The Dukes Of Hazards Crash Into Our Economic Cars

ΩΩThe US passively allows banks and corporations to evade taxes via various royal islands and havens run by the Queen of England, the Sheikhs of the oil pumping nations or old royalists in small mountain kingdoms in Europe.  Wild spending on wars and social services (guns and butter) still continues virtually unabated even as tax dodging continues to rise.  On top of this, the fiat funny money Japanese carry trade business that dumped immense debts on the public continues to be a major problem and the fixes being contemplated are insane as we shall see with the Fannie Mae mess, for example.  Someone has to pay for all of this and that is where the real explosive mess lies in the future.

Companies Dodge $60 Billion in Taxes Even Tea Party Condemns –

The profits from his $99 purchase began a 9,400-mile journey that would lead across the Atlantic Ocean and more than halfway back again, to a grassy industrial park in Dublin, a glass skyscraper in Amsterdam and a law office in Bermuda surrounded by palm trees.


While Forest Laboratories Inc., the medicine’s maker, sells Lexapro only in the U.S., the voyage ensures most of its profits aren’t taxed there — and they face little tax anywhere else. Forest cut its U.S. tax bill by more than a third last year with a technique known as transfer pricing, a method that carves an estimated $60 billion a year from the U.S. Treasury as it combines tax planning and alchemy. (See an interactive graphic on Forest’s tax strategy here.)


Transfer pricing lets companies such as Forest, Oracle Corp., Eli Lilly & Co. and Pfizer Inc., legally avoid some income taxes by converting sales in one country to profits in another — on paper only, and often in places where they have few employees or actual sales.


ΩΩOne of my themes here is how businesses and bankers are on a constant restless search for glitches, loopholes and flaws in various systems so these can either be exploited or enlarged. When it becomes painfully obvious that everyone is using the same tax dodges or loopholes or systems and that this is draining wealth from important systems, these loopholes, glitches and flaws have to be fixed as fast as possible.


ΩΩNow, all of these opportunities to evade regulations, rules, laws and taxes usually start of very small but eventually all competitors MUST do what the innovators who found these flaws are doing or they die.  So everyone ends up doing the same thing in unison.  When they all finally succeed in following the same strategy of exploiting an error in wording or a system that was set up to exploit differentials in laws, regulations, etc, the day everyone does the same thing, all surrounding systems or the parts being cut off by these loophole exploiters, die and thus, cause other systems to crash in succession.


ΩΩWe are in the middle of a major global collapse due to all the major players using the same ruses and schemes to avoid regulations and rules and taxes.  As sovereign nations are starved of tax funds, the nations die!  People die!  Things literally blow up! Wall Street shares slide, spooked by bank probe and Greece blast – Telegraph, Thai Troops to Clear Protesters Outside Main Demonstration Site – Thailand is now very violent while Greece is now seeing bombs going off and this is the beginning of this latest global economic crisis violence!


ΩΩWhen legislators notice gaping holes in the system, they have two choices: fix the glitch or make the hole much wider.  The needs of sovereign nations demand these tax glitches be fixed as fast as possible but corrupt humans exploiting these errors want these to be even better errors so they can totally evade taxes so they pay the politicians handsomely to not fix anything.  So it is with the US: nothing gets fixed and the pirate coves thrive while absolutely everyone evades taxes!


ΩΩGreece is going under because not only the rich and powerful are evading taxes, now the entire population evades taxes.  So the country goes bankrupt.  This bankruptcy happens very fast but the moral corruption (bribing politicians to not fix obvious flaws) is long term and very debilitating and hard to throw off.  Morals matter.  The moral concept of protecting one’s nation and sovereignty so the entire people are protected while at the same time, working in tandem, the government, the judiciary and business, to keep an even keel and to patch all holes in the hull.  Instead, we have a moral model in the US that knocking holes in the hull is good business and should be protected and encouraged.


