The greatest economic heist on earth was the imposition of the floating fiat currency/free trade/no taxes on the rich regime. This trio of trouble is at the heart of the present Great Depression. True, some numbers are looking up somewhat. But the fundamental problems, especially the Derivatives Beast, are not fixed at all. Indeed, these problems are now getting much worse and will cause future havoc. The entire system was papered over by immense capitalization efforts costing trillions of dollars. And one party that is having a good time now that we gave them all of this is Goldman Sachs, of course.
Goldman Sachs Still Paid for Swaps on Redeemed Bonds (Update2) – Bloomberg.com
New Jersey taxpayers are sending almost $1 million a month to a partnership run by Goldman Sachs Group Inc. for protection against rising interest costs on bonds that the state redeemed more than a year ago. .
The most-densely populated U.S. state is making the payments under an agreement made during the administration of former Governor James E. McGreevey in 2003, when New Jersey’s Transportation Trust Fund Authority sold $345 million in auction-rate bonds whose yields fluctuated with short-term interest costs. The agency finances road and rail projects. .
“This vividly shows the risk of entering into interest- rate swap agreements,” said Christopher Taylor, former executive director of the Municipal Securities Rulemaking Board in Alexandria, Virginia. “The world’s got to see what stupidity even the sophisticated investors like the transportation fund can get into.”
Interest rate swaps are a catastrophe in ZIRP systems. If the US and UK ape Japan totally, we will be mired in a ZIRP trap for decades to come. Japan dealt with inflation by pretending there was none while inflation ran at more than 3% in 2008. So will the US and UK: the need to run at zero is immense and in direct proportion to government need to create debt. This is connected with not taxing the rich properly. Japan has the most millionaires next to the US (in raw numbers) but the government runs deep in the red.
This refusal to tax the very wealthy is a social problem in a number of nations. In particular, the US and UK. It is no accident that the philosophy of free trade and the fiat dollar coincide with the philosophy that the rich are not responsible for taxes for maintaining governments. I would suggest that this economic thinking fashion lies at the heart of the international financial and trade collapse. That is, something that can’t be sustained can’t be sustained.
The seeming return to ‘normalcy’ is fraught with many dangers. We shouldn’t look at the past collapse as an anomaly but rather as the inevitable outcome of the fiat floating currency/free trade/cut taxes on the rich economic philosophy. This toxic combination has been totally wrecking the bottom lines of all systems in key economic sectors, in particular, the US and UK. As taxes were cut on the rich, the chasm between the top 0.1% of the population and the bottom 50% has widened very rapidly and now we have the disgusting sight of the international derivatives banking giants reaping immense personal profits exactly one year after the bottom 99.9% of the population bailed them out of messes these same guys created in the first place.
The above Bloomberg story illustrates perfectly how this has happened. The state was scared of the possibilities that interest rates might shoot up a la during the Volcker years when it had to rise faster than the inflation rate. The inflation rate back then was due to two things: government overspending in social and war areas and two major oil price hikes coupled with wars in the Middle East. Which hammered the US due to the US hitting its own Hubbert Oil Peak in 1973.
To protect themselves from this phantom, NJ bought ‘insurance’ from the Mafia group, Goldman Sachs. Instead of rising interest rate overhead costs, the opposite happened as the US slid into the same dark hole as Japan. Derivatives are a very queer form of insurance since it is NOT insurance AT ALL. It is a BETTING OPERATION more akin with three card Monty as played in Manhattan in Times Square. That is, you can’t win. If the ‘insurers’ who are Mafioso, must pay up, they simply refuse and run for the hills.
Then, in order to keep their side of the deals from going bust, Uncle Sam steps in and capitalizes them. Which means that if GS had to pay for any rate hikes to NJ, they would simply refuse and the Feds would pay which is why the entire thing is a fraud. And this should be taken to court. Since the chances of ANY major investment banker being able to pay up on $600 trillion in derivatives is as likely as Santa Claus coming in July, it should be shut down as a fraud, right? Of course.
Just as ‘free trade’ is a fraud and after 40 years of the US running in the red no matter what, we should kick that business to the curb, too. The support for these frauds comes from a simple desire to get rich quick and not pay taxes on this fraudulent wealth. So the people at the top support the floating fiat dollar/free trade/no taxes on the rich formula. They will fight to the death to keep this ridiculous and dangerous system imposed on the rest of us. The US public bought into this scheme due to these same Mafioso bosses offering to dump immense amounts of debt on top of our homes. So the average US homeowner was tempted into going very deep into debt to finance purchases of foreign goods which gave immense profits to the very rich who used it to corrupt our governments with bribes.
