HawthorneVillager.com

This is incredible....but i love this move...congrats on the OBAMA ADMINISTRATION

NOW THAT INFLATION IS RIP ROARING AWAY, WE ARE GETTING SQUEEZED
WAGES ARE BEING CRIMPED, OUR NUTS ARE BASICALLY IN A VISE

maybe there might be a light at the end of the tunnel., so with rates, that might be on rise in the short run, it may a good time to lock in

goodluck
House passes bill to tax employee bonuses at AIG, other companies with big bailouts


WASHINGTON (AP) -- Denouncing a "squandering of the people's money," lawmakers voted decisively Thursday to impose a 90 percent tax on millions of dollars in employee bonuses paid by troubled insurance giant AIG and other bailed-out companies.
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The House vote was 328-93. Similar legislation has been introduced in the Senate and President Barack Obama quickly signaled general support for the concept.

"I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated," the president said in a statement.

House Speaker Nancy Pelosi, D-Calif, told colleagues, "We want our money back now for the taxpayers. It isn't that complicated."

The outcome may not have been complicated. But the lopsided vote failed to reflect the contentious political battle that preceded it.

Republicans took Democrats to task for rushing to tax AIG bonuses worth an estimated $165 million after the majority party stripped from last month's economic stimulus bill a provision that could have banned such payouts.

"This political circus that's going on here today with this bill is not getting to the bottom of the questions of who knew what and when did they know it," said House Republican Leader John Boehner of Ohio.

He voted "no," but 85 fellow Republicans joined 243 Democrats in voting "yes." It was opposed by six Democrats and 87 Republicans.

The bill would impose a 90 percent tax on bonuses given to employees with family incomes above $250,000 at American International Group and other companies that have received at least $5 billion in government bailout money. It would apply to any such bonuses issued since Dec. 31.

The House vote, after just 40 minutes of debate, showed how quickly Congress can act when the political will is there

I don’t think it’s time to lock in mortgage rates just yet (for us variable holders). If the BoC follows the Fed, which they will, and print money to buy bonds, it will force down mortgage rates (that’s the goal afterall). This happened within 24 hours of the FED announcement in the US.

The key is that there is going to be a lag of 6-12 months before this shows as inflation, and market forces drive the rates through the roof. You want to convert after the rates drop, but before inflation surfaces. I’m guessing this will take place around September. Lock in, or you’ll be paying 10,15,20% on your mortgage. Remember, historically mortgage rates are around 8-10%. They are abnormally low right now, and when they go up they will NEVER be at 5% again. Those 10 year mortgages at 6% look pretty good in that context. I’m hoping to see them go to 5%. I’ll buy that security in a heartbeat!

The Mother of All Bells BY THE ONE AND ONLY PETER SCHIFF


There is an old adage on Wall Street that no one rings a bell at major market tops or bottoms. That may be true in normal times, but as many have noticed, we are now completely through the looking glass. In this parallel reality, Ben Bernanke has just rung the loudest bell ever heard in the foreign exchange and government debt markets. Investors who ignore the clanging do so at their own peril. The bell’s reverberations will be felt by everyday Americans, whose lives are about to change in ways few can imagine. While nearly every facet of America’s economy has been devastated over the past six months, our national currency has thus far skipped through the carnage with nary a scratch. Ironically, the U.S dollar has been the beneficiary of the global economic crises which the United States set in motion. As a result, our economy has thus far been spared the full force of the storm.

This week the Federal Reserve finally made clear what should have been obvious for some time – the only weapon that the Fed is willing to use to fight the economic downturn is a continuing torrent of pure, undiluted, inflation. The announcement should be seen as a game changer that redirects the fury of the financial storm directly onto our shores.

In its statement, the Fed announced its intention to purchase an additional $1 trillion worth of U.S. treasury and agency debt. The purchases, of course, will be made with money created out of thin air through the Fed’s printing presses. Few can doubt that they will persist with these operations until the economy returns to its former health. Whether or not this can ever be accomplished with a printing press alone has never been seriously considered. Bernanke himself admits that we are in uncharted waters, with no map or compass, just simply a hope that more dollars are the answer.

Rather than solving our problems, more inflation will only add to the crisis. Falling asset prices, the credit crunch, declining consumer spending, bankruptcies, foreclosures, and layoffs are all part of the necessary rebalancing of our economy. These wrenching movements, however painful, are the market’s attempts to resolve the serious problems at the root of our bubble economy. Attempts to literally paper-over these problems will lead to disaster.

Now that the Fed has recklessly shown its hand, the mad dash to get out of Treasuries and dollars should not be far off. The more the Fed prints to buy bonds the less the dollar is worth. Holders of our debt (read China and Japan) understand this dynamic. We must expect that they will not only refuse to buy new bonds, but they will look to unload those bonds they already own.

