Peter Paying Paul (then repaying Peter)...

St Paul:  "Could I have that dollar you owe me?"
St Peter:  Of course..but can I borrow $2"

I wanted to take a moment to explain as clearly as possible why the world is in such trouble financially, and do so in a way that doesn't involve background knowledge in finance or many confusing statistics.

The world is economically in bad straits because we are all nations of borrowers. Every nation.  No one has any surplus and yet, we are borrowing from each other. We borrow from banks too but that's a dupe.  Most banks globally are zombie, meaning they're so much in the red that without money being poured into their coffers from nations, they couldn't survive.   Funny isn't it.. nations give banks free money so they won't collapse, then borrow it back at interest or lend to other nations that can't ever repay even the interest.

 And if not for all this and pretend currency created on paper and pretend monetary value placed upon it, the global financial community would have destroyed civilization 3 decades ago.

The reason I pinpoint it to the 1980s because most people do not realize this but in 1983, the Dow hit 1,000 for the first time.  Wall St had been in existence since Revolutionary War days (1770s) and yet never reached 1000 until 1983.  And what is it today?  Just about 13,000.  Each thousand represents $1 trillion dollars so in simple math, in a span of only 24 years, $12 trillion of pretend wealth was created.

Washington: "I much prefer my statue face something more honorable..."

Let's follow the sovereign economic food chain..  Greece needs money.  So does the rest of the PIIGS nations. And Eastern Europe.  So they borrow from the rest of the EU.   Who puts up most of the funding to cover those losses?   Germany.  And what was Germany doing today?


Merkel Looking for Help During Visit to China (Spiegel) -- "German Chancellor Angela Merkel needs help... Germany wants China to make a concrete pledge to invest in the euro bailout fund"

So basically all of Europe are beggars in one form or another.

Now Greece gets its bailouts from a "troika"- the EU, the ECB and the IMF which is pretty much US run and financed though it always has a puppet European leader so it gives the appearance of being international.  So 17.4% of all IMF loans and bailouts around the world come from US taxpayers.

And is the US a creditor nation?  Goodness No!  lol.. Not for many years..  We owe others more than $15 trillion dollars.  And yet the US has the audacity and arrogance to lend to others as if we're in the black.   And who do we owe money to?  Many creditors but namely, the Chinese.

And how do the Chinese lend to everyone?  They're really in an economic housing asset bubble, much like the US was prior to 2007. They had their citizenry build lots n' lots of homes, namely to keep the populace busy.  Problem is, most of the populace can't afford to rent or buy the homes that were built, so they're empty.. just like in Nevada, Florida and Arizona.

But China controls its media even better than the US so details of how weak their economy is, hasn't been truly known yet.  So as a ruse of prosperity, they lend money they don't really have to the rest of the other debtor nations and dramatically devaluing their currency so they can make up the losses via trade policy.

Everyone owes everyone.  This is why Investors are treated like royalty and national economic policies around the world cater to their needs; why Everyone tries to soothe the markets.  The Rats are the only source of  fresh money left in the big game of ponzi.

In a biblical sense, you could easy say the global economies survive by borrowing from "Peter" to pay "Paul" and no nation has the guts to dare call anyone out to repay their full tab. Banks and nations are all grateful simply if debtors can meet their monthly payments

And that's the sad state of the world no one talks about.

In a Perfect World- the ideal State of Union speech

There's an old adage- If you don't want to be aggravated, do not expose yourself to things that will aggravate you.    One of these days, I shall take up that advice though today is not that day.

Came across this article in Yahoo! Financial --  5 Things Wall Street Wants From Obama’s State of the Union Address.  In a perfect world, government would be forcing Wall St to heel like an undisciplined Dog to show who really is Master.  Of course, the world we live in is as imperfect as can be, and historically, Presidents end up being the lap-dog of Wall St.   Our current leader being no exception-  there is after all a re-election to consider.

The five things it mentioned Wall St wanting from Obama were:

1) To "Crank up Stimulus Spending" which of course would put us further in debt and if we were really, really lucky, some table scraps would "Trickle Down" to the populace.

