RENDEVOUS WITH DESTINY

Franklin Delano Roosevelt’s speech at the Democratic National Convention in Philadelphia on June 27, 1936. This was seven years into the last Fourth Turning. We are now three or four years into the latest Fourth Turning. We are headed towards our own rendevous with destiny.

“Senator Robinson, Members of the Democratic Convention, My Friends: Here, and in every community throughout the land, we are met at a time of great moment to the future of the nation. It is an occasion to be dedicated to the simple and sincere expression of an attitude toward problems, the determination of which will profoundly affect America.

I come not only as a leader of a party, not only as a candidate for high office, but as one upon whom many critical hours have imposed and still impose a grave responsibility.

For the sympathy, help and confidence with which Americans have sustained me in my task I am grateful. For their loyalty I salute the members of our great party, in and out of political life in every part of the Union. I salute those of other parties, especially those in the Congress of the United States who on so many occasions have put partisanship aside. I thank the governors of the several states, their legislatures, their state and local officials who participated unselfishly and regardless of party in our efforts to achieve recovery and destroy abuses. Above all I thank the millions of Americans who have borne disaster bravely and have dared to smile through the storm.

America will not forget these recent years, will not forget that the rescue was not a mere party task. It was the concern of all of us. In our strength we rose together, rallied our energies together, applied the old rules of common sense, and together survived.

In those days we feared fear. That was why we fought fear. And today, my friends, we have won against the most dangerous of our foes. We have conquered fear.

But I cannot, with candor, tell you that all is well with the world. Clouds of suspicion, tides of ill-will and intolerance gather darkly in many places. In our own land we enjoy indeed a fullness of life greater than that of most nations. But the rush of modern civilization itself has raised for us new difficulties, new problems which must be solved if we are to preserve to the United States the political and economic freedom for which Washington and Jefferson planned and fought.

Philadelphia is a good city in which to write American history. This is fitting ground on which to reaffirm the faith of our fathers; to pledge ourselves to restore to the people a wider freedom; to give to 1936 as the founders gave to 1776 – an American way of life.

That very word freedom, in itself and of necessity, suggests freedom from some restraining power. In 1776 we sought freedom from the tyranny of a political autocracy – from the eighteenth-century royalists who held special privileges from the crown. It was to perpetuate their privilege that they governed without the consent of the governed; that they denied the right of free assembly and free speech; that they restricted the worship of God; that they put the average man’s property and the average man’s life in pawn to the mercenaries of dynastic power; that they regimented the people.

And so it was to win freedom from the tyranny of political autocracy that the American Revolution was fought. That victory gave the business of governing into the hands of the average man, who won the right with his neighbors to make and order his own destiny through his own government. Political tyranny was wiped out at Philadelphia on July 4, 1776.

Since that struggle, however, man’s inventive genius released new forces in our land which reordered the lives of our people. The age of machinery, of railroads; of steam and electricity; the telegraph and the radio; mass production, mass distribution – all of these combined to bring forward a new civilization and with it a new problem for those who sought to remain free.

For out of this modern civilization economic royalists carved new dynasties. New kingdoms were built upon concentration of control over material things. Through new uses of corporations, banks and securities, new machinery of industry and agriculture, of labor and capital – all undreamed of by the Fathers – the whole structure of modern life was impressed into this royal service.

There was no place among this royalty for our many thousands of small-businessmen and merchants who sought to make a worthy use of the American system of initiative and profit. They were no more free than the worker or the farmer. Even honest and progressive-minded men of wealth, aware of their obligation to their generation, could never know just where they fitted into this dynastic scheme of things.

It was natural and perhaps human that the privileged princes of these new economic dynasties, thirsting for power, reached out for control over government itself. They created a new despotism and wrapped it in the robes of legal sanction. In its service new mercenaries sought to regiment the people, their labor, and their property. And as a result the average man once more confronts the problem that faced the Minute Man.

The hours men and women worked, the wages they received, the conditions of their labor – these had passed beyond the control of the people, and were imposed by this new industrial dictatorship. The savings of the average family, the capital of the small-businessmen, the investments set aside for old age – other people’s money – these were tools which the new economic royalty used to dig itself in.

Those who tilled the soil no longer reaped the rewards which were their right. The small measure of their gains was decreed by men in distant cities.

Throughout the nation, opportunity was limited by monopoly. Individual initiative was crushed in the cogs of a great machine. The field open for free business was more and more restricted. Private enterprise, indeed, became too private. It became privileged enterprise, not free enterprise.

An old English judge once said: “Necessitous men are not free men.” Liberty requires opportunity to make a living – a living decent according to the standard of the time, a living which gives man not only enough to live by, but something to live for.

For too many of us the political equality we once had won was meaningless in the face of economic inequality. A small group had concentrated into their own hands an almost complete control over other people’s property, other people’s money, other people’s labor – other people’s lives. For too many of us life was no longer free; liberty no longer real; men could no longer follow the pursuit of happiness.

Against economic tyranny such as this, the American citizen could appeal only to the organized power of government. The collapse of 1929 showed up the despotism for what it was. The election of 1932 was the people’s mandate to end it. Under that mandate it is being ended.

The royalists of the economic order have conceded that political freedom was the business of the government, but they have maintained that economic slavery was nobody’s business. They granted that the government could protect the citizen in his right to vote, but they denied that the government could do anything to protect the citizen in his right to work and his right to live.

Today we stand committed to the proposition that freedom is no half-and-half affair. If the average citizen is guaranteed equal opportunity in the polling place, he must have equal opportunity in the market place.

These economic royalists complain that we seek to overthrow the institutions of America. What they really complain of is that we seek to take away their power. Our allegiance to American institutions requires the overthrow of this kind of power. In vain they seek to hide behind the flag and the Constitution. In their blindness they forget what the flag and the Constitution stand for. Now, as always, they stand for democracy, not tyranny; for freedom, not subjection; and against a dictatorship by mob rule and the over-privileged alike.

The brave and clear platform adopted by this convention, to which I heartily subscribe, sets forth that government in a modern civilization has certain inescapable obligations to its citizens, among which are protection of the family and the home, the establishment of a democracy of opportunity, and aid to those overtaken by disaster.

But the resolute enemy within our gates is ever ready to beat down our words unless in greater courage we will fight for them.

For more than three years we have fought for them. This convention, in every word and deed, has pledged that the fight will go on.

The defeats and victories of these years have given to us as a people a new understanding of our government and of ourselves. Never since the early days of the New England town meeting have the affairs of government been so widely discussed and so clearly appreciated. It has been brought home to us that the only effective guide for the safety of this most worldly of worlds, the greatest guide of all, is moral principle.

We do not see faith, hope, and charity as unattainable ideals, but we use them as stout supports of a nation fighting the fight for freedom in a modern civilization.

Faith – in the soundness of democracy in the midst of dictatorships.

Hope – renewed because we know so well the progress we have made.

Charity – in the true spirit of that grand old word. For charity literally translated from the original means love, the love that understands, that does not merely share the wealth of the giver, but in true sympathy and wisdom helps men to help themselves.

We seek not merely to make government a mechanical implement, but to give it the vibrant personal character that is the very embodiment of human charity.

We are poor indeed if this nation cannot afford to lift from every recess of American life the dread fear of the unemployed that they are not needed in the world. We cannot afford to accumulate a deficit in the books of human fortitude.

In the place of the palace of privilege we seek to build a temple out of faith and hope and charity.

It is a sobering thing, my friends, to be a servant of this great cause. We try in our daily work to remember that the cause belongs not to us, but to the people. The standard is not in the hands of you and me alone. It is carried by America. We seek daily to profit from experience, to learn to do better as our task proceeds.

Governments can err, presidents do make mistakes, but the immortal Dante tells us that Divine justice weighs the sins of the cold-blooded and the sins of the warm-hearted on different scales.

Better the occasional faults of a government that lives in a spirit of charity than the consistent omissions of a government frozen in the ice of its own indifference.

There is a mysterious cycle in human events. To some generations much is given. Of other generations much is expected. This generation of Americans has a rendezvous with destiny.

In this world of our in other lands, there are some people, who, in times past, have lived and fought for freedom, and seem to have grown too weary to carry on the fight. They have sold their heritage of freedom for the illusion of a living. They have yielded their democracy.

I believe in my heart that only our success can stir their ancient hope. They begin to know that here in America we are waging a great and successful war. It is not alone a war against want and destitution and economic demoralization. It is more than that; it is a war for the survival of democracy. We are fighting to save a great and precious form of government for ourselves and for the world.

I accept the commission you have tendered me. I join with you. I am enlisted for the duration of the war.”

MY DUMBASS CAT STRIKES AGAIN

The picture above looks like my cat Cookie, also known as the cat with the string hanging out of her ass, saved by the murdering veterinarian. As a side note, the District Attorney is going to seek the death penalty against the veterinarian. I like to think of it as putting him to sleep.

But, back to my dumbass cat. Is Cookie stupid enough to eat a cactus? Maybe.

Is Cookie dumb enough to get trapped in a bird cage by a parakeet? Probably.

But I know she is dumb enough to get trapped inside a wall. I came home from work last night to an empty house. Everyone was off doing something. My one cat – Smokey – was in the kitchen looking for dinner. I opened a can of cat food and put it on a paper plate. Smokey went to town, but Cookie was nowhere to be found. I thought it was odd but figured she was sleeping under a bed.

Avalon arrived home after dropping Mikey off at Boy Scouts. I said that Cookie didn’t come down to eat. She said Ut Oh. It seems Avalon can’t handle the cats. Every time she walks into the storage area in the basement she allows Smokey to dash into this off limits area. Smokey then proceeds to make his way up into the drop ceiling, making Avalon’s life a living hell. Her solution this time was to leave the door open, hoping Smokey would eventually exit on his own. He eventually did. Great plan Avalon!!!

One small problem. My dumbass cat – Cookie- who is so dumb she eats fishing line, must have ventured into the storage area. What happened next is anyone’s guess. All I know is that while we were looking for Cookie, we heard a faint meow coming from somewhere. Avalon was pushing back ceiling tiles, but no cat. We heard the meow again. Avalon said she thinks it was from inside the wall. I said WTF!!! and few more choice adjectives. As I unleashed a torrent of expletives we came to the conclusion that the dumbass was trapped behind the drywall with no chance of escape. It was like an Edgar Allan Poe short story. At least I didn’t have to call the fire department.

I continued to curse my ass off as I went to get my dry wall knife so I could cut a hole into the drywall I just paid thousands of dollars to have repaired from our flood. I cut a small square and after calling the dumbass for 10 minutes she eventually arrived at the hole and sauntered out.

I put the piece of drywall back into place, but I won’t be sealing it up. I pushed a filing cabinet in front of the spot. I just have a feeling I will need to access that hole again someday.

ADMINISTRATOR ENLISTS IN THE FREE SH*T ARMY

I finally finished my tax return today. I’ve done my own taxes for 25 years. I’ve used Turbo Tax for 20 years. I’m able to upload all of my Quicken data directly into Turbo Tax. And still I felt like this guy this morning as I worked on my complicated return.

We have W-2 income, I sold a bunch of stocks and mutual funds, dividends, capital gains, option losses, K-1 for my money losing Wildwood condo, and a Schedule C for this huge money making machine of a website. There are so many pieces of paper to labor through. Turbo Tax asks you questions about passive income, alternative minimum tax, deductions, and credits. I can understand why most people pay someone else to do their taxes.

When it was all said and done, we are getting a refund. My effective tax rate for 2010 was 7%. I have Obama and the Congressional redistributors of wealth to thank for my relatively low tax burden. As I noted back in the Fall, my house is 16 years old and the builder put cheap windows in the house. The seals were breaking on multiple windows allowing moisture in, with some cracking when the temperature would change. I needed to replace my windows. It just so happened that Obama was implementing another useless economic stimulation tax credit with your money in 2010. Anyone who did a home improvement that saved energy could get a $1,500 tax credit. I took advantage of Obama’s generosity with your money today. I got a $1,500 tax credit for my window purchase. I’m now a corporal in the Free Shit Army.

The government already rewards me for having three kids, with exemptions and tax credits. It rewards me for owning a house with deductions for mortgage interest and property taxes. These facts prove how worthless our tax code has become.

I would have bought windows this year whether there was a credit or not. I bought a house in 1995 because I wanted a place to live. The mortgage interest and property tax deductions had no impact on my buying decision. I didn;t decide to have kids because I would get a credit. My marginal rate of 7% on a fairly high level of income seems low. It is low unless you compare me to General Electric.

General Electric made $14.2 billion in 2010. Their effective tax rate was -22.5%. They not only paid no taxes, but received a $3.2 billion tax refund. When middle class working Americans pay more in taxes than one of the biggest corporations in the world, then the system is broken and corrupt. GE spent $200 million in the last decade on lobbying. It looks like they got a nice return on their bribes (investment).

