On Board the 'U.S.S. Titanic' 92 comments
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This article first appeared on Lewrockwell.com
On Thursday morning, September 18, 2008 a tragedy almost befell the 450 billionaires and 3,000,000 millionaires that live in the United States. The billionaires were on their way to becoming millionaires and the millionaires were about to leave the club. Luckily, Hank Paulson, U.S. Treasury Secretary, felt their pain. His $700 million portfolio was probably taking a bit of a haircut too. There are 305 million people living in the United States. The net worth of all the households in the U.S as of June 30, 2008 was $56 trillion. The 450 billionaires have a net worth of approximately $1 trillion and the 3,000,000 millionaires have a net worth of approximately $11 trillion. So, 1% of the population currently owns 21% of the net worth in this country.
Many of these billionaires and millionaires have accumulated their wealth by managing other people’s money. The customers never have the yachts. The money managers have the yachts. The .1% ruling elite are deciding the fate of your grandchildren in Washington D.C. this week out of public view. The ruling elite have the most to lose. Whose best interest do you think they are looking out for?
As I’ve watched the various business networks over the last few weeks, I sense desperation and fear among the commentators, pundits, and “experts”. It is a fear based upon self interest. Their lives depend upon the masses keeping their money invested in the market. They have overwhelmingly been in favor of the bailout bill. I wonder why. Jim “Mad Money” Cramer, who has a net worth of $100 million, is in favor of the bill. Larry “Free market capitalism is the best path to prosperity” Kudlow, a multi-millionaire, is 100% in favor of a socialist bailout of the criminal investment banks. They support this “blank check” to a government that is already $9.65 trillion in debt, because they want to maintain their lavish lifestyle, multiple estates, and prominent positions in society.
An honest balance sheet (as opposed to the balance sheets of US Banks) will always tell the true story. The balance sheet of U.S. households shown below explains the situation we are in today. The value of real estate rose 50% between 2002 and 2007, much faster than historical growth rates of 3% per year. The problem is that mortgage debt rose by 75% over this same time frame, resulting in owner’s equity as a % of real estate reaching an all-time low of 45.2% in June, 2008.
The assumption by homeowners that prices could only go up, supported by lies from the National Association of Realtors and Wall Street gurus, led homeowners to take $3 trillion of equity out of their homes and live a more lavish lifestyle than was warranted by their income. Consumer debt has risen 30%, while durable goods assets (which naturally depreciate) have only risen 24%. Financial Assets outpaced all classes, rising 55%, as the stock market came out of a bear market in 2003. The vast majority of this financial asset wealth increase benefitted the billionaire club and millionaire club. The rest trickled down.
click to enlarge
Many are now learning a hard lesson. Real estate asset values declined by $500 billion during the first 6 months of 2008, while mortgage debt continued to rise. Financial assets declined by 4%. The lesson being learned is that real estate assets and financial assets can and will decline. As the recession gets deeper and the bear market growls, asset values will decline by 10% to 20% more. The debt will remain and probably increase. With this proposed bailout, horribly run financial institutions will be relieved of all their bad debt. Who is going to relieve our debt? No one. The executives of these banks will continue to reap multi-million dollar pay packages, while we make their debt payments in the form of interest payments to the Chinese and higher taxes.
Icebergs Ahead
I can’t help but compare our country’s situation to the maiden voyage of the Titanic. Everyone has seen the movie, so can relate to the story. The captain (Alan Greenspan) has been handed the greatest ship (United States) ever made. It is unsinkable. The initial voyage across the Atlantic Ocean has drawn the rich elite ruling class (financers & bankers) onboard. But, the lower decks are filled with lowly peasants (Working Class) who are sneered at by those in the upper decks. A maiden voyage should always be taken slowly. A prudent captain would not take undue risks. Our captain (Alan Greenspan) wants to make his mark on history. He declares full steam ahead (reducing interest rates to 1%). Midway through the voyage, the captain is handed a telegram warning of icebergs (potential financial catastrophe) ahead. If he slows down the ship, he will not set the speed record. He ignores the warning and steams on to his rendezvous (eternal disgrace) with history.
In the middle of the night, the lookouts (Ron Paul, among others) scream iceberg!!! But, it is too late. The great ship (United States) has struck an enormous iceberg (banking crisis). At first, it seemed like everything is OK. There are no visible problems. But, below the waterline the great ship (United States) is taking on water (massive mortgage write downs). The engine room (Federal Reserve printing presses) works frantically to stem the damage. The captain believes that the compartmentalization of the ship will save it. The expert on the design of the ship (Nouriel Roubini) explains that the ship will surely sink. The captain orders the band (Hank Paulson) on deck to distract the masses from their imminent fate. The owners of the ship (U.S. government) never thought it could sink, so they didn’t provide nearly enough lifeboats.
To avoid mass panic, the crew (government bureaucrats) has locked the lowly peasants (Working Class) below deck. They will surely go down with the ship. But, here is where our story starts to deviate. The band (Hank Paulson) decides that the women and children (Middle Class) should not be saved first. The ruling elite (financers and bankers) are piling into the boats to escape their fate. The captain (Alan Greenspan) does not go down with the ship. In a cowardly act, he leaped onto the 1st lifeboat to be launched. So, this is where we stand today. The great ship (United States) is sinking. Should we let the band (Hank Paulson) dictate those who get onto the lifeboats first? If we do, we will all face the fate of Jack as he slowly freezes to death in the icy Atlantic.
The Big Lie
“If you tell a big enough lie and tell it frequently enough, it will be believed.”
- Adolf Hitler
We must pass this bailout bill before it is too late. This bailout bill is really for Main Street, not Wall Street. Trust the government, we’ve got the solution. Blah, Blah, Blah. The American people are tired of being lied to. Enough is enough. We’ve believed our government and financial “leaders”. They lied to us. We don’t believe them anymore. They cannot be trusted. This commitment of at least $700 billion was originally documented on 3 pages by Hank Paulson. Below is Section 8 from Paulson’s proposal.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
Do we live in Nazi Germany? To have this language in a document is outrageous. Herr Paulson may have been able to run Goldman Sachs this way, but he now works for you and I. He serves at our discretion along with every other politician and government bureaucrat in Washington. They are so consumed by their power that they have forgotten that “We The People” dictate the future of this country. The public is overwhelmingly against this bill. Calls and emails are flooding Senators and Representatives to vote against this bill. If they ignore the people, it will confirm that they are as corrupt as many believe. The same people who created the problem, didn’t see it coming down the track, insisted there was a light at the end of the tunnel, and now see their elitist corrupt system falling apart, now want you to believe that they know best. President Bush summoned up his best WMD scare mongering speech, to try and convince the American public that we must do this before it is too late. If they pass this bill against the wishes of America, they should suffer the consequences by being voted out of office in November.
