Tag Archives: Federal Reserve

Some Money Launderers are “More Equal” than Others

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“All animals are equal, but some animals are more equal than others.”
- George Orwell’s Animal Farm

It’s been many, many years since I read George Orwell’s Animal Farm, but the message conveyed in it will remain with me forever.  The book is many things, but more than anything else, it is a portrayal and critique of human nature and the political systems that we create. For those that need a refresher, or have not read the book, here’s the basic plot.

There’s a farm headed by a Mr. Jones, who drinks so much he becomes unable to take care of the farm and feed the animals.  Over time, the animals (in particular the pigs), decide human beings are parasites and the pigs lead a revolt and run Mr. Jones off the property.  They change the farm’s name from Manor Farm to Animal Farm and create a list of 7 commandments.  They are:

  1. Whatever goes upon two legs is an enemy.
  2. Whatever goes upon four legs, or has wings, is a friend.
  3. No animal shall wear clothes.
  4. No animal shall sleep in a bed.
  5. No animal shall drink alcohol.
  6. No animal shall kill any other animal.
  7. All animals are equal.

Rather quickly, the pigs assume leadership over the farm and one pig in particular, Napoleon, consolidates power after running his primary competitor off the property.  It goes downhill from here fast.  The pigs start to walk on two legs, drink alcohol and sleep in beds, amongst other things. Understanding that their new lifestyle in in direct contrast with their original seven commandments, they simply decide to make some adjustments.  The adjustments are:

  1. No animal shall sleep in a bed with sheets.
  2. No animal shall drink alcohol to excess.
  3. No animal shall kill any other animal without cause.

Rather quickly, even these adjustments becoming too binding for the glutinous and power hungry pig oligarch class.  They decide to just condense everything down to one commandment:  All animals are equal, but some animals are more equal than others.

The above process is one for the ages, a process that has been reenacted time and time again by our species over the millennia.  It is exactly what is happening in these United States right now.

The reason I spend so much time on the Constitution and civil liberties these days is because I can see the above unfolding right before my eyes.  I also see an opportunity to stop it before it reaches its final, most destructive stage.  Whether it’s the Department of Justice turning journalism into a criminal act, the IRS going after political enemies, or our Noble Peace Prize winning President droning thousands of innocent men, women and children all over the world with flying robots, the oligarch class in this country is dismantling the Bill of Rights one amendment at a time.

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Chants of “End the Fed”…Heard at Anti-Monsanto Rallies

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While most of my readers know about the widespread anti-Monsanto/GMO rallies that took place all over the world this past weekend, the rest of the public has no idea due to a mainstream media blackout.  That’s ok because that industry is dying quickly anyway.  Although I haven’t spent much time watching footage from the rallies, I did watch one from my current home state of Colorado, and I was surprised and extremely encouraged by what I saw.

The leader of the march mentioned only one thing besides Monsanto in this video, and that is the Federal Reserve.  In fact, he mentioned it on several occasions as well as his support for a local alternative currency called “mile high hours.”  I have long been frustrated by the fact that activists do not understand how the Fed is the root of all of it. Once people understand that, it’s over for these criminals.  Toward the end, he states:

“Without the Federal Reserve, there’s no Monsanto.”

These kids get the joke.  Enjoy.

 

Welcome to the UK Recovery: Indebted British Man Sets Himself on Fire

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Nothing says recovery like citizens in debt setting themselves on fire due to economic hardship.  In this tragic case, Antony Breeze self-immolated after being preyed upon by payday lending companies that began to harass his father.  Similar stories are sure to reach U.S. shores before too long, particularly considering how TBTF domestic banks are partnered up with payday loan companies charging up to 500% interest.  From the Daily Mail:

A debt-ridden father doused himself in petrol and turned himself into a human fireball after being harassed for money by payday loan firms.

Antony Breeze, 36, died after setting himself alight, telling passers-by who tried to extinguish the flames: ‘I’ve had enough.’

In the hours before the tragedy Mr Breeze, who owed around £1,600, was bombarded with text messages about his arrears, an inquest heard.

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Elizabeth Warren Confronts Eric Holder, Ben Bernanke and Mary Jo White on Bankster Immunity

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Elizabeth Warren is one of the few Senators out there pushing to understand why the federal government has created an untouchable class of criminals in America that can do whatever they want whenever they want and, not only get away with it, but also get bailed out when they make mistakes.  In case you missed it, I highlighted a powerful video a few months ago in which she made regulators squirm when confronted on “too big to jail.”  Now she has written a letter to Ben Bernanke, Eric Holder and Mary Jo White.  My favorite line is:

“If large financial institutions can break the law and accumulate millions in profits and, if they get caught, settle by paying out of those profits, they do not have much incentive to follow the law.”

