Monday, June 9, 2008
"Stimulus" Spending: Making The Dead Parrot Twitch
Last week, published comments by Israeli Prime Minister Ehud Olmert regarding the likelihood of war between the U.S. and Iran caused the price of oil to surge to roughly $138 a barrel -- and the Dow to shed nearly 400 points.
It's actually worse than this chart would lead us to believe.
Delphic utterances delivered today by Federal Reserve commissary Ben Bernanke, and Timothy Geithner of the Federal Reserve Bank of New York prompted a mild market rally and lent some transient luster to the ever-depreciating greenback.
Rarely have we been able to witness, within such a compressed time-frame, such a compelling illustration of the fact that the economic destiny of our respective households is controlled by people over whom we exercise no controlling authority.
Bernanke's comments suppurated Panglossian self-approval: Thanks to his own inspired decisions, insisted Bernanke, "The risk that the economy has entered a substantial downturn appears to have diminished."
Olympian utterances of this kind, which are considered self-ratifying, usually generate an economic placebo effect, and Bernanke's comments did conjure up an exceptionally modest market rally.
But there are limits even to the investor class's capacity for self-deception. At some point they're going to have to stop admiring the beautiful plumage and admit that the damn parrot is dead -- no matter how many times Bernanke reaches over and shoves the cage to make the bird's lifeless body twitch.
I'm betting that moment will come sometime after suitable provision has been made to bail out the major investment houses at the expense of those who actually work for a living.
And this brings us to the subject of Timothy Geithner's speech -- which was probably thrashed out in consultation with like-minded Mandarins at last week's Bilderberg meeting.
In his address to the Economic Club of New York, Geithner, a major architect of the Fed's taxpayer-backed $29 billion rescue of the fatally illiquid Bear Stearns investment house, left no self-admiring plaudit unspoken, no hymn to his own prudence unsung.
"Although we assumed some risk in this transaction," Geithner declared, "that risk is modest in comparison to the risk of very substantial damage to the financial system and the economy as a whole that would have accompanied [Bear Stearns'] default."
It must first be understood that the "risk" referred to here is not to Geithner or anybody else in the world of elite finance, but rather to the working class, who will eventually absorb the costs of the Fed-backed buyout of Bear Stearns.
The same is true of any other investment bank that partakes of the Fed's beneficence -- with Lehman Brothers apparently moving to the head of the queue. When he referred to the possibility of "substantial damage" to the economy had Bear Stearns collapsed, Geithner understated the potential catastrophe by at least an order of magnitude.
A Bear Stearns melt-down could well have ignited the derivatives market, with literally apocalyptic consequences for the world economy. Be not deceived: The derivatives market is going to burn. The Fed is simply trying to contain the damage long enough to ensure that what remains of the Middle Class will be the first fed to the fire.
This is the point of the "reform" proposed by Geithner in his speech and an op-ed published in the Financial Times. Geithner's arrangement would put the Fed in charge of a "unified regulatory framework" for the global financial system, and making permanent "some of the new liquidity facilities put in place during the credit crisis...."
"Liquidity facilities," deprived of euphemistic camouflage, refers to inflation -- the creation of credit or "money" to bail out politically connected investment firms. Central banks around the world have been pitching in to assist the Fed in carrying out this vital mission on behalf of corporate socialism, which helps explain why consumers world-wide are finding it increasingly difficult to pay for essentials -- such as food for their families, and the energy needed to prepare it.
Disfigured by greed, enslaved by an addiction to power: The Nazgul, or "Ring-Wraiths" from Tolkien's Middle Earth (left and below), were nine mortal kings whose incontinent lust for power led them to become the undead minions of Sauron.
But this system doesn't operate as seamlessly as the Fed desires. Which is why, as a solution to a crisis of its own creation, the Fed wants to make official its informal status as the One Central Bank to Rule Them All -- the Primus Inter Pares of the Global Financial Nazgul.
While the details of this division of power are worked out, our rulers still confront -- for the moment, at least -- the annoying and untidy business of tranquilizing the masses. Hence the distribution of the much-discussed "stimulus" checks, the current -- but by no means the last -- effort to make the dead parrot economy twitch.
Rather than spending the checks on ephemeral consumer goods -- which is, apparently, our patriotic duty -- many Americans have seen the tax "refund" immediately absorbed by sharply higher energy and food prices.
