Aug

8

The Goldman Sachs White House

Filed Under Intellectual Honesty | Leave a Comment

Just because someone is Socialist, Green, Communist, Anarchist doesn’t mean their views should be dismissed.  Often, it is “radical” individuals who feel more comfortable voicing the truth than those that are popular and have more at stake.  People like Dennis Kucinich, Bernie Sanders and Ron Paul bring a lot more truth to light than those that are far more  popular.

Andrew Cockburn, a socialist, writes an important piece for Counterpunch detailing the extent to which a few financial firms have the full ear of the White House.  As the US consolidates more power at a national level and with the Executive Branch of government, we see that these conflicts of interest will be more pronounced and dangerous.

Takeaway:  Popular arguments are rarely thought-provoking.  That which assuages us, nurtures our pre-existing worldviews and cannot possibly help us learn and grow.  Read what you disagree with.

Jun

5

Bernanke and Paulson Are Liars

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We all know politicians put on one face for the masses and another face behind closed doors.  It is rare we get a candid moment when we realize how two-faced our leaders can be.

Fast forward to five hours, eighteen minutes of this clip.

Do you know what the Secretary of the Treasury and Chairman Bernanke told us that famous meeting or several meetings that we had?

That we’re 24 hours away from total meltdown of the American economy and 72 hours away from total meltdown of the world economy.  That it would take us back several hundred years.

That we did not have even the security to feed America if it happened.  I could go on to other scary things but I’m not about to do it now.

Amazing.  Whenever Bernanke or Paulson was in front of a TV or in front of cameras last Fall they gave the same copacetic assessment about how the economy was stable and everything was fine.  However, to those that have power and influence, he tells a much different story.

The American people can remain confident in the soundness and the resilience of our financial system. – Hank Paulson, 9/21/2008

We often discover leaks in the Matrix.  We can all remember seeing our parents do things for the first time that let us know they were human and not perfect.  Likewise, our government is not perfect and instead of romanticizing the political process or “parties”, it is more beneficial to focus on safeguarding ourselves from the inevitable economic problems we will encounter.

I’ll be sitting down this weekend and mentally trying to imagine how I would respond to various different stress scenarios and what the outcomes would be.  It never hurts to check.  Better safe than sorry.

Takeaway: This video clip contains a startling admission.  It demonstrates the contempt that Washington has for its own citizens.  Instead of falling for the celebrity reality-show “Inside the Obama White House”, turn off the TV and do some thinking about what could happen if our “leaders” get it totally wrong.

May

12

Defense Spending – What Are Our Priorities?

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James Frick is noted for saying:

Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.

I believe that is a great thing to think about when reading this article from Counterpunch on national defense spending.  It is highly unlikely Obama can or will make any type of dent in the military-industrial complex.

National defense spending is one thing, but does the money get spent wisely?  Obviously not.  Sophisticated weapons gets priority over those that, you know, serve.

National defense is the biggest responsibility for a country’s government.  Spending $1 Trillion per year should get us farther than shoddy VA hospitals, over 150,000 homeless veterans and mentally traumatized soldiers.

Takeaway:  It’s important to remember that no matter which party is in charge, money you give the government gets redistributed according to the whims of your elected “leaders”. Ignore the rhetoric, follow the money.

May

10

Lessons to be learned from the Stress Test

Filed Under Economics | Leave a Comment

The Stress Test results were revealed last Friday after much anticipation.  The test and broadcast of the results were quite telling and there are several things we can learn from this.

My initial reaction of skepticism was confirmed when many reputable bloggers (with their own capital on the line) expressed similar qualms over the weakness of government’s test.  The two short articles I have quoted are well worth the read.

A former FX trader, “Dude”, suggests that the test is direly lacking real-world stress. He cites much more dire scenarios, which the government has not tested:

1) China didn’t show up at a Treasury Auction and bond rates jumped 3-5%
2) China started dumping US$s on the open market and our exchange rate dropped 10%
3) The Fed, under such conditions, had to raise the Fed Funds rate by 5% quickly
4) An act of war or natural disaster struck one of the big coastal cities, putting it entirely out of commission thus pushing GDP down 6-10% quickly

Admittedly, the Treasury is more interested in a longer view than I was, although given the highly leveraged derivatives positions, they might be well served to also inquire about substantial, discontinuous price changes.

I’m troubled that they don’t test for what the past suggests is possible.

What if Unemployment goes to 30% as it did in the 30s?

What if Inflation falls to -5% or rises to 12%?

What if Fed Funds goes to 17% as it did in the early 80s?

What if we can’t roll-over our foreign held debt, as has happened to most nations which have run up as large an external debt position as ours?

Karl Denninger at Market Ticker mentions:

According to The Fed’s “More Adverse” scenario prime delinquencies will reach 3-4%. Note that the PRESENT serious delinquency rate on Fannie’s credit book for single family homes is at 3.15%.  Nowhere in the “mainstream media” (e.g. CNBC, etc) has this been mentioned but it is literally right in your face while reading the Fannie quarterly report.

If we accept the above as true, we must logically draw one of two conclusions.

  1. The government knows that the stress the system could endure could be much worse.  They have decided to deliberately ignore or discount this data to assuage our fears and not report the full truth to us.  In other words, they are knowingly lying to us.  If this is in fact the case and if the government is trying to deceive us, Geithner, Bernanke and Obama should be held responsible for the misdeeds, regardless of political party.
  2. The government is ignorant of these facts that other individuals have adroitly discovered.  This would mean they are not the most intelligent or conscientious leaders to be running our financial system.  They are not fit to be in charge and should be removed as soon as possible, regardless of political party.

Takeaway:  There is a simple theme we can learn from the stress test and it comes from Buddha.  He says:

“Believe nothing, no matter where you read it or who has said it, not even if I have said it, unless it agrees with your own reason and your own common sense.”

Ben Bernanke has made statements such as:

“It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions.”

(Freddie and Fannie) “…will make it through the storm”, “… in no danger of failing.”,”…adequately capitalized”

We’ve had a $700 billion bailout and numerous corporate-welfare financial programs (CPFF, TLGP, PPIP, CPFF, TARP, etc.).  Fannie and Freddie have been nationalized.

Karl Denninger has published his remarkably accurate predictions publicly (2008, 2009) and stood by them.  People might think you’re a fool for believing a blogger, rather than an MIT-educated expert.  Look at the evidence and track-record and decide for yourself. Just because someone is a popular leader (religious, business, political) or has a popular title doesn’t mean they are any more thoughtful, intelligent or honest than someone without popularity.

For more on the crisis, read here.

Jan

26

US Journalism versus International Journalism

Filed Under Intellectual Honesty | 1 Comment

There is a noticeable difference between US and World Journalism.

US Version – Al Qaeda is losing, US is winning.

International Version – Children are dying and citizens oppose US militarism in the region.

In order to get an accurate picture of reality, I have found it helps to take a look at both the US and international versions of events.

Given the media fawning over our new President, there is a great likelihood that the coverage will tend to be viewed through the lens of patriotism.

To read more about media inaccuracy, click here.

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