What the Future Holds
I am naturally drawn to people who tell the truth. President Bush, Hank Paulson, Ben Bernanke, Barney Frank (Can you believe our fate is in his hands?), and Chris Dodd have been lying to the American public for years. The truth is buried under a blizzard of their lies. We are supposed to believe the words of a multi-millionaire Harvard MBA President telling us we must trust the former CEO of Goldman Sachs who is worth $700 million and never saw this coming, with at least $700 billion of our money. There is no detailed plan, because they have no idea what they are doing. They are making it up as they go along. Once he has this authority, he will hire the same firms that caused the problem to manage the fund. This same President promised a quick Iraq war that would cost less than $50 billion with minimal casualties. The war has cost $700 billion so far. That number has a familiar ring. Over 4,000 brave Americans are dead. Over 30,000 have been wounded. This result does not give me confidence that he will be right this time.
The President is trying to scare the American public into supporting this bailout by saying we will go into a deep recession if we don’t pass it. I’ve got news for Mr. Bush. We are in a recession and it will be deep and long, whether they pass that bill or not. We have entered a massive deleveraging phase in America. Americans are learning that debt can destroy companies, people, and governments. They are slowly wakening from their hedonistic stupor and will begin to pay off debt and save. It will not be pretty for the economy, as retailers, homebuilders, developers, and restaurants go bankrupt by the thousands. This is supposed to be a capitalistic society. A deep recession will purge the excesses. If this bill is passed, Jim Cramer, Larry Kudlow, and the rest of the ruling elite will keep most of their millions. The average American will be pushed closer to the abyss as their home price continues to decline, their 401k stagnates or declines, they lose their jobs, and pay higher taxes.
Those telling the truth include Representative Ron Paul and Senator Jim Bunning. Their views on the bill are as follows:
Ron Paul’s words:
“Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike. The events of the past week are no exception. The bailout package that is about to be rammed down Congress’ throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder.
The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences - predictable, that is, to those who understand sound, Austrian economics - are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!
The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?
When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?
Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.”
Jim Bunning’s words:
“Most pressing is the $700 billion Treasury proposal that is being negotiated with the Chairman of the House Financial Services Committee. The Paulson proposal is an attempt to do what we so often do in Washington – throw money at a problem.
We cannot make bad mortgages go away. We cannot make the losses that our financial institutions are facing go away. Someone must take those losses. We can either let the people who made bad decisions bear the consequences of their actions, or we can spread that pain to others. And that is exactly what the Secretary proposes to do – take Wall Street’s pain and spread it to the taxpayers. The plan has not even passed, and already Americans are paying for it because of the fall in the dollar as a result of all the new debt we will be taking on.
I know there are problems in the financial markets, and I share a lot of the same concerns that our witnesses do. However, the Paulson plan will not fix those problems. The Paulson plan will not help struggling homeowners pay their mortgages. The Paulson plan will not bring a stop to the slide in home prices. But the Paulson plan will spend 700 billion taxpayer dollars to prop up and clean up the balance sheets of Wall Street. This massive bailout is not the solution, it is financial socialism, and it is un-American.”
The “American Rulers” are telling you we have no alternative. That is false. Smart thoughtful people like Dr. John Hussman and NYU professor Nouriel Roubini have been right on this issue for years and have proposed alternative solutions. John Hussman’s solution relies upon the rule of capitalism and wipes out the stockholders and bondholders of these bankrupt banks before placing any burden on the American people. The problem with this solution is that Jim Cramer, Larry Kudlow and the rest of the ruling elite would lose millions. To see Dr. Hussman’s proposal, go to his webpage.
The time to act is now. This bailout bill will punish your children and their children. The only way to stop it is by swamping your Representatives and Senators with phone calls, faxes and emails. Do it before it is too late. Remember the Government Motto: If you think the problems we created are bad, wait until you see the solutions.
If this bill is passed, I see the following implications to various passengers onboard U.S. Titianic:
Rich ruling elite
- In the short-term they will be joyous. The stock market will briefly soar as their millions will be protected.
- I would recommend that they buy some books about the French Revolution and the Russian revolution. The huddled masses have had just about enough. Class warfare is closer than it has ever been. The anger in this country is building. The passing of this bill against the wishes of the vast majority will be the trigger for civil unrest.
The Poor
- You’re screwed!!!
- You don’t have any money or investments, so you have nothing to lose. There will be less jobs. The money that Obama and McCain have promised you will be used to keep rich bankers rich. Sorry, you’re going down with the ship.
The Middle Class
- You’re really screwed.
- The dollar will decline. You will pay more for gas, food, and other basics.
- Interest rates will go up, making your debt more burdensome.
- Taxes will be raised and/or benefits will be decreased because the rich will need to maintain their lifestyle.
- Your home value will continue to decline for the next five years.
- Your salary, investments and 401k will not keep up with inflation, thereby reducing your standard of living.
- I recommend that you: pay off your car and use it for 10 years or 150,000 miles, whichever comes first; stop buying crap you don’t need; pay off your credit cards; try brown bagging your lunch; wash your car in the driveway; cut your own lawn; let your kids play outside rather than trying to dictate all their time; use your appliances until they break; if the cushion on your couch is ripped or stained, turn it over; contribute as much to your 401k as possible; and buy generics.
- If you own a home, stay in that home for the rest of your life. Pay down your mortgage. Make necessary repairs. Do not get a new kitchen or bathroom because your neighbor did. Do not borrow against your equity to buy stuff you don’t need.
- If you rent, continue to rent until you have at least 20% to put down on a house and can easily make the monthly mortgage payment using a 30 year fixed mortgage.
- If your Congressman or Senator voted for the bailout bill, vote them out in November.
