Tag: WND

WND column

Zombies that ate America

Major U.S. banks and securities firms are on pace to pay their people about $145 billion for 2009, a record sum that indicates how compensation is climbing despite fury over Wall Street’s pay culture. An analysis by the Wall Street Journal shows that executives, traders, investment bankers, money managers and others at 38 top financial companies can expect to earn nearly 18 percent more than they did in 2008 – and slightly more than in the record year of 2007.
– “Banks set for record pay,” Wall Street Journal, Jan. 14, 2010

The American economy is not a zero-sum game. It is also not anything that can be reasonably considered a free-market economy. The reason that more than one percent of U.S. GDP went to pay Wall Street’s bankers in 2009 is that the Republican and Democratic politicians have utilized the power of government to significantly distort the system for their benefit. While bank executives are reporting record profits for the zombie banks that appear to justify their enormous compensation, these reports are fraudulent and the profits are non-existent. Both are based upon false asset valuations and crazy derivative gambles disguised as financial investments. Banking executives are using the additional time given to them by the U.S. government and the Federal Reserve at the expense of American workers and U.S. taxpayers to recklessly loot the system before it breaks down again.

Mailvox: don’t give up on Haiti

RK writes in response to my column today:

I agree and disagree with you at the same time. Sending only money to Haiti is useless and a complete waste because of the corrupt and inept government. However, sending people into Haiti who can help them help themselves is extremely effective. Our church has been working in rural areas for many years. We’ve set up vocational schools and have trained Haitian mothers how to sew items to sell while staying at home to raise their family. Along the way, we’ve set up several small orphanages for children who had no hope. With training they can become very productive citizens in their area.

This is just a very small area, so most of Haiti is not touched by this work. However, to them, it is a tremendous help. As followers of Christ we must be good stewards of our resources, so we should not blindly send them money. However, we must give them a way out of poverty by teaching them how to use whatever talents and resources the Lord has given them. This is much more difficult that just “sending money”, but it is what our Lord would have us do. Please don’t give up on the Haitians. Each one is a soul that Christ died for.

Give up on the Haitians? I can honestly say that I have never, ever given a moment’s thought to the Haitians one way or another. I don’t believe that 99.99 percent of the people now professing great concern about Haiti have either, and I’m confident that 99.98 percent of them won’t have a single thought about Haiti flicker past their consciousness six months from now. But I’m glad that there are those, like RK, who think otherwise.

I also think it’s great that the five men of Rubicon Rescue have taken it upon themselves to bring medical assistance to Haiti. That’s the only sort of help that means anything; it should be totally obvious that monetary contributions are nothing but self-congratulation considering that the various governments of the world are now making noises about injecting $1 billion into keeping the people of Haiti dependentsaving the people of Haiti from themselves.

To me, the Help Haiti business is little more than another example of food rotting on the docks so third-world gangsters can enrich themselves as celebrities preen, musicians write ridiculous songs, and the mindless masses salve their momentarily guilty consciences. And if you are convinced that money is the answer, then you should note that my suggested solution would provide the people of Haiti with far more money than anything proposed by even the most bleeding-heart aid activist and it wouldn’t cost the taxpayers a dime.

I’m a little amazed that people who want to help Haiti would see fit to criticize me when I’ve come up with a solution that would provide the people of Haiti with 10x more money than all the aid provided by the international community combined. If Haiti needs money, why would you oppose my Haitian Taxation scheme? Aren’t all the 10 million Haitians more important than a few thousand Goldman Sachs employees? Why do you hate the people of Haiti, why?

WND column

The Black Hole of Haiti

In 2009, the United States gave $290 million to Haiti. That was $28.90 for every single one of the 10 million-plus inhabitants of the island nation. It was also $290 million that the U.S. government neither had nor was constitutionally permitted to give. But then, that $290 million only represented about one-five-thousandths of the $1.42 trillion deficit created by the federal government over the course of 2009. It was also, obviously, financial aid that was provided prior to the earthquake that struck Jan. 12.

In the aftermath of the terrible earthquake and the reported large-scale loss of life, charities, celebrities, aid organizations and governments have geared up to pour even more money into Haiti. And while a portion of it will no doubt ameliorate the hellish lives of a small percentage of Haiti’s inhabitants for a short while, it should be recognized that the more significant and lasting result will be to provide funding for an international aid infrastructure that justifies its continued existence by keeping those it supposedly helps in a constant state of poverty and dependency.

WND column

Killing the Geese

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded – here and there, now and then – are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as “bad luck.”
– Robert Heinlein, “Time Enough For Love”

It was astonishing to read of Republican Sen. John McCain’s recent radio attack on Barack Obama. Displaying an energy and vehemence that he somehow couldn’t manage to muster during the 2008 presidential campaign, when it actually might have mattered, he accused the man who defeated him of “leading an extreme left-wing crusade to bankrupt America.” But if America goes bankrupt, it will not only be the extreme left-wing that is to blame. After all, one can’t go bankrupt without having borrowed money from someone, and there is no current politician in America who has been more closely affiliated with the financial institutions to which so much debt is owed than John McCain.

