Here We Go Again

We are back to the insanity of 2008/9 multiplied by 500% for what was essentially a global shutdown orchestrated by the elites, ie; those at most fear of loosing their lives, billionaires, politicians and the like, while around 6 billion people are left loosing their businesses, livelihoods and putting about 20% of these right back into poverty, reversing the well orchestrated false lifting of the bulk of them out of poverty over the last 30 years... My thoughts are below:

I have been thinking of the last 2 years where our "front line" emergency response people around the country were steadily being supplied Naloxone to keep overdose cases alive and rubber gloves to prevent any skin exposure to the chemicals they ingested that if improperly handled could kill a first responder... Yea, 75,000+ OD's a year by 2018 with a small decrease in 2019 mostly to the emergency response being able to jolt people back in the world of the living... Very little mention of the 70.000 alcohol related deaths ever made the press or the 35,000 gun related deaths 60% self inflicted, ie; suicide.  Oh, then there is the health epidemic where millions suffer digestive issues, diabetes, hypertension etc. directly related to the guinea pig effect of Americans being subjected to the worst quality food on the planet.  The "drug" industry has exploded in riches providing "solutions" to these "diseases".  Hell I get back to the US and see Narcolepsy ads on TV!  Narcolepsy!

Anyway, what is going on now with all that?  We are all chasing a virus that fortunately for most is mildly deadly.  We have shut down the global economy on a dime as the billionaires, global elite and politically powerful run scared and pull all the stops to keep from getting it, putting the livelihood of billions of people at risk.  I just read that it is likely roughly 500,000,000 people will fall back into poverty immediately, yea 1/2 billion people drop to impoverished to save the 1%... We are in dire straights but not from the virus.  We are in dire straits because the US was the only developed nation on the planet that tried for less then 2 years to normalize the Fed balance sheet and bring interest rates back to market levels in a global overly leveraged universe.  But they failed miserably.  By September 2019 the "swaps" market froze.  Underlying interest rates spiked more then during the financial crises and the Fed reversed course on a dime and cut rates rapidly and pumped $500,000,000 into the "financial system" to effectively bail out hedge funds that had been playing a game with increasing leverage to scrape a few pennies out of a system that had to low interest rates for to long and when things went the other way they got caught flat footed and had to be bailed out.  This all happened behind the scenes and almost nobody knows about it.  All they know is from that point forward all the money printing went directly to the stock market which reached all time highs by February.  Stock buyback's by corporations reached nearly $ 1 trillion a year for the last 3 years (following years of records preceding) further pumping up stock prices to enrich the CEO's and "investors" in these companies debt.  Any company could sell debt there was so much money chasing any yield above the Central Bank manipulated low rates that went on for far to long.  Investment was sluggish, regular wages stagnant and we were told there was no inflation.  All the inflation was in asset prices and for average wage earners, "health care", "education" and "rents", which by government accounts are under appreciated.

Why am I mentioning this?  Well because the debt accumulated to buy back that stock and the "off balance sheet" debt accumulated by the Private Equity / Hedge Fund Industry gambling in that same debt dwarfs that which existed in 2008 before the last financial crises and was looming over our economy BEFORE this current crises.  What has been the reaction?  US gov creates over $2 Trillion in additional taxpayer debt (10% increase in total debt in one bill) to further bail out a heavily leveraged corporate world.  Yea the couple hundred billion doled out in checks to citizens takes front and center in the mass media which is desperate to convince Americans "this time is different".

NOTE: Just like the heavy media campaign to glorify the military after 911, glorify entrepreneurs after 2009 and now glorify health care workers after this latest crises, each time no one is held to account, not the military and it's near $10 trillion in pointless wars against people in mud huts since 911, not questioning or convicting any financial firm for the 2009 crises and not one mass media person questioning why in a "developed nation" where more people go into bankruptcy over medical bills and nowhere does any human civilization spend more on medical care then the US with no positive metrics to show for it but wealthy "health care" intermediaries, billionaire CEO's and executives, wealthy on the backs of the American Citizenry.
Yet the Government has to step in to quell a crises!, the same government that claims any interference in the desperately broken health care system is some kind of a socialist... where we have laws on our books that even stop the government from bargaining for medicine and supplies in that they in the end pay for at huge markeup with taxpayer money (debt).

