Tea Party 2009, Chicago style

What will be the trigger in the US as this financial dustbowl bears down? Rick Santelli? Glenn Beck? When do people here just say enough is enough? Obama is now snowjobbing the cable outlets by throwing out some raw beef in the form of mortgage backstopping while they sneak through another 800 billion to aid swimming pool builders and teen STD angst. This is just like the auto sector snowjob which was highly effective in diverting public discourse away from TARP (trillions) and onto a pint-sized (10s of billions) problem.

If there is going to be a Tea Party 2009, it better happen quick because we’ve crossed the high water line on this river of debt.

Rick Santelli, you’ve got some momentum. The people are listening

We oughtta move to China if we want Capitalism – Rick Santelli

Gold nuggets and Santelli gone wild today on GETV. What is next for CNBC?

“Where is our frontier spirit?” Santelli asks the non-trader hosts. Maybe all it takes is a large long bond short position pummeled into the red by Hope Inc to get mad has heck and throw punches at the CNBC desk.

Coming soon to America

thousands protest in Marseille - BBC

If only the French had bean burritos and cablevision to keep them where they belong instead of being out on the streets stirring up trouble with the bankers and government facilitators. If only the French had 24 hour news channels to keep informed on stately matters like teen tot baby killers instead of getting all roiled up about these inane bailouts. But they don’t – and they are furious. One million protesters took to the streets all across France, yet few outside know. Other than a brief report on BBC, no major news channel in the US reported on this event.

From the BBC:

Huge crowds have taken to the streets in France to protest over the handling of the economic crisis, causing disruption to rail and air services.

Unions said 2.5m workers had rallied to demand action to protect wages and jobs. Police put the total at 1m. …more here

All roads lead to gold

Don’t be so sure to call a short term top in gold just because some hedge fund bought on grandpa’s recommendation. Private sector funds are furiously swapping paper for safe havens before the iceberg bid from Team Hope is pulled. After the grand mugging of 2008, the master financial planner of working class America will have levered their future with insolvent firms and fraudulently valued paper. So while the public’s wages of tomorrow are tied up in this ingeniously malicious buy-and-hold, financial institutions position themselves and their new-found liquidity for the final take down. They have backed up the truck and are loading up on precious metals WITH YOUR MONEY!

Team Hope is set on a course of feel-good inflation. Equities, real estate, and wages may eventually rise but lost purchasing power will be devastating, more than offsetting paper gains in 401Ks. The desperate attempt to shore up equities is an act meant only to quell civil unrest. The banking elite know how difficult it will be to enjoy their booty when their cleaners, drivers, chefs, and groomers are setting the streets ablaze.

Educate yourself and don’t be a fool. If the elite control gold they control you.

More fraudulent accounting turned into law

Give it up for Team Larceny

First, some background courtesy of wikipedia:

Robert Edward Rubin (born August 29, 1938) served as the 70th United States Secretary of the Treasury during both the first and second Clinton administrations. Before his government service, he spent 26 years at Goldman Sachs. His most prominent post-government role was as Director and Senior Counselor of Citigroup, where he performed ongoing advisory and representational roles for the firm[1]. From November to December 2007, he served temporarily as Chairman of Citigroup.[2][3] On January 9, 2009 Citigroup announced his resignation, after having been criticized for his performance.[4] He received more than $126 million in cash and stock during his eight years at Citigroup.[4] In January 2009, Rubin was named by Marketwatch as one of the “10 most unethical people in business”

Making money and managing money are two entirely different professions. What this guy Rubin is really saying is that when these firms are directed by law to properly value their assets it’s a real drag on earnings. Much better to show big profits so the banking elite can keep raking off massive compensation for “performance”.

From Bloomberg:
“I spent my whole life at Goldman Sachs believing in mark- to-market accounting, and having said that, if you look at the experience from the last two years, I think mark-to-market accounting has led to terrible vicious cycles in asset prices,”more here

Some respite – Financial prose from Pangloss

Good job boys

Today my friend Pangloss dug up some prescient financial prose to post here on the snow job. Check out these rhymes from 2005 – the days when everybody had the banker swagger.

08-27-2005
Pangloss On Fiat and Silver

Silver polished bright and clean,
Like a mirror how you gleam.
Fiat spawned at an alarming pace,
To bankrupt the human race.
I’m obsessed I must admit,
To fiat I won’t submit.
The federal reserve printing press,
Is not the cause of all this mess.
The fault it lies in us my friend,
for we refuse to buck the trend.
Trading in a promissory note
Is what got us in this boat.
Trade in paper if we will,
A promise we can not fulfill.
So take my silver it’s fair trade,
for the promises I’ve made.
Then in the end my debt is paid.

08-29-2005
Where We Began

Nature your a cunning creature
Past experience the teacher
Chicken little sky is falling
Dollar dropping, wars a calling
Pump the Saudi oil wells dry
Burn one drop price hits the sky
Print more money as wallpaper
Greatest ever federal caper
Like a sprinter from the block
To gold and silver people flock
This is not about endurance
They just want to buy insurance
Silver arrow from the quiver
One death blow will you deliver
To that promissory note
Keeping all the lies afloat
And you’ll wonder when it’s done
Why we’re back where we begun
Trade in silver said the preacher
Nature your a cunning creature

Pangloss

What we would like to see from Obama

Barack Obama in Berlin, July 2008. Credit: Jae C. Hong -Associated Press

What really are the nuts and bolts of hope and change? As of today, Barack Obama can no longer coast on these two words. The sooner he administers the tough medicine the better for us all. He has shown an incredible ability to bring out the best in everyone and now it is time to put us to task. Even the most cynical and jaded are watching closely. Obama, you have our ears but are you listening?

feel free to contribute…it’s your country.