BOE More Likely to Expand Bond Purchases After GDP Slump – Bloomberg.com
Britain’s failure to escape the worst recession since World War II may force the Bank of England to increase its bond-purchase plan next month, economists said. .
Seven months after Governor Mervyn King’s central bank started a 175 billion-pound ($286 billion) program to rescue the economy, the Office for National Statistics said yesterday gross domestic product unexpectedly shrank 0.4 percent in the third quarter. None of the 33 economists surveyed by Bloomberg predicted a contraction.
England is Japan without Toyota. That is, England has lost it own industrial base and is now an empty shell. The British subjects of the House of Hanover were told that if all of England were only an international hub for international piracy, the loot gotten this way would filter down through the economy and sustain the welfare state as well as other things. Well, the only thing that has been filtered to the masses are these two items: immense seas of debt and the obligation to capitalize the pirates no matter what including paying off the IOUs the pirates ring up in playing footsie with the Derivatives Beast.
England’s taxes are still higher than the US or Japan so the rich are very discontented and like many rock groups, are relocating in cheaper tax venues since the very rich have no national desires. That is, they don’t give a rat’s ass if their former home bases go into economic or even political collapse. For example, U2’s Bono loves to go to Bilderberg meetings and talk about saving the world’s poor. But he doesn’t want to pay taxes in Ireland or England, for that matter. So he left. He is beloved by the internationalists who think he is very hot but this is due to him becoming one of them. That is, he doesn’t care about anything, in the end, but himself. And of course, he is splashed all over the place and praised and coddled by his fellow gnomes and pirates.
LBOs Cutting $527 Billion of Debt Gain Concessions (Update1) – Bloomberg.com
The biggest leveraged buyouts from the takeover boom this decade are making a comeback in the debt market seven months after investors concluded they were almost certain to default, thanks to concessions from lenders. .
KKR & Co. and TPG Inc. asked investors this month to swap $6 billion of debt for $4 billion in new secured notes in Energy Future Holdings Corp., taken private in 2007 in the biggest buyout. Casino operator Harrah’s Entertainment Inc., acquired in a $30.7 billion takeover in January 2008 by Apollo Management LP and TPG, cut its long-term debt by more than 16 percent to $19.3 billion during the six months ended June 30 by offering new notes with later maturities and less principal.
As recently as March, credit-default swaps showed Energy Future, Harrah’s and four of the other biggest buyouts since 2005 were poised to collapse, trading as if there were a 95 percent chance of default, as the high-yield, high-risk debt markets struggled with $1.74 trillion in new borrowings. Now, the average price of contracts to insure against failures has dropped by more than half as the economy recovers from the worst recession in 70 years.
“Private-equity holders feel there is a lot more upside to play for,” said William Cunningham, global head of credit strategies and fixed-income research at the investment unit of Boston-based State Street Corp., the world’s largest money manager for institutions. “It appears as if the private-equity holders and some of the management teams are more emboldened to try and get more out of the bondholders now. That is going to create greater tension going forward.”
After devouring trillions of taxpayer bail money and now, fully recapitalized, the Derivatives Beast opens its maw and resumes eating and growing bigger and bigger. We had a wonderful opportunity back last Fall to slay this monster, once and forever, when AIG collapsed. This would have forced all derivative gamers to pay up. They all slipped away but carefully kept the Beast alive until the central bankers and the US and UK governments could restore this obvious scam and off it goes, doing what it did in the past.
So long as the gnomes know they can suck down ALL excess capital and pay NO taxes on this, they will resume their garbage and we can expect an even worse collapse to come: the total default of both the US and UK and maybe, even Japan as nearly all of Europe outside of say, Germany, also goes bankrupt. The world banking system should be conservative, not radical.
U2’s Bono is very popular with the criminal class because he endorses this system and gives it a friendly face. He is the Pied Piper of the International Gnomes. He sings and dances and talks about sharing while he and his fellow gnomes sit on top of immense mounds of wealth. Which he and they refuse to share with the rest of us via taxes. The private equity holders usually do not hold any private capital. They hold carry trade debts. This is why they need the floating fiat currency system: this is an immense, gigantic milk cow for gnomes.