But in reality the Fed is also increasing it's balance sheet by $2.3 trillion immediately on as part of it's 10x leverage of $440 billion handed to them to "replace the banking system" as the banks have all but ceased ALL LENDING outside of the new government programs and they will expand to over $4 trillion over the next 9 months to "re capitalize" already over-levered corporations... Really?  Who is on the hook for all this money printing?  Taxpayers.  Who created the crises?  Billionaires and Elites.  Who gets ultimately crushed, billions of people, including billions who "social distancing" is a joke cause they live on top of each other already! 

You have to watch the short video in this link:

https://www.cnbc.com/2020/04/09/chamath-palihapitiya-us-needs-to-let-hedge-funds-billionaires-fail.html?__source=twitter%7Cmain

It's the part where the answer to the CNBC anchor's question is "yes' when answering whether airlines should be allowed to fail.  Think about what he says... Who is getting bailed out here AGAIN.  This whole thing is as bad.  Capitalism has built an entire set of rules and ways to deal with the natural loss of value during a crises.  Those who hold the debt, those who old the equity, they loose.  That is called risk.  It is how things operate.  As of now, the Fed has jumped in, buying corporate debt directly and through ETF's etc.  They are basically funding credit markets, mortgage markets, off balance sheet debt markets and businesses that have no revenue and who have used all their reserves and taken on incredible amounts of debt to enrich those debt and equity holders over the last decade, since the last crises.  They paid each other back to the tune of trillions, further enriching themselves and stratifying the global income / wealth divide to levels never seen before in human history.  And WE ARE BAILING THEM OUT AGAIN!

Depression? Mental Illness? The US is the most medicated, unhealthy, over levered and overly financialized nation on the planet (well China and Japan and Europe all are competing for who can be the most in debt).  We were already on the edge.  This virus has become nothing more then an excuse to "reset" the debt, extend it further out to the future and to print money to buy votes.  I am so incensed by this whole thing I don't know what to do... I can't believe what I see happening every day to prop up an already failed economic system.. I went back to college to learn more and perhaps gain a voice.  I learned more, but what I learned is they were still teaching late 19th and early 20th century theory that has long become obsolete as the economic system has become several degrees separated from any theory emulating at that time.  We have no models any more.  We most definitely have no model for what to do to rescue an economy that stops on a dime, let alone a simple thing like letting interest rates rise.  Now we have stopped on a dime and we are throwing 20-30% of the population of a "developed" nation into immediate unemployment (look what can happen in less fortunate nations).  Where there is NO cash flow to pay all that debt, none. What are the effects 6 months from now, 1 year from now? The money has to be printed, to re-capitalize.  Just like in 2008, bailouts to re-capitalize all the cash that was taken out of the system, evaporated overnight?  One could do some simple math and see how about $3 trillion was removed from the financial system from 1999-2008 after the deregulation of the banking sector.  It went directly into the hands of the players in the gambling game of financial markets.  It was the largest transfer of wealth since the tech bubble of 1998 and that the largest transfer of wealth since the bond bubble in 1988 and you can trace that back to the international debt crises brewed from the oil shock in 1973 forward.  Where we are now is no-mans land.  God help us.

If you think what I write here is in the right direction, write your congress person / senator and tell them, "All the capitalist system to work as it was designed and stop bankrupting our future.  The money printing  experiment of the last 10 years proves irrevocably, it does not work.

Good Summary of Current Debt Issues

I ran across a rarity, a good summary of the current "sovereign" debt crises. I put "sovereign" in quotes for an important reason. The debt crises is much wider than the current focus on government's problems and calling the current iteration of the debt crises "sovereign" is completely misleading.

The article was on Marketwatch and you can read it here.

It starts out with:

The debt mountain that brought down some of the world's biggest banks and dragged the international financial system to the brink of disaster has simply shifted to governments.

But from then on, it focuses entirely on the debt levels in the hands of governments.

