 or 3 years and refinance, so the banks could skim off yet another set of fees for themselves and steal any equity that the hapless owner had accumulated.  If there was excess "equity" the banks graciously let you have some of it during that refinance to buy a boat (with equity that didn't really exist, but for which you'd be obligated in the future.)

Three years ago I said we couldn't get away with the intervention.  Those who have been reading The Ticker since the beginning know that I have written several open letters, have faxed tens of thousands of pages to Congress, and have offered to get in a car or on a plane and come testify - under oath - as to the mathematical certainty of what we face and what we must do.

You also know that nobody wants to hear it and no such invitation has been forthcoming, that I was basically laughed off CNBS and that the "rah rah" crowd all got millions of Americans to pile back into the stock market.

Yeah, ok.

Folks, it's quite simple.  Accumulation of debt is inflationary.  It pulls forward demand from tomorrow.  Look at house prices from 2003-2007 for your best and finest example - they quadrupled in some areas and doubled in many more.  20%+ "appreciation" annually was common.

But when you take on debt to buy something you're buying today what you would otherwise consume tomorrow.  This is the Wimpy action: "I will gladly pay you Tuesday for a hamburger today."

But when Tuesday comes, you've already eaten the hamburger, you're hungry again, and if you pay the hamburger stand owner you now have no money with which to buy another hamburger. 

When debt loads rise to the point that you can no longer buy both today's hamburger and pay for the one you ate last week the impact is deflationary, because today's demand, having been pulled forward from yesterday, can no longer be sustained.  Without demand sales collapse and without sales there is no profit - and no employment.

Keynesian economic thought is fundamentally bankrupt, as it requires that treasuries be rebuilt during flush times so you can spend the money during bad times.  Keynesian economics does not include, and never did, borrowing to spend.  That's a corruption of Keynes beliefs but it is where attempting to apply Keynes economic "theories" to the real world always ends up, as government will always find a place to blow a surplus, thereby guaranteeing there won't be one to spend when the bad times come.

As such the best we can do is allow business cycle downturns to work themselves out.  Yes, this process will suck.  Yes, people will lose their jobs.  Yes, people will go bankrupt.  But we must never, ever backstop businesses - including banks.  We can (and should) backstop depositors (people) through a self-funded insurance fund (which is what the FDIC is supposed to be, and would be if run correctly) but even there we can't make people 100% whole, as it drives them to "reach for yield" and thus chase insolvent institutions.  Changing the FDIC to pay 80% of insured deposits (instead of 100%) would be sufficient to both prevent people from being bankrupted but also stop the "chase for yield" that winds up supporting those who have already gone bust.

I remain willing and able to get on that plane or in that car and come testify before any body of Congress, under oath, or lay it all out on any form of broadcast media. 

But Congress doesn't want to hear it, and "Tout TV" sure as hell doesn't want to broadcast it - especially not the above chart and what it means, even though that, properly explained, makes everything crystal-clear - and irrefutably so.

It sucks to have to say "See, I told you so!", because we had an opportunity to flush these banksters down the toilet in 2007 and 2008, and failed to take it.  Yes, we would have had to recognize the Depression we are in right now, but by now it would be over and employment would be truly recovering.  We would have been forced to put in place something like The Fair Tax to keep our government from imploding and that would have brought 70% or more of all the multinational corporations to our shores over the intervening couple of years, stabilizing our economy.  We would have broken the back of the bankster cartel, jailed a bunch of 'em and made <snip> sure it could not happen again by re-imposing Glass-Steagall.  Those who were not jailed would have fled to other nations, waving their fingers at us at how "those countries" would be better off.  Then they would have flushed in their excessive debt loads while we, in America, would have taken our medicine already.

Yes, all this would have been at the rest of the world's expense - that's what happens when you do it right and everyone else does it wrong.

But we didn't choose to do that.  We still can do the right thing, by the way, but now the damage is greater, because you can't unbreak an egg.  The $3 trillion+ that we borrowed and spent is gone. 

Our options remain as they were in 2007.  We can take our medicine and accept the damage that has already been done yet papered over and shoveled under the carpet or we can continue to lie and pray that we don't end up like Greece.

But prayer doesn't work when you're asking God to intervene against a mathematical reality that you created by your own hand, and thus what's coming - and you're asking for the divine to stop - is something you deserve."

http://market-ticker.org/archives/2336-The-Roof-Is-On-Fire.html

Son found this ad which I'm presuming is real.  It's a guy thing. 

