Tuesday, June 12, 2012

"The REAL Reason Wisconsin Failed To Recall Scott Walker" - M.O.C. #147

Or, Wisconsin Is Just The Beginning.

Now that corporations not only 'are people' but also can spend infinitely obscene amounts of the money they stole from us on slick high tech election propaganda, political corruption is transforming the political landscape in America in much the same way that, after the 3/11 nuclear crisis,  radioactivity is  affecting Japan.   It has not even begun to get bad.

Here is an excerpt from the video below, another excellent Moment of Clarity by Lee Camp.  If for some reason you prefer to avoid strong language, the safe-for-work-and-kids version is here.

"And I'm not saying money is the only thing to blame.  The Democratic establishment abandoned wisconsin like firefighters letting one area burn to ashes in a last ditch effort to save other area.  Wisconsin is just the beginning of billions of dollars dumped into our system.  How much does it cost to convince the people that Darth Vader is just misunderstood, and would make a great senator? Or that Jeffrey Dahmer was just an eccentric lover of exotic foods, who would kick ass as Governor? How mush would it cost?  I don't know, but we're about to find out."

"Really, Wisconsin?  Scott Walker?  Has all that cheese fermented inside your goddamned skulls?  You watched a man come into your house, steal your money,  sell the contents of your fridge to his billionaire friends, smack your kids, and kick your dog, and then, when you had the chance to make him leave, you said, 'Hold on.  I think he has some good ideas.'"

One more thing, about money being the root of all evil. If you were curious as to how or why this is the case, think about this:

The original Latin phrase is "radix enim omnium malorum est cupiditas" (a phrase Chaucer, in the Pardoner's Tale, quotes from the vulgate Bible, 1 Timothy 6:10). Here's a rundown of the Latin: Radix, root; enim, truly; omnium, all; malorum, of all evils; est, is; cupiditas, avarice or greed.

So properly understood, the root of all evils is not money but the love of money.  Avarice is the root of all kinds of evil.  

Allow me to extend my initial analogy -- let's see if it applies. Is it that it isn't radioactive elements that are the problem, it is the inherently unsafe nature of the nuclear fuel cycle?  Or is the root of all kinds of evil the inevitable regulatory capture that prevents any meaningful oversight of the nuclear industry? Or is it instead the tacit unquestioned priority given to a military industrial complex addicted to the guarantee of continued sociopolitical superiority offered by weapons of mass destruction?

No wait, actually, come to think of it, properly understood, the root of all evils is not money but the love of money.  Avarice is the root of all kinds of evil. 

Not very comforting, given the economic situation.  Which, by the way, has also just begun to get bad.

Be seeing you.

Fitch downgrades Spain's Banco Santander and Banco Bilbao

Fitch credit ratings agency has downgraded Spain's two largest international banks Banco Santander and Banco Bilbao Vizcaya Argentaria (BBVA) from A to triple B plus.

The international credit agency said on Monday that the downgrades were primarily because Spanish sovereign debt ratings had been downgraded to BBB- from A- on June 7 and also due to forecasts that Spain's faltering economy would remain in recession throughout this year and also in 2013.

The downgrades "reflect similar concerns to those that have affected the Spanish sovereign rating, in particular, that Spain is forecasted to remain in recession through the remainder of this year and 2013 compared to the previous expectation that the economy would benefit from a mild recovery," Fitch said in a statement.

The move comes just two days after eurozone finance ministers agreed to help Spain’s troubled banking sector with a 100 billion euros loan.

On Thursday, Fitch downgraded Spain’s long-term foreign and local currency rating by three notches citing the country's banking crisis, mushrooming debt and recession as the main reasons for the downgrade.

Spain’s central bank reported last month that the country's economy will shrink in the second quarter of 2012, with the recession expected to continue until at least mid-2012.

Battered by the global financial downturn, the Spanish economy collapsed into recession in the second half of 2008, taking with it millions of jobs. In May, Spain fell back into recession.

Gerald Celente: American dream debunked

Family net worth plummets nearly 40%

Family net worth plummets 40%
Income and net worth fell from 2007 to 2010.
NEW YORK (CNNMoney) — The average American family’s net worth dropped almost 40% between 2007 and 2010, according to a triennial study released Monday by the Federal Reserve.
The stunning drop in median net worth — from $126,400 in 2007 to $77,300 in 2010 — indicates that the recession wiped away 18 years of savings and investment by families.
The Fed study, called the Survey of Consumer Finances, offers details on savings, income, debt, as well as assets and investments owned by American families.
The results, though more than a year old, highlight the marked deterioration in household finances brought on by the financial crisis and ensuing recession.
Much of the drop off in net worth — to levels not seen since 1992 — was attributable to a sharp decline in housing values, the Fed said.
In 2007, the median homeowner had a net worth of $246,000. Three years later that number had fallen to $174,500, a loss of more than $70,000 on average.