What is desperately missing from EVERYTHING I read about the "credit crises", the "debt crises" the "bailouts" etc. is anything about where all of the "cash" that was "lent" to create all this "debt" went. Wall Street does not "create" money. Lenders lend money based on a fractional reserve system which ultimately "creates" money. However, what really happened over the first decade of this century was the largest wholesale transfer of "cash", "real money" from the legacy banking system, pension funds, 401k's etc. to the unregulated "financial industry" and the pockets of the people who ran / run that industry (which incidentally, after 1999 deregulation included much of the regulated banking industry as well since they were part of larger conglomerate organizations that sought to rape their retail customers with fees that became 1/3 of their profits and steal their savings by transferring their money to the unregulated pyramid schemes and gambling ventures fed by reckless lending) including Private Equity, Hedge Funds and other unregulated financial ventures. Along with the hoarding of cash by countless corporate executives who pull tens of billions of dollars every quarter from both the "publicly traded" companies and those held by "private equity" firms, there was the approximately $5 Trillion in "profits", "bonuses" and "fees" that came out of every transaction over the course of about a decade.. 

This sum of money came to light in a Bloomberg article I read some weeks ago:

The suits provide a window into the offshore structures and secrecy jurisdictions the world’s richest people use to manage, preserve and conceal their assets. According to Tax Justice Network, a U.K.-based organization that campaigns for transparency in the financial system, wealthy individuals were hiding as much as $32 trillion offshore at the end of 2010. Fewer than 100,000 people own $9.8 trillion of offshore assets, according to research compiled by former McKinsey & Co. economist James Henry.

You should read the entire 5 part series.  Very good stuff.

Now, I had another thought when reading this series.  It seems that from France to England to Singapore and Hong Kong that "governments" are getting fed up with tax evasion while the developed world is mired in debt.  Now it is not the fault of the industialists and financiers that so many governments are bankrupt, but they have benefited from the process more than anyone, in fact they are the chief beneficiaries esp as governments seek to keep the bondholders, stockholders and large depositors "whole" while raping the taxpayers (citizens) of their financial futures.  So as we enter the next "phase" of crises, from debt, to Syria to the implosion of N. Africa and the Middle East to Pakastan and the inability of bankrupt "democratic" nations to deal with the fallout, the piper must be paid.  Technology makes it much easier to track all this cash and now the NSA pretty much has a database of all communications since BEFORE the financial crises, it seems it would not be much effort to root out the cash and say to the holders of these $30 Trillion:

The governments of the world that matter (those industrial nations where all the technology is held irrespective of the slaves that actually produce everything) need to deal with a rapidly disintegrating global stability in order to prevent another wholesale globally destructive war, but we don't have any money.  The $30 Trillion held by the industrialist / global rich, spread out amongst the top bankrupt industrial nations, would just about bring us to break even.  In order to ensure a future (read future stability and markets to sell to) for humanity without wholesale destruction, we are going to confiscate your cash.  We will allow you to keep your productive assets as we will need your productive capacity to wage our campaign to stabilize the planet.  So you may loose your current cash, but you will have the capacity to make it all back inside of a generation (15 years +/-).  You may not like this, but you have no choice.  There simply is nowhere left on earth to hide and we need the money.

 Mark my words on this one.  It is going to happen.

Open Explanation: Occupy Wall Street

I wrote this letter to Timothy Lavin of Bloomberg after reading this article by Amity Shlaes. It combines two recent ideas of mine in one letter to try and open a dialog on my take of the Occupy Wall Street phenomenon.

Hello Timothy,

As editor of the opinion column at Bloomberg I would like you to think about the Wall Street protesters from a couple angles and perhaps seek understanding of what is going on from these perspectives.

1) From the economic perspective, that the free economic system has at some point over the last 30 years reached a point of diminished returns to the population it "serves". All advanced industrial economies are facing the same "problem" whereas corporate entities have gone through a mass consolidation, using their capital to consolidate verses investment in new productive output. This consolidation has resulted in mega corporate entities that maximize profit by reducing competition and stifling innovation. I would estimate that nearly 70% of consumer dollars are spent on goods and services at companies that operate as oligopolies in their respective industries where two or three (perhaps 4-5 in some areas) companies control any particular industry per geographic area including production, distribution and sales channels. The consolidation of industries has also concentrated wealth in the hands of fewer companies and people and this wealth is not being put to productive use.