Alan Greenspan
- His legacy has already been discredited. His actions in the last ten years will be seen as the root cause of all the financial problems America is experiencing today.
- Because of his reckless reduction in interest rates to correct the excesses of previous bubbles, the world economic system is on the brink of collapse.
- History will not be kind to Alan Greenspan.
Hank Paulson
- This multi-millionaire, former CEO of Goldman Sachs, will go down in history as the most pompous Treasury Secretary in the history of the United States.
- He isn’t the CEO of the United States. Harvard MBAs have already done enough damage to this country because they think they are smarter than the rest of us. They are not. They are responsible for this mess. It is time they leave the scene of the crime.
George Bush
- George’s administration will be another for the history books. This administration will surely be considered one of the worst in U.S. history. He entered office with budget surpluses and leaves office after saddling future generations with $4 trillion more debt and the promise of much more.
- He can retire to his Texas ranch, write his memoirs for $10 million, and make speeches at Neo-con conventions for $1 million a shot, knowing that the average hard working American is on the hook for $9.65 trillion of debt. I hope he enjoys his retirement. Millions of Americans will not enjoy theirs.
My final thought comes from a real working class American who emailed me this week with the suggestion for a bumper sticker.
"Imagine, who would Jesus give a trillion dollars to? The money lenders or the poor, homeless (and about to be homeless)."
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This article has 92 comments:
"Warring against [the principles] of the people,... there is no length to which [the delusion of the people] may not be pushed by a party in possession of the revenues and the legal authorities of the United States, for a short time indeed, but yet long enough to admit much particular mischief. There is no event, therefore, however atrocious which may not be expected." --Thomas Jefferson to Samuel Smith, 1798.
Just about every major financial panic in our history was preceded by a period of central bankers flooding the free-markets at interest rates below the rate set by the markets.
It is the banks who distribute this money on behalf of central bankers and it is the banks and their executives who profit the most during these periods of easy money. Simply consider the net-worth of top Goldman exec' John Corzine, Robert Rubin, and Hank Paulson. Each walked out of Goldman Sachs with over $500 million. Funny how they end up in Washington to eventually clean up the mess that ultimately ensues. Their cure is always another tax-payer bailout or more easy money.
The game plan is simple for these banks. Create leverage of such size and scope that they become "too big to fail," and thus their survival is guaranteed by the ramifications of their failure.
These bankers dine and carouse with the very central bankers that finance such leverage via artificially cheap and counter-fit money. Without a central bank and its printing press, these jokers would be nothing more than a local used car salesmen.
Quoting Lord Acton, "The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
Later is now. It is the people versus the banks. To be more clear, it is the people versus the central bank. They imply to have a gun to our head and are asking for another $700 billion.
If "this sucker goes down", Alan Greenspan, Ben Bernanke, Robert Rubin, John Corzine, Hank Paulson, Anthony Mozillo, Franklin Raines and a number of others who have enriched themselves courtesy of the Federal Reserve will be more hunted than Osama Bin Ladin,
The Titanic analogy was near perfect.
The situations that you describe are based on Common Sense and Truth. Combined with Integrity, these are three characteristics lacking in most Politicians and the self interest crowd.
America is about to go a massive expensive diet.
*
As a side-note:
John Bremer published a newly discovered letter from Plato in: Plato and the Foundation of the Academy (2002), in which Plato explains the plan and philosophy behind his Polity (or Republic).
Some crucial paragraphs:
231. Now, it is hard for people to accept, but it is a fact that ALL THE CITIES OF THIS WORLD ARE BASED ON FUNDAMENTAL LIES. IT CANNOT BE ANY OTHER WAY and for a number of reasons, the first of which is that when children enter the world they find themselves in a pattern of unjustifiable social inequality. People born before them have an advantage over them – not through any greater merit or virtue on their part, but simply because they are older. Add to this the fact of economic inequality between individuals and between families and between cities and there are powerful elements making for instability. There are other inequalities – bodily health and strength, intellectual ability and interest, social position, inheritance and so on. Now, instability, especially if it becomes too pronounced, leads to social upheaval and revolution or tyranny, and sometimes both, and so a means is required to prevent – or, at least, minimize – the revolutionary tendency caused by unjustifiable inequality.
232. I say unjustifiable because there is nothing in reason to validate the inequalities among men. That they exist is undeniable, but there is no known justification for them in reason, so there must be one in convention. That convention is what I call “the noble lie,” I must admit to you, although it is always a lie, it is only “noble” in the best cases – when the inequalities are not too extreme, and the motive for keeping them is to prevent social or political instability, and there is a mechanism by which the inequalities can be gradually lessened. Every city has its own form of the lie (which is the principle of its education program), and the extent to which it is not believed is the measure of active internal repression. I say “every city” but, in truth, the cities we know are not unified – they are many cities, not one. MOST OBVIOUSLY, EACH IS AT LEAST TWO CITIES, A CITY OF THE RICH AND A CITY OF THE POOR.
This is surely bad advice. If the middle class wants to preserve their wealth as muc has possible they should close out their 401K and plow all the money in hard assests in their own possesion.
2. bailout - consider the cost of not doing it before you toss the idea in the wastebasket.
> jack
I don't know what the story is with what is happening in the economy. I don't know if the "bailout" is good or bad, will work or won't...It does seem that we have a debt and spending crisis. But the ranters against trying to save the sinking ship speak very glibly about allowing the economy to sink into deep recession at best.
Imagine unemployment at 15%. I remember the 80's and unemployment of 10% and interest rates at 15%. Of course we came out of that but it was not fun. And back then the service sector was 50% of the economy - not the 70% that it is now....
Rants are ok, but no solutions or even ideas are offered here...some people express fear as rage. That is what I see from this author
~ The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries. ~
Sir Winston Churchill
It provided some good information and it showed
you have good insight into what is happening.
I say lets lynch the b*******
Every Canadian needs to read this too because it's inevitable that whenever the U.S. suffers then Canada suffers too.
Here an article to that:
"Where was media when subprime disaster unfolded?"
rinf.com/alt-news/medi.../
As Butch Cassidy & Sundance Kid's famous line, "Hey, Who are those guys"????? The American people have a right to know, "If we're going to continue to dance with who brung us"!!!!!