The corporate share of the nation’s tax receipts went from 30% in the 1950s to 6.6% in 2009. Crony capitalism is alive and well. This needs to change before it is too late.

If the politicians in this country could ever do the right thing and put the country ahead of their own interests, we could fix the revenue side of the budget. I would gladly give up my mortgage deduction, property tax deduction and credits for having kids if I knew that the wealthy and corporations were also paying their fair share. Eliminate all deductions, all loopholes, and all credits, for everyone. I’m not tied to a flat tax or fair tax or a particular rate.

As a country we need to decide what we really want. How big of a military are we willing to fund? If we want Medicare, Medicaid, Social Security, SNAP, Unemployment Compensation, Welfare, and an oil based society, then we have to pay for it. The borrowing has to end. If we want something, we have to pay for it. If we want all of the social programs that exist today, then taxes will have to go up dramatically. If we don’t want taxes to go up dramatically, then we need to cut spending across the board.

The fools in Washington DC think they can borrow and spend to infinity. Sadly, they are wrong. I see no chance that the corrupt politicians will change our path. The Free Shit Army (we are all members) will keep marching until it meets its Waterloo.

ADMINISTRATOR OBLITERATES THE COMPETITION

Not only do I work a full time job, run a blog, write an article per week, do my own taxes with Turbo Tax, and spend 12 hours per week in traffic, but I’ve also proven to be a sports expert. In one of the most lopsided victories in the history of NCAA tournament pools, I obliterated my so called competion. My nearest opponent finished 440 points behind. I believe I told you guys at the beginning of this “competition” – THE ADMINISTRATOR ALWAYS WINS!!!

My only regret is that Smokey is not here to read this. His selections in this pool proved to be the most pathetic in history. A monkey throwing shit at the bracket to select their teams could have scored higher than 330 points. Smokey – if you happen to be reading this – you eat shit.

Group Results

RNK ENTRY, OWNER R64 R32 S16 E8 FF NCG CHAMPION PPR TOTAL PCT
1 JimQ203 1, J. Quinn 200 180 120 80 160 320 UConn 0 1060 97.6
2 jbenham99313 1, J. Benham 220 200 120 80 0 0 Kansas 0 620 83.8
3 dbacktim4 , t. priester 230 180 120 80 0 0 Ohio St 0 610 82.2
3 dannl221 1, D. white 250 200 160 0 0 0 Duke 0 610 82.2
5 Sonic, J. Crawford 230 180 160 0 0 0 Florida 0 570 72.6
5 BocaBehemoths 1, A. Petrone 250 200 120 0 0 0 Ohio St 0 570 72.6
7 Stuck-In-NJ 1, n. koch 260 140 80 80 0 0 Kansas 0 560 68.1
7 ssgconway 1, L. Conway 240 200 40 80 0 0 Ohio St 0 560 68.1
9 Plato_Pussius 1, j. parrott 250 160 120 0 0 0 Texas 0 530 56.3
10 Irrationalizer 1, L. Primrose 260 140 120 0 0 0 Notre Dame 0 520 51.9
10 LLPOHTBP 1, J. Ross 240 160 120 0 0 0 Texas 0 520 51.9
12 kevqui 1, K. Quinn 240 180 80 0 0 0 Duke 0 500 42.8
13 howard in nyc 1, w. stecke 220 140 120 0 0 0 UNC 0 480 33.6
13 TBPIowan 1, D. Latta 260 180 40 0 0 0 Kansas 0 480 33.6
15 MikeinAZ, M. Gular 210 200 40 0 0 0 Ohio St 0 450 21.3
15 Dirty Billy Boy’s Picks, D. Billy 230 180 40 0 0 0 Pittsburgh 0 450 21.3
17 Petey1187 1, A. Petersohn 250 140 40 0 0 0 Ohio St 0 430 14.6
18 BuchJoe 1, J. Buch 240 140 0 0 0 0 Notre Dame 0 380 5.0
19 proximo6060 1, d. morehouse 210 80 40 0 0 0 Kansas 0 330 1

TAKE THIS JOB AND SHOVE IT

Barack Obama and his minions were out in force on Friday declaring that the 216,000 jobs added in February are proof of a recovering economy. The unemployment rate fell to 8.8%, down from 9.8% in April 2010. All it took was 2.8 million Americans to leave the labor force to achieve this fabulous reduction in the unemployment rate. The percentage of Americans in the labor force of 64.2% is the lowest since 1983. The employment to population ratio of 58.5% is also the lowest since 1983. These atrocious figures are after a supposed economic recovery that has been underway for the last 18 months.

There are now 1.8 million more people employed than at the depths of this Greater Depression. The working age population has grown by 3.2 million people since 2009. Inexplicably, the civilian workforce has actually declined by 736,000 over this same time frame. The government drones at the BLS want us to believe these people voluntarily left the workforce. Obama apologists declare this is because Baby Boomers are leaving the workforce as they retire into the sunset. That is laughable, as all studies show Boomers have not saved enough to retire and will be forced to work into their 70’s.

The manipulation of data in order to spin the economic situation in this country in the best light possible has become so blatant that only the most ignorant could possibly believe it. The corporate mainstream media dutifully reports the propaganda, without ever critically assessing what is being distributed by the government. The percentage of the American working population in the workforce consistently ranged between 66% and 67% from 1998 through 2008. Then, suddenly in 2008, after the economy went in the tank, a couple million Americans found better things to do with their spare time and left the workforce. Anyone with an ounce of brains knows these people gave up and are really unemployed. The percentage of people in the labor force should be 66.5%. Using this 20 year average would add 5.5 million people to the civilian labor force and the unemployment rolls. This exercise in reality gives a real unemployment rate of 12%.

It is interesting that Obama and his top economic propagandist Austin Goolsbee were out in full force on Friday, taking credit for the “tremendous” job gains, but had nothing to say earlier in the week with a much more revealing government report. There is now an all-time high of 44.2 million Americans and 20.7 million households in the food stamp program. This is 14.3% of the American population and 18% of all the households.

I’d like to hear the Administration spin for the SNAP program. Since the supposed end of this economic recession in late 2009, the number of people added to the food stamp rolls has increased by 8 million. The annual cost for this program will reach $70 billion this year, up from $33 billion in 2007. If the economy is recovering and people are voluntarily leaving the workforce, why have the number of people on food stamps increased by 22% since the official start of the recovery? Why does the number of people going on food stamps go up every month? The answer is that there has been no economic recovery for the average American. Wall Street bankers and the ultra-wealthy elite are the only people who have experienced a recovery.

SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM
( Data as of March 31, 2011)
Fiscal PARTICIPATION BENEFIT AVERAGE MONTHLY BENEFIT
Year Persons Households COSTS Per Person Per Household
FY 2011 43,766,713 20,501,213 23,348,337,586 133.37 284.73
FY 2010 40,301,666 18,618,363 64,704,748,421 133.79 289.61
FY 2009 33,489,975 15,232,115 50,359,917,015 125.31 275.51

The true picture of the American economy is that in 2007 there were 146 million Americans employed, or 63% of the working age population. Today, there are 139.9 million Americans employed, or 58.5% of the working age population. Over this time frame, an additional 7.1 million Americans entered the working age population. In 2007 there were 26.3 million Americans on food stamps, or 8.6% of the US population. Today there are 44.2 million Americans on food stamps, or 14.3% of the US population. To call the current economic disaster a recovery is to practice the art of the Big Lie.

Real Median Household Income, which is calculated using the dodgy government CPI, has not grown in 14 years. Using a true, non-manipulated inflation figure and real median household income is no higher than it was in 1987. The mainstream media reports the headline figures like the good lapdogs they are. The BLS Establishment data going back to 1965 is a treasure trove of interesting data. The average hourly wages have declined for the last three months and are essentially flat in the last year.

real median household income

Decades of Decay

The current state of disarray in the job market did not occur overnight. It took decades of bad choices, willful ignorance and delusion. By charting BLS data over the last five decades, a picture of an empire in decay appears before your very eyes. We aren’t the first empire to experience this decay and won’t be the last. It is only in retrospect that it becomes clear that all empires gravitate from producing and creating to finance, debt and lending. The hubris of great empires leads them to believe they have been chosen by God as a special nation destined for eternal wealth and success. The seventeenth century Spanish empire thought so. The Dutch and their glorious maritime empire thought so. The all-powerful British Empire thought so. Do you hear much about these empires anymore? They all sacrificed productive activities and embraced the glories of a debt based society. Kevin Phillips details these declines in his brilliant book American Theocracy :

“Understandable as this cockiness might be, history teaches a crucial distinction: nations could marshal the necessary debt-defying high wire walks and comebacks during their youth and early middle age, when their industries, exports, capitalizations, and animal spirits were vital and expansive, but they became less resilient in later years. During these periods, as their societies polarized and their arteries clogged with rentier and debt buildups, wars and financial crises stopped being manageable. Of course, clarity about this develops only in retrospect. However, even though war related debt seems to have been part of each fatal endgame, the past leading world economic powers seem to have made another error en route. They did not pay enough attention to establishing or maintaining a vital manufacturing sector, thereby keeping a better international balance and a broader internal income distribution than financialization allowed.”

The chart below paints a clear picture of decay, debt and delusion. In 1961 the population of the United States was 184 million. There were 54 million employed Americans, with 15 million of them manufacturing goods for America and the rest of the world. Today the population of the United States is 310 million. There are 11.7 million people manufacturing goods, mostly weapons for export to our favorite despots. The population has grown by 68%, while manufacturing jobs have declined by 22%. Consumer spending accounted for 62.8% of GDP in 1961. Investments totaled 14.3% of GDP and we ran a trade surplus of $4.9 billion. Today, consumer spending accounts for 71.1% of GDP. Investments total 12.5% of GDP and we are running a $500 billion trade deficit. Over the course of 50 years, we’ve devolved from a production and exporting society into a consuming and borrowing society.

 

1961 1970 1980 1990 2000 2007 2010 Mar-11
Total Employment 54,106 71,005 90,530 109,487 131,786 137,599 129,819 130,738
Mining 728 677 1,077 765 599 724 705 758
Construction 2,908 3,654 4,454 5,263 6,787 7,630 5,526 5,514
Manufacturing 15,011 17,848 18,733 17,695 17,263 13,879 11,524 11,667
 Total Goods Producing 18,647 22,179 24,264 23,723 24,649 22,233 17,755 17,939
Trade, Transport, Utilities 11,040 14,144 18,413 22,666 26,225 26,630 24,605 24,797
Information 1,693 2,041 2,361 2,688 3,630 3,032 2,711 2,681
Finance 2,590 3,532 5,025 6,614 7,687 8,301 7,630 7,610
Professional & Business Services 3,744 5,267 7,544 10,848 16,666 17,942 16,688 17,075
Education & Health Serv. 3,030 4,577 7,072 10,984 15,109 18,322 19,564 19,875
Leisure & Hospitality 3,468 4,789 6,721 9,288 11,862 13,427 13,020 13,156
Other Services 1,188 1,789 2,755 4,261 5,168 5,494 5,364 5,439
Government 8,706 12,687 16,375 18,415 20,790 22,218 22,482 22,166
   Total Service Producing 35,459 48,826 66,266 85,764 107,137 115,366 112,064 112,799

A perusal of the chart shows the dramatic downturn has really occurred since 1980. Goods producing jobs have declined by 6.3 million in the last 30 years, while service jobs have grown by 46.5 million. Who would want to get their hands dirty on an assembly line when they could shuffle papers, invent CDOs, MBOs, and CDSs, create financial models to destroy the world, bribe rating agencies, file frivolous lawsuits, teach Keynesianism, or use the 60,000 page IRS code to help GE pay no taxes on their $14 billion of income. Alan Greenspan and many other “thought leaders” declared that America could succeed through its ingenuity and creative thought process. The rest of the world could handle the messy business of building things. So goes the hubris of an empire that has peaked. To get a clearer view of the conversion from a productive society to a consumption society, converting the above chart to a percentage basis is useful.