Fannie & Freddie don’t reduce balances on their mortgages – May. 14, 2010

Some 59.5% of Fannie’s loans and 57.3% of Freddie’s loans were in default a year after modification, compared to 40% of bank-portfolio mortgages, according to a joint report from the Office of Thrift Supervision and Office of the Comptroller of the Currency. This is part because banks are reducing the principal on their own loans, experts said.


So, advocates argue, lowering loan balances now can actually save the companies — and taxpayers — money later.

. ….What might force the companies’ hand is another Obama administration foreclosure prevention plan called the Hardest Hit Fund, which has charged 10 states to come up with innovative ways to help the unemployed and underwater.


Four states have proposed using their share of the $2.1 billion fund to pay off up to $50,000 of underwater homeowners’ balances, but only if loan servicers and investors — including Fannie and Freddie — agree to match the writedowns. State officials are currently in negotiations with the pair.


ΩΩGood grief, this is what happens whenever a system is allowed to sail off the cliff. It was painfully obvious that we had this ridiculous credit bubble game which was played mainly in housing and buy out corporate businesses.  The way to nip this was laughably simple: RAISE INTEREST RATES.  Instead, Greenspan kept it well below the rate of real inflation.  This fixed the 9/11 fall in stocks and commerce and also enabled the government to overspend on wars while in a recession.  Instead of recession, we got this stupid bubble.


ΩΩDuring the downturn last year, the government handed out $4,500 goodies to people wishing to buy new cars.  I was very, very offended by this.  I didn’t get $4,500 to deal with insistent inflation!  I had to tighten my own belt!  And this bonus given to private people to drive cars and thus raise the amount of CO2 in the atmosphere, was put on our collective bills.  This money will have to be paid back by everyone just like all the war money we are misspending.


ΩΩThis national debt didn’t go into public transportation!  It was handed over as a gift to people driving gas guzzling behemoths.  The gas mileage improvements required by this gift from the taxpayers only had to be 2mpg better than the car being junked!


ΩΩNow we are giving people who bought way over their heads or dumped tons of debt on their homes using it as an ATM money machine, we will hand out $50,000+ to them, too?  Good lord!!!!  Countries can and do go bankrupt very swiftly and this is how it happens.  Not only that, this $50,000 gift can be doubled by Fannie Mae which can then match this goodie!  All of this $100,000 free money isn’t free at all: it is a LOAN but instead of being held against foolish and stupid home buyers and the corrupt and evil bankers who lent the money so recklessly, this debt will be held against our entire sovereign nation!  Insane!  Insane!


Obama Seeks $80 Billion for New Nukes — News from

According to Secretary of Defense Robert Gates, the money would be spent to “rebuild and sustain America’s aging nuclear stockpile.”….Despite very public efforts to declare himself an advocate of total nuclear disarmament, President Obama has made no secret of his ambitions for an updated nuclear stockpile, ostensibly for “safety” reasons.


ΩΩIf we are going to take on $150 billion more in debt to bail out bankers and stupid home owners (during the cheap lending era, I reduced my own home debt to $0!!!! Anyone could have done the same!) why not throw in an extra $80 billion for our nuclear arsenal?  Iran was just handed a huge club to whack us with, yet again.  This isn’t disarmament!  This is the US trying to make itself a greater menace to all humanity!  These nukes are aimed specifically at two major targets: China and all Muslim nations!


ΩΩObama Seeks $205 Million to Fund Israeli Missile Defense — News from Congress, being utterly corrupt and evil, votes again, overwhelmingly, to spend even more money on one of the richest nations on earth, Israel.  The Jews feel that sucking down all our wealth is OK so long as they nickel and dime in so we don’t notice.  AIPAC always sees its financial wet dreams passed without much comment in the press or on TV.  They have no shame at this point.


Senate panel approves money for Afghan, Iraq wars – Yahoo! News

A Senate committee on Thursday approved another $33.5 billion for the wars in Afghanistan and Iraq this year, although some members said they did so reluctantly….Chairman Daniel Inouye said he hoped the Senate would act on the legislation by the end of May. The money comes on top of about $130 billion that Congress already approved for the Afghanistan and Iraq wars through September 30 of this year.


