Thursday, December 30, 2010
The Most Dangerous Man In America.
Viz a viz Wikileaks, Julian Assange, Bradley Manning, lying and corrupt governments, unjust wars, debasement of their currencies, a population impregnated by the sound bites of a cowardly media and journalists like Jon Hilsenrath, paid for by big money and the promise of power. Will history repeat itself? A great documentary on heroes and peak-empire. Visit www.ellsberg.net to read about Daniel Ellsberg and what an incredible struggle he must have gone through between career & patriotism (read: keeping your mouth shut despite knowing your government is lying) and ethics & conscience. There is presently another Daniel Ellsberg out there and his name is Bradley Manning. He is now our hero. Read about and support Bradley Manning here: http://www.bradleymanning.org/
(Hat tip: Clive)
Saturday, December 25, 2010
<-- a well deserved pension after 20 years of hard work........?
2 former executives of the Dutch Pension Fund ABP (now APG), Jan Frijns, former Investment Director 1993-2005 and Jan van der Poel, financial executive 1997-2002, seem to be desperate in trying to get the attention of msm to highlight government looting which occurred from 1997 and 2002 in order to pay for the implementation of an early retirement scheme, called VUT.
Well, I've explained before how the market works, money is never a problem, ask the politician, when he cannot steal he will print. After all, the only thing the politican wants is to get re-elected. And nothing will stop him there.
In a november 2010 interview Frijns said in the Parool, a Dutch daily newspaper:
"The government, the largest employer in the country, withdrew in the nineties around 25 billion euros from the financial reserves of the Pension Fund ABP, according to Jean Frijns, former director of ABP Investments, in the television section KRO Reporter Saturday.
For years the authorities paid too little premium to the ABP, said Frijns. In the privatization of the pension fund in 1996 the backlog had risen to around 15 billion euros, Frijns said, who from 1993 to 2005 was director of investments. He says the government is therefore partly responsible for the current financial problems of the ABP.
Frijns, now professor of investment management at the Free University in Amsterdam, says that ''a large part of the early retirement scheme''by the government was funded with money that ABP had reserved for regular pensions. That would be a sum of 10 million euro's."
Big schandal, but no outrage from msm at all? Why should there be? The entitement thinking in Holland is arguably second to only the USA. So Frijns' old time colleague Jan van der Poel got on his horse and tried again with a subsequent interview in the same Parool newspaper, now in stronger wording:
"Without any problems, the Dutch government could plunder dozens of billion of guilders from the ABP Pension Funds, despite the outrage of the Dutch Court of Audits"
This newspaper interviewed Jan van der Poel, who was from 1997 up to 2002 a financial executive of ABP. ''I received a report of the Court of Audits and read in this report that the government had stolen 30 billion guilder (app. Euro 13,6 Billion) from our Fund. The Court of Audits was furious. But nobody read that report and no journalist wrote about it".
Also private companies looted the fund, said van der Pond, but not on such a large scale as the government.
Van der Poel has no good word for the politicians who were for many years in charge of the ABP. According to him politicans are egoists who always blame others
and they regarded the ABP as a haven for early and safe retirement
The ABP has suffered greatly because of he credit crisis of the last 2 years. Investments were less profitable than originally calculated. Also, these investments were regarded as too risky. Over 2008 the pension cover degree which is the proportion between the capital of a pension fund and the amount to be paid out to pensioners, decreased with almost sixty percent points to the lowest point of 83 per cent at the beginning of last year. Afterwards the pension contribution was raised. Meanwhile the pension cover degree increased to 105 per cent.
According to van der Poel there is presently too much attention for investment results. '' The pension problem is extremely simple. With the rising life expectancy and our current life style it cannot be that you start to work on your 27st, stop working on your 60th and go on holiday for forty years for free. That is possible only in a state which works on slavery. Therefore, if people are healthy, they must work. This demographic time bomb has been ticking for a long time, it is a pyramid scheme. But the Dutch labor Unions never wanted to talk about these problems. Today, they still act as if there are no problems."
But let's get real, the fact that the Dutch would not be able to afford their pension pyramid scheme must have been known for at least 30 years. 1 + 1 = 2, still is and always will be, unless you are a politician in a comfortable chair, with a wood paneled board room, a great salary and pension and an ulterior motive not to make decisions. After all, the decision of today could very well be your personal problems of tomorrow. Only now I understand the slogan of the APG which is "tomorrow is today".