Of course, as economic analyst Max Keiser points out, the most provident thing Americans could have done with their "stimulus" checks would have been to leave them them uncashed:
"If every American had said, `No thank you' to Bush's stimulus check and refused to cash them, the value of the dollars in your pocket right now, in terms of their purchasing power would go up by a factor greater than the face value ($600) of the stimulus check. In other words, if you didn't spend these checks, you'd be richer for it.
The reason being that America does not have a hard-money economy, it's a debt-based fiat currency economy. All the money in circulation in America has been borrowed and then re-lent. So borrowing more money ($168 billion for the stimulus package) on top of America's current multi-trillion debt load will continue the Bush-Paulson-Bernanke trend of debasing the purchasing power of your money and, therefore, raise the price of goods and services by more than the $600 `gift'...."
It is a testament to the depraved, malicious ingenuity of our rulers that they devised a way to make a "gift" to us of our own plundered wealth, and then deliver it to us in a fashion that makes us poorer for receiving it.
And of course, the typical American household is so utterly broke than even those of us who understand the logic of Mr. Keiser's explanation find it almost impossible to resist spending the "stimulus" check in order to minimize the slippage in our standard of living.
(Click to enlarge.)
But our living standards will continue slipping, because our debt- and fraud-based economic system places the means of protecting our earnings beyond our control.
So common Americans liquidate their household possessions -- not to pay off debt ala Dave Ramsey, but rather to pay for gas and food -- explore the possibilities of the barter system (which the IRS has already managed to infiltrate), and -- in some extreme cases -- contemplate the possibility of obtaining dual citizenship in EU nations in order to find work abroad.
Meanwhile, the lords of the global economy labor quietly and in secrecy to perfect the mechanism of subsidizing the super-rich by debasing what the rest of us manage to earn and save.
Keeping the rabble at bay: Police provide taxpayer-funded protection as global elites gather to plan our future at last week's Bilderberg meeting in Virginia. (Infowars.com)
If enough people understood how this system of plunder operates, the lifeless bodies of at least some of those responsible for this system would be decorating lampposts across our long-suffering land.
This explains why our rulers, like their counterparts in ages past, have taken great care to win and keep the loyalty of the legions.
On sale now!
Dum spiro, pugno!
at 7:53 PM
Labels: economic apocalypse
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The willful and arrogant ignorance of boobus amerikanus will surely be viewed by history as the source of its eventual demise. The average boobus won't get it even when they are watching their children starve in the streets.
Sic Semper Tyrannis
The Federal Reserve is not only an engine of inflation; it's an instrument of war finance. Its "elastic currency" is what creates the illusion that we can afford the far-flung post-WW II military empire.
Extending the Fed's "lender of last resort" function to investment banks -- which have nothing to do with consumer or business deposit-taking -- is simply a looting operation.
An institutionalized looting operation cannot be "reformed." Either close it down, or expect its brazen effrontery to get ten times worse. The Federal Reserve is a FAR greater threat to our security and prosperity than al Qaida.
Even the plunderers are getting a little worried. Yesterday the New York Fed hauled in 17 banks and hedge funds to bail out the $62 trillion CDS (Credit Default Swap) market. Just for perspective, $62 trillion is about equal to the Gross Domestic Product of the entire planet.
Their solution is to create a central clearinghouse to guarantee trades, so that the failure of single player won't create a daisy-chain collapse (as was feared during the Bear Stearns crisis in March).
Bloomberg reports that "Ten of the 17 banks at the meeting yesterday are owners of Chicago-based Clearing Corp., which has said it will start guaranteeing credit- default swap trades by September."
By September, you say? Why, that's great. Meanwhile, though ... it's gonna be a long, hot summer. If government ministers start parroting their standard distress formula -- "the U.S. economy is fundamentally sound" -- you will know that something has snapped and we're going over the waterfall.
This is a good article.
Reading this article tends to make me annoyingly aware of how ignorant I am in yet another important area though.
Struggling for comprehension - much of this merely a swirling mental mass of terms (once it hits my brain) - due to my lack of general knowledge.
Does anyone know if there's a map - or maybe something drawn out like a genealogy tree - to help "beginners" grasp the "big picture" concerning all this?