Under normal circumstances, if creditors grew concerned that inflation was eating into their returns, the Fed would raise interest rates to entice them to buy. However, the Fed will avoid this course of action as it fears higher rates are too heavy a burden for our debt laden economy to bear. To maintain artificially low rates, the Fed will be forced to purchase trillions more debt then it expects as it becomes the only buyer in a seller’s market.

Just last week, Chinese premier Wen Jiabao voiced concern about his country’s massive investments in U.S. government debt. In the most unequivocal statement yet by the Chinese leadership on this issue, Wen made it plain that he was concerned with depreciation, not default. With his fears now officially confirmed by the Fed statement, we must wonder when the Chinese will finally change course.

There is a growing consensus that if China no longer wants to buy our bonds, we can simply print the money and buy them ourselves. This naïve view fails to consider the consequences implicit in such a change. When the Treasury sells bonds to China, no new dollars are printed. Instead, China prints yuan which it then uses to buy treasurers. This effectively allows America to export its inflation to China. However, now that we will be printing the money ourselves, the full inflationary impact will fall directly on us.

With such a policy in place, America has now become a banana republic. It won’t be too long before our living standards reflect our new status. Got Gold?

SO MANY THING S TO CONSIDER HERE ,

ANOTHER 700 K HIT THE UNEMPLOYMENT LINES...THATS TOUGH TO SWALLOW

Financial Policy Despair
comments (493)
PAUL KRUGMAN
Published: March 22, 2009
Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.



This is more than disappointing. In fact, it fills me with a sense of despair.

After all, we’ve just been through the firestorm over the A.I.G. bonuses, during which administration officials claimed that they knew nothing, couldn’t do anything, and anyway it was someone else’s fault. Meanwhile, the administration has failed to quell the public’s doubts about what banks are doing with taxpayer money.

And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.

It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.

Let’s talk for a moment about the economics of the situation.

Right now, our economy is being dragged down by our dysfunctional financial system, which has been crippled by huge losses on mortgage-backed securities and other assets.

As economic historians can tell you, this is an old story, not that different from dozens of similar crises over the centuries. And there’s a time-honored procedure for dealing with the aftermath of widespread financial failure. It goes like this: the government secures confidence in the system by guaranteeing many (though not necessarily all) bank debts. At the same time, it takes temporary control of truly insolvent banks, in order to clean up their books.

That’s what Sweden did in the early 1990s. It’s also what we ourselves did after the savings and loan debacle of the Reagan years. And there’s no reason we can’t do the same thing now.

But the Obama administration, like the Bush administration, apparently wants an easier way out. The common element to the Paulson and Geithner plans is the insistence that the bad assets on banks’ books are really worth much, much more than anyone is currently willing to pay for them. In fact, their true value is so high that if they were properly priced, banks wouldn’t be in trouble.

And so the plan is to use taxpayer funds to drive the prices of bad assets up to “fair” levels. Mr. Paulson proposed having the government buy the assets directly. Mr. Geithner instead proposes a complicated scheme in which the government lends money to private investors, who then use the money to buy the stuff. The idea, says Mr. Obama’s top economic adviser, is to use “the expertise of the market” to set the value of toxic assets.

But the Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. So this isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets.

The likely cost to taxpayers aside, there’s something strange going on here. By my count, this is the third time Obama administration officials have floated a scheme that is essentially a rehash of the Paulson plan, each time adding a new set of bells and whistles and claiming that they’re doing something completely different. This is starting to look obsessive.

But the real problem with this plan is that it won’t work. Yes, troubled assets may be somewhat undervalued. But the fact is that financial executives literally bet their banks on the belief that there was no housing bubble, and the related belief that unprecedented levels of household debt were no problem. They lost that bet. And no amount of financial hocus-pocus — for that is what the Geithner plan amounts to — will change that fact.

You might say, why not try the plan and see what happens? One answer is that time is wasting: every month that we fail to come to grips with the economic crisis another 600,000 jobs are lost.

Even more important, however, is the way Mr. Obama is squandering his credibility. If this plan fails — as it almost surely will — it’s unlikely that he’ll be able to persuade Congress to come up with more funds to do what he should have done in the first place.

All is not lost: the public wants Mr. Obama to succeed, which means that he can still rescue his bank rescue plan. But time is running out

i told you guys to think about this....look how the rhetoric is starting to filter out....the WAR MONGERS ARE AT IT AGAIN...

its the only viable option on the table...laugh now boys



CNN Senior Pentagon Producer

WASHINGTON (CNN) -- China's military is developing longer-range ballistic and anti-ship missiles that are "shifting the balance of power in the region" and could help Beijing secure resources or settle territorial disputes, a report released by the Pentagon said Wednesday.