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http://atlanta.craigslist.org/nat/bar/1753046629.html

May 21, 2010 Posted by John at 7:55 AM

Source Powerlineblog.com

"Repeated attacks on the citizens of Arizona by President Obama and many others have done nothing to dim Arizona's support for immigration law enforcement. On the contrary: a remarkable 71 percent of Arizona voters now support that state's new immigration law, up from 64 percent last month. And Governor Jan Brewer has jumped out to a 13-point lead over her likely Democratic opponent, which means that she is doing far better with the electorate than--to take just one example--Barack Obama. That's not surprising; voters like executives who actually support and defend the people who elected them."

http://www.powerlineblog.com/archives/2010/05/026347.php

Most disagreements and political posturing come down to money.  Looks like Neal nailed another one!

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Nealz Nuze on boortz.com

@ May 21, 2010 8:58 AM  

"Remember first that Mexico has even harsher laws dealing with illegal aliens than we do. Yes, Mexico does have a problem with illegals. Not heading south from the United States, but heading North out of Guatemala, Honduras, Nicaragua and other Central American countries. If these people are caught in Mexico illegally it's pretty much straight to jail ... and nobody screams about racial profiling.

But there is something flowing South into Mexico from the United States. Dollars. About one billion dollars every month, to be more precise. These dollars are being sent home to Mexico by illegals working in this country ... sent home to support families. This is the second biggest single source of income for the Mexican economy. Calderon is in trouble .. he's fighting a drug war and his economy isn't exactly on a roll. If America enforces it's immigration laws with anything close to the determination with which Mexico enforces theirs ... the money would dry up and Mexico would be in deep salsa."

http://boortz.com/nealz_nuze/2010/05/why-does-the-mexican-president.html

http://www.jpost.com/MiddleEast/Article.aspx?id=175779

Source Boortz.com@ May 21, 2010 9:03 AM Permalink  

"Does the name Russell Pearce sound familiar to you? It should. That is the name of the Arizona state senator who wrote Arizona's immigration enforcement law, SB 1070. As you can imagine, Pearce has been getting his share of hate mail .. I can relate. But in his response to citizens, Pearce has revealed that his immigration law-writing days aren't over just yet. He intends to push for another bill that would enable Arizona to no longer grant automatic citizenship to children of illegal immigrants who are born on US soil. In an email to a constituent, he says, "I also intend to push for an Arizona bill that would refuse to accept or issue a birth certificate that recognizes citizenship to those born to illegal aliens, unless one parent is a citizen."

Pearce argues that his idea is legal, constitutional and common sense. He says, "You can't break into someone's country and then expect to be rewarded for that. You can't do it."

This absolutely the right step. They're called "anchor babies" because they're seen as anchoring the illegal parent in this country. As I understand it America may well be the only country .. or one of few .. that automatically confers citizenship upon children born to parents in this country to illegal. "

http://boortz.com/nealz_nuze/2010/05/things-could-get-even-uglier.html

"The fruits of weakness

By Charles Krauthammer
Friday, May 21, 2010
Source The Washington Post

"It is perfectly obvious that Iran's latest uranium maneuver, brokered by Brazil and Turkey, is a ruse. Iran retains more than enough enriched uranium to make a bomb. And it continues enriching at an accelerated pace and to a greater purity (20 percent). Which is why the French foreign ministry immediately declared that the trumpeted temporary shipping of some Iranian uranium to Turkey will do nothing to halt Iran's nuclear program.

It will, however, make meaningful sanctions more difficult. America's proposed Security Council resolution is already laughably weak -- no blacklisting of Iran's central bank, no sanctions against Iran's oil and gas industry, no nonconsensual inspections on the high seas. Yet Turkey and Brazil -- both current members of the Security Council -- are so opposed to sanctions that they will not even discuss the resolution. And China will now have a new excuse to weaken it further.

But the deeper meaning of the uranium-export stunt is the brazenness with which Brazil and Turkey gave cover to the mullahs' nuclear ambitions and deliberately undermined U.S. efforts to curb Iran's program.

The real news is that already notorious photo: the president of Brazil, our largest ally in Latin America, and the prime minister of Turkey, for more than half a century the Muslim anchor of NATO, raising hands together with Mahmoud Ahmadinejad, the most virulently anti-American leader in the world.

That picture -- a defiant, triumphant take-that-Uncle-Sam -- is a crushing verdict on the Obama foreign policy. It demonstrates how rising powers, traditional American allies, having watched this administration in action, have decided that there's no cost in lining up with America's enemies and no profit in lining up with a U.S. president given to apologies and appeasement.