Hmmmmm . . . guess this makes me a "boobus"? Been called lots of things but never before a "boobus" I don't think. Kinda catchy! :D
Worthnoting -- here is a "crash course" by Dr. Chris Martenson which explains the "big picture" of money, credit, growth and inflation in about 90 minutes of listening time. It's free.
"It is a testament to the depraved, malicious ingenuity of our rulers that they devised a way to make a "gift" to us of our own plundered wealth, and then deliver it to us in a fashion that makes us poorer for receiving it."
WNG is the Thomas Paine of our day, only funnier. Another outstanding column.
On reflection, it is amazing that Bernanke and the NY Fed boss can go to a secret meeting with 150 other elites, propose a world wide bank takeover the next day, and not a peep in the mainstream press. Everyone knows the corporate media are controlled. To what extant continues to surprise.
I'm not meaning to get off topic but, this WOULD effect the economy soooo. . . maybe it fits sideways or something.
ALSO, I was thinking Mr.Grigg might want to send a letter in.
I got this sent to me in my email today.
Worth watching whether you agree with his plan or not!
Personally - I've always felt that solutions to problems MUST originate from the "everyday folks" - that's the responsibility of BEING free citizens.
It's not government's place to tell us what to do OR solve all problems. It is our place to tell them what to do! They work FOR us.
Hopefully, all (those believing in the power of prayer) will pray that the decisions made are based in wisdom and our responsibility to our children's children on to seven generations is also met.
It's hard to argue with this man, no matter what side of the aisle you're on.
If you don't do anything else today, take the time to watch this. It is absolutely outstanding and you will have spent the best few minutes of your time in a long while.
Subject: Joe America
This guy’s message is right on target. If only he were a candidate. I am told there will be more of these messages. At the end, Joe America provides an email address.
I would encourage you to send this on to your email distribution until every American has seen it.
Your email to Joe America could be the material used in his next production!!!
Why be surprised Zachary? The media is in the hands of only a few and they don't intend to rock the boat. To say they're in bed with the enemy is missing the mark. They ARE the enemy. They ARE the propaganda outlet for the ruling elite.
Entertainment and false "news" are conditioning mechanisms to keep you asleep. That's why I don't watch television anymore. There isn't anything that the boob-tube can tell me that's worth knowing anymore. I actually read... and read a lot to exercise my mind.
Just going to a restaurant, or any other public place, is an exercise in ignoring the ever present EYE of Sauron.
Seeing what is going on with our currency is disheartening but I don't forsee anything that will change the course that has been set. Better to buy up and store as much food and supplies now while you can afford to. There may come a time when your greenbacks won't be worth wiping your you know what.
Worthnothing - start with www.mises.org. Lots of links there to articles by those who recognized this early on and can provide a crash course on Austrian economic theory.
Unfortunately, Ron Paul is the only bureaurat able to grasp it.
Sic Semper Tyrannis
"Seeing what is going on with our currency is disheartening but I don't forsee anything that will change the course that has been set."
Its not disheartening its the historical norm. From the clipping of denari by Caligula to forced acceptance of the decimal franc under threat of the gulliotine in revolutionary France. The Weimar Reublic inflation and currency debasement that lead to WW2 and the cold war to Mugabe's current inflation in Rhodesia (I refuse to call it Zimbabwe as it is currently under occupation)inflation is the historical norm. It is done to expand empires and to buy support of the masses but it always ends the same way a complete collapse in the fiat currency. What is disheartening is that people think the US is some sort of historical anamoly. Seriousily are we really a "special people" or are we like all others that have come before us who craved empire and a something for nothing economy. Get some historical perspective and buy some gold and diversify outside of the dollar and outside of the US. It's nothing to get scared about the world doesnt end things just get rearranged.
Perhaps politicians will start wearing WIN (Whip Inflation Now) buttons again to demonstrate their idiocy and phony concern. It is tragic that most Americans will never grasp the cause of dollar's relentless destruction or why they always have to run faster and faster on the treadmill without getting anywhere. Do you think that it just might have something to do with the public education system?
If politicians start wearing WIN buttons again, it will stand for "Whip Iran Now." Meanwhile, they don't even admit that we're in recession yet.
Here's one little straw in the wind. On Monday, the investment bank Lehman Brothers sold 145 million shares to raise capital, after announcing a $2.8 billion loss. The shares were sold at $28, a slight discount to the mid-29s price of the existing shares on Monday morning.