WND column

Trust Not in Republicans

They abstain from interference, because they fear that, if it fail of good effect, their own safety or reputation may be damaged or destroyed; not because they see that their preservation and good name are needful, that they may be able to influence those who need their instruction, but rather because they weakly relish the flattery and respect of men, and fear the judgments of the people, and the pain or death of the body; that is to say, their non-intervention is the result of selfishness, and not of love.
– St. Augustine, City of God, Chapter 9

In the chapter of his magnum opus entitled “Of the Reasons for Administering Correction to Bad and Good Together,” St. Augustine explains that those who have neither sinned themselves nor opposed the evil deeds of the wicked merit the consequences that invariably arise from those evil deeds on the basis of their refusal to interfere with the rampant sin surrounding them. St. Augustine was referring to Christian morality and the sack of Rome by Alaric in 410 A.D., but the principle applies equally well to economics and the ongoing financial devastation of the United States.

Karl Denninger makes a tangentially related point at the Market Ticker:

It is a fact, whether we like it or not, that we cannot have and sustain the sort of “economic growth” we have been sold over the last 30 years on an indefinite forward basis, as you cannot continually take on debt at a rate that exceeds productive output – eventually you will default. Instead of facing the truth – a long-term growth rate roughly approximating the growth in population, or about half of what we have allegedly “enjoyed”, we have used debt pyramiding – that is, serial Ponzi schemes, to produce the illusion of dramatically higher economic growth.

There is no evidence that [Ben Bernanke], or anyone in Congress, has yet had their “Come to Jesus” moment with the blunt mathematical facts. Attempting to blow another bubble – which is the inherent path you are attempting to take – risks destruction of our nation’s political system and economic future. There are hard choices to make and economic adjustment to the realities of our debt load and what this portends for economic growth on a forward basis will not be easy. It is, however, both inevitable and necessary. The longer we continue to try to deny the math the worse the ultimate outcome.

Given that both Alan Greenspan and Ben Bernanke were Republican appointees and that a Republican White House, Senate, and House of Representatives presided over the most inflated period of “the so-called ‘modern era’ of Central Banking”, it defies both reason and history to assume that economic sanity will be provided by Republicans.

WND column

2010: The Year Ahead

While the Great Depression is considered to have begun with the great stock market crash of 1929, the first mention of the words “great depression” was in a speech given by Herbert Hoover in late 1931. The first specific and titular reference did not occur until 1934, when British economist Lionel Robbins published a book titled “The Great Depression.” This would neither be the first nor the last time economists influenced by the Austrian School would be the first to identify a major economic downturn in the making or to point out that the policies of the fiscal and monetary authorities were guaranteed to exacerbate it.

What then, are the prospects of enduring recovery? It is clear that they are not bright. It is quite probable, if there is no immediate outbreak of war on a large scale, that the next few months may see a substantial revival of business. If the exchanges are stabilised and the competition in depreciation ceases, there is a strong probability that the upward movement, which began in the summer of 1932, will continue. If the stabilisation were made permanent and some progress were made with the removal of the grosser obstacles to trade, it is not out of the question that a boom would develop. There are many things which might upset this development. The basis of recovery in the United States is gravely jeopardised by the policy of the Government.
– Lionel Robbins, “The Great Depression,” Page 195

UPDATE I – In the column, I neglected to specifically point out that if the present situation follows the historical precedent, public figures should first begin to recognize the existence of the Great Depression 2.0 two years after it began. This would indicate the fourth quarter of 2010.

UPDATE II – We are amused. Yesterday, I wrote this: “While some of the wiser economists are hedging their bets by stating that they expect growth to be “sluggish” with “downside risks,” there are no more expectations of market crashes, financial collapse or widespread economic contraction than there were at the beginning of 2008.” At the same time, Paul Krugman was anticipating his need to engage in the customary CYA of the mainstream economist: “Yeah, its a reasonably high chance [of economic contraction in the second half of 2010] – it’s less than 50/50 odds – but we have now a recovery that … is being driven by fiscal stimulus which is going to fade out in the 2nd half of next year….”

Reasonably high. Less than 50/50. Remember, that’s the finest that mainstream economics has to offer. Now, I don’t believe in feigning accuracy by assigning meaningless numbers that hint at nonexistent probability calculations, so I will simply say that 100 > 50/50. So speak up now, every doubter, anklebiter, and would-be critic. How many of you dare to publicly declare that all the mainstream economists are correct about the prospects for continued “economic recovery” in 2010 and that I am therefore wrong? Is anyone actually willing to go on the record and state that my rejection of the expert consensus is incorrect or not?