Indeed, which is why they don’t.  Full letter embedded below.

Denver Public Schools Pay $216 Million to Wall Street Banks to Unwind Swaps

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You can move from New York City to Colorado, but it seems you can never escape the all encompassing tentacles of Wall Street parasitism and theft.  I recently covered a similar situation back in March in my piece Wall Street: $474 Million, Detroit: 0.  In both cases it seems clear that public officials had no idea what they were getting into and there was a great deal of irresponsibility, but that is beside the point.  It’d be one thing to say these communities should suffer the consequences of their actions if Wall Street had to as well, but we all know that isn’t the case.  So it is highly immoral and culturally destructive to say it’s ok that Wall Street gets bailed out from all their mistakes and then is able to turn around and impose austerity on everyone else.  That’s the way America works today and we can thank Ben Bernanke and Barack Obama for that reality.  We must never forget the enablers in chief of all of this.  Oh, and did I mention that the $216 million paid by Denver represents two-thirds of annual teaching expenses?  USA! USA!

From Bloomberg:

Wall Street banks collected $215.6 million that Denver’s public schools paid to unwind swaps and sell bonds since the district began borrowing to cut pension costs in 2008. That sum is about two-thirds of annual teaching expenses.

The district paid $146.6 million last month to banks, including RBC Capital Markets LLC, Wells Fargo Securities LLC and Bank of America Corp., to end interest-rate swaps as part of a second attempt to restructure a 2008 borrowing, bond documents show. The April 17 deal sold as the district’s property-tax rate has risen 26 percent in two years to fund education.

Municipal borrowers from Detroit’s utilities to Harvard University in Cambridge, Massachusetts, have paid billions of dollars to banks to end privately negotiated interest-rate bets sold as hedges. The Federal Reserve’s policy of holding its benchmark borrowing rate near zero since 2008 has turned many of the swaps into wrong-way bets.

The Federal Reserve works for Wall Street.  Period, end of story.

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Guest Post: Why Policy Has Failed

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The essay below is courtesy of Doug Rudisch, a friend and former fund manager, who I have known and respected since my days on Wall Street.  I am extremely grateful that he took the time and effort to so insightfully write on some of the greatest issues facing our nation today and to provide this content to my readers.  What follows below are some of the most powerful passages from his piece and the entire thing is embedded at the end. The whole thing is simply excellent.

What I can say with absolute certainty is that I have lost a lot of faith and trust in the system. And I am not the only one. This sentiment is running at all-time highs amongst business leaders (their collective in-actions prove it) and guys on the street. It is both sides of the barbell and middle that are upset. Often it’s one or the other, but not all three. This time it’s not at an external state, it’s directed inwards. That is a tough problem to solve. Jingoism is not the answer either as we already tried that.

If there is no faith in the system, it has a really hard time working. And I mean real underlying faith and trust in the system, as opposed to the confidence born from economic steroid injections or entitlements. These are valid notions, but as a point of clarity I am talking about a something different. There also is a subtle but important distinction between faith and trust versus confidence. Faith and trust are longer term and more powerful concepts.

There is more going on than a temporary lull in animal spirits that current fiscal and monetary policy will cure. If that was the case, it would be working already.

dougpic

However as the above chart shows, things clearly changed in the 2003 and 2009 profit cycles as corporate profits surged while employment did not. My explanations:

Starting with the 2009 cycle first. In the 2008 downturn companies eliminated a lot of jobs. The depth of the downturn forced them to make the tough decision. Normally that kills consumer spend due to wage loss. But the government plugged the revenue gap with transfer payments and direct investment. See the green line go nearly vertical and it is fascinating how profit growth has mirrored the trajectory of debt growth. The consumer has started to dis-save again as well. Thus corporations kept the revenue, lost the labor, and voila record margins. You could argue unemployment is being subsidized. Like anything else, when something is subsidized, you tend to get a lot of it.

For example, see the recent new investor activity in single family homes and farmland of all things, including equity hedge funds who apparently think homes are like stocks. Maybe it’s a sign that other asset categories (equities and credit) are getting toppy or inflation expectations are increasing when hedge funds begin to foray into the single family housing market and farmland (some having little or no prior experience in these markets). At any rate, it seems odd and not good to me when policy results in hedge funds buying single family homes and farms.