U.S. and Chinese militaries need "resumption of dialogue," Adm. Timothy Keating told Congress.

1 of 2 China also continues to build up short-range missiles and increase its "coercive capabilities" against Taiwan. The report suggests such moves constitute an effort to pressure Taiwan into settling the cross-strait dispute in favor of China, though tensions between the two countries have receded over the past year.

The report, called the "Military Power of the People's Republic of China," is the Pentagon's annual briefing to Congress on the status of the communist country's military might.

While China continues to proclaim that its military buildup is for defense purposes to protect its interests, the report says the country's lack of transparency is worrisome and could lead to an unintended conflict.

"The limited transparency in China's military and security affairs poses risks to stability by creating uncertainty and increasing the potential for misunderstanding and miscalculation," according to the report. "Much uncertainty surrounds China's future course, particularly regarding how its expanding military power might be used."

The lack of transparency causes Washington "to speculate to some degree on what their intentions are," Pentagon spokesman Geoff Morrell told reporters at a Wednesday briefing.

According to Adm. Timothy Keating, the head of the U.S. Pacific Command, some of that uncertainty is due to the cessation of talks between the Chinese and U.S. militaries.

In March of 2008, the United States and China installed a hot line between the two countries' militaries. But there have been no military-to-military talks since November 2008, when Washington announced it was selling weapons to Taiwan.

"We are looking for the resumption of that dialogue so we can engage in discussion with our colleagues in the People's Republic of China and their Army, Navy and Air Force so we can have a sense of their way ahead," Keating told the House Armed Services committee on Tuesday. "We don't have a clear idea of their broad strategic way ahead."

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In-depth: China
The Pentagon report comes after a recent incident in which Chinese ships, including a Chinese navy vessel, confronted an unarmed U.S. Navy surveillance ship in the South China Sea in international waters. The confrontation prompted the United States to move a destroyer ship to the area to protect the surveillance vessel.

While the report does not discuss the incident, it notes the importance China puts on controlling its waterways and the surrounding territories because "China's economic and political power is contingent upon access to and use of the sea, and that a strong navy is required to safeguard such access."

The analysis also said that while much of China's capability is more for regional disputes, it did send two destroyers and one supply ship off the coast of Africa to protect Chinese vessels from pirate attacks.

That move was a sign of Chinese intent to expand its militaries to protect expanding economic and political interests around the world, according to a China analyst.

"The Chinese military is being told to develop capabilities to deal with Chinese national interests beyond the pure defense of Chinese territory," said David Finklestein, the Director of China Studies for CNA, a nonprofit research group that does analysis for the U.S. military and other clients. "China, with a global economy, now obviously has global political interests and clearly has expanding global security interests."


Though the Pentagon report concludes that "China's ability to sustain military power at a distance remains limited," it does have a growing space program, nuclear weapon system and cyber warfare capabilities, "the only aspects of China's armed forces that, today, have the potential to be truly global," the report explained.

In citing China's cyber warfare, the report notes that U.S. government computers were the target of "intrusions that appear to have originated" from China, although they were not confirmed to be from the military.

a trillion reasons why the future is red

China's president Wen Jiabao admits he's "definitely worried" that the banana republic known as the United States will default on its debt. And it probably will--although not in the way Wen fears.

The U.S. will likely default by triggering hyper-inflation, obliterating the value of the $1 trillion that the U.S. owes China. This tactic will also obliterate U.S. citizens who have been dumb enough to save money, of course, but better that (from the government's perspective) than drowning voters in mountains of debt.

NYT: “President Obama and his new government have adopted a series of measures to deal with the financial crisis. We have expectations as to the effects of these measures,” Mr. Wen said. “We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.”

He called on the United States to “maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”

Good luck, fella.

OTTAWA – Bank of Canada governor Mark Carney is warning that Canada is currently suffering through the worst economic downturn in a half century and that recovery will likely be slower and take longer than expected.

The central bank governor says there's no question the world economy is falling at the sharpest rate since the Second World War and is now in the throes of a crisis in confidence.

Growth, when it comes, will be slow and muted as the world enters a period of clearing away years of excesses and debt.

"It would appear likely that the global economy is entering a period of lower potential growth," he said in notes from a speech delivered in Yellowknife on Wednesday.

"It is now readily apparent that there was a substantial capital misallocation in the boon years, including heavy investment in non-tradable real estate and a global auto industry geared to outmoded demand models."

Citing Japan's lost decade of the 1990s, Carney says it is apparent that "an economy cannot really have sustainable growth until past excesses have been worked off."