Families who reside in the west and south, where the housing market was especially hard hit by the recession, were worse off than their peers in the rest of the country.
Making matters worse, income levels also fell during the tumultuous three-year period, with median pre-tax income falling 7.7% as earnings from capital gains all but disappeared.
The loss of income and net worth appears to have impacted savings rates, as the number of Americans who said they saved in the prior year fell from 56.4% in 2007 to 52.0% in 2010 — the lowest level recorded since the early 1990s.

 t the same time, some families were able to escape from debt, as the share of families with debt decreased slightly to 74.9% over the three-year period. Credit card use was down, and the median account balance fell 16.1%.
Meanwhile, families who did report carrying debt showed little change in the degree of indebtedness over the period.
Lower interest rates helped keep debt levels down, but the number of Americans who had fallen more than 60 days behind on debt payments still grew from 7.1% to 10.8% in 2010.
The report also indicated that families with more assets at the start of the recession were able to retain more of their net worth than less fortunate families.
Families in the top 10% of income actually saw their net worth increase over the period, rising from a median of $1.17 million in 2007 to $1.19 million in 2010.
Meanwhile, middle-class families who ranked in the 40th to 60th percentile of income earners reported that their median income fell from $92,300 to $65,900 over the same time period. To top of page

Wall Street Shrugs as JPMorgan Trades Lop Off $27 Billion

JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon plans to testify before Congress this week about his firm’s $2 billion trading loss. His Wall Street colleagues don’t understand why.
“Occasional losses are inevitable,” said Blackstone Group LP (BX)’s Stephen A. Schwarzman, 65, CEO of the largest private- equity firm. “Publicly excoriating JPMorgan serves no purpose except to reduce people’s confidence in the financial system.”

The loss sliced $27 billion from JPMorgan’s market value in the month after the May 10 disclosure, while triggering at least five federal probes and two planned Capitol Hill hearings with Dimon. It also renewed debate about whether curbs on trading by bankers were tightened enough after their wrong-way bets pushed the system to the brink of collapse in 2008.
Executives, lobbyists and analysts said in more than a dozen interviews that the public stir is an overreaction to a minor misstep.
“I kind of shrug,” said Bill Archer, 58, a former co- chairman of Goldman Sachs Group Inc. (GS)’s capital markets committee and now a partner at buyout firm Veronis Suhler Stevenson LLC in New York. “That’s just the way the world is.”
JPMorgan shares dropped 17 percent through last week after the New York-based bank, the largest in the U.S., disclosed the losses on credit derivatives held by its chief investment office. Dimon, 56, had shifted the unit from a conservative manager of unused cash into a profit center that bet on riskier assets, former employees have said. Some wagers became so large that they were driving prices in the $10 trillion market and couldn’t easily be unwound, Bloomberg News reported.

Bigger or Safer

U.S. banks can be tiny and safe or big global competitors that make mistakes, Archer said. “There are wrongs that come with too-big-to-fail, but there are a lot of rights,” he said.
Executives who say the loss is small for a firm that earned $19 billion last year are missing the warning it represents about unwieldy large lenders, said Richard Sylla, a financial historian at New York University’s Stern School of Business.
“Even a great banker like James Dimon can’t really manage such a huge operation,” Sylla said. “They convince themselves that everything is fine because they’re making money.”
U.S. Comptroller of the Currency Thomas J. Curry told the Senate Banking Committee last week that the loss raises “questions about the adequacy and rigor” of the bank’s risk management. Treasury Secretary Timothy F. Geithner last month called it a “pretty significant risk-management failure.”

U.S. Probes

Government investigations include the Federal Reserve studying organizational issues, the comptroller looking into trading, and the Securities and Exchange Commission examining why the bank changed internal risk gauges earlier this year. The Department of Justice and the Commodity Futures Trading Commission are also conducting inquiries, Bloomberg reported.
Joseph Evangelisti, a JPMorgan spokesman, declined to comment for this article.
Dimon, who averaged more than $1.9 million a month in salary and bonuses in 2010 and 2011, dismissed initial concerns and news reports as “a complete tempest in a teapot” on an April 13 call with analysts. Dimon later said on May 10 when he disclosed the loss that he should have paid more attention.
The market’s response and media coverage since then have been overwrought considering the size of the loss and its actual impact, said a JPMorgan executive who wasn’t authorized to speak on internal views. Quarterly profit is projected at $3.7 billion, according to the average estimate of analysts surveyed by Bloomberg.