The waiting is now for "The Big Reset", which will come with or without the market riggers, politicans and bankers. A return to reality is imminent.
English translations: google translation
UPDATE 1: European Nation begin seizing private pensions. Christian Science Monitor
UPDATE 2: License to Steal?: ZeroHedge
UPDATE 3: All OK! Worried Dutch Government will "rescue" pension funds
Wednesday, December 22, 2010
"I also have a family and need to put food on the table!", he says, "everybody does it!"
Without criticism or additional questions, he just copied and pasted the nonsense he must have received from FoxNews. Just leave the important parts out, a screaming headline and the money is in the bank. Sell your intelligence for £ 75.23, VAT inclusive and please come back next time. After all, what is journalism about?
US shows stronger growth as investors look to 2011 tax cuts
Existing homes sales across the country climbed 5.6pc last month, which though weaker than economists had pencilled in, caps a consistent improvement from the summer. Meanwhile, the government's final estimate for GDP growth in the third quarter came in at a 2.6pc annual pace, a slight upward revision on the 2.5pc seen in the second estimate.
The question Wall Street economists are now asking is whether the $858bn (£558bn) in tax cuts agreed by Congress last week, including a surprise reduction in a payroll tax companies have to pay when taking on staff, will prompt consumers to spend their extra income and encourage businesses to hire. Their answer, for now at least, appears to be yes. JP Morgan, for example, has increased its forecast for growth in the first quarter to 3.5pc from 2.5pc.
With most countries in the eurozone – Germany apart – struggling to stage sustainable recoveries, investors are looking anxiously to the US to improve on growth that has proved underwhelming this year.
"The more recent data suggest we're seeing reasonably healthy (? troy ounce) retail sales growth, pretty healthy investment spending, some growth in employment," said Zach Pandl, an economist at Nomura.The world's biggest economy will enter the new year backed by an unprecedented wave of stimulus. Alongside the tax cuts, the Federal Reserve is working its way though a second, $600bn round of quantitative easing designed to lower long-term interest rates. Each policy has proved controversial abroad and at home.
Sunday, December 19, 2010
The mechanics of what is happening with money now is fascinating, and seems to be clarifying in my mind. It is hard to imagine a more inherently ineffective system of capital and resource allocation than crony capitalism. It is like playing a game in which the rules are rigged to deliver the money in the system to a relative minority of insiders, thereby bankrupting all the customers.
It is said that in a purely competitive capitalist system, all businesses are vectored to zero profit in a process of creative destruction. As a certain class of particpants clearly recognizes this they take every opportunity to corrupt and game the system through fraud. This is why markets must have regulators. At times the fraud overcomes the regulation to such a degree that the normal market balances are rendered ineffective and the system passes to a crony capitalist system, if not an outright oligarchy.
In a crony capitalist system a similar outcome can be achieved, but with the insiders and powerful interests holding most of the money which ultimately becomes worthless because the foundation of the money, the labor of the people, is destroyed.
In other words, greed compels the materially obsessed to obtain the greatest piles of chips, but in the long term renders their chips to be worthless because they are unable to stop their fraud and plundering even when it is in their best interests. They are not governed by rationality or conscience or even common sense. For periods of time oligarchies are able to survive in an uneasy equilibrium enforced by power, but ultimately these wicked die forever on their great piles of gains.
I now give more weight to the potential for hyperinflation, and will be exploring this topic during 2011. The Congress and the Fed are reckless to the point of self-destruction.
Saturday, December 18, 2010
If you believe you are safe, where ever you are, think again: the interconnected financial world will make sure you will be affected. It will be interesting to see what is going to happen: Obama still in charge promoting "a new plan", the Bernanck with QE 2, 3 and 4 and the military out in full force. The Europeans throwing rocks and Molotov cocktails but I am afraid the American protests will not be peaceful. It is gun country. Prepare for the worst, hope for the best.
US Empire Could Collapse At Any Time: Pullitzer Price Winner Tells Raw Story
America's military and economic empire could collapse at any time, but predicting the precise day, week or month of its potential demise is unattainable, according to a former New York Times war correspondent who spoke with Raw Story.