While most of these excesses occurred in the United States and Europe, Canada cannot escape the consequences, says Carney.

That's because so much of the economy is based on exports of autos and lumber and on commodities such as grain, metals and oil and gas, which are in heavy demand only when the world economy is healthy and growing.

"The drop in our terms of trade since July will translate into a significant reduction in Canadian incomes and thus in our ability to sustain real domestic spending in the economy," he said.

Carney has faced considerable grief and second-guessing for his forecast in January that Canada's economy would shrink 4.8 per cent this quarter, but return to growth in the third quarter and bound along with a 3.8 per cent growth rate in 2010.

By contrast, the Organization for Economic Co-operation and Development projected this week that Canada's economy would barely crawl along at 0.3 per cent growth next year, after falling three per cent this year – almost three times Carney's 1.2 per cent growth prediction.

While Carney won't issue an official new forecast for another three weeks, the bank governor went out of his way to set the stage for a scaling back of expectations for a quick recovery from recession.

"The contraction in the first quarter now looks likely to be the worst on record since 1961," when growth statistics first started being kept. Reading between the lines, that means a tumble beyond the 5.9 per cent retreat of 1991, during the last major recession.

While I agree with much of what he said, Moyers has the causes of the problem wrong. It’s not the bankers fault. The CEO’s of the banks operated according to the environment they found themselves in. Most of them probably knew that sub-prime would be a disaster, but in the peak of the bubble if you weren’t bringing in annual growth of over 10%, you got fired. They did exactly what their shareholders demanded of them.

For a more accurate analysis of the problem, I’d see today’s financial post:

http://network.nationalpost.com/np/blog ... risis.aspx

<Snip>
Fact This decade saw drastic attempts by the government to control the housing and financial markets — via a Federal Reserve that cut interest rates to all-time lows and via a gigantic increase in Fannie Mae’s and Freddie Mac’s size and influence.

Fact Through these entities, the government sought to “stimulate the economy” and promote home ownership (sound familiar?) by artificially extending cheap credit to home-buyers.

Fact Most of the (very few) economists who actually predicted the financial crisis blame Fed policy or housing policy for inflating a bubble that was bound to collapse.
</Snip>

We will continue to experience these problems so long as people elect politicians who promise to make their lives better through government.

I disagree. These are the six largest banks holding the US hostage. The smaller ones just don’t get any attention. Banks are going bankrupt at the rate of 1-2 a week, and the FDIC is sinking billions into them to insure deposit holders. Other banks that appear to have escaped the mess are being bailed out of the back door. BMO was heavy into sub-prime, but insured it’s debts with AIG, which has paid BMO over $1 billion in insurable claims. These things are not widely covered, but the US government is essentially bailing out these banks via AIG via TARP. There are hundreds if not thousands of banks collecting these payments, but nobody know who they are. The government won’t say.




The root cause was the fed, Fannie, and Freddy (ie, the US government). The banks were just a symptom, and now a scapegoat so the government doesn’t have to take the blame. In a properly functioning economy, investors (in this case banks) make loans in return for interest. What keeps greed in check, ie making risky loans in return for higher returns, is the risk that you might loose all your money. Risk keeps greed in check.

What the US government did was remove risk from the equation. Why bother worrying about the loan being repaid when the FED will make the money you are loaning dirt cheap, and the US government, via Fannie/Freddy, guaranteeing all the loans, in some twisted attempt to get the poor into the housing market.




The root cause is the electorate. People don’t understand what government is, and don’t understand how damaging it is to anything it touches. We all hate dealing with anything the government is involved with, yet consistently demand more of it.

The Libertarian party is our best bet at the moment, there is a strong underground base supporting it, but they seem too academic/philosophical to become a major force at the moment. If they ever decide to get serious, they could go places. Socially, they appeal to the left (Legalize drugs, prostitution, gay marriage, etc.) and economically, to the right (smaller government, less regulation).

July 24, 2009
ol skool, garbage is still garbage no matter how they wrap it....and you just have to drive through any inner city in america (garbage) toronto is following the same path

what a mess....and im not just talking about the toronto garbage situation......williamb

one other note...every employee from goldman slacks just got a $750k bonus...great job boys and girls

By Peter Schiff

In a Wall Street Journal op-ed on Monday, and in congressional testimony later in the week, Fed Chairman Ben Bernanke reassured all that thanks to his accurate foresight and deft use of the Fed’s policy toolkit, he could maintain near zero percent interest rates for an extended period without creating inflation. With supernatural powers such as these, one wonders if Ben would be better employed by the Justice League rather than the Federal Reserve.