It is a major part of how the Derivatives Beast was created. Before the floating fiat currency regime, gold balanced trade values. After Nixon slew the gold system, we got stuck with this miserable and useless system (it obviously does NOT balance anyone’s trade at all!).
Dollar’s Doom Puts a Face on New $1 Million Bill: David Reilly – Bloomberg.com
The dollar has fallen almost 3 percent over the past two weeks against a basket of six major currencies. The greenback has dropped 20 percent against the euro since early March. .
Reflecting investor angst, BofA Merrill Lynch Global Research analysts recently held a conference call titled, “How Damaged is the Dollar?” Google searches for the phrase “dollar collapse” have doubled since the start of 2008, according to financial Web site Clusterstock.
The dollar may not easily snap back. U.S. policy makers and economists “actually argue for depreciation of the dollar to bail out America and make it more competitive,” Marc Faber, publisher of the Gloom, Boom & Doom report, said during a recent Bloomberg News interview. “Nobody in the world has ever become rich by devaluing the currency, but that’s what they’re advocating in America.”
HAHAHA. Marc Faber is one of many goofy guys who claims he understands what is really going on. Yet he is quoted saying one of the stupidest things ever. Right now, the US has been screaming for nearly a decade at China to raise the value of the yuan because of the immense trade imbalance between the US and China. Right? And China has gotten immensely richer running a trade imbalance thanks to keeping the yuan cheap, right? HAHAHA. So, by devaluing the currency, they got richer? Right? I hope Faber reads this somewhere but I doubt this.
Very, very few people want to understand the nexus that connects all these things and it isn’t international bankers. It is people wanting to exploit international free trade for their own ends. Each player has his or her own game plans. And China’s is to drive the US deep into debt and then force us to default on our international loans and then collapse like all previous empires while China takes over the helm and imposes a Pax Chinoise on the world.
The dollar can’t be ‘damaged’. It is a TOOL. And supposedly, according to 99% of all US economics professors, it is supposed to balance our trade with the world. So it should go up or down according to how much red ink we produce. But we just produced nearly half a century of trillions of dollars of red ink and the dollar has NOT functioned in any way, shape or form as a ballast to balance trade values. Not even slightly. We can’t fix any of our problems unless we first force all the professors to finally admit that their beloved philosophical system is utter rot and is toxic as hell and can’t be fixed by tweeking the corners.
The fundamental basis has to be fixed. And even people with very modest incomes are so scared of paying up for things instead of charging them on our collective bills, the political will to fix what is broken is not there. We can’t tax cut our way to prosperity. We can’t run trade deficits to prosperity. We can’t offshore our way to prosperity. We can’t borrow our way to prosperity. We have to regain a full understanding of the nature of capital and its very close relationship to labor to regain power over our own economic systems again.
Or we can ape Japan and die a very slow ZIRP death.
20 responses to “Goldman Sachs Eats Tax Money While Giving No Service At All”
as played in Manhattan in Times Square. That is, you can’t win. If the ‘insurers’ who are Mafioso, must pay up, they simply refuse and run for the hills.
what is up with that…. then we get ‘paid back’ by these banks going into the open market and offering diluted shares ‘GS’…. so they can pay humungus bonuses, and their shareholder value goes up
greedy->bankrupt->destroy shareholders->get rich by trading your own book???… GS is a myopic corporate reality… I really cant stand those guys, maybe they are 2 small to hide and 2 big to fail… how come you can literally structure an industry to make money almost to the point of printing it themselves…. are we validating trickle down economics??? why the gammey face on the basic fraud that took place here… people said they would pay, they lied, the people hoarding said product never looked at what they were buying BECAUSE THEY KNEW IT WAS 2 DANGEROUS 2 FAIL…. so the numbers dont have to say anything…. greed and luck alone is enough to run the government
how smart is this phone again
Talk about lazy, back in the day it was called “Pax Sinica”. Who knows, we might actually see a new 21st century version.
My first impression was of the whole “ching chong” phenomenon.
Otherwise nice article, reminds me of all the retarded apologists for the rich-like they are some sort of endangered species.
Wonder why so many people are so easily fooled into feeling sorry for the “poor” rich.
Its sort of amazing that so many people have this deep-seated need to defend the indefensible. Sort of like all the Roman Polanski’s apologist like woopi saying that it wasn’t rape “rape.”
Its disappointing that it isn’t possible to die of shame.