The last decade of this wealth concentration played out in the financial industry whereas the money concentrated in the hands of the few was and is being put to "work" in speculative gain through financial instruments. The proliferation of unregulated pools of money like hedge funds and speculative private equity companies provides a real tangible look at what happens when such concentration of wealth proliferates. Unfortunately so much money has flowed into these non productive uses of capital, real investment has all but ceased to exist in mature economies. Unfortunately as well, is the reality that when these speculative uses of capital go haywire in the hands of people who over leveraged their balance sheets, massive amounts of money is "lost" or better put transferred from the "real" savings of the citizens when regulated financial institutions leverage these savings to offer credit to unregulated institutions that imploded due to overly leveraged balanced sheets and speculative practices.

The bail out of regulated financial institutions (and the conversion of speculative financial to regulated financial institutions) so they to could get "bailed out" was nothing short of the largest transfer of "wealth", the savings of the American people (and citizens of other developed nations), to the speculative, unregulated markets, the world has ever seen. The "real" savings that were "lost" were replaced by sovereign debt, basically the people have had their own money "replaced" after the regulated financial institutions had transferred it to the speculative unregulated markets, and been give a big IOU. All people of the advanced industrial world are now paying interest indirectly on their own money that was essentially "stolen" from them through the process of regulated financial institutions lending it to speculators who took pools of capital from the corporate elite and gambled a reckless way by "creating" financial instruments based on real assets and liabilities valued at over 50 times the true underlying assets / liabilities. When this system of reckless gambling failed and the underlying capital that existed was wiped out then replaced on the backs of taxpaying citizens we (the Occupy Wall Street crowd) have the impression, correctly so, that the government is working on behalf of the wealthy and corporations, not it's citizens.

All this evolution in economic activity derives its origins from the premise that "capital" simply found no more productive uses in the advanced nations where it was created and hence it found it's way to speculative uses instead of productive uses. My guess of the point where our vastly unregulated free market system reached a diminished point of returns to the population it "serves" was somewhere in the late 1970's, about the same time that real incomes stagnated in the US and have remained fairly constant or declined since (with the small exception of the latter 1990's when capital was invested in productive use due to the opportunities created by the evolution of the Internet / networks). Any productive use of capital from that point forward was transferred overseas to "developing" economies where production is cheaper and growth in those economies from a basic level of need still attainable, where all basic level of material needs had been satisfied in the advanced economies. (Note: China is currently doing both productive investment and speculation on such an tremendous scale their implosion in the next 12-18 months will rock the globe.)

Europe manages to slow this migration of capital somewhat through stiffer regulation and a later stage of development due to the destruction of WWII. However over that past 15 years or so they have increasingly modeled their economies after the freer economic model of the US and the EU and common currency has escalated that trend. Japan and German and a few island nations are somewhat exceptions in that both nations continued to invest in productive output as they lead in the manufacture of advanced industrial products and machine tools that make production possible elsewhere.

2) The second area is more directly related to the people who are involved in the protest movement. This is the first generation of people to grow up with computers and the Internet in their homes. It only takes 10% of this population of young people, who found the Internet to be an enlightening source of information to create a major national movement. These young people, many of who have completely lost faith in the institutional framework of our political and economic system, have "self educated" via the Internet and have learned to shun the institutional "learning" that is propagated in our public school system, a system that has failed to keep pace with the leaning abilities of our young people and failed to keep pace with the evolution of our economic / political system at hand, instead continuing to focus on the social cohesion aspects of learning that has propagated in our public education since the early to mid 20th Century.

These young people see public education for what it is and seek to acquire "real" knowledge through understanding the world around them as it exist today. They can easily find information on everything from ecology, environment, politics, war, economy, power, industrial processes, history, current events, governments, foreign policy etc. from their home and increasingly share that information with others and through that process develop deeper and more comprehensive understandings of the world around them. Each person is free to focus on the aspects of learning that interest them most and share and communicate with like minded people. All of them ultimately share common goals, though in different areas, that changes need to be made for the common good. You will see issues all over the map, from industrial food process and it's effects on human populations and the lack of regulation and tainted "research" spewed out by universities funded by the companies that exercise such practices to global economic theft and manipulation by pools of capital that seek to turn every resource on the planet into a speculative instrument and exploit these instruments with abandon while answering to no legitimate governmental organization from where these pools of capital originate.

