swaps

The NYT Finally Admits There's a Spending Problem

Good post.
I also support Gary A's comments which I wrote about in my instablog today but cannot copy into this message.

In essence, I wrote default to the central banks and let Japan and China - if the dollars they hold become worthless - seek international litigation against the Federal Reserve and its shareholder banks.
Issue a new U. S. government currency to replace the privately issued Federal Reserve notes. Hold Congress accountable for the value of the new currency.
Pay back foreign debt holders by a portion of any future expanded production in the U. S. This gives the global elites an incentive to return the factory production they outsourced overseas and to stop importing wage busting cheap illegal labor.

On Nov 24 02:51 AM Gary A wrote:

> It is criminal to pay interest to central banks who are in on all
> this raising of the interest on the national debt to critical levels.
> I say we default on the central banks, and pay our obligations to
> China and Japan.
>
> Then we ask the Fed to leave our shores permanently. The Fed allowed
> the ponzi housing scheme and is profiting for the member central
> banks because of our deflationary pressures.

Wall Street Breakfast: Must-Know News

After doing what the banks wanted, Geithner is now taking the fall.

Maybe Dimon does not want to serve his country so much as he wants to save the banking system from total wipeout.

Did it not take Chase a century to accumulate its first billion dollars, and then only four years to double that by being the banker in Vietnan, a war advocated by its chaiman?

Will Dimon pursue a policy of breaking down banks to smaller size that are big enough to fail, or will he want to close banks and then sweep its customers into the ever growing JP. Morgan Bank One Chase etc super bank with government backing?

Hopefully Dimon is being altruistic and will do what is best for the public and the republic, but so far bankers are only waging constant class warfare against everyone else.

The Single Most Important Thing to Understand About the Fed

You totally forget the Federal Reserve is a privately owned bank, owned by banks.
The last time I looked at a "dollar" it was a Federal Reserve note, backed by the privately owned Federal Reserve.
There is much talk of a dollar collapse. If that occurs, it will be a collapse of the Federal Reserve notes (dollars) and privately owned Federal Reserve money system.
Any attempt to make U. S. citizens liable for the losses at a privately owned bank would be outright cirminal fraud. The banking system currently has an insurance program in place which is funded by the industry itself.
If an audit determines the Federal Reserve is bankrupt and thus cannot continue to operate as a privately owned bank it will have to be liquidated.
China, Japan and entitites and individuals holding worthless Fedeal Reserve dollars and obligations could theoretically go to the World Court and seek prosecution of Fed officers and shareholders, the banks, for mismanagement and possibly fraud if that is detected.
I can now see that the audit is absolutely necessary If the Fed is insolvent, it can be eliminated like any other privately owned bankrupt enterprise.
The federal government could then issue new dollars, this time backed by the U S. government and overseen with transparency by the U S. Congress, which would be held accountable.
I see no reason why the audit of a privately owned bank operating within the U. S. should be exempt from routine audits and oversight when all other privately owned banks are subjected to audits.
Appointments of the "governors" at the Federal Reserve banks is just deceptive eyewash for clearly the Fed has operated as an independent bank since 1913.
In my lifetime every top Fed chairman has come from only one inbred group, one of the problems for this management chain has no feel for the broader community it is supposed to serve.
The collapse of the Federal Reserve would not be the collapse of the United States, but the collapse of a private bank that should not have been created in the first place.
Any martial law will only have to be imposed on the banking system. When Hank Paulson threatend to take down the country last autumn the U. S. should have immediately imposed martial law on the rebellious banking system whch has been waging class war with its 29 percent interest rates and other predatory practices.

Pay Extra Close Attention to the Dollar

Shoving all that extra money out the door last autumn did little to solve the main problem - the huge pile up of unsustainable debt.

Who is going to pay it down? If "they" do, won't that be deflationary because money to pay interest and debt won't be available for spending?

New York Times. Government faces a wave of debt.

www.nytimes.com/2009/1...