1. Encourage innovation, perseverance, and prudence while penalizing corporate greed, corruption, and incompetence.

2. Rethink outdated infrastructure spending on highways and overpasses and start spending it on efficient transportation and green energy sources.

3. Motivate Americans to produce goods the whole world wants and to stop buying the ones only Americans want.

4. Restore law and order to Wall Street, retrieve ill-gotten assets on behalf of the people, and jail those in violation of law.

Trust not the only thing to have fallen catastrophically

Don’t expect events like what is happening in the EU to be reported on when they occur here. Remember those Wall Street protests back in October? Didn’t hear about them? The best reporters cover entertainment not politics.

With the US and EU issuing more and more debt that creditor nations are unwilling to finance, who ends up buying all of these corporate and government bonds? Well, the issuing body buys them up with freshly minted fiat. Money printing on a global scale has only served to slow the decline in value of paper assets.

From the Telegraph:

Monetary union has left half of Europe trapped in depression

By Ambrose Evans-Pritchard

Events are moving fast in Europe. The worst riots since the fall of Communism have swept the Baltics and the south Balkans. An incipient crisis is taking shape in the Club Med bond markets. S&P has cut Greek debt to near junk. Spanish, Portuguese, and Irish bonds are on negative watch.

Dublin has nationalised Anglo Irish Bank with its half-built folly on North Wall Quay and €73bn (£65bn) of liabilities, moving a step nearer the line where markets probe the solvency of the Irish state.

A great ring of EU states stretching from Eastern Europe down across Mare Nostrum to the Celtic fringe are either in a 1930s depression already or soon will be. Greece’s social fabric is unravelling before the pain begins, which bodes ill.

Each is a victim of ill-judged economic policies foisted upon them by elites in thrall to Europe’s monetary project – either in EMU or preparing to join – and each is trapped.

As UKIP leader Nigel Farage put it in a rare voice of dissent at the euro’s 10th birthday triumph in Strasbourg, EMU-land has become a Völker-Kerker – a “prison of nations”, to borrow from the Austro-Hungarian Empire…

..read more

Update for Jan 20, 2009

Looks like more trouble for debt issuers as the first German government bond auction for 2009 failed to attract bidders

A German sovereign bond auction failed on Wednesday as investors shunned one of the most liquid and safe assets in the world in a warning for governments seeking to raise record amounts of debt to stimulate slowing economies.
…read more

Is Gold a Commodity?

Marc Faber’s latest comments on Bloomberg that gold was overvalued relative to other commodities got me thinking if gold was really a commodity. When most of us think of commodities we think corn, sugar, oil, base metals and even precious metals. Even clean water and computers are commodities when no premium is being paid for any particular brand. All commodities are a store of value but their value is discounted by cost of storage and shelf life. Gold is the most accepted commodity to store value because of its liquidity and relatively concentrated form. Wheat – probably not so good. One big difference between gold and all other commodities is that it is not consumed. Almost all gold ever mined is available at the right price. The same cannot be said for oil, copper, nor the other precious metals consumed industrially. Since commodities are driven by supply and demand (and a little paper manipulation) and the supply of gold is really quite massive, why isn’t gold undervalued relative to other commodities? When there is a bumper crop in the wheat fields, the price of wheat drops. This, despite perennially bullish fundamentals such as dwindling global supplies, weakening US dollars, and population growth. Can gold then even be considered a commodity?

With a continually increasing supply and almost zero destruction, gold really has more in common with fiat currency than with it’s peers in the commodity pit.  If you don’t like the definition of gold as a currency, then you must be defining US dollars as a commodity (think wheelbarrows full of them and the commodity title isn’t far off). Being rectangular and made of paper are not the exclusive properties of currencies. Throughout history gold, along with sticks of wood and seashells, have all served as exchangeable stores of value. Unlike other commodities, all of these examples shared the quality of being essential purely for commerce and not for life. Gold endures because it is difficult to counterfeit, difficult to extract, more appealing than sticks and beads, and concentrated. It is the currency of currencies.

Of course with gold having limited growth in supply, it’s role as global currency extends into fiat currency markets where it serves as a barometer. One need only look at the price of gold relative to any fiat currency to determine growth in that nations money supply.  Despite gold hitting record highs in many currencies around the world, such as ruble, Canadian dollar, or pound, its performance is too often described in US dollar terms.  With massive monetary expansion greatest in the USA, it is more likely that gold remains undervalued, not overvalued as Marc Faber is now stating.

Yes, gold is barbaric and wars will be fought over it.  But a relic, it is not.  Gold continues to be the longest running currency in existence. Fiat based nations will continue trying to diminish gold’s perceived usefulness the only way that paper wars can be fought – in the paper gold market. Those that understand this game are quietly exchanging fiat currency for gold currency as fast as they can.