Final note about Ron Paul. He's a great ranter, but has little in way of workable ideas.
Yes it's true Bush is a "high functioning moron" whose administration will go down as the worst in history. It's true that because of his administration and the Republican rubber stamp Congress with their mantra of "self regulating free trade" and massive tax cuts for the super wealthy, that society has become polarized as never before, the economy has entered a phase of massive debt and the economic conservatism of the past has morphed into bible thumping demogoguery. So now what. Hunker down in your fall out shelter? Lynch the bankers and politicians? There are no life boats for a reason, it's not a boat, it's the entire economy and everything that entails. Maybe next time you could give us a workover analogy for Psycho or Its a Wonderful Life, both about as relevant as Titanic. I would suggest attempting actual analysis of the proposed solutions at hand, and leave the movie analogies at home.
Gee, as long as we're going down, we might as well bang them up to the limit and default on the payments. Washington will surely come running and bailout the commercial banks. At least we'll be one step ahead of the criminals.
Analogous to your vascular system, the financial markets are the arteries of the economy. Analogous to your arteries, when the financial markets are frozen, the monetary supply does not flow. This creates an emergency situation where it is imperative that we restore the monetary flow.
In today's environment it is critical that we on an emergency basis thaw the financial markets thereby enabling the required monetary flow. There is not a lot of time to react. Waiting too long will create a severe recession or a depression.
"It is obvious to most that when you arteries are clogged, the blood doesn't flow. When you have blocked arteries it is an emergency, and to avoid a heart attack it is critical to get the blood flowing, which implies the use of a stent or open heart surgery. A complete blockage will result in a heart attack or worse. Time is critical, and the required correction is an emergency. "
Nice analogy and a good try. However, if the patient keeps on eating at Berger King or McDonalds, the procedure is a waste of time and money.
Alleviating the blockage in the credit market by bailing out those who feasted on sub-slime mortgages and other fraudulent security schemes is not the answer. We will never have a healthy and sustainable economy until we change our belief that credit rather than productivity is required for growth and prosperity. As a society, we must change our way of thinking and become financially responsible both publicly and privately.
We no longer guillotine Royalty. But can we find a way to reduce their wealth? First a one-time progressive tax on total assets. Then more progressivity in the annual income tax. Remember the 1950's. The top bracket was 90% and this country's economy thrived. There was still plenty of motivation to work harder for the corner office, to be the leader. Even dogs have an alpha male.
I have seen no mention of Marx's crisis of capitalism. This is a theory, and therefore an explanation, which produces predictions. The main prediction, which caused the theory to fall into disfavor was he predicted the collapse of capitalism followed by revolution of the workers. It didn't happen in the 1930's when we had the last crisis of capitalism.
The theory is essentially quite simple. If the owners of capital don't pay their workers the fair rewards of their labor, then those workers won't be able to consume all of the production (unless you lend them the money - my addition). There is an oversupply of production. Profits then fall. The capitalists look for new profit opportunities, i.e. new markets and colonies, now called globalization. The same problems occur again. Marx never thought of raw material supplies being limited, but their scarcity is clearly adding to the cost of business and lowering profits also.
We were there in the 1930's, but there was no revolution. We are there again, and there will be no revolution, because most people, including me, are sheep. Don't separate from the mob, because you will be culled. How do you like that metaphor? Here's another, inspired by Mel Brook's History of the World - the meek shall inherit the earth - 6 feet under.
Another Depression, no matter what politicians do? Quite possible. Even if they make credit available again, those who can afford to borrow don't want to. The others who need credit can't borrow. It doesn't look good. Can China save the day? Probably not. I figured out long ago that if China and India were to emulate the western growth path, the world would quickly run into Malthusian supply constraints. If the world can resume economic growth oil prices will go through the roof. Although there are many alternatives to oil, none are cheaper than oil, and they are all take lots of capital and time to put in place. The capital is cheap, but there isn't much available. This paradox is about the only new thing under the sun in this situation.
We live in interesting times.
I wish the term "bailout" were not used so broadly for very differently structured plans and agreements. If the government were to simply give money to a company to prop up its balance sheet, clearly that is a bailout. Taking 79% of AIG with usurious financial terms where they looked like aggressive venture capitalists? Not a bailout. The $700 billion plan looks like it would be a budget to buy assets that over the long term have value but in the short term aren't trusted. The plan would take these assets at discount prices and at great cost to the rich shareholders of the companies, increase the liquidity of the financial system. This should not be termed a bailout. Would you call it a bailout if you had no money to buy groceries and pay your rent, and your friends wouldn't buy your second car, but then a used car dealer bought it from you for a song? Yes, the car dealer would be bailing you out of your situation, but he hadn't done so against his own interest.
It's absolutely true that without a financial deal to invigorate the balance sheets of the nation's financial anchors, the problem we'll have will hurt far more than the deal would.
For whatever reason, your fellow reporter, James Quinn with his "On Board the 'U.S.S. Titanic" must hate America and what it stands for. Not all millionaires made their money making trades for people, or selling them bad loans The majority made their money owning a small business and providing good paying jobs to quality people.
I paid all of my sales people from $75,000 to $250,000 a year and was happy to do so. As you mentioned of others, I only buy used cars and pay cash for them and worked 16 hours a day building my business.
The, I want the American dream, and I want it now, and don't want to put a penny in the bank to get it attitude, has ruined our nation.
There is good debt and bad debt, we have a massive supply of bad debt, and our country is now addicted to it. We never even tried to educate our population in high school as to how to make a basic budget, get a good loan, manage credit cards, how to invest, or god forbid, don't spend more than you make.
It is our own fault that the majority in America are financially illiterate and can't understand why they are paying $1000.00 a month for their home loan while their neighbor is paying $2500.00. He just thinks that his neighbor is stupid, right up until the time that they come for his house. Then he screams, I didn't know......
We need something symbolic from Washington to save all of these small businesses from laying off all of these well deserving people.
Jeff
Beyond that, the class warfare and lack of discernment on what works and what doesn't are not helpful.