1961 1970 1980 1990 2000 2007 2010 Mar-11
Total Employment 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Mining 1.3% 1.0% 1.2% 0.7% 0.5% 0.5% 0.5% 0.6%
Construction 5.4% 5.1% 4.9% 4.8% 5.2% 5.5% 4.3% 4.2%
Manufacturing 27.7% 25.1% 20.7% 16.2% 13.1% 10.1% 8.9% 8.9%
   Total Goods Producing 34.5% 31.2% 26.8% 21.7% 18.7% 16.2% 13.7% 13.7%
Trade, Transport, Utilities 20.4% 19.9% 20.3% 20.7% 19.9% 19.4% 19.0% 19.0%
Information 3.1% 2.9% 2.6% 2.5% 2.8% 2.2% 2.1% 2.1%
Finance 4.8% 5.0% 5.6% 6.0% 5.8% 6.0% 5.9% 5.8%
Professional & Business Services 6.9% 7.4% 8.3% 9.9% 12.6% 13.0% 12.9% 13.1%
Education & Health Serv. 5.6% 6.4% 7.8% 10.0% 11.5% 13.3% 15.1% 15.2%
Leisure & Hospitality 6.4% 6.7% 7.4% 8.5% 9.0% 9.8% 10.0% 10.1%
Other Services 2.2% 2.5% 3.0% 3.9% 3.9% 4.0% 4.1% 4.2%
Government 16.1% 17.9% 18.1% 16.8% 15.8% 16.1% 17.3% 17.0%
   Total Service Producing 65.5% 68.8% 73.2% 78.3% 81.3% 83.8% 86.3% 86.3%

In 1961 America was a well balanced economic powerhouse. Goods production accounted for 34.5% of all jobs, with manufacturing making up 27.7% of all jobs. Goods production now accounts for a pitiful 13.7% of all jobs in the country. The slack was picked up by financial analysts, accountants, lawyers, tax specialists, and bankers. They surged from supporting roles in a production society with 11.7% of the jobs in 1961 to the dominant big dogs today, with 18.9% of the jobs. The rest of the slack was taken up by teachers, school administrators, nurses, cabana boys and waitresses as they surged from 12% in 1961 to 25.3% of all jobs today. There is one problem with this shift. We have millions more educators, but our school systems churn out millions of functionally illiterate non-critical thinking drones. We have millions more healthcare professionals and are the most obese, unhealthy nation on earth even though we spend more per person than any other country. A country that employs one quarter of their workers in jobs that do not increase the wealth of the country is a country in decline. This shift has also pushed people into lower paying jobs.

1965 1970 1980 1990 2000 2007 2010 Mar-11
Total Private Industry $2.63 $3.40 $6.85 $10.20 $14.02 $17.43 $19.07 $19.30
Mining $2.87 $3.77 $8.97 $13.40 $16.55 $20.97 $23.83 $24.68
Construction $3.23 $4.74 $9.37 $13.42 $17.48 $20.95 $23.22 $23.36
Manufacturing $2.49 $3.23 $7.15 $10.78 $13.55 $17.26 $18.61 $18.90
   Total Goods Producing $2.63 $3.52 $7.66 $11.46 $15.27 $18.67 $20.28 $20.48
Trade, Transport, Utilities $2.94 $3.65 $7.04 $9.83 $13.31 $15.78 $16.83 $16.99
Information $4.47 $5.25 $9.47 $13.40 $19.07 $23.96 $25.86 $25.99
Finance $2.38 $3.07 $5.82 $9.99 $14.98 $19.64 $21.49 $21.63
Professional & Business Serv. $3.28 $4.04 $7.22 $11.14 $15.52 $20.15 $22.78 $23.10
Education & Health Services $2.12 $2.88 $5.93 $10.00 $13.95 $18.11 $20.12 $20.45
Leisure & Hospitality $1.17 $1.82 $3.98 $6.02 $8.32 $10.41 $11.31 $11.38
Other Services $1.25 $2.01 $5.05 $9.08 $12.73 $15.42 $17.08 $17.23
   Total Service Producing $2.63 $3.34 $6.43 $9.72 $13.62 $17.11 $18.81 $19.05
Consumer Price Index 31.50 38.80 82.40 130.70 172.20 207.34 218.06 221.31

The insidious effects of Federal Reserve generated inflation can be seen in the above chart. The BLS Establishment data going back to 1965 reveals much about the hidden impact of inflation over time. In 1965 the average hourly wage was $2.65. Back then, Americans put in a full work week, averaging 38.6 hours per week. The average American was making $101.52 per week. This was enough for a family to live comfortably on with only one spouse working. Fast forward to today and we have an average wage of $19.30 per hour and work week of 33.4 hours. This yields an average weekly pay of $644.62. It is also necessary for most households to have two working spouses to make ends meet. I added the government reported CPI at the bottom of the chart to provide some perspective on our 50 years of middle class wage compression. Applying the change in CPI since 1965 to the change in average weekly earnings provides the clearest view of what has been done to our country by the Federal Reserve and the government/corporate oligarchy. It would have taken weekly wages of $713.25 to have kept up with inflation since 1965. The average worker today is making 10% less than they did in 1965, on an inflation adjusted basis.

Wages in the service industries fell behind by even more, with the exception of bankers, doctors and teachers. The finance sector wages and the healthcare/education sector wages are 25% higher than their inflation adjusted wages in 1965. You reap what you sow. The country has decided that bankers, doctors, and teachers are relatively more important to our economy than people who make products, create wealth, and increase the productive capacity of the country. Any impartial outcome based assessment of these choices would conclude these choices have been an unmitigated failure.

The financial/ banking sector has peddled debt to the masses that didn’t realize their standard of living has been declining for 50 years, and blew up the worldwide financial system through their greed and fraudulent business practices. We spend more per child on education than any country in the world and test scores are lower than they were 40 years ago. Our children graduate high school with no critical thinking skills and the inability to decipher propaganda from truth. We spend more per person on healthcare than any other country, but obesity, diabetes, and heart disease are rampant. Administrative bureaucracy and vast amounts of rules and regulations consume billions in these sectors of our economy. The simple art of creating and producing things that other people need or want has been cast aside by a country who thought they could borrow and spend their way to long-term prosperity.

So, here we find ourselves 18 months into a “recovery” and the country has added 1.3 million jobs in the last year. We’ve added 529,000 lawyers, accountants, consultants and tax specialists. We’ve added 420,000 teachers, nurses and administrators. We’ve added 193,000 waitresses and hotel busboys. And we’ve added 238,000 Wal-Mart clerks. Our well balanced economy is back in gear. What could go wrong?

The truth is that the country remains in a 50 year death spiral of bad choices, delusion and fraud, created to benefit the few at the expense of the many. The average American wallows in a reality of low wages and high debt. Some of this reality has been self inflicted. Willful ignorance is a choice. Educating yourself to the truth is available to every American. Spending less than you make is something everyone can do. But, at the end of the day, the 1% at the top of the food chain controls the levers in this country. While the average American has fallen behind over the last 50 years, the ultra-wealthy elite have prospered.   The top 1% takes home 25% of the national income and control 40% of the financial wealth in the country. Their lives have improved considerably. Twenty-five years ago, the ruling elite “earned” 12% of the national income and controlled 33% of the financial wealth. These are the people who control the message. They own the mainstream media. They run the Wall Street banks. They control the Federal Reserve. They write the laws and the tax code. They control the politicians like puppets on a string. An economic system based upon debt and Federal Reserve generated inflation benefits these chosen few, while destroying the middle class of America. We’ve chosen this path and are destined to experience the same fate as Spain, the Dutch, and Britain.

TBP POLL # S

It has been a week since Smokey left TBP. In that week no one has been told to eat shit, swallow anything gross, fuck off, or 50 other Smokeyisms. I personally feel that the blog has dropped a notch or two with his departure. This might be because he was one of my biggest supporters from the day I started the blog. He was a supporter before I had a blog when I posted on Seeking Alpha. So, my opinion is skewed.

So that brings us to the new poll question.

Is TBP better or worse without Smokey as one of the chief commentors?

A. Better

B. Worse

C. The Same

D. Eat Shit and Die

E. Suck my 11 1/2 inch Vein-laden beef pipe

TBP’s RECORD MONTH

We had a record month, despite the tragic loss of Smokey. We had 211,000 visitors in March. That was a 30% increase over January and February. We are getting a lot of new visitors, as the number of unique visitors went up by 35%. You can see that on the days when I post a featured article, the visitor counts go sky high. Another interesting statistic is that the average visitor spends over 6 minutes on the site, with 9% of visitors staying for longer than 30 minutes at a time. You know who you are.

Thanks for your continued support and don’t forget to click “you know what”.

Day Number of visits Pages Hits Bandwidth
01 Mar 2011 4831 24244 123282 875.24 MB
02 Mar 2011 5296 28220 145400 1002.78 MB
03 Mar 2011 4932 24517 130817 948.57 MB
04 Mar 2011 4646 25097 126751 850.27 MB
05 Mar 2011 5925 24038 155720 1.21 GB
06 Mar 2011 6676 26790 173081 1.43 GB
07 Mar 2011 6936 34775 199818 1.51 GB
08 Mar 2011 5330 28650 148710 1.09 GB
09 Mar 2011 5203 29112 146201 1.01 GB
10 Mar 2011 5617 30305 163359 1.12 GB
11 Mar 2011 5306 28812 154734 1.01 GB
12 Mar 2011 4573 24072 125133 900.55 MB
13 Mar 2011 5622 24779 150733 1.13 GB
14 Mar 2011 20589 68983 621904 5.46 GB
15 Mar 2011 14142 53871 421735 3.84 GB
16 Mar 2011 7704 35540 216232 1.78 GB
17 Mar 2011 6159 33318 179168 1.34 GB
18 Mar 2011 5403 29117 152194 1.10 GB
19 Mar 2011 4524 22805 119363 904.50 MB
20 Mar 2011 4995 26103 132832 1022.38 MB
21 Mar 2011 5596 27319 152127 1.07 GB
22 Mar 2011 12105 41991 348815 2.71 GB
23 Mar 2011 12544 46608 370987 2.84 GB
24 Mar 2011 6840 29075 179105 1.30 GB
25 Mar 2011 5407 29573 153453 1.01 GB
26 Mar 2011 4463 25040 123630 890.66 MB
27 Mar 2011 4646 25597 129969 899.49 MB
28 Mar 2011 5637 31662 164440 1.08 GB
29 Mar 2011 5722 29404 154402 1.07 GB
30 Mar 2011 5623 28551 146634 1.00 GB
31 Mar 2011 8586 34872 231550 1.80 GB
Average 6825.10 31381.94 191686.42 1.45 GB
Total 211578 972840 5942279 45.01 GB

EXTEND & PRETEND IS WALL STREET’S FRIEND

“We now have an economy in which five banks control over 50 percent of the entire banking industry, four or five corporations own most of the mainstream media, and the top one percent of families hold a greater share of the nation’s wealth than any time since 1930.   This sort of concentration of wealth and power is a classic setup for the failure of a democratic republic and the stifling of organic economic growth.” Jesse – http://jessescrossroadscafe.blogspot.com/

Source: Barry Ritholtz

“All of the old-timers knew that subprime mortgages were what we called neutron loans — they killed the people and left the houses.” – Louis S. Barnes, 58, a partner at Boulder West, a mortgage banking firm in Lafayette, Colo

The storyline that has been sold to the public by the Federal government, Wall Street, and the corporate mainstream media over the last two years is the economy is recovering and the banking system has recovered from its near death experience in 2008. Wall Street profits in 2009 & 2010 totaled approximately $80 billion. The stock market has risen almost 100% since the March 2009 lows. Wall Street CEOs were so impressed by this fantastic performance they dished out $43 billion in bonuses over the two year period to their thousands of Harvard MBA paper pushers. It is amazing that an industry that was effectively insolvent in October 2008 has made such a spectacular miraculous recovery. The truth is recovery is simple when you control the politicians and regulators, and own the organization that prints the money.

A systematic plan to create the illusion of stability and provide no-risk profits to the mega-Wall Street banks was implemented in early 2009 and continues today. The plan was developed by Ben Bernanke, Hank Paulson, Tim Geithner and the CEOs of the criminal Wall Street banking syndicate. The plan has been enabled by the FASB, SEC, IRS, FDIC and corrupt politicians in Washington D.C. This master plan has funneled hundreds of billions from taxpayers to the banks that created the greatest financial collapse in world history. The authorities had a choice. This country has bankruptcy laws. The criminally negligent Wall Street banks could have been liquidated in an orderly bankruptcy. Their good assets could have been sold off to banks that did not take their extreme greed based risks. Bond holders and stockholders would have been wiped out. Today, we would have a balanced banking system, with no Too Big To Fail institutions. Instead, the years of placing their cronies within governmental agencies and buying off politicians paid big dividends for Wall Street. Their return on investment has been fantastic.

The plan has been as follows:

  • In April 2009 the FASB caved in to pressure from the Federal Reserve, Treasury, and Wall Street to suspend mark to market rules, allowing the Wall Street banks to value their loans and derivatives as if they were worth 100% of their book value.
  • The Federal Reserve balance sheet consistently totaled about $900 billion until September 2008. By December 2008, the balance sheet had swollen to $2.2 trillion as the Federal Reserve bought $1.3 trillion of toxic assets from the Wall Street banks, paying 100 cents on the dollar for assets worth 50% of that value.