Ben’s game plan is apparently simple: once he determines that the economy is on solid ground, he will use the monetary equivalent of Superman’s laser vision to strategically evaporate all the excess liquidity that he has recently created without endangering the recovery. Don’t try this at home, kids.

In other words, as he did just a few years ago when the subprime fiasco began to emerge, Bernanke is assuring us that inflation is contained. He is just as wrong now as he was then.

The idea that the inflation genie can be painlessly rebottled has no historic precedent. Even mainstream economists, who’ve never met a fiscal stimulus they didn’t like, agree that central banks must act preemptively with regard to inflation. Bernanke is making the case that the new set of liquidity tools, hastily developed in the panic of late 2008, will act just as well in reverse. But liquidity is a lot like liquid, it’s a lot easier to spill than to un-spill. The Chairman believes that his new gadgetry will allow him to perform a feat of monetary magic no other central banker has managed to pull off. But given his history of getting it wrong, why should we assume that this time he will get it right?

The bottom line is that Bernanke has no exit strategy. He can talk about it all he likes, but when it comes time to actually pull the trigger, his nerves will buckle. The current communications campaign is simply an attempt to calm the markets. I doubt few citizens or members of Congress had any hope of understanding the exit strategy mechanisms that Bernanke described. Many likely place their faith in his seeming mastery of financial minutiae. Sadly, as with the mythical “strong dollar policy,” confident talk may be the sum total of the Chairman’s strategy.

He senses that the villagers, in the form of currency traders and bond market vigilantes, are becoming a bit restless. To sooth their concerns, he must pretend that he has the situation under control. Like Jack Nicholson in A Few Good Men, he knows full well that markets simply “can’t handle the truth.”

But make no mistake, in order to mop up all the excess liquidity, the Fed will need to raise interest rates substantially to attract buyers for all the bonds that the Treasury must sell. Fed officials know that our economy is completely dependent on cheap money and limitless government credit, and can’t tolerate the loss of either. Of course, the longer the monetary spigot remains open, the more addicted to low rates we get, and the harder it will be to kick the habit. If the Fed could not remove the punch bowl during the years before the bust, how will they do so while the economy is far weaker? Even if they do start the process, the minute the “recovery” seems in jeopardy, look for the Fed to turn the showers back on.

Also, paring down the Fed’s bloated balance sheet will require selling hundreds of billions of dollars of toxic assets, such as bonds backed by subprime mortgages, credit card debt, and auto and student loans, back into the market. Finding buyers for such sludge without crushing the market is a trick that Houdini himself would be reluctant to attempt. The Fed’s assumption that the assets will no longer be toxic by the time it sells them is farcical. The economy at large has not yet suffered the full weight of the recession because these assets have been largely quarantined at the Fed. Reintroduce these toxins back into the economy and the reaction could be lethal.

Bernanke also mistakenly expressed optimism that a strengthening global economy would aid our recovery. Unfortunately, a global resurgence will force Bernanke’s anti-inflation hand, and will thereby cause more pain to the U.S. economy.

Few appreciate how the global panic of 2008 actually benefited the U.S. by causing a flight into U.S. dollars and Treasury bonds. The resultant flows put a lid on consumer prices and kept interest rates low. As growth overseas resumes, and these flows reverse, both consumer prices and interest rates will rise.

Further, as current policy prevents the structural imbalances underlying our economy from being corrected, U.S. unemployment will continue to rise. Combined with higher interest rates and rising consumer prices and the Misery Index (inflation + interest rates + unemployment) will be a big issue in the 2010 mid-term elections, and an even bigger one in 2012.
--------------------------------------------------------------------------------

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great follow up on ol skools goldman report


where we are headed












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Banksters Love Cap-and-Trade
The well-placed and well-connected are set to make trillions off new climate bill; economic collapse about to accelerate
James Corbett
The Corbett Report
2 July, 2009



The sweeping new bill which just passed the House last Friday, the Clean Energy and Security Act of 2009, is ostensibly about climate change, but it is in fact a bill of staggering economic ramifications that is going to accelerate the takeover of the economy by the well-placed financiers who have already plundered the Treasury and the Fed of $12+ trillion and counting. It was rushed through the House in the tradition of such nightmarish legislation as the Patriot Act and the banker bailout of last October: hundreds of pages were added to it at the last minute and it was humanly impossible for anyone to have read it before they voted on it. This, of course, is exactly what Obama promised his administration would never allow to happen, and for good reason; bills passed in this manner are always the result of fear and panic and inevitably results in legislation that would never be passed upon sober second thought.