Why a Market Crash Doesn’t Matter

Warren Buffet was so concerned about the stock market crash last autumn that he lobbied for the government to bail out his companies' bad financial holdings.

The Fed Backed Itself into a Corner

I blame the Federal Reserve and Allan Greenspan and all the other inbred chief central bankers for this mess.
Their exploded laboratory should be abolished. Period.

The King Canute Economy: Governments' Futile Attempt to Stem the Tide

This is madness. A huge government like the U. S. needs money. It goes to a central bank, which creates money out of thin air and loans it to the U. S.
The U. S. then spends the money....;and then has to tax citizens to pay back the money and compounding interest to the central bank in gratitude for the money the central bank created out of thin air.
How much wiser for the government to have just spent the money in form of digital credits deposited to vendors, contractors and retirees. and have no debt to pay off or interest tread mill to begin running on.
If inflation started to heat up from the distribution of government money it simply had to adjust tax revenue rates to soak up money that was exceeding productivity.
A simple system but too simple for the evil minds that need complexity for the evil spells they cast on politicians and publics.

Could England Be Headed for a Sudden Stop?

In this deflationary environment with no money around Britian like the U S. has to just print money and distribute it. The Rothschild banking syhstem apparently does not have enough money to loan to governments - instead governments are having to make imaginary loans to the banks who are now saved and paying themselves huge bonuses so they won't go elsewhere to "makek more" Why should large governments think they have to borrow if they have more outgo than income?
And how in heck are Britain and the U. S. going to pay back any new debts when they have clearly demonstrated the inability to pay down the huge debt obligations already accumulated since 1913 and the banking takeover of the nation?
No government should be issuing new debt to investors whether other governments or individuals.. Just print money and get it out there. Investors should be deploying their money only to businesses so they have the capital to operate and expand as opportunities arise.
By dumbly thinking that a large once dynamic country like Britian or the U. S. has to go hat in hand year after year to borrow and be ever further indebted to bankers or other nations who tell it what to do has resulted in this situation. Obviously, listening to bankers and borrowing from them has the same consequences as it did hundreds of years ago when kings were decapitated or run off after piling up debts to finance dreams of empire or revenge..
So far the western world is proving only that history repeats itsel over and over when it comes to money. That staying with the bondage of usury banking only results in periodic chaos, economic collapse and people arguing how to resume with an economic system that is inherently flawed to begin with.
Printing money will not cause inflation. But trying to raise taxes to pay off more borrowed money will be futher deflationary.
Paying interest on a loan is a drag on spending, whether public or private. Thus it is deflationary, the dreaded monster of the banking system.

Robert Samuelson on Debt in First-World Nations

This whole situation is absurd because the federal government bought into the myth that it could not just print money and had to borrow from the banks - who through fraud became insolvent and then had to borrow from the citizens in theory to keep banks and citizens going.
. Huge sums of more massive debt was theoretically piled onto the citizens (as if they can be taxed enough to ever pay it back) last autumn by a Congress with a gun held to its head.
The extortion imposed on Congress last autumn by Paulson and the Federal Reserve has only made the debt situation far worse and harder to resolve.
The people who love money the most - like the banks who borrow TARP money at near zero and then loan it back at 29 percent interest to the citizens who theoretically saved the banks - should now experience the pain of more default by the citizens. Default on exorbitant high interest mortgage loans did not teach the banks a lesson, which now charge exorbitant credit card and loan rates.
(If the banks are trying to make borrowing so painful so as to kill lending, then the banks and their balance sheets should have just been liquidated in an orderly fashion anyway.)
If the banks are trying to kill lending, then why did Paulson insist Congress try to save lending last autumn?
The whole panic city scene last year was illogical and the only martial law should have been imposed on Wall Street and the too big to fail banks - and no where else.
Citizens should default on all debt.. And then the citizens, being insolvent, can apply for TARP funds from the government and buy back its defaulted debts from the banks and sell them to the government and the privately owned and never audited Federal Reserve.
This complexity is so simple to solve with must more complexity and every rising debt totals. The investment banker way.
In the long run no tree grows to the sky....and Congress, the banksters and central banks don't know that....and the citizens who did were ignored.