I’ll even provide some hard metrics and predict that by the end of 2010:

1. The BLS will report U-3 unemployment to be in excess of 11 percent. The actual number of unemployed workers will be much higher.
2. The BEA will report at least one quarter of negative GDP growth. The GDP figures for Q309 and Q409 will be revised downward. Again.
3. The Federal budget deficit for 2010 will exceed the projected $1.17 trillion.
4. More than 200 banks will be seized by the FDIC. Their deposits will represent more than two percent of all U.S. bank deposits.
5. Commercial bank loans and leases (TOTLL) will fall below $6.3 trillion.
6. All sectors credit market instruments excluding corporate equities and mutual fund shares liability, which is published in the Fed’s quarterly Z1 Flow of Funds Accounts, will fall below $52 trillion.
7. The national median existing-home price will not rise four percent from $172,600 to $179,500 as predicted by NAR’s lead economist Lawrence Yun. It will fall instead to a level I will attempt to estimate before the next NAR release.

These seven specific predictions are all directly contrary to what almost all mainstream economists are presently predicting for 2010; I am presently compiling a selection of economic predictions from all the usual suspects for future comparison.

WND column

How to Create Skeptics

It would seem that the venerable magazine the Economist really believes the global economic crisis is over, since it is now turning the focus of its formidable expertise from economics to climate science. And by climate science, I don’t mean the economic implications of the political policies of the eco-fascists in Copenhagen who are seeking to further cripple an already damaged global economy. No, the magazine has actually published an article attempting to examine the large difference between the raw data produced by Australian weather stations and the massaged version of that data subsequently published by the Global Historical Climate Network.

WND column

The Dire Sign of Dubai

In 2007, the international financial elite knew very well that there were serious problems with the world’s largest banks. Perfectly good loans were being called, long-standing corporate relationships were being cast aside for short-term benefit and there was a palpable perception of something wicked on its way. While news of the so-called credit crunch was duly reported by all the major newspapers, few outside the financial world had any idea that consequences such as the meltdown of 2008 were rapidly approaching.

But if you knew what to look for, it was fairly obvious that something big and ugly was developing, which was why I wrote that “the United States was fast approaching an interesting juncture” in my WND column published March 24, 2008. In a similar manner, what appears to be the minor matter of a Dubai-based corporation requesting a six-month moratorium on its debt payments looks very much like a warning that the next stage in the global financial crisis will be upon us soon.

UPDATE – Karl Denninger notes the irony of an Arab government being more free market-oriented than the USA:

Dubai’s government said it hasn’t guaranteed the debt of Dubai World, the state-controlled holding company struggling with $59 billion in liabilities, and that creditors must help it restructure.

“The company received financing based on its project schedule, not a government guarantee,” Abdulrahman Al Saleh, director general of the emirate’s Department of Finance, said in an interview with Dubai TV, when asked whether the government was backing the debt. “Lenders should bear part of the responsibility.”

WND column

The Great Global Warming Fraud

I have an old T-shirt that I used to wear from time to time during my techno days with Psykosonik. Eric Bloodaxe of the Legion of Doom created it in honor of the “Hacking for Jesus” tour, complete with a listing of ISP addresses that were supposedly hacked during the LOD’s Internet World Tour of 1991. But last week, an anonymous hacker achieved a feat that will long be lionized by computer pirates, libertarians and genuine scientists alike, as he broke into the Climate Research Unit’s computers, copied 172 megs of data, and then released it into the digital wild.

Information wants to be free. And this information desperately needed to be freed.

UPDATE – In England, the CRU expose is now being described as “the greatest scandal in modern science“.

WND column

Fallacy of Recovery

A one-time skeptic of fiscal stimulus, [German chancellor] Ms Merkel plans what amounts to a third stimulus package worth about € 7 billion ($10.4 billion), starting on January 1st.
– The Economist, Oct. 31, 2009

The mainstream media is full of reports of economic recovery and an end to the recession of 2008, even though the Business Cycle Dating Committee of the National Bureau of Economic Research has not yet spoken its official word on the matter. The significant rise in the stock markets and a single advance GDP report has been enough to convince nearly every economist and financial analyst that the worst is past, that 10.2 percent unemployment is a lagging indicator, and that the primary concern at hand is now too much monetary and fiscal stimulus leading to inflation.

Read the rest of the column at WND
Karl Denninger at the Market Ticker appears to have reached the same conclusion. Note that I wrote my column prior to reading his post To the Barkers: Answer This Question:

“The recession ended in June”: Dennis Kneale

“The recession was definitely over in September”: Any one of a number of people.

Ok. Let’s say that I accept all this at face value, even though while driving through my definitely-beach-oriented local town here this afternoon I noted even more closed-and-gone storefronts than there were a couple of weeks ago, and last night at the local open-air mall, although the evening was absolutely gorgeous, you could have fired a 155mm Howitzer down the “main drag” without killing anyone – because there was almost nobody there, and literally not one shopping bag was in evidence.

I simply have to ask the pundits and the carnival barkers, of which CNBC is the worst (but certainly not the only sinner) the following – why do we need any of these programs if in fact the economy is growing again:

Something clearly isn’t adding up. So, who is more likely to be correct? The skeptical economists looking at the evidence and seeing that nothing fundamental has changed or the mainstream economists utilizing the very same models that didn’t let them see a recession coming in the first place? And furthermore, if the models are known to be unreliable, then how does it make any sense to put faith in an estimate that is constructed on the bases of those models?