I love your articles! This one is brilliantly written. However, it is incomplete. How do you propose to address the problem? I agree, bailing out the scoundrels is counter-productive. I agree, everything proposed (in Washington) will not provide direct relief to the non-elite. You should propose something be done that is not yet being done, rather than just advising Mr. and Mrs. Main Street to just hunker down. (By the way, you are right, we should hunker down. Fortunately, I have. I have no mortgage, no debt and enough savings for my needs.)
What public policy would you recommend to address the source of this crisis? The source is a pyramid of financial paper that has no regulated, transparent market. This pyramid is supported by real estate and other assets that can not, in many cases, be identified easily as individual assets.
What about a process that unravels this rat's nest so that financial paper can be directly connected to assets? If this could be done, then restructuring repayment of the underlying debt to maximize return could be undertaken. This is far more productive than piling up defaults and writing down assets (somewhat arbitrarily) through a mark to market process that has no market, just marks.
Yes, most people are sheep included me and you, but still there have been quite a few revolutions, because desperation turns cowards into heros; on the other hand one must not forget that capitalism has a tendency to perpetuate itself in crisis by turning to fascism! In the 30s it was the German industry supported by international bankers who brought Hitler into power to stabilise "the economy". And so it comes that section 8 from Paulson’s proposal is nothing but the playing out of the inner logic of capitalism!
THEY ALL SUCK!BIG TIME!
they also pay 40% of the taxes (per the WSJ and IRS Statistics of Income, 2008)
All you cynical smart asses who think this bail out proposal is only intended to help "rich fat cats" are clueless at best, and nefariously manipulative at worst. You yourselves are only trying to scare the middle and lower class...people who don't really understand what this overall crisis is about in the first place, what it's impact will be, and where it's leading to.
Mark my words -- and all you "populist" cry-babies will eventually eat your own words -- without this "bailout" this country is going to encounter fiscal pain like you have never seen (and it's not really a "bail out," by the way---it's a facilitation plan designed to get credit markets moving again, and every penny will likely be paid back, very likely with upside to the taxpayers you're trying to scare with this article) .
Now that's not "fear mongering" of the kind you are trying to foment here with this article...that's the truth. I am a student of history and know where this is headed. You raise a lot of good points in your article, for sure, but like others have noted, I don't see any viable alternative solutions.
So quit cynically stoking people's fears and try to be a part of the solution.
But the rich will only lose their possessions if there is a socialist revolution which isn't in the cards because the socialist left has been completely suppressed in America and has no power whatsoever.
The so-called liberal bias of the press is a delusion and, from the perspective of world left wing politics, the American press and television network press varies from right of center (CNN) to far right of center (FOX.)
There is very little old style left wing news analysis (some on the internet and small circulation magazines) and no revolutionary left wing analysis at all.
It is interesting to hear a supposedly revolutionary voice (FBI plant no doubt to judge by its lack of sophistication) rising "spontaneously" from the American people after it has been suppressed for so long.
If America had allowed socialism/communism to have a place in American political discourse after World War II, the way the Europeans did, we could have inoculated ourselves against class warfare by reducing these differences in wealth (the way Bismarck did in Germany in the 19th century) and also by experiencing for ourselves the real inefficiencies and injustices that socialism produces (which are similar to those produced by monopolies) along with the real benefits such as free education, free basic health care, free basic lawyer services and a draft army for the defense of American interests as determined by the will of the American democracy (and not a mercenary army that follows the will of the elitist, plutocratic government,) to mention only a few benefits.
As it is, a deep economic crisis in America will produce a malignant if ultimately impotent explosion fueled by the long suppression lower and middle class political and economic reforms.
"Burn baby burn." Too bad for the lower classes who will probably burn the ghettos down again along with their slum landlord owned dwellings but leave the rich alone.
The poor will terrorize the middle class but there is no real danger for the rich who will be even happier with impoverished Americans who will be willing to do anything for them just to bring order back and to feed themselves and their children.
Remember, all those movies made in the thirties during the Great Depression didn't demonize the rich. They romanticized them instead.
maybe so on jim rogers.however,who would you rather have as treadury sec. or fed chairman,paulson,uncle ben,or rogers.enough said!
This is an investment. The U.S. will buy tranches of mortgages at fire sale prices which are supported underneath by actual houses sitting on actual land. Furthermore, the vast majority of these mortgages are actually current! The securitized bundles have lost value, not because we "know" how many mortgages are delinquent, but precisely because we do NOT know. This uncertainty poisons the true value. The U.S. Treasury, however, can print money which it does not have to pay back to anyone, so it can afford to hold these mortgages for five or ten or even twenty years until home prices have recovered and the financial system can re-absorb the mortgages. This is as much a "bail out" as Buffet raping Goldman-Sachs when they desperately wanted his $5 billion. There is little chance of a long-term disappearance of housing need so in just a few years this $700 billion investment in U.S. property and U.S. homeowners by the U.S. government will become a particularly profitable deal. In fact, if the U.S. Treasury later turns around and lets us buy pieces of their deal, most of us will be quite eager to buy.
"what chance of you got against a tie and a crest." Paul Weller.
"A deep recession will purge the excesses."
and let the markets sort it out. We can't postpone the inevitable indefinitely and it's immoral to saddle our children with it. So let's look it in the face ad see the true nature of the beast.
The sky hasn't fallen on Main St yet. they're still building new banks down the street from me.
I sincerely doubt there will be revolution in the streets. a few riots maybe, nothing we haven't seen may times in the past over other issues (draft, civil rights, power outages). call this one fiscal responsibility.
Very embarassing to have our currency devalued to 10% like some Third World country. probably lose our defacto reserve status.
In the end, the worst that could happen is that we don't learn from this and make significant structural economic changes to prevent it from happening again. since apparently no one is smart enough to see it coming, I would suggest financial changes along these lines- keep the entities small, keep the mechanisms simple, reduce leverage.
While they're at it, checks and balances to keep government from growing inexorably, limits on extreme wealth (distribution) and taxing consumption instead of income.
"The U.S. Treasury, however, can print money which it does not have to pay back to anyone, so it can afford to hold these mortgages for five or ten or even twenty years until home prices have recovered and the financial system can re-absorb the mortgages. "
This statement doesn't surprise me. It's this kind of thinking that has got us into this mess. Hopefully, sane minds will eventually prevail and will lead us to a responsible and equitable economic and monetary system.
but given the staggering level of big lies told by so many in our benighted government, it hardly matters who said what when.