"The when and how is very dangerous to predict because there's always some factor that blindsides you that you didn't expect," Pulitzer-winning journalist Chris Hedges said in an exclusive interview. "It doesn't look good. But exactly how it plays out and when it plays out, having covered disintegrating societies, it's impossible to tell."
He explained that he learned this lesson as events unfolded around him in the fall of 1989. Then, members of the opposition to the Soviet Empire told him that they predicted travel across the Berlin Wall separating East from West Germany would open within the year.
"Within a few hours, the wall didn't exist," he said.
Hedges was one of the 131 activists were arrested in an act of civil disobedience outside the White House yesterday, even as Obama was unveiling a new report citing progress in the Afghanistan war.
"We're losing [the war in Afghanistan] in the same way the Red Army lost it," he said. "It's exactly the same configuration where we sort of control the urban centers where 20 percent of the population lives. The rest of the country where 80 percent of the Afghans live is either in the hands of the Taliban or disputed."
"Foreigners will not walk the streets of Kabul because of kidnapping, and journalists regularly meet Taliban officials in Kabul because the whole apparatus is so porous and corrupt," he said.
One day after this interview was conducted, reports hit the global media noting the CIA's warning to President Obama, that the Pakistan-supported Taliban could still regain control of the country.
Hedges predicted that President Obama's war report released Thursday would "contradict not only [US] intelligence reports but everything else that is coming out of Afghanistan."
His prediction came startlingly true: the CIA's own assessment was said to stand in striking contrast with President Obama's report.
Defense Secretary Robert Gates, however, insisted that the US controlled more territory in Afghanistan than it did a year ago.
'A corporate coup d'état in slow motion'
Hedges said he attended the protest and planned to get arrested because he is against the corporate powers that have enveloped the nation.
"We've undergone a corporate coup d'état in slow motion," he said. "Our public education system has been gutted. Our infrastructure is corroding and collapsing. Unless we begin to physically resist, they are going to solidify neo-feudalism in this country."
"If we think that Obama is bad, watch the next two years because these corporate forces have turned their back on him," Hedges warned.
Hedges, author of "Death of the Liberal Class," said that his vision of America is one with a functioning social democracy, which stands in stark contrast to the nihilism of the corporate state.
"American workers, as they are repeatedly told, will have to become competitive with prison labor in China," he said. "That's where we're headed, and all the pillars of the liberal establishment are complicit in this."
"At least if you get sick in the UK, you don't go bankrupt or die," he added.
Hedges said that another pressure point is the US dollar, which he pointed out had been dropped by Russia and China in favor of modified ruble/renminbi exchanges.
"A few more deals like that, and our currency becomes junk," he said.
Hedges continued, "As long as we have relative stability, these lunatic fringe movements can be held at bay, but if we don't undertake serious structural reform, which we're not doing, then it is inevitable that we will come to a tremendous crisis - economic and political as well as environmental."
With editing by Stephen C. Webster.
Thursday, December 16, 2010
A great post from Simon Black. His recommendation to young people: escape from our country and try your luck somewhere else. Governments are trying to let you pay for their mistakes. Go for it. Do not be scared; the world is big, many countries offer great opportunities and are full of good people.
Notes from the Field
Date: December 16, 2010
Reporting From: Auckland, New Zealand
If you're reading this and under 30, let me be absolutely clear about one indubitable point: your government is going to sacrifice your future in order to pay for its own mistakes from the past.
To give you an example, students in London came out to the streets in droves last Friday to protest the British parliament's most recent austerity measures which tripled the cap on their university tuition to $15,000.
Sure, Britain is imposing all sorts of austerity measures on its citizens... and while I won't get into a discussion about the absurdity of government controlled education, I will point out that students are having their benefits cut far more drastically than any other segment of the population.
Are pensioners seeing their costs triple? No. Are middle-aged workers seeing 50% tax hikes? No. Aside from the very small segment of high-income earners who will be forever robbed and pillaged of their wealth, the younger generation is next in line to receive the butt end of the crisis fallout.
Younger folks have comparatively lower incomes, benefits, job opportunities, and political clout than their seniors, yet they are increasingly expected to assume a disproportionately larger burden of the consequences of government folly.
It's the younger generation that is called on to go fight and die in pointless wars in faraway lands; it's the younger generation that is forced to assume the debts of their forefathers; and it's the younger generation that gets relegated to the back rows of the political amphitheater and dismissed by the establishment.