The failure of established institutions to recognize what is going on with these young people is to their detriment. This movement is global. Whether it is 5%, 10% or 15% of the population of young people all over the world that are involved in this movement, have educated themselves and are impassioned to change the world around them is irrelevant. The fact is that this change is coming and failure to recognize it for what it is is dangerous and irresponsible. When one educates themselves, there is a different dynamic that takes place. They feel empowered by their knowledge. This is very different than the indoctrination education received at public schools and higher learning institutions. You have to understand this or you will fail to understand what is going on.

In addition, when one looks at the issues / demands / concerns of these people, they are reasonable, attainable and achievable while protecting a capitalist system of economy and democratic form of government. The establishment will still have it's place and the institutions that exist today will continue to exist. There is no call for their destruction. There is a call for their humanization. This must be recognized. The greed with abandon, reckless capitalistic tendencies of corporations constantly seeking advantage by cheating, deregulation, theft and outright fraud will have to end. Yes, capitalism is ugly, human evolution is ugly, existing on a harsh planet can be ugly, but we humans have not choice, we pick what works best for us and so far capitalism and democracy have served better than any other alternative till now. Yet, in the 21'st century, the practices that have lead to consolidation of power and wealth in the hands of the few by corporate entities that seek to operate irrespective of the well being of the people they serve, the environment they exploit or the policies they extol to their own benefit must change sooner rather than later.

To point a finger at these young people and attempt to understand what they are trying to achieve through any other lens is to fail. The establishment will try to resist change, protect their advantage, protect their profits etc. but until they understand profit is still possible even giving ALL of the demands of these young people, they will fail to get the point and do more harm then good trying to resist them.

Sincerely,

Real Terrorism vs. Financial Terrorism

Within days of some terrorists flying some airplanes into buildings our government leapt into action passing legislation to restrict American freedoms so fast it is obvious that all of this legislation was sitting on the shelf waiting for the opportunity to be implemented. The Patriot Act was obviously a pre-conceived piece of legislation that had broad backing of industry and right wing elements of the US government for some time. It passes with flying colors, even overwhelmingly by the more liberal members of the government who bent over and allowed themselves to be bullied into passing the legislation less they be deemed “un-patriotic or un-American” during this knee-jerk time of American history.

Yet TWO YEARS after the first major financial firm’s collapse (Bear Sterns) and 18 months after the rest of the market’s collapse as a result of what could be called “financial terrorism”, the domination of the market by unregulated risky and toxic financial derivatives traded, financed and created by unregulated and regulated financial institutions alike, with abandon and with no sense of respect or responsibility to the financial system or lives of people who would be affected by their reckless actions, we have yet to have ONE IOTA of regulation passed to address this run-amok unregulated toxic industry.

In fact, this very industry is betting Billions of Dollars with financial derivatives designed to “pay out” if the finances of the nation of Greece collapses. Yet no-one is asking, “Who is going to pay out on these derivatives if Greece truly collapses and will the actions of these gamblers in Greece’s debt create winners and losers and another market tsunami that will inevitably result in Greece becoming the first domino in a cascade of nations which will ultimately have their finances also collapse under the pressure of these financial speculators?”

It seems clear to me who “owns” Washington and it is not the citizens of the United States, but the “corporate super citizens” who have our government in their pockets and have just been give the green light to spend an unlimited amount of money buying and selling the individual legislators who make the rules in this nation.

I don’t give a damn about the finances of Greece. I do give a damn about the lack of governance in the US and the rising fascist, corporate domination of the structure with which Americans now live and will be increasingly living under in the future.

I also have a desire to completely do away with “unregulated markets” of all kinds and “unregulated financial derivatives” of all kinds. In a world with over 6 Billion people, highly interconnected and mutually destined to live the same fate, there no longer exist any positive human element to Trillions of Dollars swathing around betting for or against any asset class or created asset class with the sole objective of raking as much money out of the global financial system as possible irrespective of the consequences of their actions on the lives, destinies or wellbeing of the human beings their actions touch.

These unregulated institutions function outside of the regulatory structures of any nation, global governing body, or regulated institutions, answer to no person or persons in any jurisdiction with which they operate and seek to make money irrespective of their impact on the human beings they may have positively or negatively. They need to be eliminated or regulated. They need all funding by regulated financial institutions to be terminated. Their products need to be liquidated. We need them no more.