San Francisco, California
May 28, 2008
Please sit tight while I walk you through the math of Medicare. As you may know, the program comes in three parts: Medicare Part A, which covers hospital stays; Medicare B, which covers doctor visits; and Medicare D, the drug benefit that went into effect just 29 months ago. The infinite-horizon present discounted value of the unfunded liability for Medicare A is $34.4 trillion. The unfunded liability of Medicare B is an additional $34 trillion. The shortfall for Medicare D adds another $17.2 trillion. The total? If you wanted to cover the unfunded liability of all three programs today, you would be stuck with an $85.6 trillion bill. That is more than six times as large as the bill for Social Security. It is more than six times the annual output of the entire U.S. economy.
Why is the Medicare figure so large? There is a mix of reasons, really. In part, it is due to the same birthrate and life-expectancy issues that affect Social Security. In part, it is due to ever-costlier advances in medical technology and the willingness of Medicare to pay for them. And in part, it is due to expanded benefits—the new drug benefit program’s unfunded liability is by itself one-third greater than all of Social Security’s.
Add together the unfunded liabilities from Medicare and Social Security, and it comes to $99.2 trillion over the infinite horizon. Traditional Medicare composes about 69 percent, the new drug benefit roughly 17 percent and Social Security the remaining 14 percent.
I want to remind you that I am only talking about the unfunded portions of Social Security and Medicare. It is what the current payment scheme of Social Security payroll taxes, Medicare payroll taxes, membership fees for Medicare B, copays, deductibles and all other revenue currently channeled to our entitlement system will not cover under current rules. These existing revenue streams must remain in place in perpetuity to handle the “funded” entitlement liabilities. Reduce or eliminate this income and the unfunded liability grows. Increase benefits and the liability grows as well.
Let’s say you and I and Bruce Ericson and every U.S. citizen who is alive today decided to fully address this unfunded liability through lump-sum payments from our own pocketbooks, so that all of us and all future generations could be secure in the knowledge that we and they would receive promised benefits in perpetuity. How much would we have to pay if we split the tab? Again, the math is painful. With a total population of 304 million, from infants to the elderly, the per-person payment to the federal treasury would come to $330,000. This comes to $1.3 million per family of four—over 25 times the average household’s income.
"By the way...the Treasury does not print money, it only borrow. The federal reserve can print or monetized debt. "
You need to take a refresher course in Banking 101.
From Treasury's website:
"Throughout Treasury's history, the Department has been in charge of overseeing the production of U.S. coins and currency notes for our nation. The United States Mint is responsible for producing coins and the Bureau of Engraving and Printing produces paper money. The Treasurer of the United States advises the Director of the Mint, the Director of the Bureau of Engraving and Printing, the Deputy Secretary and the Secretary of the Treasury on matters relating to coinage, currency and the production of other instruments by the United States."
They ended the Iraqi war like they said in January when they got elected, didn't they?
Seems to me the problem boils down to choosing between two options:
-you subsidize the banks WITHOUT diluting the shareholders/haircutti... bondholders. That's Trader Hank's solution, favored by Cramer/Kudlow and anybody owning a mansion in the Hamptons and a couple of Bentleys.
-you subsidize the banks AFTER diluting the shareholders/haircutti... bondholders. That's John Hussman's solution (see his website, last week's column). That should be the solution favored by the rest of the American people. No need to abolish the Federal Reserve, live in a cave or build a temple in honor of Austrian economists. :)
You need to go back read my posts again. Somehow, you have confused my response to Fourbrane's post with your own.
The following quote was Fourbrane's:
"The U.S. Treasury, however, can print money which it does not have to pay back to anyone, so it can afford to hold these mortgages for five or ten or even twenty years until home prices have recovered and the financial system can re-absorb the mortgages. "
This was your statement:
"By the way...the Treasury does not print money, it only borrow. The federal reserve can print or monetized debt. "
There's a big difference between "print " or "monetize debt " My response to you was quoted right from the U.S. Treasury website:
"Throughout Treasury's history, the Department has been in charge of overseeing the production of U.S. coins and currency notes for our nation. The United States Mint is responsible for producing coins and the Bureau of Engraving and Printing produces paper money. The Treasurer of the United States advises the Director of the Mint, the Director of the Bureau of Engraving and Printing, the Deputy Secretary and the Secretary of the Treasury on matters relating to coinage, currency and the production of other instruments by the United States."
And yes, the Federal Reserve is the gatekeeper, albeit a terrible one at that. We need to get rid of the Fed and put our financial system on a sound monetary foundation that cannot be influenced by bankers or politicians, who through their malfeasence and greed, have run our great nation into the ground. My stomach turnsover everytime I see Bush, Greenspan, Bernanke, Paulson, Dodd, Frank, Fuld and the rest of the bastards that are ruining our lives and abridging our freedoms. Worst of all, the media including CNBC and Bloomberg are lending respect and credibility to these thieves in the night. All these people are totally out of control.
But no... actually helping out the lower classes is too much to ask of the capitalist elite. Rather, since the elite are our "noble" Aristocracy, lets spend unlimited amounts to keep their institutions solvent and continue business as usual. Nevermind that the resultant depression or hyperinflation scenario will result in a large number of the lower classes being out of a job and having no way by which to consume the capital that the now solvent banks have at their disposal.
It's too simple but alien for the capitalist elite to consider so it will never come to pass. Too bad...
- Borrow as much money as possible.
- Convert all financial assets and ready cash to gold, take physical delivery, and bury it under a rock in the middle of the desert.
- Default on all debt.
- Continue living rent-free for a year or three while your bank is "discouraged" from foreclosing.
- When the sheriff finally comes around, file BK.
- Dig up your gold, smuggle it out of the country, and start a new life.
It you had a good suggestion to avoid or mitigate the problem, it would be most appreciated. Instead this article portrays a doomsday scenario with no way out.
But there are things that we can do. When I read comments by Charles Mauldin and Warren Buffett, they support a lot the current proposal to thaw the financial markets.
When a person has blocked arteries, we use bypass surgery to fix the problem. It works pretty well. We need bypass surgery to fix the vascular system of the financial markets.