Meanwhile, retirees aren't seeing massive benefits cuts, and middle-aged wage earners income earners are being protected from above by politicians. In fact, let's take a minute and look at the looming fate of the average young person today:
1) Your government-run university tuition is going to go through the roof, saddling you with unfathomable debt before you even enter the world as an adult;
2) Once you graduate, you'll be the last in the hiring queue;
3) If you do get hired, you'll be the lowest on the totem pole and the first to be let go when tough times befall your business;
4) Once the labor market eventually stabilizes, you'll enter your prime earning years with some of the highest tax rates ever seen as your government continues to cannibalize your generation to pay off its largess and indebted entitlement programs that benefited older generations;
5) For your entire working life, you'll pay into a pension system that is going to be bankrupt by the time you're qualified to draw on it;
6) More than likely, you'll never achieve the standard of living that your parents achieved;
7) Whatever wealth your parents accumulated won't be left to you-- the bulk of it will be confiscated by the state (unless your folks were smart enough to plant multiple flags) due to a host of death taxes.
If you're in the millennial Facebook generation, this is going to be the standard storyline of your peers. The system that's in place right now-- the failed cycle of debt and consumption fed by continuous government intervention-- has stuck you with the bill.
Fortunately, there's a silver lining (as always). Younger people are generally less anchored and more mobile than their elders, hence it's much easier to opt out of this perverse system.
If you're angry that your government is saddling you with the responsibility to pay off generations of bad decisions, then get out of dodge. Stop playing by the same rules of the game that used to work in the past-- the old playbook of "go to school, get a good job, work your way up the ladder" simply doesn't apply anymore.
Don't stick around a society that has completely forsaken you and is waiting with knife and fork in hand to carve up your earnings once you finally enter the labor market... get out of dodge now, while it's easy to do and you have little to risk.
Go explore the world and get an education based on experience, not expensive academic theory. Seek opportunities in thriving, frontier markets overseas... places like Kurdistan, Mongolia, Botswana, Kazakhstan. Soak up the local intelligence and become the grease guy on the ground who can make things happen.
Find people whose lifestyles you want to emulate and make yourself indispensable to them as an apprentice... this will be the only time in your life that you can afford to work for nothing in exchange for a valuable, first-hand education.
Most of all, stop playing by everyone else's rules. Refuse to be enslaved by the idea that it's your civic and moral responsibility to pay off the debts of your government's failures. Cast off the yoke of their control... and summon the courage to live a life by your own design.
The path to prosperity in the Age of Turmoil depends on this ability to reject the old system, declare your economic independence, and carve your own path.
Senior Editor, SovereignMan.com
Sunday, December 12, 2010
Break The Power Of The Big Banks
It cannot be said enough; that's why they also call the big Wall Street Bank "financial terrorists". They have the world economy by the balls. Together with the IMF and rating agencies they invented a criminal racket to let the middle class pay for their gambling addiction. From Max Keiser: "
The pattern is the same. The rating agencies downgrade. The bond assassins start selling sovereign debt with naked (counterfeit) short-sales. The politicians start talking austerity. The IMF is called in to steal the country’s assets. This organized crime racket has been active in Central and South America for decades (read John Perkins, “Confessions of an economic hit man”). And we’ve seen this technique used on Wall St. for just as long as one company targets another with a ‘leveraged buy out’ (buying another company by pledging the assets of the company being taken over as the basis for a loan big enough to swallow the company). Now we are seeing this in Western Europe and the folks in the U.S. who have been insulated from this predatory financial terrorism are getting a taste of it first hand. There is no end for the suicide bankers. They will continue like this until every economy they can find has been stripped and left for dead.
A lot of people still haven't heard that the economy cannot recover until the big banks are broken up.
But as everyone from Paul Krugman to Simon Johnson has noted, the banks are so big and politically powerful that they have bought the politicians and captured the regulators.
In addition, as Fortune pointed out last February that the only reason that smaller banks haven't been able to expand and thrive is that the too-big-to-fails have decreased competition:
Growth for the nation's smaller banks represents a reversal of trends from the last twenty years, when the biggest banks got much bigger and many of the smallest players were gobbled up or driven under...
As big banks struggle to find a way forward and rising loan losses threaten to punish poorly run banks of all sizes, smaller but well capitalized institutions have a long-awaited chance to expand.
