Black Hole Alert: The Last Sucker into the Stock Market Was the Pension Guaranty Corporation

You simply cannot make this stuff up.

The Pension Benefit Guaranty Board, which backstops defined benefit plans (yes, Virginia, they still exist) faced a rather sizable gap between its expected returns on its $64 billion in holdings and its expected liabilities.

So in a stroke of sheer genius, it increased its allocation to risky assets considerably at precisely the time those assets started tanking. It even managed to cut its allocation to Treasuries way back, reducing its participation in the big Treasury rally of last year.

Now anyone who was finance literate would look at the PGB's new asset allocation and recognize it as conventional wisdom as dispensed by pension fund consultants. And if you had read Benoit Mandelbrot or Nassim Nicolas Taleb, you'd also know that those pension fund consultants base their prescriptions on theories that simply do not pan out empirically, and worse, greatly understate risk.

Read on...

There is little doubt that one of the reasons the Pension Guaranty Corporation switched to equities, was to prop up the stock market, prevent a crash during Bush's presidency and give big fees to Wall Street movers and shakers. This is the same reason Bush was so desperate to privatize social security. So now we have pension plans all over North America and the world that are unable to meet their obligations.

Do you think it is different in Canada? Is Air Canada's pension secure? Is GM Canada's? Is Ford Canada's? Is Manulife's? Peacenik just emailed and asked if Peacenik's penison is secure. Ominously Peacenik has not gotten an answer. The whole corrupt system has imploded. And the commerical real estate markets and credit card markets are only in the early stages of collapse. But Harper says Canadian banks are a model for the world. Harper says things are going to get better. Thank goodness.

Another War Lost?

By William S. Lind

With the usual fanfare, the Obama administration has proclaimed a new strategy for the war in Afghanistan. On the surface, it does not amount to much. But if a story by Bill Gertz in the March 26 Washington Times is correct, there is more to it than meets the eye. Gertz reported:

"The Obama administration has conducted a vigorous internal debate over its new strategy for Afghanistan….

"According to two U.S. government sources close to the issue, senior policymakers were divided over how comprehensive to make the strategy….

"On the one side were Vice President Joseph R. Biden Jr. and Deputy Secretary of State James B. Steinberg, who argued in closed-door meetings for a minimal strategy of stabilizing Afghanistan….

"The goal of these advocates was to limit civilian and other nonmilitary efforts in Afghanistan and focus on a main military objective of denying safe haven to the Taliban and al-Qaeda terrorists.

"The other side of the debate was led by Richard C. Holbrooke, the special envoy for the region, who along with U.S. Central Command leader Gen. David H. Petraeus and Secretary of State Hillary Rodham Clinton fought for a major nation-building effort.

"The Holbrooke-Petraeus-Clinton faction, according to the sources, prevailed. The result is expected to be a major, long-term military and civilian program to reinvent Afghanistan from one of the most backward, least developed nations to a relatively prosperous democratic state."

I have not seen similar stories in other papers, so it is possible Gertz is not correct. But if he is, the Obama administration has just made the Afghan war its own, and lost it.

Ironically, the reported decision duplicates the Bush administration’s error in Iraq, another lost war (the next phase in Iraq’s Sunni-Shi’ite civil war is now ramping up). The error, one that no tactical or operational successes can overcome, is setting unattainable strategic objectives.

Keep Reading...

Punditman says...

Since the end of the so-called "surge" in Iraq, the bubbleheads who inhabit TV news land have been either hinting at, or directly referring to, Iraq as a "success story." A country where, hmm, let's see...on a fairly typical day, yesterday, 15 Iraqis were killed and 19 were wounded in political/criminal violence; a country where occupation by US troops continues; where 40 American soldiers have died so far this year; a country where increased sectarian violence looms, where...(okay, so there's a few minor problems left, but let's move on where the White House wants us to go, okay? - mainstream media minder).

I suppose if our kindergarten quality media can call the Iraq War a success, then the definition of "success" in Afghanistan can be equally misappropriated. Look for it as this new strategy unfolds...

The Quiet Coup

by Simon Johnson

One thing you learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Typically, your “clients” come in only after private capital has abandoned them, after regional trading-bloc partners have been unable to throw a strong enough lifeline, after last-ditch attempts to borrow from powerful friends like China or the European Union have fallen through. You’re never at the top of anyone’s dance card.