Finally Agree with Geithner on Regulations Needed

I was pleased to read on Bloomberg today that Mr. Geithner has a plan to regulate over-the-counter derivatives. This is so overdue and I have been frustrated for 3 years by various leaders in Washington do anything about this market even though it was largely responsible for the collapse of the global economy.

Not only was it largely responsible for the collapse but very dangerous precedents are being set as I write this where these exotic financial products are being used as a gauge to price debt.

These contracts represent a $684 trillion over-the-counter derivatives market and they are now typically conducted over the phone between banks and customers!

What an absolute trip. I know with the "trillion" word being passed around like water lately another "trillion" figure may not sink in but Think about this number for a moment. What is the US debt, $10 Trillion? We are talking $684 trillion here. Yes, yes many of you will say, "So what." there are trillions of dollars in "derivatives" out there on every other product, commodity, stock etc. traded every day. Yes, "traded" on "open markets" with clear pricing and risks born by those who trade them and these types of "products" are not "insuring" against default of debt.

I was so incensed when I heard a clip by Lloyd Blankfein where he made this point with a straight face. The guy is a raving lunatic in my book to be able to do so. He is a "Hitler" of finance. There is no question. Some may call him a genius but he defends destruction and annihilation of all around him from a financial perspective and as I have said a million times and will continue to say, with 6 billion people on the planet all more interconnected every day, guys like Blankfein and the businesses they run no longer serve any benefit to humanity, on the contrary, they are destructive to humanity, our "capital system" and serve no allegiance to any good on the planet other than to do whatever is necessary to return 30% plus to their investors irrespective to the damage they cause economies and individuals and they operate without rules governed by any sovereign state, territory or jurisdiction (except for the strings now on his firm after taking money from the government and borrowing to feed his machine with the backing of the FDIC).

So some reasoning has entered Washington and they seem to understand the importance of regulating these derivative products. Now what about the unregulated pools of global money driving this, Hedge Funds?

Mad as Hell

I thought I was mad as hell a few weeks ago. That was after reading about the $200 Billion the Fed was going to offer to Hedge Funds or anyone else willing to take the money and buy consumer debt with it while the Fed automatically was willing to take a 10% "haircut" on the deal assuming it would be lost up front. There were many reasons why this pissed me off.

Now I am madder! Reading an article in the Wall Street Journal today made me so mad I am not even finished reading it yet and I had to write this post.

I just got finished reading an article on Bloomberg about the incompetent SEC and their blatant and pointed failure to investigate short sellers or otherwise enforce any of the rules on the books with respect to short selling for years. It appears anyone with half a brain in the industry will tell you the shorts drove Bear and Lehman out of business. I mean this game has been going on for over a century. The fines that were levied were by the NYSE or the AMEX and who got the largest fine since July 2006 from the NYSE? None other than J.P. Morgan Securities. This is all old school BS from the Blue Blood firms on Wall Street who have been putting their competitors out of business when the opportunity arises for over a century.

Yea, that article did not piss me off so much because I have been writing for years how incompetent the SEC is / was / and will be for to long to be surprised or pissed off by anything those num-nuts did or did not do.

But this WSJ article... That is a different story.

So we have this Geithner protégé of Paulson and his infinite wisdom of continuing the print money and bail out Wall Street mentality he was trained into talking about is brilliant scheme to pump over $1 Trillion of cash into the hands of hedge funds or whoever is willing to then buy debt with it. Yea, OK, so it is bad enough that the Treasury / Fed / Guaranteed debt program has practically BEEN the debt markets for going on 6 months now but now we are going to expand it for another 6-9 months only through the avenue of the unregulated markets.

Yea, that is what I said. We are asking the pigs in the unregulated markets to bail out the "shadow banking system" i.e.; the business model that you borrow money from the "markets" and lend it to consumers to buy shit when you are not a bank and are not regulated like the banking industry.

Side note: I remember back in 1989, during the last real estate / banking / S&L / junk debt market bubble imploded and my mother was taking money from investors and buying foreclosures with it and flipping them and she got a letter from the MD State Banking regulator inquiring whether she was acting as a bank, taking deposits and paying a rate of return. This was basically harassment instigated by a local bank that obviously was not pleased by the competition she may or may have not posed to the property developer owners of the bank. Needless to say, since then it seems any organization could raise money from just about anywhere and lend it out so long as they did not open "retail" branches.