They've watched President Obama's humiliating attempts to appease Iran, as every rejected overture is met with abjectly renewed U.S. negotiating offers. American acquiescence reached such a point that the president was late, hesitant and flaccid in expressing even rhetorical support for democracy demonstrators who were being brutally suppressed and whose call for regime change offered the potential for the most significant U.S. strategic advance in the region in 30 years.

They've watched America acquiesce to Russia's re-exerting sway over Eastern Europe, over Ukraine (pressured by Russia last month into extending for 25 years its lease of the Black Sea naval base at Sevastopol) and over Georgia (Russia's de facto annexation of Abkhazia and South Ossetia is no longer an issue under the Obama "reset" policy).

They've watched our appeasement of Syria, Iran's agent in the Arab Levant -- sending our ambassador back to Syria even as it tightens its grip on Lebanon, supplies Hezbollah with Scuds and intensifies its role as the pivot of the Iran-Hezbollah-Hamas alliance. The price for this ostentatious flouting of the United States and its interests? Ever more eager U.S. "engagement."

They've observed the administration's gratuitous slap at Britain over the Falklands, its contemptuous treatment of Israel, its undercutting of the Czech Republic and Poland, and its indifference to Lebanon and Georgia. And in Latin America, they see not just U.S. passivity as Venezuela's Hugo Chávez organizes his anti-American "Bolivarian" coalition while deepening military and commercial ties with Iran and Russia. They saw active U.S. support in Honduras for a pro-Chávez would-be dictator seeking unconstitutional powers in defiance of the democratic institutions of that country.

This is not just an America in decline. This is an America in retreat -- accepting, ratifying and declaring its decline, and inviting rising powers to fill the vacuum.

Nor is this retreat by inadvertence. This is retreat by design and, indeed, on principle. It's the perfect fulfillment of Obama's adopted Third World narrative of American misdeeds, disrespect and domination from which he has come to redeem us and the world. Hence his foundational declaration at the U.N. General Assembly last September that "No one nation can or should try to dominate another nation" (guess who's been the dominant nation for the last two decades?) and his dismissal of any "world order that elevates one nation or group of people over another." (NATO? The West?)

Given Obama's policies and principles, Turkey and Brazil are acting rationally. Why not give cover to Ahmadinejad and his nuclear ambitions? As the United States retreats in the face of Iran, China, Russia and Venezuela, why not hedge your bets? There's nothing to fear from Obama, and everything to gain by ingratiating yourself with America's rising adversaries. After all, they actually believe in helping one's friends and punishing one's enemies."

http://www.washingtonpost.com/wp-dyn/content/article/2010/05/20/AR2010052003885.html

http://www.foxnews.com/politics/2010/05/20/oklahoma-attorney-general-nominee-vows-sue-illegal-immigration/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+foxnews%2Fpolitics+%28Text+-+Politics%29

But this little goodie could complicate things. A 2002 legal memo has emerged that could complicate things for Obama, Eric Holder and the rest of his staff who haven't bothered to read Arizona's bill.

From the Washington Post ...

The document, written in 2002 by the Justice Department's Office of Legal Counsel, concluded that state police officers have "inherent power" to arrest undocumented immigrants for violating federal law. It was issued by Jay S. Bybee, who also helped write controversial memos from the same era that sanctioned harsh interrogation of terrorism suspects.

The author of the Arizona law -- which has drawn strong opposition from top Obama administration officials -- has cited the authority granted in the 2002 memo as a basis for the legislation. The Obama administration has not withdrawn the memo, and some backers of the Arizona law said Monday that because it remains in place, a Justice Department lawsuit against Arizona would be awkward at best.

"The Justice Department's official position as of now is that local law enforcement has the inherent authority to enforce federal immigration law,"said Robert Driscoll, a former Justice Department Civil Rights Division official in theGeorge W. Bush administration who represents an Arizona sheriff known for aggressive immigration enforcement. "How can you blame someone for exercising authority that the department says they have?"

Gotta love it."

http://boortz.com/nealz_nuze/2010/05/complicating-the-challenges-of.html

"New Jersey Teachers Union Forced to Take Back Seat to Kids

****** video*****

http://biggovernment.com/ldrummer/2010/05/19/new-jersey-teachers-union-forced-to-take-back-seat-to-kids/

Language warning, but points exceptionally well made. 