  • In November 2009 the Federal Reserve and IRS loosened the rules for restructuring commercial loans without triggering tax consequences. Banks were urged to extend loans on properties that had fallen 40% in value as if they were still worth 100% of the loan value.
  • By December 2008 the Federal Reserve had moved their discount rate to 0%. For the last two years, the Wall Street banks have been able to borrow from the Federal Reserve for free and earn a risk free return of 2%. The Federal Reserve has essentially handed billions of dollars to Wall Street.
  • When it became clear in October 2010 that after almost two years of unlimited liquidity being injected into the veins of zombie banks was failing, Ben Bernanke announced QE2. He has expanded the Fed balance sheet to $2.6 trillion by injecting $3.5 billion per day into the stock market by buying US Treasury bonds. Bernanke’s stated goal has been to pump up the stock market. While taking credit for driving stock prices higher, he denies any responsibility for the energy and food inflation that is spurring unrest around the world.
  • The Federal Reserve has increased the monetary base by $500 billion in the last three months in a desperate attempt to give the appearance of recovery to a floundering economy.

FRED Graph

  • Beginning on December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions.  The unlimited insurance coverage is available to all depositors, including consumers, businesses, and government entities. This unlimited insurance coverage is separate from, and in addition to, the insurance coverage provided to a depositor’s other deposit accounts held at an FDIC-insured institution.

When You’re Losing – Change the Rules

Wall Street banks had absolutely no problem with mark to market rules from 2000 through 2007, as the value of all their investments soared. These banks created products (subprime, no-doc, Alt-A mortgages) whose sole purpose was to encourage fraud. Their MBA geniuses created models that showed that if you packaged enough fraudulent loans together and paid Moody’s or S&P a big enough bribe, they magically became AAA products that could be sold to pension plans, municipalities, and insurance companies. These magnets of high finance were so consumed with greed they believed their own lies and loaded their balance sheets with the very toxic derivatives they were peddling to the clueless Europeans. They didn’t follow a basic rule. Don’t crap where you sleep. When the world came to its senses and realized that home prices weren’t really worth twice as much as they were in 2000, investment houses began to collapse like a house of cards. The AAA paper behind the plunging real estate wasn’t worth spit. After Lehman Brothers collapsed and AIG’s bets came up craps for the American people, the financial system rightly froze up.

After using fear and misinformation to ram through a $700 billion payoff to Goldman Sachs and their fellow Wall Street co-conspirators through Congress, it was time begin the game of extend and pretend. Market prices for the “assets” on the Wall Street banks’ books were only worth 30% of their original value. Obscuring the truth was now an absolute necessity for Wall Street. The Financial Accounting Standards Board already allowed banks to use models to value assets which did not have market data to base a valuation upon. The Federal Reserve and Treasury “convinced” the limp wristed accountants at the FASB to fold like a cheap suit. The FASB changed the rules so that when the market prices were not orderly, or where the bank was forced to sell the asset for regulatory purposes, or where the seller was close to bankruptcy, the bank could ignore the market price and make up one of its own. Essentially the banking syndicate got to have it both ways. It drew all the benefits of mark to market pricing when the markets were heading higher, and it was able to abandon mark to market pricing when markets went in the toilet. 

“Suspending mark-to-market accounting, in essence, suspends reality.” – Beth Brooke, global vice chair, at Ernst & Young

Wall Street desired all the billions of upside from creating new markets for new products. Their creativity knew no bounds as they crafted MBOs, MBSs, CDOs, CDSs, and then chopped them into tranches, selling them around the world with AAA stamps of approval from the soulless whore rating agencies. When the net result of a flawed system of toxic garbage paper was revealed, there was no room at the exits for the stampede of investment bankers. The toxic paper was on the banks’ books and no one wanted to admit the greed induced decision to purchase these highly risky, volatile “assets”. The trade had not gone bad, the ponzi scheme had unraveled. Suspending FASB 157 has been an attempt to hide this fraudulent business model from investors, regulators and the public. By hiding the true value of these assets, the financial system has never cleared. The banks remain in a zombie vegetative state, with the Federal Reserve providing the IV and the life support system.

Let’s Play Hide the Losses

Part two of the master cover-up plan has been the extending of commercial real estate loans and pretending that they will eventually be repaid. In late 2009 it was clear to the Federal Reserve and the Treasury that the $1.2 trillion in commercial loans maturing between 2010 and 2013 would cause thousands of bank failures if the existing regulations were enforced. The Treasury stepped to the plate first. New rules at the IRS weren’t directly related to banking, but allowed commercial loans that were part of investment pools known as Real Estate Mortgage Investment Conduits, or REMICs, to be refinanced without triggering tax penalties for investors.

 

The Federal Reserve, which is tasked with making sure banks loans are properly valued, instructed banks throughout the country to “extend and pretend” or “amend and pretend,” in which the bank gives a borrower more time to repay a loan. Banks were “encouraged” to modify loans to help cash strapped borrowers. The hope was that by amending the terms to enable the borrower to avoid a refinancing that would have been impossible, the lender would ultimately be able to collect the balance due on the loan. Ben and his boys also pushed banks to do “troubled debt restructurings.” Such restructurings involved modifying an existing loan by changing the terms or breaking the loan into pieces. Bank, thrift and credit-union regulators very quietly gave lenders flexibility in how they classified distressed commercial mortgages. Banks were able to slice distressed loans into performing and non-performing loans, and institutions were able to magically reduce the total reserves set aside for non-performing loans.

If a mall developer has 40% of their mall vacant and the cash flow from the mall is insufficient to service the loan, the bank would normally need to set aside reserves for the entire loan. Under the new guidelines they could carve the loan into two pieces, with 60% that is covered by cash flow as a good loan and the 40% without sufficient cash flow would be classified as non-performing. The truth is that billions in commercial loans are in distress right now because tenants are dropping like flies. Rather than writing down the loans, banks are extending the terms of the debt with more interest reserves included so they can continue to classify the loans as “performing.” The reality is that the values of the property behind these loans have fallen 43%. Banks are extending loans that they would never make now, because borrowers are already grossly upside-down.

Extending the length of a loan, changing the terms, and pretending that it will be repaid won’t generate real cash flow or keep the value of the property from declining. U.S. banks hold an estimated $156 billion of souring commercial real-estate loans, according to research firm Trepp LLC. About two-thirds of commercial real-estate loans maturing at banks from now through 2015 are underwater. Media shills proclaiming that the market is improving, doesn’t make it so. The chart below details the delinquency rates from 2007 through 2010 as reported by the Federal Reserve:

  Real estate loans Consumer loans
All Booked in domestic offices All Credit cards Other
Residential Commercial
2010 4th Qtr 9.01  9.94  7.97  3.71  4.17  3.10 
2010 3rd Qtr 9.77  10.90  8.69  4.03  4.60  3.39 
2010 2nd Qtr 10.02  11.32  8.74  4.25  5.07  3.37 
2010 1st Qtr 9.78  10.97  8.66  4.63  5.76  3.48 
2009 4th Qtr 9.48  10.29  8.74  4.64  6.36  3.48 
2009 3d Qtr 9.00  9.67  8.57  4.72  6.51  3.61 
2009 2nd Qtr 8.19  8.69  7.84  4.85  6.75  3.69 
2009 1st Qtr 7.19  7.89  6.55  4.62  6.50  3.52 
2008 4th Qtr 5.99  6.57  5.49  4.29  5.65  3.37 
2008 3rd Qtr 4.88  5.26  4.66  3.73  4.80  3.05 
2008 2nd Qtr 4.21  4.39  4.15  3.55  4.89  2.80 
2008 1st Qtr 3.56  3.70  3.50  3.48  4.76  2.76 
2007 4th Qtr 2.89  3.06  2.75  3.41  4.60  2.66 
2007 3rd Qtr 2.40  2.78  1.98  3.20  4.41  2.48 
2007 2nd Qtr 2.01  2.30  1.63  2.99  4.02  2.37 
2007 1st Qtr 1.77  2.03  1.43  2.93  3.97  2.29 

 

Delinquency rates on residential and commercial loans in early 2007 were in the range of 1.5% to 2.0%. Now the MSM pundits get excited over a decline from 8.7% to 8.0%. These figures show that even after trillions of Federal Reserve and Federal Government intervention, delinquencies remain four times higher than normal. In the real world, cash flow matters. Payment of interest and principal on a loan matters. Actual market values matter. According to Trepp, LLC, a data firm specializing in commercial data, non-performing commercial real estate loans makes up 72% of the $320 million in non-performing loans reported by banks in February. These figures are after the “extremely” relaxed definition of non-performing allowed by the Federal Reserve. The game is ongoing. Misinformation abounds. The SEC now issues press releases saying they are worried that banks are covering up losses, when they were involved in encouraging the banks to cover-up their losses. Last week the SEC announced they have become concerned that extend and pretend, along with another practice known as “troubled debt restructuring” that allows banks to break loans into pieces, may have been abused in order to diminish the volume of reserves banks are holding. What a shocking revelation. Who could have known?

Are You Smarter than a Wall Street CEO?

The Federal Reserve paid shills and Wall Street front men are out in droves declaring that TARP was a success and the banking system is recovering strongly. Columnists like Robert Samuelson declare  TARP was a great investment and will profit the taxpayer. Samuelson says that the Treasury has recouped $244 billion of the $245 billion it invested in banks and that, when it winds down its last investments, it likely will show a $20 billion profit from the banks. This type of propaganda is ludicrous, as Barry Ritholtz succinctly points out:

“No, we are not profitable on the bailouts. TARP has $123B to go before breakeven, and the GSEs are $133B in the hole. All told, the Taxpayers have a long way to go before we are breakeven. That’s before we count lost income from savings, bonds, etc., the increased costs of food stuff and energy due to inflation (the Fed’s has done this on purpose as part of their rescue plan), the higher fees the reduced competition of megabanks has created, and the future costs our Moral Hazard will have wrought in increased risks and disasters.”Barry Ritholtz

Source: Barry Ritholtz

Fannie Mae and Freddie Mac have hundreds of billions in bad loans sitting on their balance sheets. Their total cost to taxpayers will reach $400 billion, and never be repaid. The Federal Reserve has over $1 trillion in toxic assets on its balance sheet, off loaded by the TARP recipient banks in 2009. The taxpayer will never be repaid for this toxic waste. The government is implementing the Big Lie theory. If you tell a big lie often and loud enough, the non-thinking masses will believe it. That leaves us with today’s fantasy world.

The reality on the ground does not match the rhetoric coming from the government, Wall Street and the corporate mainstream media. The truth is as follows:

  • The vacancy rate for office space in the U.S. is currently 16.5%.
  • The vacancy rate for industrial space in the U.S. is currently 14.2%.
  • The vacancy rate for retail space in the U.S. is currently 13%.
  • Delinquencies within collateralized debt obligations in commercial real estate loans rose to 14.6% in February. The increase signals a trend of higher delinquencies in the segment. Signs of pressure surfaced as early as January when the delinquency rate on CDOs within commercial real estate loans hovered well above 13%.
  • According to Moody’s, CRE prices are down 4.3% from a year ago and down about 43% from the peak in 2007.
  • The delinquency rate on loans packaged and sold in commercial mortgage-backed securities rose to a record 9.2% in February, according to a March 15 report by Moody’s.
  • Regional and local community banks have as much as 80% of their balance sheets tied up in commercial real estate, and very few other sources of significant fee income to offset CRE losses.
  • CRE once had an estimated national value of $6.5 trillion.  Today it stands at an optimistic $3.5 trillion.
  • There are 1.8 million homes seriously delinquent, in the foreclosure process or REO that are not currently listed for sale.
  • There are about 2 million current negative equity loans that are more than 50% “upside down”.
  • Home prices are off 31.3% from the peak. The Composite 20 is only 0.7% above the May 2009 post-bubble bottom and will probably be at a new post-bubble low soon.

In the face of this data, mouthpieces for the Federal Reserve go before Congress and try to paint an optimistic picture. “While we expect significant ongoing CRE-related problems, it appears that worst-case scenarios are becoming increasingly unlikely,” Patrick Parkinson, the Federal Reserve’s director of banking supervision and regulation, told Congress. Parkinson said that since the beginning of 2008 through the third quarter of 2010, commercial banks had incurred almost $80 billion of losses from commercial real estate exposures. Banks are estimated to have taken roughly 40% to 50% of losses they will incur over this business cycle, he said.

The Federal Reserve will be forced by the Federal Courts to reveal the banks they have saved from failure since 2008 by funneling billions of practically interest free tax payer dollars into their hands. The Fed is expected to release this week documents related to discount window lending from August 2007 to March 2010, including the peak month of October 2008, when loans hit $111 billion. It will be revealed they kept alive hundreds of banks that should have died. Shockingly, the supposedly taxpayer protecting Dodd-Frank law exempts past discount window lending from an audit by the Government Accountability Office, that’s examining much of the central bank’s other crisis-era programs. That champion of the little people, Barney Frank, said such disclosures might have “a negative market effect. If people saw the data the next day, they come to the conclusion that the bank must be in trouble.” Openness and transparency are evidently grey areas for Mr. Frank. Despite the non-disclosures, free Fed bucks, accounting fraud and uninterested regulators, over 300 banks managed to go out of business in the last two years, essentially bankrupting the FDIC. Have no fear. The Treasury gave the FDIC an unlimited line of credit with your money.