‘Everyone Screams’

“If they had made $4 billion no one would have noticed, but everyone screams when they lose $2 billion,” said Jay Dweck, who led a modeling group for sales and trading at New York-based Morgan Stanley until last year. The alarm “is irrational and unfair,” he said.
Richard Marin, former head of asset management at Bear Stearns Cos., which was taken over by JPMorgan during the 2008 financial crisis, would recommend shares of the bank to anyone who has traded them away. “If you sold the crisis, buy the reality,” Marin said. “Lapses do occur.”
Losses come and go every few years, said Philip Keevil, a former head of European mergers at Citigroup Inc. (C) Advocates of tightening the so-called Volcker rule, which restricts banks’ proprietary trading, want “to use it for their own ends” and have been “piling on,” said Keevil, now a partner at Compass Advisers Group LLC in New York.

‘Small Beer’

“I don’t think it’s a big issue,” BlackRock Inc. Chairman Larry Fink told CNBC June 7. Steven Rattner, co-founder of private-equity firm Quadrangle Group LLC, mentioned his friendship with Dimon in a May 14 Financial Times commentary before calling the JPMorgan loss “small beer.”
The bank still has support of analysts including Wells Fargo & Co.’s Matthew Burnell, who affirmed his buy rating the day of the loss announcement. A 6 percent after-hours drop in the stock price was “somewhat outsized,” he said then. In the days that followed, Credit Suisse Group AG and Royal Bank of Canada labeled the loss a “blemish,” with RBC and Goldman Sachs repeating their buy ratings in reports that both called JPMorgan “down but not out.”
“Anyone can run the numbers and see,” Citigroup said in a May 21 report, calling JPMorgan an “absolute buy.” Estimates of losses more than doubling are “getting a bit carried away.”

Regulatory Reaction

Investors and bankers, including Dimon, have speculated that the loss may hurt efforts to soften restrictions imposed by the 2010 Dodd-Frank Act and its Volcker rule, which were designed to head off a repeat of the financial crisis. Dimon will face the Senate Banking Committee on June 13 and the House Financial Services Committee June 19.
“Everyone needs to take a half step back,” said Rob Nichols, CEO of the Financial Services Forum, a Washington-based lobbying organization. “Since the crisis there have been numerous reforms that have improved the safety, the soundness, that make our system more safe and more secure.”
His group, led by Goldman Sachs CEO Lloyd C. Blankfein, includes heads of 20 global financial firms. Dimon is a member.
The market’s punishment of JPMorgan’s stock is effective and an “argument for less regulation,” Hester Peirce, a researcher at the Mercatus Center at George Mason University, wrote last month. Mercatus is funded by billionaire Charles Koch, according to the Koch Family website.

Losses Happen

“There is no law that says you can’t lose money,” said H. Frederick Krimendahl II, chairman of New York-based real estate investor Petrus Partners Ltd. and a former Goldman Sachs management-committee member. “The reason that I shrug is that I don’t think anybody got badly hurt in this” except JPMorgan.
Schwarzman, New York-based Blackstone’s chief, said losses can’t be prevented “by legislation, regulation, supervision or other forms of planning.” JPMorgan’s loss amounts to about 7 percent of its pretax earnings expected this year, he said.
Dismissiveness is dangerous, according to Simon Johnson, a former International Monetary Fund chief economist who teaches at the Massachusetts Institute of Technology.
“Complacency was at the heart of the problems that almost brought down the system,” he said. “No one considered that there was a serious problem.”
Analysts who’ve expressed concern include Chris Wheeler at Mediobanca SpA, the Milan-based investment bank, which downgraded JPMorgan to neutral on June 6. Bank analysts tend to be positive about the industry because they work in it, said Wheeler, who co-wrote the Mediobanca report.
“I’m not screaming from the hilltops that Jamie Dimon has major problems,” he said. “But, in this particular case, something went very badly wrong.”


Ron Paul: The CBO Sees the Economic Cliff Ahead

Ron Paul  Last week the Congressional Budget Office (CBO) issued its annual long-term budget outlook report, and the 2012 numbers are not promising. In fact, the CBO estimates that federal debt will rise to 70% of GDP by the end of the year– the highest percentage since World War II. The report also paints a stark picture of entitlement spending, as retiring Baby Boomers will cause government spending on health care, Social Security, and Medicare to explode as a percentage of GDP in coming years.
While the mainstream media correctly characterized the CBO report as highly pessimistic, they also ignored longstanding errors of methodology in CBO estimates. And those errors tend to support arguments for higher taxes and government spending, when in fact America needs exactly the opposite.