McCain Moves to Block FCC Net Neutrality
According to the text of the McCain bill, the FCC “shall not propose, promulgate, or issue any regulations regarding the Internet or IP-enabled services.” Isn’t that what the FCC does? Isn’t that sort of like introducing a bill to prohibit the Treasury from printing money, or a bill to prohibit the IRS from collecting taxes?
wow im so glad i did not vote republican this time… i feel so good… i voted for alot of republicans…. but after energy ‘deregualtion’ i couldnt understand how they could take assets from people and give them to companies, that is not a free market… people who dont produce energy ‘california’ should pay ALOT more so that other states can control congress, have high paying jobs, enjoy a lucrative mobile talent pool, and get cheap processed silica from california…
but theres only one thing better than the status quo… and thats stealing from people
Roman Polanski’s apologist like woopi saying that it wasn’t rape “rape.”
yeah… i read an article where the ‘raped’ party didnt want it in the media… like thats why we shouldnt nail a guy like this…. becuase he raped and shamed a human being…
my feeling is who cares what people feel…. thats why we have laws so people dont get raped
amusing how billionaires hype the free markets, “competition,” and survival of the fittest but want a “leveled playing field.” (i.e. regulated labor and protected cartels)
“American billionaire Robert Kraft is only interested in buying a European football club if a salary cap is introduced
We are involved in the NFL and in Major League Soccer, and we are happy to compete where it’s a level playing field (those wonderful single entity leagues with salary caps to prevent greedy players from taking advantage of poor owners)
We don’t want to be a business where the wallet determines what kind of player you have.
I don’t blame a player for wanting to get paid as much as they can, but in the end the greatest rewards in team sports come when great players subjugate their egos to the team”
Wah wah wah, those greedy players wanting some of the pie 😉
How long till this ?
“So long as the gnomes know they can suck down ALL excess capital and pay NO taxes on this, they will resume their garbage and we can expect an even worse collapse to come: the total default of both the US and UK and maybe, even Japan as nearly all of Europe outside of say, Germany, also goes bankrupt. The world banking system should be conservative, not radical.” – Elaine Supkis
“…..We can’t tax cut our way to prosperity. We can’t run trade deficits to prosperity. We can’t offshore our way to prosperity. We can’t borrow our way to prosperity. We have to regain a full understanding of the nature of capital and its very close relationship to labor to regain power over our own economic systems again”.
Sorta convinces me that maybe a coterie of Goldman Sucks types, particularly the Semites, don’t want the people of the United States to be prosperous.
the financial system was created by people, not the government. the government gave a select group of people the license to run the financial and currency systems. Of course, there is no way 99% of the people that are “in” the market can know what is going to happen or the effect that changes to currency values will have. Its crazy to think otherwise. The media has created the myth that the market can be anticipated by reading charts/tealeaves, whatever. When in fact, what happens, happens because these select people MAKE it happen.
In the 20’s, the market was seen as immoral, a tool of the devil. christians preached against participating in this charade and instead encouraged thrift and hard work to attain ones wealth. We should have listened to our elders.
Whenever the market moves, there are “winners” and “losers”. The media selects the current “winners” who become the new gurus until they, too, become the next losers.
Elaine, how do you manage to crank out all of this content. I have been writing all weekend against a deadline and am seriously considering fleeing the country. I am so sick of writing that I am secretly hoping for some sort of natural calamity as a diversion.
I wholeheartedly approve of your exposing the role many popular musicians (and the entertainment industry scam in general, by extension) play in this whole mess.
Paul McCartney is a freaking Knight of the realm. That makes me sick. And I saw Brian May play ‘God save the bloody queen’ really loud standing on a tall stack of speakers in front of thousands of people at one of those so-called ‘aid’ events.
There was an episode of King of the Hill where a hippie band came through Arlen doing some kind of benefit. As Hank was about to introduce the band near the end of the show, he reported on all of the behind-the-scenes corruption he discovered through the course of the plot to the audience. But at the end of the day, the people didn’t care, they just wanted to get a buzz and see a show.
This is one reason why I gave up on a music career. You can Rage against the Machine until doomsday but all that will happen is people will mosh out their frustrations and then go right back to being cogs in the machine.
It’s a shame, because decent music is pretty much just going to waste in some cases.
But not U2, they are bloody lame, and that is my professional evaluation.