 

It is fascinating that every Friday afternoon the FDIC announces approximately three bank failures. Steady as she goes. No panic. Just a slow trickle of failure. But the reality is much worse than the show. Despite the gimmicks of extending and pretending, there are 900 banks essentially insolvent sitting on the FDIC “Problem” list. This is after closing the 300 banks. There are at least a couple hundred billion of losses in the pipeline, to be funded by the American people/Chinese lenders. A critical thinking American might ask, if things are getting better, why does the number of troubled banks continue to rise week after week, month after month?

One year ago the website www.businessinsider.com listed the 10 major regional banks with the highest risk from commercial real estate loans. These 10 banks had $133 billion of commercial real estate loans on their books. Most, if not all, are still in business today. The fact is those real estate loans are worth 30% to 50% less than they are being carried on the books. A true valuation of these loans would put all 10 of these banks out of business. They are dead banks walking. In a world where transparency, honesty, and true free markets reigned supreme, these banks would pay for their poor risk taking choices. They would be liquidated and their assets would be sold off to banks that did not make horrific lending decisions. Failures would fail.  

Bank CRE Loans (bil.) % of Tier 1 Capital
NY Community Bank $22.0 915%
Wintrust Financial Corp. $3.4 419%
M&T Bank $20.8 378%
Synovus $11.2 376%
Wilmington Trust $4.0 369%
Marshall & Iisley $13.8 283%
Zions Bancorporation $13.4 253%
Regions Financial $28.3 218%
UMB Bank $1.3 156%
Comerica $14.3 97%

 

How could anyone deny the world is back on track after examining the following chart?

 

It should warm your heart to know that Financial Profits have amazingly reached their pre-crash highs. All it took was the Federal Reserve taking $1.3 trillion of bad loans off their books, overstating the value of their remaining loans by 40%, borrowing money from the Fed at 0%, relying on the Bernanke Put so their trading operations could gamble without fear of losses, and lastly by pretending their future losses will be lower and relieving their loan loss reserves. The banking industry didn’t need to do any of that stodgy old school stuff like make loans to small businesses. Extending and pretending is much more profitable. 

The big four of JP Morgan, Citigroup, Bank of America, and Wells Fargo should have undergone orderly bankruptcy liquidation in 2008. They took on a vast amount of leverage and a vast amount of risk. Their greedy bets went bad. In a true capitalist system, they would have failed. Instead, in our crony capitalist system, they were bailed out by taxpayers and continue to function as zombie banks pretending to be healthy. They reported profits of $34.4 billion in 2010. Every dime of these profits was generated through accounting entries that relieved their provisions for loan losses. These “brilliant” CEOs who virtually destroyed the worldwide financial system in 2008, looked into their crystal balls and decided their loan losses in the future would be dramatically lower. I’ll take the other side of that bet. I dug into their SEC filings to get the information in the chart below. Just the fact that Citicorp and Bank of America have still not filed their 10K reports after 3 months tells a story.

Bank   Source CRE Mortgages Credit Card Total Loans Loss Reserve % of Loans
JP Morgan 12/31 10K $53,635 $174,211 $137,676 $692,927 $32,266 4.7%
Citicorp 9/30 10Q $79,281 $209,678 $216,759 $654,311 $43,674 6.7%
Bank of America 9/30 10Q $77,062 $394,007 $142,298 $933,910 $43,581 4.7%
Wells Fargo 12/31 10K $129,783 $337,105 $22,375 $757,267 $23,022 3.0%

 

These four “Too Big To Fail” bastions of crony capitalism have $340 billion of commercial real estate loans on their books. That’s a lot of extending and pretending. Just properly valuing those loans at their true market value would wipe out most of their loan loss reserves. I wonder if Vikrim and his buddies have noticed that home prices have begun to plunge again. Deciding to not foreclose on home occupiers that haven’t made a mortgage payment in two years is not a long term strategy. These four banks have $1.1 billion of outstanding mortgage debt on their books. I wonder what a 20% further decline in home prices will do to these loans. Throw in another half a billion of credit card loans to Americans being hammered by soaring energy and food prices and you have a toxic mix of future losses. These banks are gonna need a bigger boat.

The game of extend and pretend at the expense of the American working middle class is growing old. When this game is over, Wall Street will be looking for another bailout. The American people will not fall for the lies again. Wall Street’s oppression reeks of greed and disgrace. They are liars and thieves. They have pillaged and stolen all that was left to steal. I will be surprised if they get out alive.

Well you are my accuser, now look in my face
Your opression reeks of your greed and disgrace
So one man has and another has not
How can you love what it is you have got
When you took it all from the weak hands of the poor?
Liars and thieves you know not what is in store

There will come a time I will look in your eye
You will pray to the God that you always denied
The I’ll go out back and I’ll get my gun
I’ll say, “You haven’t met me, I am the only son”

Dust Bowl Dance – Mumford & Sons

ADMINISTRATOR LOOKING FORWARD TO THE GOOD PARKING SPOT

Well, it looks like the Administrator has done it again. My timing is imeccable. Our beloved government agency, the EEOC, has expanded the definition of disabled under the ADA law to include people with diabetes. The new rules go into affect in May. The new expanded definition of disabled will only add 12 to 38 million new people to the exclusive club and add $60 million to $183 million of new annual costs for employers. Since that is a government estimate, multiply it by 10 to get an accurate figure.

I’m in heaven. With my recent diagnoses of diabetes, I’ve hit the jackpot. I’ll be applying for my handicap parking sticker. This way, I’ll get the good parking spot at McDonalds and Dunkin Donuts (no drive thru at the Harleysville store). I won’t have to illegally park in handicap spots anymore like George Costanza. I can’t wait to order my new free Hoveround. They are so cool.

And finally I won’t have feelings of guilt every day when I use the huge handicap stall at work. I love the roominess. And best of all, if they ever try to fire my fat ass from this place, I’ll sue them because of my handicap. God, I love this country. 

New regulations to add millions to pool of those protected by Americans with Disabilities Act

By Sofia Resnick | 03.29.11 | 11:58 am

Come May, employers will be required to provide accommodations for a new range of issues and diseases that have recently been given the distinction of “disability” after an update to the Americans with Disabilities Act.

The Equal Employment Opportunity Commission last week published the guidelines as to how to define a disability under the latest version of the Americans with Disabilities Act of 1990, which was amended in 2008 as the ADA Amendments Act.

The document published in the Federal Register includes the final revised ADA act and interpretative guidelines, which, according to an EEOC release, are ”designed to simplify the determination of who has a ‘disability’ and make it easier for people to establish that they are protected by the Americans with Disabilities Act.” The regulations go into effect May 24.

In the most current version of the act, “disability” is defined as a “physical or mental impairment that substantially limits one or more life activities of such individual.” In other words, a disability was always considered to be constantly “debilitating.” The new regulations maintain the ADA’s definition of disability, but major changes come from how the terms “impairment” and “life activities” are interpreted. With the new language, “impairment need not prevent or severely or significantly restrict performance of a major life activity to be considered a disability. Additionally, whether an impairment is a disability should be construed broadly, to the maximum extent allowable under the law.”

Impairments that are in remission or are episodic, such as cancer or epilepsy, can now be interpreted as “substantially restricting the performance of a life activity”  when the condition is active.

Under the regulations, “major life activities” include “major bodily functions,” such as functions of the immune system, normal cell growth, and brain, neurological, and endocrine functions. The rules document clarifies that not every impairment will be considered a disability and gives clear examples, such as HIV infection, diabetes, epilepsy and bipolar disorder.

Formerly, the burden of proof was on the worker to prove he or she suffered from a condition that required certain accommodations; now it will be up to individual employers to make certain they have not overlooked any condition or disability that could be covered under the law.

A census estimate (PDF) from 2005 found that of all Americans, 16.5 percent of people aged 21 to 64 had some level of disability; 45.6 percent of this group was employed.

In its preliminary estimation of the effects of the amended ADA, the EEOC, predicted that the new regulations would increase the pool of those considered to be workers with disabilities by 160,000 people; but further analysis and input from academics and experts raised that estimation to between 12 million and 38.4 million new disabled workers.

The EEOC further estimates that the broadened definitions will lead to between 400,000 and 1.2 million new accommodations employers will be required to provide, which is estimated to cost between $60 million and $183 million annually. The commission notes that many of these accommodations will be low-cost, such as allowing breaks or making small modifications to office equipment.

“Just as the ADAAA [ADA Amendments Act]  was the result of a considerable bipartisan effort by Congress, the final rule represents a concerted effort of EEOC Commissioners representing both parties to arrive at regulations that hold true to that bipartisan Congressional intent,” said EEOC Commissioner Constance S. Barker in a press statement. “I was pleased to have been able to vote in favor of the final rule.”

Read the full analysis and implications of the regulations here.

Law firm Seyfarth Shaw LLP provides a list of implications for employers, essentially suggesting new tactics for fighting lawsuits. These include:

  • “Defendants are far less likely to prevail in court by arguing that an individual is not disabled and therefore is not covered under the ADA and/or does not require accommodation. “
  • Now more than ever, employers must focus on reasonable accommodation, and on whether an individual with a physical or mental condition is otherwise qualified to perform essential job functions, with or without reasonable accommodation.”
  • “Lawyers defending ADA cases in court must, in most cases, wean themselves off arguing that the plaintiff is not disabled … the employer must typically focus its arguments on accommodation – it made accommodation, the plaintiff failed to request accommodation, the plaintiff declined accommodation, the plaintiff failed to participate meaningfully in the accommodation process, etc.”
  • “The class action epidemic that continues in most parts of the country will now likely expand further to encompass mass actions under ADAAA. Some such actions will be brought by the EEOC under pattern and practice theory. Others will be filed by plaintiffs seeking class certification under Rule 23. … The EEOC’s repudiation of that approach could well mean a rise in class cases, e.g., by numerous individuals with a particular impairment, or numerous individuals having various impairments – all of them now protected.”

SUPER RICH

It still amazes me that a MSM outlet allows Paul Farrell to write such revolutionary articles. I applaud him. He’s got a big set of cajones. His article is full of truth. I think George Carlin and Paul would have gotten along just great.

Tax the Super Rich now or face a revolution

Commentary: A ‘Super-Rich Delusion’ is leading us to ruin

By Paul B. Farrell, MarketWatch

SAN LUIS OBISPO, Calif. (MarketWatch) — Yes, tax the Super Rich. Tax them now. Before the other 99% rise up, trigger a new American Revolution, a meltdown and the Great Depression 2.

Revolutions build over long periods — to critical mass, a flash point. Then they ignite suddenly, unpredictably. Like Egypt, started on a young Google executive’s Facebook page. Then it goes viral, raging uncontrollably. Can’t be stopped. Here in America the set-up is our nation’s pervasive “Super-Rich Delusion.”

We know the Super Rich don’t care. Not about you. Nor the American public. They can’t see. Can’t hear. Stay trapped in their Forbes-400 bubble. An echo chamber that isolates them. They see the public as faceless workers, customers, taxpayers. See GOP power on the ascent. Reaganomics is back. Unions on the run. Clueless masses are easily manipulated.

Even Obama is secretly working with the GOP, will never touch his Super Rich donors. Yes, the Super-Rich Delusion is that powerful, infecting all America.

Here’s how one savvy insider who knows described this Super-Rich Delusion: “The top 1% live privileged lives, aren’t worried about much. Families vacation at the best resorts. Their big concerns are finding the best Pilates teacher, best masseuse, best surgeons, best private schools. They aren’t concerned with the underlying deterioration of America or the world, except in the abstract, because they aren’t directly affected by it. That’s not to say they aren’t sympathetic, aware, or don’t talk about the issues you bring up. They are largely concerned with protecting and enhancing their socio-economic positions, ensuring their families live well. And nothing you write about will change things.”

Warning, in 2011 that attitude is delusional, deadly, yet pervasive in America.

Super Rich replaying “Great Gatsby” age, won’t learn till it’s too late

Our top 1% honestly believe they’re immune, protected from the unintended consequences of beating down average Americans for three decades with the free-market, trickle-down Reaganomics doctrines that made them Super Rich.

They honestly believe those same doctrines will protect them in the next depression. Why? Because they have megabucks stashed away. Provisions for the long haul. Live in gated compounds with mercenaries guarding them.

They believe they’ll continue living just fine in a depression. But you won’t. Nor will your retirement. Neither will the rest of America. And still the Super Rich don’t care, “except in the abstract, because they aren’t directly affected.”