It is a bailout for the Wall Street elite and a face saving move by the corrupt politicians. If you think that they have any concern for you and your family's welfare, I'm sorry but you are naive; they couldn't care less about us. Their only concern is how to line their pockets off the hard work of honest Americans. They are a disgrace.
"The government solution to any problem is at least as bad as the problem."
Milton Friedman
Great Video about the bail out (very entertaining too!!!) No Bailout, No Way, No Way in Hell !!!!
www.youtube.com/watch?...
www.youtube.com/watch?...
my parents came from greece in the 1950's, they were both illiterate country people, in their thirties, with no money and four small children. they worked hard, became citizens, had four more children. ours was not an easy existence, but our parents, sick or well, worked hard every day. we absorbed their strong work ethic. most of us went to college and have advanced degrees. i thank god every day that my parents came to america. i'm betting that millions of americans feel the same way i do.
one day, maybe all the world will stop sending their poor, their tired, their hungry, yearning to be free, but until that day, god will continue to bless those people who believe and work hard to make their dreams come true. you cannot scare us. we have known your worst fears.
get out of debt..drive less..walk and pedal more..and watch nature instead of the overpriced athletics who are employees of the rich...strive for inner peace..not outer appearances..you will then be able to laugh at all this illusional BS. All the best everyone.
The Administration is currently proposing to Congress, a $700B blank cheque for Mr Paulson to re-establish confidence in the Banking system by making taxpayer money available to it. The identical Banking system in which banks won’t lend money between themselves because they do not trust one another. There is a delicious irony here.
Leastways, I think that is what is happening. There is little substantive detail in the Media over what is being decided on behalf of the taxpayer. For example, how is the asset to be valued fairly when confidence is so low? There, is potential for abuse of power here. Furthermore, and, again because of the lack of data, there is little evidence that the Great and the Good in Washington actually understand the nature of the problems that confront them and, even more so, that they are capable of producing solutions to them. Maybe they do. But there is no evidence of this.
I conclude that a waning Administration is attempting to stampede Congress into accepting a solution which is potentially and probably, much more to the benefit of the financial sector than to the tax payer. The attempt to rush things may result in the Titanic being lost. Where is the consideration of other and perhaps better solutions? I concede that the Mellon solution of pure market forces has its drawbacks. How about a solution based on the nature of the problem? Concealing toxic debt from balance sheets in order to prevent loss of confidence is fraud. Perpetrators should be sent directly to jail. Let us hope there are enough jail places to accommodate them. Financial organisations which have chosen to maximise their exposure to risk in the form of toxic debt in order to maximise their profits and now find themselves unable to trade should be subject to market forces since they are incompetent. Financial organisations which have traded prudently and find themselves now unable to trade only because the assets on which they based their loans are now devalued by a lack of confidence, then these should be fully supported by the taxpayer, because they are competent. This would be a much fairer solution for all the stakeholders but I suspect would be unacceptable politically. It is also possible that the financial institutions have so much bad debt that this solution would rescue insufficient of them.
It occurs to me that the Paulson proposal is not a solution, merely a band aid.
In the worst case, the proposal will not work. In the best case it may re-establish total confidence. Reality will probably be somewhere between the two. It does not, in any way, correct the problems that caused the crisis in the first place.
I see no thought about solutions to the problems, which caused the crisis, coming from Washington. I see no evidence that such solutions are really concerning the media. I see some evidence of these problems being thought about in the Public domain eg the Web but no evidence that the crisis is sufficiently understood.
However, the great unknown in this is whether sufficient of the set of problems that are eventually identified have an effective solution. Some certainly do not. For example, during the short selling of a nominated stock, the starting of rumours designed to depress the value of this stock. Were this to be prohibited, unless a person confesses to it, or they are caught red handed in the act, the burden of proof required by a court of law is such that they are unlikely to be convicted especially if they resolutely deny the offence. This is the lesson of History. There are other examples. Without effective sanctions, regulation will not work.
Now, I have no idea what is an acceptable mean time between crises or if this is aiming too low. Still less do I understand the percentage of the problems that have to be fixed in order to achieve any specific mean time between crises.
If an acceptable fix is not forthcoming from Washington, the financial systems of the World will have the credibility of a chocolate teapot. That is, until some other entity takes the initiative and solves the problem for Washington.
In conclusion, at present, I see no evidence that Washington has the will, understanding and competence to prevent future crises. I judge that the excesses of the financial sector are out of control. I have lost confidence in financial institutions in the US and UK and am in the process of withdrawing my assets from UK financial institutions. In the current climate where greed, stupidity and incompetence in the financial sector appear to be so richly rewarded, it behooves us all to investigate setting up a bank.
I would not like to handicap any other person with responsibility for the views expressed here. They are the views of the writer, only.
The administration is currently proposing to Congress, a $700B blank cheque for Mr Paulson to re-establish confidence in the Banking system by making taxpayer money available to it. The identical Banking system in which banks won’t lend money between themselves because they do not trust one another. There is a delicious irony here.
Leastways, I think that is what is happening. There is little substantive detail in the Media over what is being decided on behalf of the taxpayer. For example, how is the asset to be valued fairly when confidence is so low? There, is potential for abuse of power here. Furthermore, and, again because of the lack of data, there is little evidence that the Great and the Good in Washington actually understand the nature of the problems that confront them and, even more so, that they are capable of producing solutions to them. Maybe they do. But there is no evidence of this.
I conclude that the present waning Administration is attempting to stampede Congress into accepting a solution which is potentially and probably, much more to the benefit of the financial sector than to the tax payer. The attempt to rush things may result in the Titanic being lost. Where is the consideration of other and perhaps better solutions? I concede that the Mellon solution of pure market forces used in 1929 has its drawbacks. How about a solution based on the nature of the problem? Concealing toxic debt from balance sheets in order to prevent loss of confidence is fraud. Perpetrators should be sent directly to jail. Let us hope there are enough jail places to accommodate them. Financial organisations which have chosen to take on disproportionately large amounts of securitised debt whose risk they do not understand in order to maximise their profits and now find themselves unable to trade should be subject to market forces since they are incompetent. Financial organisations which have traded prudently and find themselves now unable to trade only because the assets on which they based their loans are now devalued by a lack of confidence, then these should be fully supported by the taxpayer, because they are competent. This would be a much fairer solution for all the stakeholders but I suspect would be unacceptable politically. It is also possible that the financial institutions have so much bad debt that this solution would rescue insufficient of them. If this latter is the case, then the financial sector is probably beyond rescue.