In this case, the rush to pass this new bill was an attempt to stop any scrutiny of a plan that is going to utterly transform the American economy, further centralize control of citizens' lives in the hands of unaccountable federal bureaucrats and complete the transfer of the American economy from Main Street to Wall Street. And all of this in the name of fighting a threat which itself is a demonstrable fraud. In short, the banksters and bureaucrats are sharpening their knives, preparing to butcher what's left of the carcass of the United States, and a good portion of the public are not only willing to allow it but are actually clamoring for it.

The first thing that needs to be understood about the brand new trillion dollar carbon-trading commodities market that will be brought into existence if this bill passes the Senate is that it is a ripoff designed by and for the very corporate interests the environmentalists claim to be fighting. For an historical precedent of what is being proposed under this cap-and-trade scam one can look to Enron, which immediately found ways to plunder billions of dollars from new energy market legislation passed by the Clinton Administration in 2000. They gave schemes for manipulating billions of dollars out of Californians funny little names like Death Star and even went so far as to rig up a completely fake trading floor in their offices in order to bamboozle investors who were interested in the company's remarkable success. They got away with it because they were The Smartest Guys in the Room, much brighter than the government bureaucrats who were supposed to stop them from committing such blatant fraud (assuming the regulators weren't simply paid to look the other way). And now supporters of this new bill are putting their blind faith in these same bureaucrats to regulate a scheme to create a vastly more complex market with hundreds of times as much money at stake. Is it any wonder Enron was a booster for cap-and-trade?

That the new carbon trading market can and will be manipulated by the very same financial oligarchs and government bureaucrats who have brought the world to the brink of economic Armageddon is laid bare in a must-read article by Matt Taibi in the latest issue of Rolling Stone. In "The Great Bubble Machine" Taibi meticulously documents how the amazingly well-connected Goldman Sachs has managed to manipulate and profit from every financial bubble since the Roaring Twenties and how they're getting set to do it all over again with the creation of a carbon trading bubble:

"The bank owns a 10 percent stake in the Chicago Climate Exchange, where the carbon credits will be traded. Moreover, Goldman owns a minority stake in Blue Source LLC, a Utah-based firm that sells carbon credits of the type that will be in great demand if the bill passes. Nobel Prize winner Al Gore, who is intimately involved with the planning of cap-and-trade, started up a company called Generation Investment Management with three former bigwigs from Goldman Sachs Asset Management, David Blood, Mark Ferguson and Peter Harris. Their business? Investing in carbon offsets. There's also a $500 million Green Growth Fund set up by a Goldmanite to invest in green-tech ... the list goes on and on. Goldman is ahead of the headlines again, just waiting for someone to make it rain in the right spot."


In effect, this bill creates an entirely new commodity that is guaranteed to generate ever-increasing profit for those who have already spent millions preparing to get in on the ground floor. Here's a hint: that does not include your average mom and pop investor or your dual-income family struggling to make ends meet in a crashing economy. Here's another hint: it does include financial juggernauts like Goldman Sachs who have been investing in solar, wind, and biofuels for years and now just happen to find themselves in the perfect position to start reaping vast profits from their headstart in the new carbon credit economy (and you thought Paulson was into going green for any other reason than making green?). It also includes Obama, who was instrumental in helping set up the Chicago Climate Exchange for his political cronies like Al Gore, who already has a company which he uses to buy carbon credits from himself and who had made multi-million dollar investments in companies developing carbon tracking software that will be essential to the new carbon-swindle economy.




There are still those out there, however, who believe that this time it's going to be different. This time the government is going to set up a new trillion dollar industry overnight, make sure it is regulated by angels of unquestionable integrity and goodwill, prevent it from being manipulated by big business, and create scores of new "green" jobs in the renewable energy industry (presumably to replace the hundreds of thousands of jobs that the economy is already hemorrhaging or the hundreds of thousands more that will be shed when these carbon taxes and penalties really ratchet up in the next decade). Well, let's assume for a moment that we have crossed into just such a fantasy world. It still does not change the fact that the bill itself only offers phony solutions to a problem that doesn't exist.

The phony solution is the "Clean Energy" part of the Clean Energy and Security Act. What feelgood platitudes about pumping billions of dollars into solar, wind and alternative energy projects obscure is that throwing money hand over fist at inherently flawed technologies will not actually make them work, nor will it make the money-hungry charlatans who promote them any more honest. Just ask Albert Lanier. He's a freelance journalist who has been writing a series of articles about First Wind, a Massachusetts-based wind developer that is currently being investigated by the New York Attorney General's office. In a recent interview with The Corbett Report he revealed how the Mafia has been linked to the Italian wind farm industry, which might say more about the industry than it does about the mob.