Warning: The Super-Rich Delusion has pushed us to the edge of a great precipice: Remember the Roaring Twenties? The Crash of 1929? Great Depression? Just days before the crash one leading economist, Irving Fisher, predicted that stocks had “reached what looks like a permanently high plateau.”

Yes, he was trapped in the “Great Gatsby Syndrome,” an earlier version of today’s Super-Rich Delusion. It was so blinding in 1929 that the president, Wall Street, all America were sucked in … until the critical mass hit a mysterious flash point, triggering the crash.

Yes, we’re reliving that past — never learn, can’t hear. And oddly it’s not just the GOP’s overreach, the endlessly compromising Obama, too-greedy-to-fail Wall Street banksters, U.S. Chamber of Commerce billionaires and arrogant Forbes 400. America’s entire political, financial and economic psyche is infected, as if our DNA has been rewired.

The Collective American Brain is trapped in this Super-Rich Delusion, replaying the run-up to the ’29 Crash.

Nobody predicted 2011 revolutions in the oil-rich Arab world either

Warning: Mubarak, Gaddafi, Ali, Assad, even the Saudis also lived in the Super-Rich Delusion. Have for a long time. Were vulnerable. Ripe for a revolution. They, too, honestly believed they were divinely protected, chosen for great earthly wealth, enjoyed great armies.

Then, suddenly, out of the blue, a new “educated, unemployed and frustrated” generation turned on them, is now rebelling, demanding their share of economic benefits, opportunities, triggering revolutions, seeking retribution.

Still, you don’t believe there’s a depression ahead here in America? The third great market crash of the 21st century? A new economic revolution about to blow up in our faces? No, you don’t believe, can’t believe … you, me, we are all infected by the Super-Rich Delusion, just as Americans were in the Roaring Twenties.

Check the stats folks: The last time America’s wealth gap between the Super Rich and the other 99% was this big was just before the 1929 Crash and the Great Depression.

You can’t remember? Or you won’t? America is trapped in “terminal denial,” a setup for failure. Too many still live in the false hope of this Super-Rich Delusion. Do you believe government stats hyping a recovery? Believe Wall Street’s nonsense about a new bull market ahead? Believe Exxon-Mobile’s misleading ads about energy stocks. Believe Bill Gross’ when he says dump Treasurys, and buy his emerging country bonds? Dream on.

Start preparing for the third meltdown of the 21st Century, and depression

Denial and lies. Remember, 93% of what you hear about markets, finance and the economy are guesses, wishful thinking and lies intended to manipulate you into making decisions that suck money from your pockets into Wall Street. They get rich telling lies about securities. They hate any SEC fiduciary rules forcing them to tell the truth.

But the fact is, on an inflation-adjusted basis, Wall Street lost 20% of your retirement money in the decade from 2000 to 2010, over $10 trillion. And “Irrational Exuberance’s” Robert Shiller warns of a third meltdown coming. You better start preparing now.

Before you start betting any more at Wall Street’s rigged casinos, think long and hard about these six megatoxins lurking in America’s Super-Rich Delusion, a mind-altering pandemic infecting our nation’s leadership in Washington, Corporate America and Wall Street … but also “trickling down,” infecting many Americans. Listen:

1. Warning: Super Rich want tax cuts, creating youth unemployment

Bloomberg warns: “The Kids Are Not Alright.” Worldwide, youth unemployment is fueling the revolution. In a New York Times column, Matthew Klein, a 24-year-old Council on Foreign Relations researcher, draws a parallel between the 25% unemployment among Egypt’s young revolutionaries and the 21% for young American workers: “The young will bear the brunt of the pain” as governments rebalance budgets. Taxes on workers will be raised and spending on education will be cut while mortgage subsidies and entitlements for the elderly are untouchable,” as will tax cuts for the rich. Opportunities lost. “How much longer until the rest of the rich world” explodes like Egypt?

2. Warning: rich get richer on commodity prices, poor get angrier

USA Today’s John Waggoner warns: “Soaring food prices send millions into poverty, hunger: Corn up 52% in 12 months. Sugar 60%. Soybeans 41%. Wheat 24%. For 44 million the “rise in food prices means a descent into extreme poverty and hunger, warns the World Bank.” Many causes: Speculators. Soaring oil prices. Trade policies. Population explosion. But altogether they expose “the underlying inequalities and issues related to the standard of living that boil beneath the surface,” says a Pimco manager.

3. Warning: Global poor ticking time bomb targeting Super Rich

A Time special report, “Poor vs. Rich: A New Global Conflict” warned that a “conflict between two worlds — one rich, one poor — is developing, and the battlefield is the globe itself.” Just 25 developed nations of 750 million citizens consume most of the world’s resources, produce most of its manufactured goods and enjoy history’s highest standard of living.” But they’re now facing 100 underdeveloped poor nations with 2 billion people with hundreds of millions living in poverty all demanding “an ever larger share of that wealth.” Think Egypt. British leader calls this a “time bomb for the human race.”

4. Warning: Next revolution coming across ‘Third World America’

We are ripe for one: In “Third World America” Arianna Huffington warns: “Washington rushed to the rescue of Wall Street but forgot about Main Street … One in five Americans unemployed or underemployed. One in nine families unable to make the minimum payment on their credit cards. One in eight mortgages in default or foreclosure. One in eight Americans on food stamps. Upward mobility has always been at the center of the American Dream … that promise has been broken… The American Dream is becoming a nightmare.” Soon it will implode. a meltdown, revolution, depression.

5. Warning: Super Rich must be detoxed of their greed addiction

In “Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick You With the Bill),” David Cay Johnston, warns that the rich are like addicts, and to “the addicted, money is like cocaine, too much is never enough.” A few years ago an elite 300,000 Americans in “the top tenth of 1% of income had nearly as much income as all 150 million Americans who make up the economic lower half of our population.” The Super Rich Delusion is an addiction that requires a painful detox.

6. Warning: Politicians infected by Super-Rich Delusion, revolution

In “Washington’s Suicide Pact,” Newsweek’s Ezra Klein warns: “Congress is careening toward the worst of all worlds: massive job losses and an exploding deficit.” How bad? As many as 700,000 more jobs lost, says Moody’s chief economist, Mark Zandi. What a twist: Remember vice president Dick Cheney said “deficits don’t matter.” Today the GOP is so blinded by its obsession to destroy Obama’s presidency, deficits are now the only thing they say matters.

Wake up folks. The Super-Rich Delusion is destroying the American Dream for the rest of us. The Super Rich don’t care about you. They’re already stockpiling for the economic time bomb dead ahead. Don’t say you weren’t warned. Time for you to plan ahead for the coming revolution, for another depression.

HURT

I wanted to write my new article today. I haven’t been able to focus because of the departure of Smokey and Stuck. This is a tough site with strong personalities. I find it to be entertaining and intellectually stimulating. I like the brawls and no holds barred flamefests. I would never want to become the school teacher telling people to behave. I’ve had nasty battles with Stuck and Smokey. I’ve gotten really pissed off with both of them. But, we’ve always let bygones be bygones.

The departure of these two intelligent, funny, and caring people from this site will hurt the site tremendously. I’ll let Johnny Cash doing Nine Inch Nails sum up my feelings today.

 

I hurt myself today
to see if I still feel
I focus on the pain
the only thing that’s real
the needle tears a hole
the old familiar sting
try to kill it all away
but I remember everything
what have I become?
my sweetest friend
everyone I know
goes away in the end
and you could have it all
my empire of dirt

I will let you down
I will make you hurt

I wear this crown of thorns
upon my liar’s chair
full of broken thoughts
I cannot repair
beneath the stains of time
the feelings disappear
you are someone else
I am still right here

what have I become?
my sweetest friend
everyone I know
goes away in the end
and you could have it all
my empire of dirt

I will let you down
I will make you hurt

if I could start again
a million miles away
I would keep myself
I would find a way

DON’T PULL THAT STRING

OK. This one is hard to believe. But true stories are better than fiction. Three weeks ago I posted a story about my dumbass cat and the string hanging out of her ass. http://www.theburningplatform.com/?p=12124

I thought it was crime that I had to pay $220 to Harleysville Veterinary Hospital so they could keep her for two days until she shit the string out. The nice mild mannered veterinarian stayed all weekend with our cat and kept Avalon up to date on the string’s progress. The nice veterinarian’s name was David Rapoport. He evidently loves dogs and cats, but isn’t a big fan of babies. I opened my local newspaper this morning to the headline below.

Upper Gwynedd veterinarian David Rapoport charged in murder of woman and unborn child

A married veterinarian furious over his mistress’ pregnancy shot the woman three times before dumping her body in a nature preserve, authorities said Tuesday.

Dr. David A. Rapoport of the 1200 block of Brownstown Court, Upper Gwynedd, is being held without bail on charges of criminal homicide and criminal homicide of an unborn child.

Rapoport, a married veterinarian who worked at the Harleysville Veterinary Hospital, is accused of fatally shooting Jennifer L. Snyder, a 27-year-old Lower Macungie Township woman, who was 10 to 12 weeks pregnant with his child, according to the Lehigh County District Attorney’s office.

State police arrested Rapoport, 30, in last week’s shooting death of Snyder, whose body was discovered Friday in a wooded ravine in the Trexler Nature Preserve in North Whitehall Township, near Allentown.

Bullet casings from the scene matched a gun that officers recovered from Rapoport’s vehicle, Lehigh County District Attorney James Martin said.

Authorities suspect that Rapoport, 30, killed Snyder because he was angry about the pregnancy. Snyder had been a technician at a Lower Macungie veterinary hospital.

Police say Snyder was last seen Wednesday and failed to show up for a doctor’s appointment Thursday morning.

State police took Rapoport into custody before 10 a.m. Tuesday “outside his father’s home in Montgomery County,” according to Lehigh County officials, and was arraigned by District Judge Jacob Hammond of Allentown.

He did not have an attorney, court officials said.

Snyder’s body was found a short distance from where her vehicle was discovered on Thursday while police were responding to a call of a suspicious vehicle in a parking lot on Independence Drive in North Whitehall.

Police said that the vehicle, which was registered to Snyder, had a shattered passenger side window and that there was blood and two spent shell casings inside the vehicle.

Lehigh County Coroner Scott Grimm determined that Snyder had been shot once in the back and twice in the head.

Police said that an investigation interview with Rapoport Thursday revealed that he and Snyder had been dating.

The investigation turned up a 9mm Glock semiautomatic pistol belonging to Rapoport, according to authorities. Police ballistics tests determined that the discharged casings found in Snyder’s vehicle and at the scene where her body was found matched the gun.

According to court documents, police believe Rapoport killed Snyder on Wednesday, then dumped her blood-soaked car behind a professional building about two miles from where the woman’s body was found doused in bleach and wrapped in a blanket and trash bags bound with duct tape.

Surveillance video from the building appears to show Rapoport getting out of Snyder’s vehicle on Wednesday afternoon and tossing a bottle of bleach into the trash nearby, police said.

Blood-spattered duct tape and a handgun were recovered from Rapoport’s vehicle, according to police.

When questioned by police, Rapoport initially denied any recent contact with Snyder, but later acknowledged having a relationship with her and not wanting his wife to know about it.

Snyder’s roommate said the victim left her apartment in Lower Macungie on Wednesday and was planning to meet Rapoport.

She wasn’t seen after that and was reported missing after she failed to show up for an obstetrician appointment Thursday morning. An autopsy determined she was pregnant with a boy.

According to court documents, Rapoport is scheduled for a preliminary hearing at 10:30 a.m. March 29 at the Lehigh County Courthouse in Allentown.

Martin said it was too early to say if he would seek the death penalty in the case.

The Associated Press contributed to this report.

This photo was taken from Harleysville Veterinary Hospital’s website.

I THINK THE KITTY DID IT.

LLPOH’s SHORT Story: Another Tale of Woe

Some twenty plus years ago I came to work for a company we will call AJAX. This company was founded in the 1930’s, and remained in family hands until the 1980’s, when the CEO bought it from the founder. In addition to its primary business of industrial supplies sales, the company manufactured a range of commercial widgets. The industrial supply side of the business was the dominant part of the business and represented in excess of 90% of its sales and profits. Manufacturing widgets was a sideline.

One large multinational organization dominated the US widget business. The multinational decided it was time to modernize its manufacturing facilities world-wide and built two identical plants – one in the US and one overseas. These plants were identical in every way – same size facility, same equipment, etc. Foreign markets would be supplied by the overseas plant and local markets by the US plant. The company quickly found – much to its disgust – that the local plant produced only half as many widgets per man-hour as their overseas plant, despite being identical. Additionally, local labor costs were dramatically higher. The reason for this was simple – the new local plant was built at the same site as the previous plant, and used the same employees – highly unionized and militant employees – who refused to run the new equipment beyond the capacity of the old plant. When the multinational realized that they could import widgets cheaper than they could make them locally, they closed the local plant entirely and built a second new plant overseas to supply the US market. Goodbye jobs, hello imports, thank you militant union.