It occurs to me that the Paulson proposal is not a solution, merely a band aid.
In the worst case, the proposal will not work. In the best case it may re-establish total confidence. Reality will probably be somewhere between the two. It does not, in any way, correct the problems that caused the crisis in the first place.
I see no thought about solutions to the problems, which caused the crisis, coming from Washington. I see no evidence that such solutions are really concerning the media. I see some evidence of these problems being thought about in the Public domain eg the Web but no evidence that the crisis is sufficiently understood.
However, the great unknown in this is whether sufficient of the set of problems that are eventually identified have an effective solution. Some certainly do not. For example, during the short selling of a nominated stock, the starting of rumours designed to depress the value of this stock. Were this to be prohibited, unless a person confesses to it, or they are caught red handed in the act, the burden of proof required by a court of law is such that they are unlikely to be convicted especially if they resolutely deny the offence. This is the lesson of History. There are other examples. Without effective sanctions, regulation will not work.
Now, I have no idea what is an acceptable mean time between crises or if this is aiming too low. Still less do I understand the percentage of the problems that have to be fixed in order to achieve any specific mean time between crises.
If an acceptable fix is not forthcoming from Washington, the financial systems of the World will have the credibility of a chocolate teapot. That is, until some other entity takes the initiative and solves the problem for Washington.
In conclusion, at present, I see no evidence that Washington has the will, understanding and competence to prevent future crises. I judge that the excesses of the financial sector are out of control. I have lost confidence in financial institutions in the US and UK and am in the process of withdrawing my assets from UK financial institutions. In the current climate where greed, stupidity and incompetence in the financial sector appear to be so richly rewarded, it behooves us all to investigate setting up a bank.
I would not like to handicap any other person with responsibility for the views expressed here. They are the views of the writer, only.
What nobody is talking about and what NEEDs to happen is REVOLUTION. Voting for your candidate or an Independent is a complete waste of your time. Our political system is broken and it needs to be broken down and rebuilt. Rome is burning!
Read my blog and spread the word. A revolution is this country's last hope.
The typical American is just as much to blame. I predicted this economy for years, watching the majority live above their income level. Yes, it was easy to pull "false equity" from their homes and extend their credit way too far. They didn't have to!
Now my hard earned dollars are going to help bail out the irresponsible? I think they should be held accountable for their own mistakes. Yes, take their homes, cars and toys they couldn't afford anyway. Maybe they will learn a hard lesson.
As far as the 'Fat Cats/wealthy', theres usually a good reason for their success. Its called hard work and careful planning, in most cases.
I'm not rich, just a hard working middle-class business owner doing my best to support my family. I don't live above my means and only refinanced my home to get a better rate. I never use credit cards unless I have the cash to pay immediatly when the bill is recieved. 'Delayed Gratification' has always been my motto, not getting the things I have always wanted until I can actually afford them. And what happened to hard work and pride in workmanship?? The average american worker wants more-more-more and yet they work only as hard as they need to to collect their paycheck, at the expense of the hard working business owner.
Employees of mine in the past have said "pay me more and I will work harder", LOL, your fired!
They also think that I am somehow 'Lucky' for the things I have worked hard for. This is also very ammusing to me. I have worked 16-18 hours a day/7days a week for years, missing time with my family and losing tens of thousands of dollars from investments that didn't work out. My family and I suffered to provide them a job and that makes me lucky. GET A CLUE!!
I am a very proud American and feel fortunate to have the opportunities that are only possible in this great country we live in. These opportunities are there for anyone who is willing to do what it takes.
SO, to the American people who stand to lose there homes, cars and toys - stop with the self pitty and learn a lesson. You have all set the course of the 'Titanic' and now we all must pay the price. If you think the economy is bad now, this recession has just begun!!
GOD BLESS AMERICA!!
I agree with you ! years ago , when I had my home built , everryone told me " I should build a much larger home ".I drove a honda accord until it died at 121/2 years old . I replaced with a 2003 4 cylandar toyota , not a gas guzzler . I worked damn hard , 12 1/2 hour shifts 5-7 days a week to pay my bills . I didn't live beyound my means . Now I'm supposed to feel sorry for the dumn asses that shopped , until they dropped ? Bad part , resposible folks are going to be pulled down from this to , when we did everything in our power , to not act , spend irresponsibly . We have just seen a " tip of the iceberg " we are headed for the ' greater depression' that will make 1929 seem like a picnic !
Investing is not saving. That should be obvious as the markets slide into oblivion.
The bail-out would be, at best, a short-term solution to postpone the inevitable, and if it goes through, then we'll see a 1 year period where the economy will run much as it has for the past 10, after which there will be an even bigger economic crisis, requiring more than $700 billion.
However, doing nothing could have drastic consequences, and there are many in America that are not willing to face those consequences. It is possible that those consequences could entail revolution, poverty, death, and maybe in 20 or 30 years, things would be better and we'd live in an egalitarian society, or maybe the bankers would win and we're be back where we started.
We need to strike a middle ground here and try to soften the blow, but ensure that the people in DC are working to solve the root of the problem. I give kudos to whoever made this series of clips on YouTube cause it explains the bigger picture and proposes a solution (albeit, a rather socialistic picture, but really that's the only way for a sustainable society to exist).
www.youtube.com/watch?...
To NH Businessman and Jeff Herman, I would ask whether or not population and financial growth was a factor in the success you experienced as a result of your hard work. No one is saying you didn't work hard and used your money wisely, but if the following generation wasn't larger than your generation, do you think it would have been more difficult to start a successful business? With population leveling off (as witnessed by lower birth rates), it is harder to find cheap labor, and its harder to find customers. This makes the business climate much less lucrative. Would you agree on some level?
make it clear that there will be a huge punishments if you cheat on your taxes or do anything illegal. if the guilty are stripped of all their assets, they will behave better. any assets given to another, especially a lawyer, come back to the treasury. any assets hidden and found will cost you more jail time, too. what do we need public beheadings? shock the monkey!