By Tuesday morning, LEH shares fell below $28, handing an instant loss to all the new share buyers. By Wednesday morning, LEH shares had fallen to the mid-26 level, handing them an even bigger loss.
Who you gonna believe -- a bunch of bent politicians, desperately trying to salvage the next election? Or folks trading LEH shares with real money?
WM (Washington Mutual) is another one to watch, as it trades down to penny-stock levels.
The Bubble blowers forgot that leveraged expansion is followed, as night follows day, by leveraged contraction. They lost Iraq abroad, and they lost the economy at home. Nitwits. Goofballs. Criminals.
Sorry, I wrote too soon on Weds. morning. By the Weds. close, Lehman (LEH) had fallen to $23.69 ... producing losses of over 15% for those who bought its emergency secondary share offering on Monday.
And today the Dow Jones Transportation Average suffered its worst beating since October 2002, according to CNBC, as it fell 247 points (is that a lot?).
But George Bush and Hank Paulson and Ben Bernanke will assure you that the U.S. economy is fundamentally sound ... even as Donnie Kohn, Ben's second fiddle at the Fed, said today that we may just have to hunker down and tolerate rising oil prices and rising unemployment at the same time, till they burn themselves out. Lovely!
So -- pay no attention to the flashing red numbers -- we're in good hands with these experts. They wouldn't lie to us, now would they? They found Saddam's WMDs, and they'll find the solution to this little hiccup too.
I wonder if those "public servants" (as shown in the photo) who guarded the most recent meeting of our global overlords were paid overtime out of state or municipal police funds confiscated at gunpoint from us taxpayers, or did the establishment kick in its own supply of rapidly depreciating (and probably also stolen) currency to pay for this protective phalanx?
Obviously a rhetorical question to which I hope no one is planning on posting an answer.
I had forgotten about the Monty Python "Dead Parrot" skit, and am thrilled that you have found it on Youtube! Indeed, the skit makes much more sense than the government's economic policies these days!
Now, can you find the "I'm a Lumberjack" skit?
Thanks so much to the folks that passed on sources for me concerning basic economy stuff. Maybe with enough study I'll eventually understand - "US Economy:What the Heck Is Going On?"
Those of us trying to suddenly "get up to speed" in a variety of areas find "getting a mental handle" on everything being discussed - can be overwhelming. . .
Most of us have our hands full with - just trying to survive - as our daily challenge (all those "displaced" workers don't simply disappear - when we're no longer needed - and most of us have families).
While most of our leaders can be referred to as "willfully ignorant" the rest of us (everyday folks)would be more honestly described by use of the term "betrayed".
Ron Paul's book "The Revolution:A Manifesto" is out now! There's a couple of articles at this link that include excerpts:
Concerning "grasping things" the bills presented at DownsizeDC.org are encouraging to me (although I favor a decentralized goal concerning alternative energy development).
This link goes to a page that lists them:
Also, a helpful tool for determined beginners is GovTrack.
"GovTrack tracks the United States Congress. Follow the status of federal legislation or learn about your members of Congress by using the tools on the left. We have information on all bills and votes going back over a decade, and you can subscribe to RSS feeds to keep up with the latest activity in Congress."
I LOVE Monty Python but am on dial-up which makes me "YouTube Challenged". (Can't really do the videos available there and other places yet.)
Is the "dead parrot" skit in any of the Monty Python movies? Wait a minute! Is this the same skit shown in, "And Now For Something Completely Different" ?????????
There's also a lumberjack song in "And Now For Something Completely Different". Is that the one you're looking for?
the link you posted http://www.govtrack.us/ leads to a field and track website. Try again.
Doc Ellis 124
re: doc ellis 125 -
Just checked it by doing a cut and paste and the site came up for me both times.
Did it from my comment and also yours in case I'd inadvertently put in a space I wasn't seeing or something.
I'm not computer savvy enough to know why this would happen.
Plus, don't know any other way to check it other than cut and paste on my machine.
It's an awesome site!
Worthnoting 1.30: This time the reference worked. I saved the link as a favorite. Thank you.
Doc Ellis 124
Out of respect for the blog writer I won't use the words necessary to describe what I really think of the so called "Stimulus Package."
I wish America would "Stimulate" Washington by firmly applying a foot to their back sides, thus sending them flying out the door.
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