Keynes is now irrelevant.
Fraudulent derivatives made it so. Keynes never factored in fraud and 300 to 1 derivatives leveraging.

Our Steroid Pumped Economy

CNN today reports that the interest on the federal debt will total $4.8 trillion by 2019.

It's now time for the federal government to just print money and spend it - and stop trynig to borrow and borrow and borrow and borrow and borrow and borrow and borrow.

Congress should have imposed martial law on Hank Paulson when he threatened to take down the nation if Congress did not borrow and borrow and borrow and borrow to cover up the fraud at the banks.


On Nov 18 04:33 PM bob adamson wrote:

> Judged solely by this article I would assume that you, Mr. Katsenelson,
> oppose the fiscal and monetary efforts by governments and central
> banks made around October of 2008 and thereafter to forestall the
> collapse of the banks, near banks and government insurers that caused
> and were collapsing as a result of the housing, mortgage, secularized
> debt instrument and derivative bubble. Whatever your position on
> that, you clearly oppose the extent and duration of these government
> and central bank interventions in the free market.
>
> Clearly these interventions are massively expensive and fault can
> easily be found in the detail of how these expenditures were applied
> in many cases. That said, which of the following best describes your
> position:
> 1. The free market would have essentially focused its creative destruction
> on the banks, near banks and government insurers at fault and whatever
> collateral damage was caused to the rest of the economy would have
> been no worse than what has been experienced after all the stimulus
> that has been mistakenly applied.
> 2. A deep recession/depression would have occurred but is only being
> delayed by these interferences with the free market. Not only is
> such interference expensive, it will only make a much worse depression
> unavoidable sometime soon; such interference only delays and makes
> more painful the necessary cleansing action by the free market.<br/>3.
> Some focused and limited stimulus intervention (tax holidays for
> corporations generally, for example) to mute overreaction during
> the October 2008 panic might have been justified but not the measures
> taken.
>
> Judging from your article, one might assume that position 2 best
> describes your bottom line position (i.e. position 1 would have applied
> if we were very lucky but position 2 was more likely given past interference
> with earlier recessions) and also that you would have the guts to
> say so. While I don’t share your analysis of the economy and the
> solution to its ills, I can respect an honestly held different position
> and a willingness to acknowledge the consequences of that position.
>
>
> Any reaction to the forgoing?

How U.S. Investors Can Play the Carry Trade

CNN today reports the federal government will owe 4.8 trillion in interest by 2019.

This is an incredibly imaginative and audacious result of Hank Paulson threatening Congress with riots and martial law if they did not go along with more debt creation.

Is there a way to dump all this debt into an ETF or trust fund and make it go away...forever???

Seaboard: Watching the Stocks that Nobody Watches

I deeply regreet not buying LUK - I think it was formerly Talcott Factoring - years ago when I parted ways with Ian Cumming. Instead, years ago I picked up a LUK bond paying beaucoups interest but he craftily called it in.

I have a small holding of LUK now the past three years but last year's purchase of some JEF shares, a LUK balance sheet affiliate after a billion dollar investment, is up a lot more short term than the LUK holding intermediate term.

Another 22000% gain is hard to pull off since no tree grows to the sky, and a greater challenge will be replacing in the distant future the intuitive cagey Cumming, who is a Canadian original with great intelligence and resolve.

It is difficult to pile into an affiliate investment made by Cumming - Steinberg because it will not be disclosed until well after the fact, but following them into affiliated ventures that are still publicly held outside LUK might be one way to play this the next few years. But choose carefully.

That is what I did with JEF, which I rode down in the debable, and then rode up for a nice recovery and then some.