We need to elect a new congress with ethics sufficient to follow Germany's lead.  According to this article the German government didn't grovel before banksters as we've witnessed over and over in the US ........ they simply acted.

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Tuesday, May 18. 2010
Posted by Karl Denninger in International at 15:13

"The German Government Has Had Enough


http://market-ticker.org/archives/2331-The-German-Government-Has-Had-Enough.html

"Critics weigh Blumenthal's words

Neil Vigdor, Staff Writer

Source StamfordAdvocate.com

Published: 11:29 p.m., Tuesday, May 18, 2010

"I wore the uniform in Vietnam and many came back & to all kinds of disrespect. Whatever we think of war, we owe the men and women of the armed forces our unconditional support."

The occasion was the Stamford Veterans Days parade: Nov. 9, 2008. 

The speaker was Connecticut Attorney General Richard Blumenthal, as quoted by The Advocate.

A trove of potential bulletin board material was unearthed Tuesday by Hearst Connecticut Newspapers from its archives quoting the once seemingly unflappable U.S. Senate candidate on his military record, one that he has been accused of embellishing.

During a May 18, 2009, military board tribute to veterans in Shelton, Blumenthal was quoted by the Connecticut Post as saying, "When we returned from Vietnam, I remember the taunts, the verbal and even physical abuse we encountered."

A year later at a Stratford Memorial Day event covered by the Post, Blumenthal dropped the "we" reference but didn't go out of his way to say that he never went to Vietnam.

"I am called general all the time in my role, but the highest rank I will ever have in life is as a sergeant in the United States Marines," said Blumenthal, who went on to comment how tough it was for veterans of the unpopular conflict to return to "taunts and jeers."

Blumenthal's critics claim that the Democrat's veiled references to serving in Vietnam, which the candidate himself qualified as rare and unintentional misstatements but now number at least five, establish a pattern of duplicity that calls his credibility into question.

"At one point I wanted to go up to him a couple of years ago and say, 'Hey Dick, you're giving the impression you were on the battlefield," said former U.S. Rep. Christopher Shays, R-Conn., "I thought that might come back to bite him."   ....................."

http://www.stamfordadvocate.com/default/article/Critics-weigh-Blumenthal-s-words-491848.php

Came in email, astounding info.  No wonder identity theft is so widespread. 

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http://www.wimp.com/copymachines/

Posted by Karl Denninger in Corruption  at 10:57
Source The Market Ticker

"ALL The Banks Ripped Off Taxpayers?

And yet none of them are being indicted?

West Virginia was just one stop in a nationwide conspiracy in which financial advisers to municipalities colluded with Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Lehman Brothers Holdings Inc., Wachovia Corp. and 11 other banks.

They rigged bids on auctions for so-called guaranteed investment contracts, known as GICs, according to a Justice Department list that was filed in U.S. District Court in Manhattan on March 24 and then put under seal. Those contracts hold tens of billions of taxpayer money.

That would be pretty much all the big ones.

Oh, they intend to indict everyone but the banks:

“The whole investment process was rigged across the board,” said Charlie Anderson, who retired in 2007 as head of field operations for the Internal Revenue Service’s tax-exempt bond division. “It was so commonplace that people talked about it on the phones of their employers and ignored the fact that they were being recorded.”

Anderson said he referred scores of cases to the Justice Department when he was with the IRS. He estimates that bid rigging cost taxpayers billions of dollars. Anderson said prosecutors are lining up conspirators to plead guilty and name names.

So you'd think the banks would be under indictment, right?  Uh, no:

In exchange, the government promised in an amnesty agreement not to prosecute the bank. Bank of America spokeswoman Shirley Norton in San Francisco said in an e-mail the firm is continuing to cooperate.

While it's good that they're chasing the individuals involved it's an outrage that the banks themselves are not being prosecuted.  It is alleged that they kept the stolen money and used some of it to pay the bribes!

The so-called yield burning drove down the returns that local governments earned and trimmed required payments to the IRS. The firms neither admitted nor denied wrongdoing.

Even as the banks were settling with regulators, they devised another way to burn yield, this time by skimming money from GICs, according to the indictment, which said the conspiracy went from 1998 to at least 2006.

How do you spell RACKETEERING?"

http://market-ticker.org/archives/2329-ALL-The-Banks-Ripped-Off-Taxpayers.html

Referring back to Todd's post linked below, Powelineblog has the text of a letter from Senators Kyl and McCain to Posner, plus a few choice comments of their own.

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