As Paul Roderick Gregory explained in a recent Forbes column, CBO has always applied wrongheaded assumptions inherent in Keynesian economics when forecasting future deficits – no matter how many times both history and economic theory have proven such assumptions incorrect. In particular, CBO seems wedded to two enduring Keynesian myths: First, that higher taxes necessarily increase federal revenue and have no negative effect on the economy; and second, that lower government spending hurts the economy.  Neither is true, of course.
CBO also fails to factor in unexpected wars and expensive foreign entanglements, and we should not assign too much validity to predictive models based on peace. Judging from the actions and rhetoric coming from both parties in Washington, new military entanglements in Syria and Iran may well spike military spending in coming years.
Despite these sobering budget realities, the CBO report suggests that a solution is possible with merely a few minor adjustments in the way Congress handles economic issues. But what we need are not minor adjustments, but rather a fundamental shift in our philosophy of government.  If we could come to our senses about the proper role of government in America, and what level of government interference is appropriate in a free economy, we would quickly find that there is no reason for government to spend so much, borrow so much, and tax so much.
If we simply allowed markets to work free of governmental or Federal Reserve interference, bad debt would be liquidated relatively quickly and malinvestment would be curtailed. Scaled-back regulations would encourage businesses to expand. Lower taxes would jump start investment and spur job creation.
This is not rocket science, it is Economics 101. All it would take is for government to get out of the way. There would be some short term pain, of course, but only by allowing the bubble to burst and bad debt to liquidate can we ever hope to begin building a real economy again.
The CBO report was alarming to most simply because they know neither party will take the steps necessary to avoid eventual fiscal calamity. Instead, despite their rhetoric, both parties want to maintain the fantasy that “deficits don’t matter.” But the CBO report, combined with what is happening in Greece and the European Union, should finally make the undeniable case that economic realities apply even to industrialized first world economies. We must take concrete steps today to avoid having America become the next Greece.

The Central Banks Are Buying Gold Like It’s 1965 (GLD, SLV, IAU, PHYS)

Andy Hagans: This week’s Barron’s points to recent World Gold Council data showing enormous gold purchases by central banks over the past year. These purchases are most likely not a temporary tactical move, but rather a powerful long term trend that will continue for years, if not decades. But wait: don’t the central banks want us “normies” to buy up more equities, invest and spend with record amounts of fiat currency, and heckle the gold bugs for their hilarious foolishness? It appears to be a case of “Do as I say, not a I do.”

Related: Jim Rogers: Buy Commodities Now, Or You’ll Hate Yourself Later

Not that we’d suggest you make investment decisions based solely on the words or deeds of a central banker [see: Jim Rogers Says: Buy Commodities Now, Or You’ll Hate Yourself Later]. This sustained buying by central banks however is no longer a “scoop” for Web journalists such as your humbler writer, but rather a significant, semi-permanent factor in the overall supply-and-demand equation that will determine the price of gold over time.

Central banks increased their gold hoards by 400 metric tons—each equal to almost 2,205 pounds—in the 12 months through March 31, up from 156 tons during the prior year… The council “is now confident that central banks will continue to buy gold and has added official-sector purchases as a new element of gold demand,” writes Austin Kiddle in a report for London-based bullion dealer Sharps Pixley.
This steady flow of gold into the vaults of central bankers is notable for both the size and consistency of its volume. Indeed, this type of official purchasing last occurred in 1965, when the global monetary landscape hardly resembled the current all-fiat experimental system.
So what does this mean for retail gold investors?
…consistent buying of 10% of annual supply can’t but help keep the price elevated… But that’s only one big change. The second: Short-term speculators have fled the market. Open interest of managed futures funds, considered a good proxy for all speculators, has dropped a staggering 28% since the beginning of September…

Related: Warning: Ignore Bill Gross’ Hard Money Prediction At Your Own Risk 

Less liquidity will tend to make gold prices more volatile. On the other hand, sustained, large-scale gold purchases by central banks can’t help but build the bull case for all precious metals, and especially gold, over the next decade or two. Many retail investors who can’t justify buying gold as an investment, might consider buying a smaller amount as a hedge [see: What Are The Most Popular Gold Bullion Coins?].
The old maxim “don’t fight the Fed” can apply to many different trading scenarios; the implication that you should be long the yellow metal may simply be a sign of the times.
Related Tickers: SPDR Gold Shares (NYSEARCA:GLD), iShares Silver Trust (NYSEARCA:SLV), iShares Gold Trust (NYSEARCA:IAU), Sprott Physical Gold Trust (NYSEARCA:PHYS).
Written By Andy Hagans From CommodityHQ  Disclosure: The author is long gold.
CommodityHQ offers educational content, analysis, and commentary on global commodity markets. Whether you’re looking to speculate on a short-term jump in crude or establish a long-term allocation to natural resources, CommodityHQ has the information you need.

U.S. Government Bond Bubble to Burst, Faber Says

Is a global financial collapse coming?