Classical music can be cheesy as well. In LA they are trying to turn Gustavo Dudamel into some cult of personality. He gesticulates wildly and makes interesting faces and audiences love those sorts of theatrics, but it really just makes the musicians’ jobs more difficult. They could easily live without that stuff.
Here is an article about CIA involvement in influencing blogs and media in general.
I think the crowd here will find it interesting.
Darpa and the CIA excel in disinformation campaigns. I grew up inside the CIA structure and know how lies operate. I also understand science and know how IT operates, too.
Many people who fall for fake conspiracy stories don’t understand the basic underpinnings of science and worse, do not understand how the human brain processes information.
Whenever I talk about the brain and its immense powers to self-decieve people get mad at me.
Everyone wants to think their brains are their own and not occupied territory. And can’t figure out that the very best propaganda plays on people’s beliefs and reinforces itself via them VOLUNTARILY consuming ONLY propaganda, all the time.
This is why many websites refer only to other sites and don’t refer much to any mainstream information. I stick mostly to mainstream information and try to understand it, not simply make up stuff and claim, this is the real reality.
As for the article that mocks the mainstream media for reporting the economy saying it is getting better: it IS getting better in many ways.
But the fundamentals are still off, badly off. There can be two things at the same time, this is normal, not a conspiracy. The media knows that reporting good news in the economy gets more readers than bad news.
In the conspiracy side of the net, they want only bad news because the readers want confirmation that everything is evil.
This is similar to religious sites which think everyone is sinning all the time and have to be saved.
The real debate about the previous Great Depression must go on, obviously, but demanding that we think we are going to collapse tomorrow is foolish. We are still in the status quo and not in revolutionary change right now.
“Darpa and the CIA excel in disinformation campaigns.”
Yup. See how well they served these chimpanzees. Welcome to the Planet of the Apes.
@domingo: Robert Kraft is a notorious gimme-girl of a gnome whose favorite sport is playing states off of each other so he can get some moolah out of the tax kitty of the fan base he likes best. Back in the 1990s he courted CT to build him a new stadium for his New England Patriots only to turn around and extort money from MA to build a new stadium around the old Shaefer / Sullivan / Foxborough Stadium outside of Boston.
@cc: They most certainly did. And they managed to manipulate us all into swapping out one set of overspending war criminals for another. Other than the color of the President’s skin, we’ve got extremely little change since this past January.
“Its disappointing that it isn’t possible to die of shame.”
To die of shame, one must first actually feel it, and unfortunately, most criminals and pyschos and gnomes feel none at all.
It would be better for most of us if people died from greed.
I saw on “headlines” that the new German chancellor plans to “cut taxes and reform health care”. We all know what this means. I would not include Germany in the group of nations that will survive the collapse just yet.
As for U2, that was my favorite group right before I lost my hearing, but I saw what fame and money did to them and how it also changed their music (which turned to total crap). I really loved their “Sunday Bloody Sunday” album, but after that they just started producing utter crap, and I do believe all the albums they have put out since I lost my hearing were probably just as crappy and meaningless. I don’t feel like I missed out on anything regarding them.
It is so strange to see how musical groups that became famous because they addressed difficult social issues later transform themselves into meaningless bands who no longer care about the social issues that made them famous in the first place.
America is now a feudal society in all but name, and the people support it because they all dream of becoming one of the feudal overlords, but this rarely, if ever, happens. Sometimes, it takes upwards of a thousand years for the serfs to figure this out.
http://www.creditwritedowns.com/2009/10/bohemian-bankruptcy-a-tragedy-by-drag-queen.html If you don’t like the embed thingy. Either way, this is a hoot.
I shopped in Japan during the ZIRP years in the early 2000s. The crap in their malls was really bad. I examined computers and electronics that looked and performed three to ten years behind the times. I remember being amazed. I couldn’t reconcile that crap with what was available at the time in the U.S. at CompUSA or CircuitCity.
Today, if the U.S. goes into a ZIRP system then it has several critical differences with Japan’s ZIRP sytem in the late 1990’s: Japan could balance the downward pressure of a ZIRP economy with the devalued currency boost to its export economy during the front side of the Hubbert curve, all the while selling into a U.S. economy building debt. The U.S. has no such luxuries going into a ZIRP system.
“But not U2, they are bloody lame, and that is my professional evaluation. ”
Wow, all these years I’ve thought the same thing with a couple of exceptions, I find their music not very listenable.
Huge Beatles fan, but I think only John and George returned their MBEs. Paul, well he was always a businessman.