2)  End the foreclosure/housing crisis by throwing obscene amounts of money at it.   A recent audit found Freddie/Fannie Mae needing At Least $100 Billion more taxpayer dollars.  What's a few billion when the trendy word for this crisis as been "Trillion".  This would really help Investors make money.

3)  Dramatically increase oil production by 'Drill, Baby Drill!'..  Anywhere... Everywhere...   Peak Oil be damned (Peak Oil means there is a  "peak" on how much oil is available for drilling and from that point, the supply dwindles which pushes price up via supply/demand)

4)  To " Cap the tax rate on capital gains and dividends at 15%"  -- Brilliant!  Allow the Scum and Shit who caused the depression and still profiting off it, to keep even More money..  I am sure "Mittens" Romney and his $21 mill salary while paying only 15% in taxes would Love that so much, he'd be tempted to vote Obama.

5)  The "Do Not Say" list, including "discussing the election and GOP candidates, discussing Warren Buffett and the 1%, and playing the blame game."  Last thing these rats want to hear is they're to blame, they made too much money off the crisis and the gravy train must stop.

So..  What to do when one reads a piece of garbage article like that?


Simple.. respond with 5 things that in a perfect world, the President Would say and do in the State of the Union to show Wall St who is really boss.  Of course, for this exercise, I am the President, and not a corporate shill, like the last four in office.

5 Things in my State of the Union specific to Wall St.:

1)  If stimulus spending is going to occur, it would bypass Wall St and specifically the banks to be recycled into the real everyday economy.  The government would either issue debt debit cards of $10k per person who earned under $500k/yr to assist in paying down debts or the government would simply buy up All outstanding private debt so every American could start at $0 and have a chance at a good life they'd be deprived if under the weight of bank debt.

2) Legislation to control what credit cards charge to consumers.  If you have good credit and never miss payment, no card can charge more than 5.9% interest. Ever!  If consumer misses a payment, he/she is charged a fee but rate does not spike to 20% or 30%.  And if consumer has difficulty paying off 1 card, other card companies can not raise the interest rate in collusion.  The new goal of credit card companies would be to profit without capital-P "Profitting" off people.

3) If there was a way as President I could take oil off the commodities trading board so no rat or roach could speculate and drive the price artificially high, I would.  Barring that, I would take away the federal tax on gasoline per gallon for everyday drivers and trucks on the road, but then place an excise tax on jet fuel with a discounted rate for public airlines so that the airline industry would not be severely affected.  Think of it as a Sin tax for those with private jets.

4)  The tax rate on capital gains and dividends would be lowered for those who earn $50k or less in profit from investing in the market.  However, earn more and the tax rate would start at 35% with a cap of 75% for those who earn more than $2million/yr in profit specifically from Investing.  No more free ride for the rats... they Pay too.

5)  Announce that any bank who can not pass a stress test is to be Nationalized, then broken up into smaller banking units much in the way Bell Telephone or Standard Oil was broken up historically.  Enough of a warning would be given to the public so funds could be withdrawn and accounts closed in an orderly fashion without fear of panic or loss of access to funds.   Glass-Stegall would be re-introduced as law where a firewall would be in place between normal everyday banking and speculative risk.

~ The American people seem to like it...

Of course Congressional approval would be needed for many of my declarations but where none was to be found I would use Executive Privilidge wherever legally allowed to get my policies through.

Wall St would howl & begin to understand who runs this nation.

Here's how the US Economy works in 2012

Wall St is back after a 3 day weekend; the filth of the world dressed in expensive attire making deals; making profit based on mirages and insignificance..   market is up today.. yawn..  One of those trading days instantly forgotten by 5min after closing bell rings.

So what to write about? 

We're going to try to address a Very complex topic with as much simplicity as we can convey to educate the reader how truly absurd the economic picture is and how fortunate things have not spun truly out of control as it is.

Now for the purposes of clarity, we're not going to bog the mind with statistics and equations for all that does is stunt even the most advanced intellect from understanding the bigger picture.  For instance, if you are asked to close your eyes and picture a woman between 30 and 50, you can easily and with detail.   Now, try picturing a million women at once with similar detail?  