ΩΩObama lied to us and claimed he would cease the endless off budget deals for our expensive wars.  So here it is: exactly as bad as when the GOP ran things.  This is because AIPAC runs things and there is no such thing as a war too many against Muslims.  This is now at $240 billion this year on top of the $600 trillion+ budget if we add up the amounts in these three new stories just from today!  All of this quarter trillion spending is OFF BUDGET and is being added.  I can see why the corrupt pigs in Congress think nothing about adding another half a trillion to bail out our corrupt and stupid banking/lending system, too.


ΩΩ Last of all today, here is an email from John F. in England, one of my readers and someone I correspond with on a regular basis:

Unlike in dying Japan, England is very, very rowdy and I expect actions like what we see in Thailand or Greece to pour into the streets in England. .

True Elaine, this f*kd up nation is very nasty and aggressive, but these days it’s confined to Saturday nights when we are all drunk and fighting amongst ourselves. .

I was present at the Poll Tax “riot” in 1990, when South Africa House was set on fire. But back then, we still had a Labour Party with a dissafected membership, the scarred remains of a trade union movement and some notion of society. .

In Scotland now, there exists a new trade union party; going right back to the roots of the labour movement. It’s sad that in the most advanced capitalist nation on earth that the globaly unique political formation of unions, Trade Union Congress, and the Party is having to rebuild from scratch because it’s broken beyond repair. .

England led the world into capitalism. It is now far ahead in the decline as the State itself is cannibalised and contracted out to foreign businesses.


. ….(LeavingThe drivers (clearly trash bins) will be having to take a weeks holiday and cough up £500 for a new qualification and registration that has been invented by the parasites. The drivers over 45 will now have to pay for their mandatory medicals themselves. .


(The writer complains about how unions in Britain are defanged or degenerated into selling services to workers instead of fighting for better working conditions or stopping the flood of aliens undercutting pricing of services) If the council refuse employees ever form a picket line, I cannot see myself being desperate or degraded enough to cross it, but I don’t think they have the fight in them. .

As I see it, the English working class are defeated. It started when Thatcher beat the miners in 1984.

.Rowdyism without a doubt, but I don’t see it amounting to anything more threatening than some poor people of colour being beaten to a pulp in the street.

.I hope I to be surprised.


ΩΩI deleted all of the personal information. Yes, England will blow up. There is no doubts about this. Throughout history, whenever corruption allows wholesale looting of the public treasury via tax evasions coupled with wild spending that doesn’t benefit public services and national infrastructures, we get not just economic collapses but eruptions of greatest violence. This is why passively allowing corruption and loophole building to grow is extremely and totally dangerous. The ruling elites refuse to learn lessons for obvious reasons: the wealth they get via corruption is so tempting, they tend to rationalize history and negate the probabilities of revolutions, riots, social collapse, the total death of a culture (a la Japan today or ancient Rome!) or other hazards.


ΩΩThe moral need to have a well-regulated, well-organized, fair and clean system with a minimum of graft and where virtues such as saving money, caring for neighbors, cleaning the environment and using diplomacy rather than war to protect a nation, are all virtues which are pursued rather than mocked.


ΩΩCleaning up Congress is definitely on the agenda. The Tea Party, having very little philosophical basis of unity, wants to stop taxes and spending but NOT AIPAC. The core corruption here has been extended by the Supreme Court with the Vatican Opus Dei crew sitting there voting in a bloc for no regulations at all in election spending! So morals are degrading even worse, not improving.


ΩΩThis is one giant loophole exploited by the army of tax evaders who want many tax loopholes so they can get a free ride on the back of our massive national economy. That is, the ability to bribe Congress is laughably easy when it is disguised as an election donation! This farce is the most important one we must go after and the Tea Party has zero desire to do this any more than the GOP or the DNC.