The owner and CEO of AJAX noted the closure of the plant with interest – and determined there was an opportunity. He decided that he could take over the entire US market for widgets, by building a new widget plant in a non-union part of the country, and thus saving the not insignificant transport costs his competitor incurred. He believed AJAX could dominate the market on price and by promoting the product as local made.

The owner put together a business proposal for building the new plant, and went to the banks for the $25 million required to build the plant. The bank was suitably impressed – after all the business was long-established and profitable, and further the CEO/owner was also personally guaranteeing the loan via his personal wealth of some $10 -15 million.

The CEO immediately hired a flash young manager to manage the new facility, an experienced engineer to design and commission the facility, a new accountant to account for all the expenditure, and he also hired the most experienced sales manager of widgets in the country (indeed he hired the only experienced sales manager in the country – the sales manager from the competitor that moved overseas). Of course there were a range of other personnel hired as well – planners, supervisors, engineers, etc.

The story now jumps approximately two years forward. The plant has been built, and has largely been commissioned. Unfortunately, it is running at only about 10% of design capacity. The plant is fully staffed, and is bleeding money by the hundreds of thousands of dollars per month. The initial bank loan has blown out to over $35 million, and the parent company is going broke owing to the ever increasing losses and inability to fund the interest bill. The bank is desperate to try to recover some of their money, as the plant is virtually worthless in its current state, and the only really security they have is the CEO’s personal assets. They demand that a new manager be brought in to run the plant. And that is where I come in.

The bank recruited me to take charge of the plant, but allowed the CEO/owner to remain in place, and had me report to him. This would prove to be a terrible mistake.

All manufacturing and engineering personnel reported to me, including the previous young plant manager. I quickly discovered that this flamboyant young manager had been using huge slabs of company resources to assist him in building his new house. This was well known among his employees, but as they worked for him, no one said anything. As the CEO was located in another city, he did not know it was happening – although he surely should have known. I summarily dismissed this young manager, and suggested he be charged for various crimes. The bank and the CEO opted not to do so, for fear of negative publicity. I do not understand that reasoning, but it was not my call. This young manager, to my understanding, never again succeeded in resurrecting his career, lost his partially built new house, and disappeared from sight.

Every three months we undertook a complete physical count of inventory. I was in charge of this inventory count. I would oversee the count, and send it to the accountant for pricing and summation. The accountant would send it back to me for final verification. I completed the first count, and received back the summary for verification. There I caught a $1 million dollar discrepancy – the accountant had keyed in 10,000 widgets when there were in fact only 1,000. I duly documented the discrepancy, and notified the accountant both in writing and verbally of the discrepancy – after all, a $1 million discrepancy was nothing to ignore. Three months later we undertook the same process. I did the count, the accountant did the summary, I verified the count was accurate – and sent it back. I immediately received a call from my panicked CEO – the count was off $1 million, and he wanted to know how I had lost a million dollars of stock. It took me about 2 nanoseconds to realize that the accountant had screwed the pooch – and that despite my best efforts, he had not fixed his mistake. The CEO went very quiet at my explanation, and I could sense his fear (not unexpected, given his personal fortune was hanging by a thread). The idiot accountant was never again heard from, and I understand his career in accounting was over from that moment.

The CEO made a series of catastrophic errors, each leading him ever closer to his doom:
1) The CEO made the fateful decision to abandon his core business of industrial supplies and enter manufacturing on a large scale. He had no experience in manufacturing. He then made a series of errors in hiring the wrong personnel, and of letting overheads get away from him, costing some millions of dollars.

2) The CEO, at the age of 55, guaranteed the $25 million loan (which then grew substantially) with his substantial personal wealth.( I and my partner never personally guarantee anything. We are too old to recover should anything go wrong.) This was a fatal mistake for the poor old CEO.

3) The CEO opted to interfere in my daily handling of resurrecting the business. This was somewhat understandable, as he could see his personal fortune disappearing, but it was a terrible mistake. There were two incidents where his interference cost him dearly. I had developed a spread sheet for ordering parts – a very basic MRP system that was not very pretty but was effective. The CEO saw this spread sheet, and determined that his system was better (i.e. prettier), and took upon himself the task of ordering 1) the high dollar imported products we needed in widget manufacture, and 2) the order of the high dollar specialty steel we required. Upon receiving the containers of imported product, we discovered he had ordered the wrong parts – some $500,000 of wrong imported parts, that were, of course, non-returnable. Upon receiving the steel, we discovered he had ordered the wrong steel – again $500,000 of steel that could not be returned. In a time of crisis, the CEO blew $1 million dollars. The bank, of course, was not amused. He decided it was best to leave me to do the ordering in the future.

These errors, unbelievably, were not terminal, and were in fact recoverable. I managed, over the course of a few months, to get the plant fully operational. In fact, if the interest on the bank loan was ignored, the plant was making a modest to reasonable profit, and the future looked pretty good. Unfortunately, the CEO had made one more error that had yet to come to light.

When the plant was fully commissioned and up and running, the CEO, the sales manager, the bank and myself sat down to discuss the next step. The plant was fully operational, and needed to be filled with orders. The CEO turned to the sales manager and said, “Sales manager, go forth and sell, and bring in orders for 1 million widgets, as that is the plant capacity”. The sales manager sat there and blinked, and was quiet. Finally the sales manager spoke – he said “The entire US market for widgets is only 200,000 per year.” This was a fateful comment indeed.

It seems that the CEO had used the figure of 1 million widgets per year in his business plan to the bank. He had never confirmed these numbers with anyone, and no one knows how he came by these numbers. The bank accepted this information (heads rolled at the bank over this), and loaned $25 million (and expanding to $35 million over time) based on these fictitious numbers. The sales manager was not with the company when the figures were created. Nonetheless, he knew that the numbers in the business plan were incorrect, but decided not to tell anyone, as to do so would likely have meant losing his job. He was over 60 years old, and his entire career had been spent selling widgets, and he believed he could not get any other work, and so he kept quiet until he could no longer do so. He was unethical in the extreme.

So, in the end, the CEO went bankrupt and lost his company and his wealth owing to his mistakes and his personal guarantee of the loan. His wife of many years left him (it seems to be a common theme). I have heard little of him since.

The sales manager lost his job owing to failing in his fiduciary duties. He disappeared from sight.

The bank took ownership of the business, and eventually sold it for a fraction of the monies owed. It was recapitalized at a value, including the industrial supplies arm, of approximately $15 million, and generated a reasonable profit at that valuation. The bank in the end lost about $10 million. The 100 or so manufacturing employees got to keep their jobs, which was a great result. I moved along to the next stricken company shortly thereafter, having accomplished my goal of saving the plant.

In this tale there is arrogance aplenty, there is unethical and criminal behaviour, and there is sheer incompetence and stupidity. But when I think about this story, I keep coming back to something I have long believed – that there are simply very few people out there who are capable of effectively running complex organizations – it takes a lot of skill, experience (both diverse and in-depth), and talent. There are a great many people who are incompetent and a great many more that simply do not care.

As a nation, we are an incredibly complex entity. We rely on politicians, for the most part, for leadership. These politicians are frequently life-long politicians or academics, with little or no real-world experience, and in many times they have entered the family business of politics (think Bush and Kennedy and Paul). And yet we rely on them to formulate and implement solutions to very complex solutions. For the most part, they simply are not up to the task – they do not have the requisite experience or skill. People with the appropriate skills and experience, as rare as they are, tend to avoid politics like the plague.

And so I despair when I consider the future – who will lead the people? I am convinced that politicians have insufficient skill, experience, and perhaps most importantly, the will to do what needs to be done. The American people show no inclination, on the whole, to reject the politicians we have for those we should have. So the grave question remains – who will save the country in the time of coming crisis?

LAND OF THE SETTING SUN

The linear thinkers that dominate the mainstream media and the halls of power in Washington D.C. are assessing the series of disasters in Japan without connecting the dots of history. Their ideological desire to convince people that things will go back to normal in short order flies in the face of the facts. It makes me wonder whether these supposed thought leaders lack true intelligence or whether their ideological biases convince them to lie. At the end of the day it comes down to wealth, power and control. If those in power were to tell the truth about the true consequences of demographics, debt, disasters, and devaluation, their subjects would revolt and toss them out. Before the multiple disasters struck Japan last week, the sun was already setting on this empire. The recent tragic events will accelerate that descent.  

 

Japanese Beetle Meet Windshield

 

Smart financial minds have been expecting a Japanese economic tsunami for the last few years. John Mauldin described Japan’s predicament in early 2010:

“I refer to Japan as a bug in search of a windshield. I am not so sure about the timing, however, as the economic and fiscal insanity that is Japan may be able to go on for longer than many think possible. But to me it is not a question of whether there will be a crisis, but when there will be one. This year? 2011? 2012? I doubt Japan makes it to the middle of the decade with a very serious and sad day of reckoning.

The downside to the continuation of running massive deficits is that when the break does come, it will be all the more painful and difficult to deal with as the debt mounts. If there is an upside, it is for the rest of the world to see what can happen to a developed country like Japan when massive deficits are allowed to pile up one after another. It will be a morality play writ large upon the walls, which cannot be dismissed.”

Ambrose Evans-Pritchard expected a 9.0 debt earthquake to strike Japan in 2010:

“Weak sovereigns will buckle. The shocker will be Japan, our Weimar-in-waiting. This is the year when Tokyo finds it can no longer borrow at 1% from a captive bond market, and when it must foot the bill for all those fiscal packages that seemed such a good idea at the time. Every auction of JGBs will be a news event as the public debt punches above 225% of GDP. Finance Minister Hirohisa Fujii will become as familiar as a rock star.

Once the dam breaks, debt service costs will tear the budget to pieces. The Bank of Japan will pull the emergency lever on QE. The country will flip from deflation to incipient hyperinflation. The yen will fall out of bed, outdoing China’s yuan in the beggar-thy-neighbor race to the bottom.”

Mr. Pritchard was either wrong or early, depending upon your point of view.  

                                       JAPAN INTEREST RATES

Japan can still borrow for 10 years at 1%. Despite the highest government debt as a percentage of GDP on the planet at 225%, Japan has not felt the wrath of the bond vigilantes. Not only did the Yen not fall out of bed, but it soared to a post-war high against the USD last week after the earthquake/tsunami. Investors drove the value of the yen higher, anticipating a huge rebuilding program in Japan. Japanese financial institutions would need to convert foreign assets into yen to pay for damage claims and construction expenses, a process that would strengthen the currency. In anticipation, investors piled into yen, helping drive up its value. Central banks across the globe intervened and weakened the currency, for the time being. When the world comes to its senses, the Yen will weaken on its own.

Japanese Yen (JPY) to 1 US Dollar (USD)

Debt & Demographics

 

Japan is a one trick pony that just broke two legs and is waiting to be put down. They have experienced a two decade long recession. Their stock market is still 70% below its 1990 peak. They have no natural resources. They allow virtually no immigration. And their population is in a death spiral. The one and only thing they have going for them is their phenomenal ability to manufacture high quality products and export them to the rest of the world. The earthquake and tsunami that struck Japan severely damaged their just in time manufacturing machine. A surging yen would destroy their export machine by making their products more expensive. Hundreds of high tech Toyota, Honda, and Sony factories are shut. Four hundred miles of ports and harbors have been wiped out. There are rolling blackouts, with one million households without electricity. Over 500,000 people are still homeless.

The short-term impact of this disaster will push Japan into recession. The rebuilding efforts over the coming years will create a positive GDP figure, but will not do anything to benefit Japan over the long haul. The billions designated to rebuild will be money not invested in a more beneficial manner. The linear thinkers conclude that over the long-term Japan will be OK. These people are ignoring the double D’s – Debt and Demographics. When Japan entered its two decades of recession and experienced the Kobe earthquake in 1995, its government debt stood at 52% of GDP. Today it stands at 225% of GDP. Twenty one years ago, the Japanese population was still relatively young, with only 12% of the population over 65 years old. The population of Japan peaked in 2004 and now is in relentless decline. Over 23% of the population is over 65 and the median age is 45 years old. For comparison, the median age in the U.S. is 37 years old, with only 13% over 65. The projection portion of the chart below paints a picture of death. The population of Japan is aging rapidly and will decline by 4.4 million, or 3.5% in the next ten years. 