The mind just doesn't work that way.  Which is a big reason why terms like billions and trillions and zillions have no real meaning beyond the fact we know its a lot. So for this lesson, we're going to use very small and understandable dollar amounts.

OK..  here's how the US Economy works in 2012..

The government has a budget for running expenses- everything from defense to Social Security and many necessary functions in between.   Now for simplicity sake, let's say the total US budget for 2012 based on known expenses is $100 dollars.  I say 'known' because while the government may set aside contingency funds, it can not predict natural disasters, acts of terror, etc.

Now, right now the government takes in less tax revenue than it spends, mainly due to a refusal to tax the super-wealthy and corporations their fair share, so for simplicity, we will say the government collects $95 in taxes.    

It is $5 short.. this is the deficit.

The US has been short for many years and borrowing from China among others- it owes its creditors $115 dollars.   That's the debt.   Now the US brings in $95 in total tax revenue, so even if 100% went to the repayment and severe austerity was enacted- zero to anything else, we still could not pay back our creditors in full in a reasonable period.

So in a very simple world, the US spends more than it takes in.. creditors get owed more and more on the total balance but get nice monthly repayment checks with interest, and the debt continues growing, albeit very slowly. 

Now the government also collects revenue through something called Treasury auctions where it sells bonds to investors at periods of anywhere from 3mths to 30 years based on interest rates offered.  In a perfect world, the US is always able to sell its bonds which gives the necessary and immediate money to continue operating, and over time the investors get repaid on their risk.

OK, now let's make things more realistic--  Since the financial crisis of 2008 began, the US has had to spend A Lot of $ to keep the system from collapsing and economically resetting itself.  So if we use the example of the Govt spending $100 a year in normal operating expense, then the Fed Reserve and Treasury by proportion gave the zombie banks and other Wall St financials $1,000-$2,000.

Now the US govt. really didn't have this money to give.  So, how did it?  Well, it sped up the printing presses, creating lots of lots of money to go to the banks and other entities to keep afloat while the money, while being mere pieces of paper with pictures backed by nothing, also create debt which at a future point must be repaid.

So let's get a little more specific about the banks, Freddie/Fannie Mae and institutions like them.  Why is it when the US govt bails them out, is it not enough?  Well, see the banks and other financials are never honest about how much toxic debt is on their balance sheets.  

So let's say Bank A is holding $100 in debt, it can't ask the Govt for $100. No way the Govt could help, especially if Bank B, C and D also is holding $100 a piece in debt.   So instead each Bank says they only hold $5 in bad debt and if repaid, that solves the problem.  So they get the $5 and a few weeks later magically "discover" another $5 in bad debt and ask for more.  And if not bailed, the system will collapse-  that's the Bank's bargaining chip.

Now the Fed "lends" this money to banks at a very low interest rate .25% or 1/4th of one percent.  But the Fed doesn't want this new money circulated or loaned out to people; so it offers the banks another .25% to hold the money for them.  So basically, the interest paid to hold the money pays the interest to lend, and the banks now have free money to speculate especially in the stock market where the Fed wants it to go, and buying US Treasuries.

Basically, most of the money the government gets each month do not come from true outside investors.  It either comes from the banks, which the Fed gave for free essentially, or the Fed itself directly buys the bonds to spare the government the embarrassment of a lack of buyers.   And how does the Fed pay?  It prints more money.  And what does that do to the National Debt?   Yes, it increases it.

It gets more intricate from here but I want to tie up loose ends.  The US used to be on the Gold Standard until Nixon took the nation off in 1971 due to the expense of funding Vietnam.  Now money is basically pieces of paper, hollow coinage and digital ones and zeros.  

Everything is kept afloat in the US economy for one reason-- confidence.  I give you a piece of paper with Andrew Jackson's picture in it in exchange for something you possess, and you accept because you feel confident that piece of paper will be accepted elsewhere by someone else.   And when you put those pieces of paper in a bank and see your balance digitally blinking, you feel confident you will be able to access those funds at any time.