By the way, years ago Cumming called himself a pirate. But he is not a pirate like Dr. John Malone - also an alumnus of him, who got rich more by crafty stock options and relentless mergers that diverted equity to himself. Investors in LUK share more in the spoils because Cumming and Steinberg have more directly invested in LUK themselves and do not use the super voting shares trick to leverage more modest ownership.

Coincidentally yesterday a private company, Powdr Corp., started by Ian Cumming but now owned by his sons added Copper Mounain Ski Resort in Colorado to its holdings. Powdr gained some notoriety in New England when it fired year round domestic workers and replaced them with cheaper seasonal foreign workers.
But there is no way to benefit from that play. Unless you are cheap foreign labor from Peru or elsewhere.

Whistling Past the Deficit - NYT

To my knowledge, state governments cannot deficit spend forever - unless the Federal Reserve Bank is abolished and is replaced by (privately owned) central banks in each state that can print fiat mney to cover the local spending deficits.

California - the gorilla in the United States - is cracking under the strain of ongoing deficit spending.

Usury banking requires a periodic year of jubille when compounded debt has to be written off one way or another.

No compounded debt tree grows to the sky. Otherwise the ancient Roman Empire would still be here. Debt drove its native farmers off the land, forcing them to migrate to the fringes of empire or Rome and leaving their land to be worked by new waves of debt free immigrants.

California has been exporting its former land owners to Idaho, Utah and Colorado and importing hordes of cheap workers from Mexico. This has not shored up California's state finances.

The darkness is now here whether it is being cursed or not.

On Nov 17 03:01 AM bob adamson wrote:

> Arguably Mr. Winkler is neglecting to give sufficient consideration
> to all relevant factors governing government spending at this point
> in time. Sure, it would be great if taxes could be lowered and budgets
> balanced (and winters were shorted and milder, except on ski hills)
> but these objectives have to be prioritized against other economic
> objectives.
>
> Nine months ago the US and global economies were in clear and present
> danger of collapse into deflationary depression chaos and maintenance
> and even enhancement of public spending was and remains an important
> bulwark against such collapse. The price of maintenance of those
> levels of public spending was high and this will weaken the capacity
> of governments in the future to provide needed public goods and services.
> Unfortunately, there were no other easy and thrifty options; either
> the economy would be stabilized through expensive stimulus spending
> (together with monetary easing) until true recovery can be achieved
> or it would be allowed to collapse and hopefully recover at some
> later date without government intervention. Deficit government spending
> (together with monetary easing) was therefore the least bad option
> available and it has not yet completed its intended role of setting
> the stage for recovery. It is pointless to decry the price, risks
> and burden entailed in choosing the stimulus route unless this is
> coupled with a concrete, practical and affordable plan to achieve
> recovery now at less cost and with less pain and misery. It is equally
> pointless to abandon stimulus prematurely as this would be the worst
> of all possible choices (i.e. the cost of stimulus to date would
> be incurred but deflationary depression would also be induced by
> conscious choice).
>
> Mr. Winkler’s article simply curses the darkness without even suggesting
> that there is a candle, let alone lighting one.

Is This the Beginning of a New Secular Bull Market?

Interstng article. But there are no underlying fundamentals to justify this rally - a rally which is much appreciated by me.

How much of this "rally" is actualy repricing of stocks in terms of a cheapening fiat dollar that requires more of them to buy anything? How much of this rally is enginneered by a plunge protection team that was overwhelmed in late 2008?

In 2002 the DOW fluctuated between roughly 7400 and 10000 and was around 8800 in Nov. 2002.

In 2002 gold prices were fluctuating around $300 rising to around $330 in the last half I think.

Today the Dow is at 10400

Gold is at $1,100..

Is gold in a secular rally or being priced in terms of the falling dollar?

Is the DOW in a rally or just repriced in 2009 inflationary dollars?

Goldcorp-Canplats Deal Highlights Value of Junior Gold Miners

I took all my profits on Goldcorp months ago because it seemed their mines were aging. This purchase makes sense. But for now I will remain exposed to gold through Kinross and New Gold.

GG merits continued watching.