ΩΩAll the previous efforts at restraining election donations disappeared after 2000 and now are officially gone. Multimillionaires and multibillionaires are taking over greater parts of our government directly as we saw in NYC for example, with Mr. Bloomberg, a man who hides most of his wealth in Bermuda, unilaterally overturning a popular term limit law and outspending his political rival 10-1 in what was basically a rigged election. NYC is also the home base of much of this mess: it is Wall Street, literally.


ΩΩThe city is in financial trouble while Goldman Sachs which towers over Lower Manhattan, rolls in dough.


ΩΩTax those bastards to pay for their wars that they wanted! Tax them all to hell.

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Filed under .money matters, Free Trade, war and peace

10 responses to “The Dukes Of Hazards Crash Into Our Economic Cars

  1. payAttention

    You always claim to be rational, but I see the opposite. Why would you call for increased taxes. Even Stanley Tool Works is in Bermuda, along with Bloomberg and a few hundred others, all pharma is in Ireland or Puerto Rico, Haliburton is in Dubai, you are in Mohicanstolenland USA. Guess who will be taxed? The Goldman tower on Water street was paid with 9/11 bonds, meaning taxes. If they walk, they finish writing off the small part that is theirs and go to Bermuda with Mayor Mike. Since you claim to know about the history of the Great Depression, you may know about the sheriff’s tax sales of family farms from Steinbeck. Although I think it is more likely that your family was buying the lands, rather than being evicted, since you are a ruling elite. So the increased taxes will mean sheriff land sales, since no one can pay any more than now, with declining incomes and severe debt loads. Why the heck would you want that? And when the states increase taxes, they will quote your articles and say that the people wanted more taxes.

  2. Joseppi

    To what depth’s will we descend as unservicable debt sucks credit out of the system and creates the downward spiral of deflation?
    This despite the central bankers bailing out insolvent banks using accounting fraud and the hyper printing of currencies to purchase worthless sovereignty bonds of countries like Greece (California).
    What will be the next strategy for the world financial stormtroopers the IMF?

  3. payAttention

    No way Fed purchased California bonds. They do not care if states have to raise taxes or lay off employees. Those are not the Fed’s constituents. You have a lot to learn.

  4. charlottemom

    I sense a lot of frustration on your part Elaine. I am outraged too.

    “Tax those bastards to pay for their wars that they wanted! Tax them all to hell.”

    Those bastards are virtually untaxable! Taxing them means taxing ourselves as it will be passed on to us. Taxing them is akin to punching a pillow.

    I’m seeing a smaller and smaller window of opportunity for reform of any kind of our corrupt structures – financial, political, etc. I think US will soon be in European-style financial crisis with states pitted against each other.

    Waiting to hear US politicans argue for austerity measures and increased taxes a la Europe…

  5. Joseppi

    Well, Mr. Payattention – It’s the FED, not the Fed that cares about the financial institutions holding municipal and state bonds. Bailouts are the new normal in the Ponzi world of extend and pretend. You can bet on it.

  6. Gus

    In the BOE world banking
    system, money is loaned
    into circulation. The interest
    that must be paid is not put
    in circulation.

    The loans cannot be paid back because there is never
    enough money in circulation to pay the debt.

    Whether the private sector
    or the public sector wants
    to grow the economy, more
    money must be borrowed
    into circulation.

    The “bail outs” just mean
    more public debt. Then
    they use this debt to
    justify raising taxes!

    Welcome to

    “I tell you this, I’m gonna get my kicks before the whole shithouse goes up in flames.” – Jim Morrison the way, the NWO
    wants a race war it seems.

    This movie has deniro,
    don johnson, lohan and a few other well know hollywood actors!

  7. if

    Fekete’s point is absent a wholesale destruction of US production, a shrinking money supply and reduced velocity is a harbinger of deflation.