Of course, the entire idea of "cleaning" the atmosphere of carbon dioxide seems a bit ridiculous when you realize that by historical levels we are living in a CO2-starved environment, that global surface temperatures are dropping, that global ocean temperatures are dropping, that key proponents of the manmade global warming theory have been caught faking data to support their arguments, that Arctic sea ice is expanding, and that sea levels are not rising. But why let actual science get in the way of a good scare story, especially when that scare story can be used to create a new trillion dollar industry for the banksters?

For those who cannot be convinced to consider an issue until it affects them personally, rest assured this draconian new legislation will reach into every American citizen's living room...literally. As Congressman Steve Scalise has already pointed out, this "climate bill" contains within it a new national building code that supersedes all existing state codes. If enacted, this legislation will create an entirely new class of federally-funded green brigades with the mandate to perform house-to-house inspections to look for violations of this new "green" building code. They would even be able to impose civil penalties for code violations (like having the wrong windows or lightbulbs). Watch Congressman Scalise's comments in the player below:

This bill is not only unnecessary, it is dangerous. It is not only economically reckless, it is economically suicidal. It's passage will be a particularly dark day in American legislative history, something almost unthinkable given the constitution-destroying atrocities passed during the Bush years. There is only one thing left for Americans to do: call their senators and let them know that it's time to make a decision: vote against the Clean Energy & Security Act of 2009 or join the unemployment line come next election.

Related works from The Corbett Report:

Environmentalism is corporate controlled (podcast episode)

B.C. introduces carbon tax (podcast episode)

Tim Ball on B.C. Carbon Tax, Climate Change Conference (video)

July 31, 2009

Happy Days Aren’t Here Again


By Peter Schiff

Have you heard the great news? The recession is over! It’s true; I saw it on TV. Why fret about growing unemployment lines when banks are paying big-time bonuses again?

Proof of the turn was apparently revealed by the 2nd quarter GDP figures that showed that the economy declined by only 1%. After four consecutive quarters of negative GDP, the green shoots now assume that growth will resume over the summer. But before we pop the corks, it may be worthwhile to ask, “what really has changed, and what is responsible for our new lease on life?”

In truth, because of the continued profligacy of the government and Federal Reserve, the imbalances that caused the current recession have actually worsened. We are now in an even deeper hole than when the crisis began. Rather than wrapping up a recession, we are actually sinking into a depression. If things look better now, it’s just because we are in the eye of the storm.

We must remember that recessions inevitably follow periods of artificial growth. During these booms, malinvestments are made which ultimately must be liquidated during the ensuing busts. In short, mistakes made during booms are corrected during busts – and in the recent boom we made some real whoppers. We borrowed and spent too much money, bought goods we couldn’t afford, built houses we couldn’t carry, and developed a service sector economy completely dependent on consumer credit and rising asset prices. All the while, we allowed our industrial base to crumble and our infrastructure to decay.

In order to lay the foundation for real and lasting recovery, market forces must be allowed to repair the damage. However, current policy is counterproductive to this end. Trillions in stimulus dollars have kept the party going, but now what? How does deficit spending by the government address the problems that brought about the crash? It doesn’t; it just delays and worsens the hangover – and we have to hope we don’t die of alcohol poisoning.

By interfering with the unpleasant forces of the recession, we simply trade short-term gain for long-term pain. By propping up inefficient companies that should fail, we deprive more effective companies of the capital they need to grow. By holding up over-valued asset prices, we prevent the prudent or less well-off from snatching them up and, in doing so, creating a new price equilibrium based upon reality. By maintaining artificially low interest rates, we discourage the very savings that are so critical to capital formation and future economic growth. In addition, the false economic signals the Fed sends the market prevent a more efficient re-allocation of resources from taking place and leads to even more bad economic decision being made. By running such huge deficits, we further crowd-out private enterprise by making it harder for businesses to invest or hire.

The recently passed “cash for clunkers” program (currently on-hold, as it ran out of funding in one week) is a perfect example of how government policy can make the economy worse. By incentivizing Americans to destroy fully paid-for cars so they can go deeper into debt buying brand new ones, the government weakens an already crippled economy. The last thing we want to do is subsidize Americans to go deeper into debt by buying more stuff. Don’t they realize that is precisely the behavior that got us into this mess?

Think about it this way. If your friend were in trouble because he had too much debt, would you encourage him to take on even more? Wouldn’t a real sign of progress be a reduction of debt, even if he had to cut back on his everyday expenses? What is true for an individual is also true for a collection of individuals, even if they call themselves a ‘government.’ If, as a country, we are even deeper into debt now than we were before, we are worse off. Period. The fact that the additional debt enabled better short-term GDP numbers is a long-term negative.