Sorry Mr. Greenspan we have seen where valuing assets solely on the basis of current rates got us. If we should do that, baseball cards and chewing gum would also be great investments today. My suspicion is from here baseball cards and chewing gum will hold their value over time better than the typical company trading at 15x earnings derived from profit margins that are twice its average levels. And in point of fact according to the CPI the price of candy and chewing gum increased 31% between the years 2000-2012, while the S&P index including this year’s rip is only up 6% since 2000. Yes it matters what the price is that one pays for an asset!

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Rasmussen: 81% of Americans are Paying More for Groceries

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What?!  Someone get the Bernanke on the line ASAP!  Apparently the remaining 19% of Americans work at TBTF banks and the Federal Reserve.  From Rasmussen:

Most adults continue to say they are paying more for groceries than they were a year ago, and they expect that amount to be even higher next year.

A new Rasmussen Reports national telephone survey finds that 81% of American Adults are paying more for groceries than they were a year ago, down from 86% in March but generally in line with previous findings. Just 12% say their grocery bills are no higher than they were last year. 

It’s interesting that even after adjusting for fake tuna and horse meat, prices are still climbing.  These Americans are clearly conspiracy theorists (if you want to know whether you are one or not click here), everyone knows there is no inflation and that Oceania has always been at war with Eastasia.

Full story here.

In Liberty,
Mike

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Bitcoin Startup Coinbase Raises $5 Million…Major Venture Capital Players Getting Involved

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Yesterday, the Wall Street Journal reported that Coinbase has raised $5 million, which represents the largest funding round to date for a Bitcoin startup.  The funding is being led by the highly respected Union Square Ventures, and despite the fact that 90% of financial “journalists” and mainstream “economists” continue to bash Bitcoin as a bubble and a ponzi scheme, some of the brightest minds in venture capital are getting involved.  From the Wall Street Journal:

Eleven-month-old startup Coinbase announced Tuesday the largest funding round to date for a Bitcoin startup, a $5 million investment led by Union Square Ventures.

Coinbase is an online platform that allows users to buy Bitcoin, the virtual currency taking the tech world by storm. Users can also store Bitcoin in a digital wallet and pay merchants for goods or services with it. About 300 merchants have signed up with Coinbase so far, including content-aggregation site Reddit.com and dating siteOKCupid.com.

In April, Coinbase’s co-founders said the company claimed about 116,000 members who converted $15 million of real money into Bitcoin, up from $1 million in January. Ehrsam said the volume of dollars it’s converting to Bitcoin is increasing at a rate of about 15% a week, and its user base is growing at a weekly rate of about 12%.

Bubble!  Stay away!

He added that he thinks Bitcoin is poised to be a true game-changer for the business world, and the tech community in particular. “Hackers are the animals that can detect a storm coming or an earthquake,” he said. “They just know, even though they don’t know why, and there are two big things hackers are excited about now and can’t articulate why–Bitcoin and 3D printing.”

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Welcome to Kreuzberg, Berlin: The Neighborhood with the Highest Bitcoin Concentration on Earth

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Fascinating article out today from the Guardian about the Kreuzberg area of Berlin, which has the highest density of businesses accepting Bitcoin in the world.  The associated video at the top of the article is also a must watch, as it becomes readily apparent how excited both the merchants and the customers are about using this free market currency.  I am completely convinced that the more people learn about Bitcoin and use it, the more exponential its adoption will become.  My favorite line from the video comes at the very end from Joerg Platzer, owner of the bar Room 77:

“Every day we do not start using a free currency like Bitcoin, we actually actively vote for the current system to continue.”

From the Guardian:

Like Chebli, Martens, whose Kersenvlaai (cherry cake) from her native Maastricht is rated as one of the best culinary offerings of the area, says she decided to accept Bitcoins because of the ease, cheapness and transparency of its payment system.

“It’s an easier way of digital payment than credit cards, which cost me a lot of money as a business and to which I’m forced to sign up for years,” she says.

These two tradespeople are among around a dozen in the Graefekiez, a cosy neighborhood established in the 19th century in the southern Berlin district of Kreuzberg, which currently boasts the highest density of businesses accepting the currency in the world. Its growing list of Bitcoin establishments includes a restaurant, a printing shop, a bar and boutique.

“Kreuzberg is traditionally an area in which people are very politically aware, critical towards existing systems and are constantly discussing and looking for alternatives to them, which makes it the perfect breeding ground for Bitcoin,” says Joerg Platzer, a staunch Bitcoin advocate who roams the neighborhood with a missionary zeal in search of new recruits.

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