We're getting close to a point in time where people aren't feeling as confident about being repaid on services rendered or debts held... Nationally.. globally.. and when that happens, all the bad stuff no one wishes to think about, will begin to occur; the things one experienced in the 1930's Depression.

Its all about confidence.. con man.. con game...   

Con.

Unemployment rates around the globe

A few weeks ago I posted that Spain's unemployment rate is over 21% and today, the Bureau of Labor Statistics released its monthly report saying "official" US unemployment is at 9%  (its really at 17% but Shhh... Shhh....)

So I was curious to see the most recent unemployment rate figures of other nations.  Because I do not know the interworkings of ever nation's Department of Labor, I can not state if or which nations doctor their numbers as is done in America.  So the following figures are the most accurate information I can provide...

Afghanistan- 35% as of March, 2011; yes 35 out of every 100 unemployed

Australia-  4.9% as of March, 2011-  that's a normal percentage

Austria- 4.8% as of February, 2011

Belgium- 7.6% as of February, 2011

Brazil-  6.5% as of February 2011, and their nation is really growing

Canada-  7.6% as of April, 2011

China- 4.1% as of late 2010; any surprise it will be #1 by 2016

Croatia- 19.3% as of March, 2011;  that's about 1 in 5

Egypt-  9.7% as of early 2011 before Mubarrak left

France-  9.5% as of April 2011; 2010 was 9.1% unemployed

Germany- 6.3% as of February, 2011

India- 10.8% as of early 2011; growing nation with expanding population

Ireland-  14.6% as of May, 2011; 1 in 7 out of work.. other 6 working for IMF

Italy- 8.6% as of January, 2011

Mexico- 5.38% as of February, 2011; with figures like that, you may start seeing 'gringos' rushing over the border for a job

Portugal- 11.2% as of January, 2011

Russia- 7.4% as of February, 2011

South Africa-  25% as of March, 2011; guess the World Cup didn't help

Spain-  21.3% as of April, 2011

United Kingdom-  7.8% as of February, 2011

United States-  9% as of May, 2011;  really 17% when counting the U-6 factors which are conveniently ignored (Kinda like saying only 9% of Americans are redheads by intentionally ignoring the other 8% from your calculations)

Vietnam-  2.9% as of March, 2011; guess that's what happens when a nation makes everything the rest of the world consumes

Zimbabwe- 95% as of early 2011; yes.. 95%.. 9 out of 10 jobless

April 19- special day in history few recall

April 19th is an interesting day in history...   In 1770, Captain James Cook sights the east coast of Australia for the first time, Marie Antoinette marries Louis XVI in a proxy wedding in France in the same year, and in 1956, Grace Kelly marries Prince Ranier or Monaco to officially become Princess Grace..

Yes.. many interesting things.. something I am missing though.  Hmm..

The Warsaw Ghetto uprising began today in 1943 and the Bay of Pigs invasion was repulsed by Cuba in 1961.. hmm.. but I am missing something else.. ~thinking...

Oh yes.. of course..  April 19, 1775- the beginning of the American Revolution when the battles of Lexington & Concord were fought.

Two Hundred Thirty-Six years have passed..

And in that time, the conversion from colonists to countrymen took place, followed by a massive manifest destiny movement, a gold rush, civil war, more expansion, industrialism and an economy that even amid numerous Panics always seemed to grow until recently.

From our inception to the present, the US has fought 14 official wars (Had to bunch up all the various wars against the Native American populations into 1 because I'm not capable of counting that high). We fought against the British twice, then fought along side them a bunch more times for in geopolitics, yesterday's combatant is today's ally.

Through 236 years, we've been every adjective from heroic to horrible; ethical to immoral, as every nation has-- we all have our proud moments and our skeletons.

But today in history, colonists from Massachusetts opened fire on British 'redcoats' at Lexington & Concord.  And whatever their individual reasoning, they committed themselves to an endeavor to rid themselves of monarch rule, by force if need be.

Brave, they most certainly were to stand up for oneself with no guarantees of success or knowledge of the future.. and even Braver when considering how few people were willing to fight for their beliefs and values prior to the American Revolution and still how few are willing to presently.