Table 2.2 Trends in Population

The question I pose to the mainstream thinkers is, “How can a country with a rapidly aging population and nearly one quarter of its population over 65 years old generate the necessary dynamic enthusiasm for rebuilding a shattered country?” Youthful enthusiasm and hope for a brighter future is essential to any enormous rebuilding effort. Japan does not have it in them. News reports already indicate a lethargic and seemingly insufficient response by emergency workers. The devastation seems to have overwhelmed this aging country. The psychological impact of this type of natural disaster will likely have two phases. Psychology professor Magda Osman describes the expected human response:

“After a disaster, typically small communities become incredibly co-operative and pull together to help each other and start the rebuilding process. There’s an immediate response where people start to take control of the situation, begin to deal with it and assess and respond to the devastation around them. The problem is that we aren’t very good at calculating the long-term effects of disasters. After about two months of re-building and cleaning up we tend to experience a second major slump when we realize the full severity of the situation in the longer term. This is what we need to be wary of because this triggers severe depression.”

This would be the normal response of a traumatized populace. An aged populace is likely to experience worse depression and not bounce back from this tragedy. Japan is still the 10th most populated country on earth, with the 3rd largest economy. China just passed Japan to become the 2nd biggest economy in the world. India will pass Japan by 2012.

Table 2.1 Countries with a Large Population (2009)

Youthful countries across the world are gaining on Japan. The wisdom of the elderly doesn’t cut it in a global economy. Global competition is cutthroat. China, India and the other emerging Asian countries will take advantage of Japan’s misfortune by filling the hole left by Japanese manufacturers. The short-term issues of power, supply lines, and reconstruction are minor when compared to a mass die off of the Japanese population that will result in a population that is 25% smaller in 2050 than it is today. Demographics are a bitch. 

Figure 2.4 Proportion of Elderly Population by Country (Aged 65 years and over)

With the amount of debt hanging over the Japanese empire, it might be a good strategy to commit hari-kari. The non-thinking pundits on CNBC contend that since Japan hasn’t had any detrimental effects from running their debt to 225% of GDP, running it to 300% won’t be a problem. Reinhart and Rogoff studies concluded that once a country breaches the 90% level, growth slows and a debt crisis is likely to ensue. Japan has been stuck in a 20 year recession, as they chose Keynesian shovel ready projects, quantitative easing, currency manipulation, and covering up the true financial condition of its banks over accepting the consequences of a debt bubble. Remind you of anyone? The result is their real GDP is lower today than it was in 1995. The Paul Krugmans of the world would contend that they just didn’t spend enough.

 

The only reason Japan has not collapsed is due to its homogeneous population willing to buy virtually all of the debt issued by its government for the last twenty years and its prodigious ability to produce high quality products that the rest of the world wants. Japan has maintained a consistent trade surplus, and its government debt has been held mainly by its own people, with 95% of Japanese government bonds in the possession of Japanese, meaning the country was able to finance itself without depending upon fickle foreign investors who might prefer a return greater than 1%. This ain’t 1990. The savings rate of the Japanese population had already declined from 14% in 1990 to 2% by 2008. In a recent article, Mike Shedlock explained the situation prior to the recent devastation:

“The Government Pension Investment Fund, which oversees 117.6 trillion yen ($1.4 trillion), in September forecast that it would sell 4 trillion yen in assets in the business year ending March 31 to fund payouts. Sales by the fund, which helps oversee public pension funds for Japan’s 37 million retirees, come as the first of Japan’s baby boomers is set to turn 65 in 2012, making them eligible for pension payments. Japan choices are to default on its debt, print money to fund interest on the debt, raise taxes effectively robbing savers of their money, or undertake huge spending cuts. The dilemma stems from years of Keynesian and Monetarist stupidity.”

The new tragedy will just accelerate the conversion of Japanese savers into forced spenders. Millions of Japanese savers will be forced to spend their savings on survival, as many have lost their jobs and businesses due to the monumental damage to northern Japan.

Setting Sun – Race to the Bottom

 

Traders figured out what must happen over the coming years. A large swath of Japanese insurers and companies will begin repatriating assets held in other currencies to begin the rebuilding effort at home, driving the value of the Yen higher. At a time of crisis a stronger Yen would severely damage Japan’s export based economy even further. Therefore, Central Banks around the world jointly intervened. The Bank of Japan spent Y2 trillion ($25 billion), while central banks across Europe contributed $5 billion and the Federal Reserve spent $600 million to push down the yen on Friday. The Bank of Japan is doing what they do best – printing money. Quantitative easing is an art form perfected by all Central Banks across the globe. Every disaster over the last twenty years, whether man made (wars, internet collapse, housing collapse, debt meltdown) or caused by nature, are met with the exact same solution – PRINT MONEY.

This method works until it doesn’t work. Japan’s central bank cannot reverse the demographics. From this point forward the population of Japan will be net sellers of government debt. Japanese insurance companies will be on the hook for $33 billion in claims. They will need to sell government bonds in order to make those payments. The World Bank has estimated the cost of rebuilding to be $235 billion. The government will need to borrow this money. At least 30% of its energy needs are off-line. It already imports 95% of its oil and coal. They will need to increase energy imports to make up for the nuclear energy shortage. Its positive trade balance was already in decline.  The clueless CNBC pundits can drone on about how this natural disaster will be good for the Japanese economy because of the substantial rebuilding program, but they are dead wrong. Japan is trapped, with no way out. They will need to issue hundreds of billions in new debt, which cannot be bought by its citizens, pension funds, or insurance companies. How many foreign investors will buy a 10 Year Japanese government bond paying 1%, knowing that Japan wants to weaken its currency? NONE. The only choices are to raise interest rates to attract buyers or print more money. With an already suffocating level of debt, they can’t allow interest rates to rise. They would choke on the interest.

The Bank of Japan will follow the same script as Ben Bernanke. They will print new Yen and buy the newly issued debt. What an original idea. Japan is caught in a debt stranglehold and demographic nightmare. Their currency will ultimately collapse like a nuclear reactor after a tsunami. When Japan defaults on their debt, the pain will be intense, as they will be throwing their own aged population under the bus. America, on the other hand, will throw the whole world under the bus when we default.

The Japanese own $886 billion of US Treasuries and have bought $256 billion of our debt since October 2008. Timmy Geithner will need to issue $1.5 trillion of new bonds per year. Japan will no longer be a buyer. They will be a seller. This will put upward pressure on U.S. interest rates. Japan’s reconstruction needs will put pressure on commodity and energy prices. Production and supply problems for Japanese parts and goods are already creating problems for GM and other car companies in the U.S. Lack of supply leads to higher prices. The great earthquake/tsunami/nuclear meltdown of 2011 will result in more quantitative easing in Japan and the U.S. This will result in even more inflation than we are experiencing today. Once the inflation genie is out of the bottle, the race to the bottom will accelerate. Gold will decide who wins the race. It has been a neck and neck race since 2001. I’m not sure it is a race anyone wants to win. But the destination is certain.

 

“The endeavors to expand the quantity of money in circulation either in order to increase the government’s capacity to spend or in order to bring about a temporary lowering of the rate of interest disintegrate all currency matters and derange economic calculation.”Ludwig von Mises

Mr. Obama’s War For Oil

Remember, folks: the causes and reasons for war are often remembered far differently than as stated or widely understood at the beginning of the conflict.

 This has been the case over and over.  Sure, Libya is ‘different’.  Actually, it is quite remarkable that a coalition of Arab states is welcoming this US intervention (sure, the French and Danes would’ve gone ahead had we decided to sit on the sidelines), as are the people of eastern Libya.

But rest assured.  In short order, the Muslim world and beyond will soon be saying, “sure, Gaadafi was bad, but they had no business invading Arab North Africa.”  And that is if Libya comes to a swift, happy conclusion, with Gaadafi gone, rebels in charge and committed to popular democratic rule.  And oil continues to flow to Italy and elsewhere in the EU.

Anything goes wrong, and the ire of the world at yet another American intervention will grow.  Again.

The obvious hypocrisy of Yemen and Bahrain, where the US government and military are on the side of the dictators literally shooting their own people, while we assist the people of Libya rebelling against another dictator who this year we don’t like.  A dictator who was a pariah, but then he paid a big bribe to the west, gave up some uranium, and was off our shit list, from 2003-2011.  A horrible terrorist murderer, who six months ago was an ok guy, allowing Halliburton and other western companies profit from that oil trade.

There are two huge forces at work, as I see it.  First is the obvious geopolitics of oil.  Keep the oil flowing is the overwhelming factor in all American policy, regardless of refusal to state the obvious by almost everyone.  China has developed a similar addiction to Middle East oil.  Inevitably they will gradually get more and more involved in this region.  Eventually with military force, by proxies or directly.  So far their actions have been small, subtle and non-military.  India, and thus Pakistan, will get into this mess too.

Second is the Sunni-Shia division in the Arab Muslim world.  They love fighting one another only slightly less than they hate killing Jews.  The first shot of the coming battle along this religious schism has been fired with the Saudi invasion of Bahrain.  On behalf of the Bahrain (Sunni) royals; against the Bahrain (Shia) majority population, up until this week protesting peacefully for democratic reforms.

Throw into the mix Iran: sitting on one of the larger pools of oil, a nation on the Shia side of Islam; a longtime enemy of the Saudi Kingdom.  And an active supporter of any Arab, Sunni, Shia, Druze or whatthefuckever who wants to kill Jews in Israel.

I can’t help to draw parallels to the late summer of 1914.  Yeah, I know, a tired metaphor, a ragtag group of Serbian anarchic rebels assassinate the heir to the occupying kingdom throne, the Archduke of Austria-Hungary.  But I see the multiple sparks ultimately resulting in these two large forces dictating how leaders and nations line up and fight a big hanging hairy conflict.  Foreign powers that need oil–America and our baby brothers in Western Europe, India and China.  And Arab Muslim states that have that oil, but some of them hate each other on strong religious terms.

Exactly how the nation-states line up into sides will be determined.  The Saudi’s have the biggest pool of oil, and they will only accept dollars if you want to buy some.  The Chinese are tightly tied to the US dollar.  Those two dollar facts are subject to change.

I will guess that Sunni will line up against Shia, China against the US and the West, Pakistan against India.  Pakistan is 80% sunni (according to the wiki); Iran is 92% shia, and officially a Shia State, the Ayatollahs and all.

Yep.  US, Europe, India and Iran on one side; China, Pakistan and Sunni Arabia on the other.  of course Israel with the West team.  Despite the rhetoric of the current monkey in Iran, who remember lost his election in 2009, the people there and ultimately the old men in clerical robes that call the shots could give a crap about Israel.  They are much more concerned with what happens in next door Iraq, whose leader killed a couple of million Persians not all that long ago.  They were quite happy to see Mr. Saadam go; they are cool with Iraq as long as their Shia brethren get a fair shake, and they probably have more control over events there than the Obama administration, as we withdraw many of our ground troops.

Iran, to oversimplify, despite all the blab blab you hear, hate the Sunni and Saudi much more than they hate the US and Israel.  But they don’t hate China at all yet.

A lot of my thinking is influenced by John Xenakis and his work at his Generational Dynamics website.
Which in turn is based on a foundation of Strauss/Howe and their Fourth Turning explanations of major historic events based on the turning of four generations.

Obama’s action here is typically incoherent, hypocritical, illegal and likely to be counterproductive.  I think it is folly for the US to start another military action, with the stupid Iraq and Afghan actions continuing, with the covert Pakistan and Yemen actions against Al Qaada (i don’t know if i support or oppose those two, if they are smart or stupid, because my leaders don’t trust me to tell me what they are doing and who they are killing).  Without clear, discussed objectives, without any clue as to what is likely to happen next or how we may be drawn further into a post-Gaadafi situation.  In the context of rebellion in Yemen and protest suppression in Baharain. Without Congressional debate, much less constitutionally mandated declaration.  Yeah, I know, how quaint, the fucking constitution.  I’m just old fashioned.

And even if I concede for a moment that it truly is in the vital interests of the USA to act to support the Libyan rebels, against Gaadafi.  Why today?  Did that vital interest not exist one week ago?  two weeks ago?  When Gaadafi could’ve been toppled with a feather, and with minimal bloodshed?

Even if this is a good idea, it was a much much better idea two weeks ago.  And obviously, Obama was ignorantly hoping events would play out as they did in Tunisia and Egypt, without strong decisive action by the US.  That just a few speeches would turn the trick.  Despite the long history of rebellions against brutal dictators generally being protracted, bloody affairs.  Being fooled by these two outliers in Tunis and Cairo.  Didn’t these fuckers ever read a history book at Harvard or Yale?

Regardless of the rhetoric of the moment, or the excuses that will follow, about being forced by events or by the looming shadow of humanitarian crisis, this is Obama’s war of choice.  For oil.  For Italy’s oil. Against a nation that bears zero threat to the United States.  Without congressional approval, much less a declaration of war.  Even if this goes perfect, and is over in a few weeks, it is wrong beyond what I imagined possible a couple of years ago.

“The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation…”

~Senator Barack Obama, quoted by the Boston Globe, December 20, 2007