Small banks have been lending much more than the big boys. And the giant banks which received taxpayer bailouts actually slashed lending more, gave higher bonuses, and reduced costs less than banks which didn't get bailed out.
JP Morgan Chase, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley together hold 80% of the country's derivatives risk, and 96% of the exposure to credit derivatives. Experts say that derivatives will never be reined in until the mega-banks are broken up.
As I pointed out in December 2008:
Now, Greece, Portugal, Spain and many other European countries - as well as the U.S. and Japan - are facing serious debt crises. See We are no longer wealthy enough to keep bailing out the bloated banks. We have serious debt problems. See this, this, this, this, this and this. By failing to break up the giant banks, the government is guaranteeing that they will take crazily risky bets again and again and again, and the government will wrack up more debt bailing them out again. (Anyone who thinks that Congress will use Dodd-Frank to break up banks in the middle of an even bigger crisis is dreaming. If the giant banks aren't broken up now - when they are threatening to take down the world economy - they won't be broken up next time they become insolvent, either. And see this).
The Bank for International Settlements (BIS) is often called the "central banks' central bank", as it coordinates transactions between central banks.
BIS points out in a new report that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don't have, central banks have put their countries at risk from default.
Moreover, Richard Alford - former New York Fed economist, trading floor economist and strategist - recently showed that banks that get too big benefit from "information asymmetry" which disrupts the free market.
Nobel prize winning economist Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market:
"The main problem that Goldman raises is a question of size: 'too big to fail.' In some markets, they have a significant fraction of trades. Why is that important? They trade both on their proprietary desk and on behalf of customers. When you do that and you have a significant fraction of all trades, you have a lot of information."
Further, he says, "That raises the potential of conflicts of interest, problems of front-running, using that inside information for your proprietary desk. And that's why the Volcker report came out and said that we need to restrict the kinds of activity that these large institutions have. If you're going to trade on behalf of others, if you're going to be a commercial bank, you can't engage in certain kinds of risk-taking behavior."
The giants (especially Goldman Sachs) have also used high-frequency program trading which not only distorted the markets - making up more than 70% of stock trades - but which also let the program trading giants take a sneak peak at what the real (aka “human”) traders are buying and selling, and then trade on the insider information. See this, this, this, this and this. (This is frontrunning, which is illegal; but it is a lot bigger than garden variety frontrunning, because the program traders are not only trading based on inside knowledge of what their own clients are doing, they are also trading based on knowledge of what all other traders are doing).
Goldman also admitted that its proprietary trading program can "manipulate the markets in unfair ways". The giant banks have also allegedly used their Counterparty Risk Management Policy Group (CRMPG) to exchange secret information and formulate coordinated mutually beneficial actions, all with the government's blessings.Again, size matters. If a bunch of small banks did this, manipulation by numerous small players would tend to cancel each other out. But with a handful of giants doing it, it can manipulate the entire economy in ways which are not good for the American citizen.
No wonder so many independent economists and financial experts are calling for the big banks to be broken up, including:
- Nobel prize-winning economist, Joseph Stiglitz
- Nobel prize-winning economist, Ed Prescott
- Former chairman of the Federal Reserve, Alan Greenspan
- Former chairman of the Federal Reserve, Paul Volcker
- Former Secretary of Labor Robert Reich
- Dean and professor of finance and economics at Columbia Business School, and chairman of the Council of Economic Advisers under President George W. Bush, R. Glenn Hubbard
- President of the Federal Reserve Bank of St. Louis, Thomas Bullard
- Deputy Treasury Secretary, Neal S. Wolin
- The President of the Independent Community Bankers of America, a Washington-based trade group with about 5,000 members, Camden R. Fine
- The head of the FDIC, Sheila Bair
- The head of the Bank of England, Mervyn King
- The leading monetary economist and co-author with Milton Friedman of the leading treatise on the Great Depression, Anna Schwartz
- Economics professor and senior regulator during the S & L crisis, William K. Black
- Economics professor, Nouriel Roubini
- Economist, Marc Faber
- Professor of entrepreneurship and finance at the Chicago Booth School of Business, Luigi Zingales
- Economics professor, Thomas F. Cooley
- Economist Dean Baker
- Economist Arnold Kling
- Former investment banker, Philip Augar
- Chairman of the Commons Treasury, John McFall
- Leading bank analyst, Chris Whalen
Economics professor, James Galbraith