Posts Tagged ‘bailout’
Zimbabwe Ben Bernanke’s “green shoots” fallacy
Posted by Benjamin J. Thompson | Filed under Economics, Essays, Liberty, News
Just focusing on the movements of a graph really doesn't help you see the big picture.
If there’s one thing I’ve learned from watching the financial markets for the last five years, it’s that eight weeks is nowhere near long enough to pronounce a conclusive change in the winds. Relying solely on post-hoc technical analysis of a graph is a sure-fire way to get yourself pantsed by the market.
When guys like Peter Schiff were foretelling the implosion of the housing market, it took over a year and a half for their predictions to manifest. Shiff, Ron Paul, Lew Rockwell, Tom Woods, and the rest of the scholars at the Ludwig von Mises Institute were right on the money, not because they were good at analyzing graphs, but because they understood immutable economic laws.
Yet during all that time, it was exactly Bernanke, Paulson, Krugman and the ones with the biggest megaphones on the mainstream news who said all was well, and the doomsayers were off their rockers. Now those people expect us to believe them when they say 8 weeks of non-carnage is an economic turnaround? There’s been no fundamental change!
An eight-week-long upturn in … stock markets since March 10th has sparked a wave of optimistic commentaries in the financial media…
It’s largely the new “mark-to-make-believe” fraudulent accounting rules that’ve permitted the banks’ financials to look so good — or at least look not so bad.
We need to keep in mind that the Fed and the government have been stirring the pot of economic chaos even more aggressively than we previously thought, and we have yet to see all the unintended consequences.
Just because the Wall Street numbers turn up for a couple of months doesn’t mean the general economy is out of the woods yet. The Great Depression lasted for about 15 years, and since our government’s chasing the same Hooverian/Rooseveltian policies so far, we should expect the same until they decide to do an about-face on their policies.
It’s not that I don’t want to see the economy recover, or that I dislike Obama so much I don’t want to see his policies bring about a recovery. This is a matter of economic laws that governments can’t suppress. Their policies have been aimed at all the symptoms but never the underlying problem. They’ve shot us up with enough pain killers to make it feel OK, but the bones are still broken. Any real recovery will be in spite of these policies. Once this bear-market rally runs its course, these facts will become obvious, at least until they find some new free market bogeyman to blame.
The true scale of the AIG scandal
Posted by Benjamin J. Thompson | Filed under Economics, Essays, News
The banner story at every news outlet is about the AIG employees and the multi-million dollar bonuses they got from their company when it convinced the government to give it $144 Billion. Congress is slapping them hard with a 90% tax on that money. Everyone’s mad about those executives. They’re getting death threats, members of Congress are grandstanding with impassioned speeches about their corruption.
But I think people are straining at gnats here while the heist of the millennium goes almost completely unnoticed. The voters know they’ve been fleeced, but apparently AIG is the only raiding party whose theft was on a scale that won’t implode their brains.
I believe my friends here on RvB are very smart people, so you deserve the whole story. I don’t claim any authority on this; I’m just relaying to you the information I get buried on the nineteenth page of the news, and from the sources who predicted this whole meltdown in the first place. Years in advance.
Let’s get some perspective
I don’t know the exact numbers, but the figure I’ve seen for AIG executive bonuses was in the neighborhood of $4,000,000. Even if 1,000 executives got that amount of money, that’s still not even 3% of the total AIG bailout money. The bailout of AIG itself is literally about two orders of magnitude bigger than the executive bonuses. Think of it this way: If Congress gave away a $200,000 house, they’re demanding 90% of the hall closet back.
AIG is small potatoes
But even beyond AIG, the Federal Reserve just this week decided to create 1.3 trillion dollars out of thin air. They create money out of thin air all the time, but this particular episode is especially egregious. Since this whole business of bailouts has started, they’ve given away some 8 to 10 trillion dollars already, not to mention an unlimited line of credit for further Treasury giveaways. That’s money that the government plans on taxing out of you and me someday. The money they don’t tax out of us, they will use the stealth tax of monetary inflation to extract that money from everyone all over the globe who holds dollars. They do this when they sell Treasury Bonds to the Federal Reserve. The Fed often buys these with money they simply create with a few keystrokes on a computer.
The Fed’s Power
It’s hard to wrap one’s mind around the level of power the Federal Reserve has. It is a private banking consortium no more federal than Federal Express. It is has exactly zero regulation or oversight. Its board members have the only legal counterfeiting operation in the country, and let me say it again, they have NO accountability to Congress. The Fed arbitrarily pushes interest rates throughout the country up and down, which gives them almost godlike powers to manipulate the financial markets for their own gain. Did I mention Congress has never audited these people or demanded full accountability? It wasn’t even created by Congress. Instead it was dreamed up in secret by a cartel of the wealthiest US bankers as a means to preserve their wealth and power forever.
Orders of Magnitude
This banking consortium called the Federal Reserve has put US taxpayers on the hook for over 10 trillion dollars. That’s another two orders of magnitude bigger than AIG. To get a sense of scale, without exaggerating: If the AIG bailout is the distance from the Sun to the Earth, the overall heist by the Fed and Wall Street is the distance from the Sun to Eris, which is twice as far away as Pluto. The executive bonuses would be about half the Sun’s distance to Mercury.
Crimes of the Fed
Through their manipulation of interest rates, they’ve whipsawed the economy from boom to bust for a century, and they use the busts to expand their ownership and power over America, its economy and its government. The national debt is primarily debt owed to the Fed, not to taxpayers.The most horrifying aspect to all of this is that the income taxes you pay every year go almost exclusively to pay the interest on that debt. If our government only had the discipline to pay for its obligations without forever escalating debt, we would have no use for an income tax on individuals.
And since the last months of the Bush Administration, the Fed has been printing money like mad, sapping wealth from people all over the globe who hold dollars by making those dollars depreciate, in order to pay for Wall Street’s insanity. This printing spree has gotten so badly out of hand that the UN is about to recommend ditching the Dollar as the world’s reserve currency.
If that happens, say hello to Second Great Depression. And no, that’s not hyperbole. I’m telling you right now to stock up on essentials.
So what’s the big story NOW?
All of the above is why when someone walked up to me at work and said, “What do you think of this Madoff guy?” I said, “who?” When a team of pirates — the Federal Reserve and global bankers — is literally robbing the world and twisting the dagger in the world economy’s heart, a guy like Bernie Madoff, or the AIG executives, just don’t compare. Why worry about a fly in your soup, when the waiter just served you a giant cauldron of Shit Soup?