Since we have learned nothing from past mistakes, we are condemned to repeat them. As if we have not already suffered enough as a consequence of the Bush/Greenspan stimulus, Obama/Bernanke are giving ever larger doses, which will prove lethal to any recovery. The recession is over; long live the depression!
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“Experts” Never Learn


There is an inexplicable, but somehow widely held, belief that stock market movements are predictive of economic conditions. As such, the current rally in U.S. stock prices has caused many people to conclude that the recession is nearing an end. The widespread optimism is not confined to Wall Street, as even Barack Obama has pointed to the bubbly markets to vindicate his economic policies. However, reality is clearly at odds with these optimistic assumptions.

In the first place, stock markets have been taken by surprise throughout history. In the current cycle, neither the market nor its cheerleaders saw this recession coming, so why should anyone believe that these fonts of wisdom have suddenly become clairvoyant?

According to official government statistics, the current recession began in December of 2007. Two months earlier, in October of that year, the Dow Jones Industrial Average and S&P 500 both hit all-time record highs. Exactly what foresight did this run-up provide? Obviously markets were completely blind-sided by the biggest recession since the Great Depression. In fact, the main reason why the markets sold off so violently in 2008, after the severity of the recession became impossible to ignore, was that it had so completely misread the economy in the preceding years.

Furthermore, throughout most of 2008, even as the economy was contracting, academic economists and stock market strategists were still confident that a recession would be avoided. If they could not even forecast a recession that had already started, how can they possibly predict when it will end? In contrast, on a Fox News appearance on December 31, 2007, I endured the gibes of optimistic co-panelists when I clearly proclaimed that a recession was underway.

Rising U.S. stock prices – particularly following a 50% decline – mean nothing regarding the health of the U.S. economy or the prospects for a recovery. In fact, relative to the meteoric rise of foreign stock markets over the past six months, U.S. stocks are standing still. If anything, it is the strength in overseas markets that is dragging U.S. stocks along for the ride.

In late 2008 and early 2009, the “experts” proclaimed that a strengthening U.S. dollar and the relative outperformance of U.S. stocks during the worldwide market sell-off meant that the U.S. would lead the global recovery. At the time, they argued that since we were the first economy to go into recession, we would be the first to come out. They claimed that as bad as things were domestically, they were even worse internationally, and that the bold and “stimulative” actions of our policymakers would lead to a far better outcome here than the much more “timid” responses pursued by other leading industrial economies.

At the time, I dismissed these claims as nonsensical. The data are once again proving my case. The brief period of relative outperformance by U.S. stocks in late 2008 has come to an end, and, after rising for most of last year, the dollar has resumed its long-term descent. If the U.S. economy really were improving, the dollar would be strengthening – not weakening. The economic data would also show greater improvement at home than abroad. Instead, foreign stocks have resumed the meteoric rise that has characterized their past decade. The rebound in global stocks reflects the global economic train decoupling from the American caboose, which the “experts” said was impossible.

Though the worst of the global financial crisis may have passed, the real impact of the much more fundamental U.S. economic crisis has yet to be fully felt. For America, genuine recovery will not begin until current government policies are mitigated. Most urgently, we need a Fed chairman willing to administer the tough love that our economy so badly needs. That fact that Ben Bernanke remains so popular both on Wall Street and Capital Hill is indicative of just how badly he has handled his job.

Contrast Bernanke’s popularity to the contempt that many had for Fed Chairman Paul Volcker in the early days of Ronald Reagan’s first term. There were numerous bills and congressional resolutions demanding his impeachment, and even conservative congressman Jack Kemp called for Volcker to resign. Had it not been for the unconditional support of a very popular president, efforts to oust Volcker likely would have succeeded. Though he was widely vilified initially, he eventually won near unanimous praise for his courageous economic stewardship, which eventually broke the back of inflation, restored confidence in the dollar, and set the stage for a vibrant recovery. Conversely, Bernanke’s reputation will be shattered as history reveals the full extent of his incompetence and cowardice.

As congress and the president consider the best policies to right our economic ship, it is my hope that they will pursue a strategy first developed by Seinfeld character George Costanza. After wisely recognizing that every instinct he had up unto that point had ended in failure, George decided that to be successful, he had to do the exact opposite of whatever his instincts told him. I suggest our policymakers give this approach a try.

Here's why Canada will not fall into a depression

http://www.thestar.com/news/gta/article ... te-by-2031

[quote="Star article]"Minority populations will more than double in the next 20 years – from 2.3 million in 2006 to 5.6 million in 2031"[/quote]

To me this means my house will go up up up in price! 3.3 million people have to live somewhere... Perhaps a percentage will be moving to Milton??? I guess there will be no drop in the market [/quote]

3.3 million will bring a lot of money into Canada, as long as Canada is bringing people in, we will not be in a huge recession/depression.