OK, so the Obama Administration's stance on pay for the participants:

To encourage investor participation, the Treasury believes participants in the program shouldn't be subject to executive-pay rules imposed by Congress. The law authorizing the $700 billion bailout and a provision in the $787 billion stimulus package impose tough pay restrictions on firms that receive government funds, including limits on bonuses.

Of course not. These people are hurting. I mean I just got finished reading about Greenwich's "Rodeo Drive" and the impact of these hedge fund folks declining income levels. God forbid we subject an unregulated industry to some kind of cap on how much of the cash they can strip from the government handout. I mean, the government is already willing to take a 10% loss. Now if I were a smart hedge fund manager, I would be willing to jump in and buy assets now only if I thought 1) they have fallen so far there is little to no risk buying them and 2) with a 10% write-off by the government up front, I know I can take my cut because I can easily beat the pathetic odds a desperate bunch of rookies in Washington are willing to give away to play this game.

This is a good one:

Administration officials are hoping the public will draw a distinction between financial firms that receive a government rescue, such as AIG, and those such as hedge funds and private-equity firms that participate as investors in broad government programs.

Let me rephrase this for you. The Administration officials are hoping the public is just stupid enough to allow them to take taxpayer money and give it to a bunch of unregulated pigs who are directly responsible for much of the malign in the financial markets right now and differentiate between those pigs and the other ones that Paulson bailed out last fall when he gave AIG $80 Billion that promptly went into the accounts of his former firm who was made whole on the worthless paper they held from AIG while managing to make a fortune shorting the stock and on AIG CDS's bought from third parties. Goldman knew the contracts AIG sold them would bankrupt AIG as there was no way in hell any company could cough up the kind of collateral needed to cover the contracts AIG sold for pennies on the dollar that covered billions in debt.

Read this:

Targeting mortgages that banks no longer want to hold, the Treasury and the FDIC will provide financing to buyers. The FDIC will auction off pools of loans that a bank wants to sell and will become a co-owner by forming a partnership with the highest bidder.

The partnership will then raise FDIC-guaranteed debt to finance a portion of the purchase price, with the Treasury willing to kick in between 50% and 80% of the equity needed to buy the assets. The Treasury will be an equal investor in the partnerships.

Why the F*** are they bothering with the private industry at all? Because the government is trying desperately to figure out how to make their buddies "whole" again. I mean, when the dot com crash hit shortly after dragging some long established companies in the toilet with them (along with the telecom industry, the Enrons' etc.) what a better way to dole out big fat government checks then to have a war?

Well the peace-nic administration is up to its eyeballs in war, debt, bankruptcies and the like. So how in the hell are they going to keep the artificial free market economy with it's consolidated global financial industry (not to mention almost total consolidation of every other GD industry in the US) afloat? Print money! Yea. And don't forget, include the unregulated financial markets, and don't forget, take the vast majority of the risk for further write downs or financial collapse, and don't forget, we are all partners here:-) Smiles for everyone. Back to Greenwich and "Rodeo Drive".

Oh don't forget:

Lastly, the government will expand the Fed's Term Asset-Backed Securities Loan Facility, or TALF, to help absorb risky assets dating back several years.

Yea, ingenious.

Lastly I am absolutely dumfounded pissed at the insistence of calling the s*** the banks bought over the past few years "assets".

In an op-ed piece in Monday's Wall Street Journal, Mr. Geithner wrote that the efforts will help tackle the glut of assets clogging bank balance sheets and will help provide some kind of normal price for these assets, which the Treasury believes are currently undervalued.

God Damnit, the stuff is worthless paper. Get over it. It is gone, lost, worthless. Write the S*** off and if you go under so be it. There are plenty of folks out of a job from the financial sector who are perfectly capable of opening a fricken retail bank to serve the rest of us lowly servant citizens...

Madagascar’s president steps down

I have been lightly following the turmoil in Madagascar through the FT over the past couple weeks and I would love for someone to do a dissertation on the island country. Economically speaking, they seem to have quit a wealth of natural and land resources and as usual a tiny elite exploiting the resources while most live on about $1.00 equivalent per day.