    He offers an alternative theory, the Black Hole of Zero Interest:

    When the Federal Reserve (the FED) is pushing the rate of interest down to zero (insofar as it needs pushing), wholesale destruction of capital is taking place unobtrusively but none the less effectively. Deflation is the measure of wealth in the process of self-destruction — wealth gone for good. The Fed is pouring oil on the fire as it is trying to push long-term rates down after it has succeeded in pushing short term rates to zero. It merely makes more wealth self-destruct, and it makes the pull of the Black Hole irresistible.

    Velocity. What money-supply watchers always seem to overlook is the velocity of money, how fast it turns over:

    * Velocity decreases when deflation looms, as people hoard money (save, pay down debt, spend less)
    * Velocity increases when inflation looms, as people trade it for tangible things (they spend it as fast as they get it)

    When you look at the Weimar hyperinflation, and other incidents (Austria at the same time, Hungary in 1946, Argentina so many times), what you see is inflation is much higher than growth in money. This means velocity went up faster than the money supply. If people expect the Riechsmarks they get in the morning to be worth half as much by evening, they pile it in shopping carts and rush to the stores. THAT creates hyperinflation.

    Nothing of the sort is happening right now. Verdict: gold should drop.


    I would put this economics debate more prosaically as: we have barely begun the process of debt write-off and de-leveraging. That process will rapidly reduce the money supply, since in a fiat currency regime, credit creates money (debt becomes purchasing power and turns into bank accounts somewhere). Imagine what happens if the Euro-TARP fails to prevent the defaulting of Greek (and Portugal, etc). The debt gets written off and money is destroyed despite the attempts to keep the game going. As Fekete puts it:

    Charles Ponzi’s dream has come true. The US Government is duplicating Ponzi’s scheme in the bond market

    If deflation is on us, gold will drop, as the Dollar (and Euro) will rise. If the Euro-TARP fails, the Euro will drop and rapidly bottom; the changed expectations of the coming debt destruction will then cause its value to rise. Oil has already rolled over, and so gold may soon, too. It would indicate an expectation that the wolfpack of shorts will outlast the ECB.

    So: gold tops near where the Euro bottoms, after the wolfpack wins.

    When might that be? It took the Austrian government a month to fail when they supported the Creditanstalt Bank in May 1931. While stocks seem to be unfolding this time around about 1/3 the pace of 1929-31, at the rate the Euro is sliding the endgame may be only a matter of weeks. The Euro has gone all in with a poor hand, and the wolves are ripping apart the pretense that more debt can solve an insolvency problem.

    If Europe fails to mass an intervention by Monday, the game may already be over, and gold will have topped.

  8. emsnews

    When Japan went ZIRP, what we saw was not lots of investment in Japan but rather, in the HIGHER interest countries! For example, Australia had a housing bubble boom but its was not at ZIRP rates at all while Japan, running ZIRP for nearly two decades, has a dead housing market!

    The only entity that grows massively under a ZIRP regime is public debt. So, Japan’s housing collapsed and stayed in the cellar while Japan’s national debt ballooned and now is double its GDP!

  9. Joseppi

    If states that as the amount of money decreases in a deflationary period, which we are presently immersed in, despite ZIRP – then commodity prices should decrease because of there being less money, because servicing past debt is consuming more money than governments have to fund their present day obligations.

    Therefore, velocity of money also slows because everyone fears there’s not much of it.

    At the same time we have governments around the world struggling against deflation by issuing currency in the form of fiat credit, thereby, decreasing the value of their respected currencies. Except for the US dollar because of the present fleeting fear factor.

    Currencies are depreciating in their fight to stop deflation and to have an export advantage – So I have to ask the questions –

    What metals with a history of their ability to maintain value in which currencies are depreciating?
    What metals transcend the concept of having value strictly as a commodity?

  10. emsnews

    The US dollar may decline against the euro or the yen but NOT against all important commodities! This is ‘fiat fueled global inflation’ via the US.

    As Europe and Japan lower their currencies against the dollar, they pay much more for energy or gold which means…inflation! This is a classic squeeze job: inflation bites everyone even as a depression hammers everyone. That is, the dread beast Stagflation comes bounding out of the forest.

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