This quote from the latest FT article is fitting:

While a business elite – of whom Mr Ravalomanana is among the most successful – has grown rich through agriculture and other ventures, the average Malagasy survives on about $330 a year. They have yet to see much benefit from the arrival of foreign investment in biofuels, bitumen and titanium.

The collapse of the vanilla market, and, as the tensions spilled over into violence, the tourist trade, only added to resentment stoked by a agreement last year to lease half the country’s arable land to a conglomerate planning to use it to feed South Korea. That the deal was subsequently halted did not assuage the outrage the Mr Rajoelina was able to harness.

You know, I feel very strongly that this dynamic has been strongly applied to the developed world over the past 10-25 years (depending on when you start the cycle) by private equity and hedge funds who's main objective is to do everything possible to harness all productive capacity and resource production with the use of high degrees of leverage and suck as much of the profit as humanly possible from the enterprises regardless of the plight of the citizens of the planet they squander.

I agree this is nothing new in our short and pathetic experiment with "free economic" models. But I have said and will continue to say, with 6 billion people on a very interconnected planet there simply no longer exist any positive value to trillions of dollars sloshing around in the hands of a few in unregulated markets trading anything and everything to suck as much wealth out of the "economic system" as humanly possible without respect to the plight of the population of the planet.

Thank you Bernie

Driving and listening to NPR this evening I heard two guests talking about the Bernie Madoff guilty plea. One guest had, at best, a trailer park knowledge of the workings of the investment world and continuously refered to "her sources" an could do no more than focus on the few million dollars Bernie and his wife managed to squirrel away in her name. Listening to this woman was worse than listening to a bunch of impotent Senators talk about Wall Street bonuses. The more I listen to the "news" and "news shows" with supposed "knowledgeable" reporters and other industry appointed "experts" the more incensed I get with the ignorance being blatantly displayed about the world of international finance and the workings of unregulated funds.

Every time I hear "the SEC 'investigated' Madoff's business" and gave him a clean bill of health my eyes roll. Since when in the last 20 years did the SEC do a damn thing? Anyone who has known me for a while will remember my outrage when Eliot Spitser had to do their job for them for 5 years and the how pissed off I was when he came to DC to sit in front of our spineless, impotent government while being sneered at by the SEC for making them look like the complete fools there were.

So the media saying "the SEC did nothing to stop Bernie Madoff" is like saying its hard to light a match when it is raining. Duh. The SEC did nothing for 20 years.

Then I hear people suggesting the SEC is responsible for them loosing money with Madoff. Well this is just as comical. Madoff operated his "fund" like a "hedge fund" and from what I know, they are not regulated. The SEC only looked into his clearing operations, not his "fund". They apparently had him register as an advisor, but about that time, the SEC had started a program requiring certain Hedge Funds to register with the SEC. However, the Hedge Fund industry sued and had that requirement overturned. So if (and I don't know if this is the case in Madoff's fund) Madoff was required to register under the then "new" SEC requirement, he could have withdrawn his registration like many Hedge Funds did after the overturning of the rule in court.

So what is the moral of this story and why am I thanking Bernie? It is because as far as I am concerned, Bernie may have done more harm to the reputations of unregistered pools of cash burning every asset class on the planet then any impotent SEC or government body possibly could have. And, until unregulated pools of capital and their wrath of unregulated insurance products and the like are completely removed from the global financial system, we are going to have serious problems.

Thank you Bernie. You are scum. But the Banks, Wall Street firms, Insurance companies, and other "financial firms" that have been allowed to become "regulated banks" who have all taken taxpayer money and cannot or will not explain where it went are all the same right now. They take taxpayer money, put in a pool of cash and pay out others with it. What is the Fricken difference?

All the pigs became ridiculously over leveraged and lost the capacity to segregate any aspects of their Enron structured, far fledged, business. All of them have done everything possible, including stealing from their clients funds, instituting ridicules arbitrary fees, charging for services that were supposed to be free or included in certain types of accounts, raising interest rates or any other scheme they could think of to stay afloat.

I have personally witnessed each of these in my bank, investment and credit cards in the past 9 months. Just ask me and I will give you an example of each one listed above.