The reason, of course, is that the IMF specializes in telling its clients what they don’t want to hear. I should know; I pressed painful changes on many foreign officials during my time there as chief economist in 2007 and 2008. And I felt the effects of IMF pressure, at least indirectly, when I worked with governments in Eastern Europe as they struggled after 1989, and with the private sector in Asia and Latin America during the crises of the late 1990s and early 2000s. Over that time, from every vantage point, I saw firsthand the steady flow of officials—from Ukraine, Russia, Thailand, Indonesia, South Korea, and elsewhere—trudging to the fund when circumstances were dire and all else had failed.

Every crisis is different, of course. Ukraine faced hyperinflation in 1994; Russia desperately needed help when its short-term-debt rollover scheme exploded in the summer of 1998; the Indonesian rupiah plunged in 1997, nearly leveling the corporate economy; that same year, South Korea’s 30-year economic miracle ground to a halt when foreign banks suddenly refused to extend new credit.

A week or so ago Peacenik gave a link to Matt Taibbi's article, The Big Takeover, in the Rolling Stone. That article is the best explanation that Peacenik has read about what happened at AIG. Today, Peacenik links to The Quiet Coup by Simon Johnson. Simon Johnson was a chief economist at the IMF.

Peacenik thinks anything longer than 200 words is long. Both of these are long pieces. This one describes how the U.S has become a banana republic. And unhappily it forecasts a depression worse than the Great Depression--unless. Unless what? There is no unless. We are in the march towards an even greater depression, and there is nothing anyone in this world, including Peacenik can do about it except stock up on lima beans, post on Punditman until the electricity runs out and then head for the compound. So when will it hit? How will it hit? Peacenik thinks it has hit. But if you watch American Idol, and enter hockey playoff pools, and kibbitz at the pub, and spend your last bit of credit, you might be able to ignore it. For a bit longer. In the meantime, Peacenik is getting prepared. Are you?


Obama's Domino Theory

by Juan Cole

President Barack Obama may or may not be doing the right thing in Afghanistan, but the rationale he gave for it on Friday is almost certainly wrong. Obama has presented us with a 21st century version of the domino theory. The U.S. is not, contrary to what the president said, mainly fighting "al-Qaida" in Afghanistan. In blaming everything on al-Qaida, Obama broke with his pledge of straight talk to the public and fell back on Bush-style boogeymen and implausible conspiracy theories.

Obama realizes that after seven years, Afghanistan war fatigue has begun to set in with the American people. Some 51 percent of Americans now oppose the Afghanistan war, and 64 percent of Democrats do. The president is therefore escalating in the teeth of substantial domestic opposition, especially from his own party, as voters worry about spending billions more dollars abroad while the U.S. economy is in serious trouble.

He acknowledged that we deserve a "straightforward answer" as to why the U.S. and NATO are still fighting there. "So let me be clear," he said, "Al-Qaida and its allies -- the terrorists who planned and supported the 9/11 attacks -- are in Pakistan and Afghanistan." But his characterization of what is going on now in Afghanistan, almost eight years after 9/11, was simply not true, and was, indeed, positively misleading. "And if the Afghan government falls to the Taliban," he said, "or allows al-Qaida to go unchallenged -- that country will again be a base for terrorists who want to kill as many of our people as they possibly can."

Read on...

Peacenik would rather be writing about the total meltdown of Wall Street that may be happening as Peacenik types this. Peacenik likes Obama. But Peacenik thinks Obama is totally screwing up trying to fix the financial crisis. It can't be fixed. And Peacenik thinks Obama is well on the way to screwing up his foreign policy. He's back to talking about those bad boogymen hiding in caves. A domino theory forchrissakes. The frigging speech about Afghanistan could have been given by George Bush. The growing recognition that it is all a house of cards, finance policy, foreign policy, social policy, makes it harder and harder for Obama to keep insulting the public's limited intelligence. Trouble, big trouble is brewing. Optimists are saying to watch out this fall. Peacenik says watch out....today.


50 Truths: Now Run For Cover

50 truths: The simple, underlying fundamentals of a dying system:

1. Unemployment is increasing
2. Federal tax revenues are decreasing
3. Consumer spending is decreasing
4. The risk of catastrophic Deflation is increasing
5. The risk of catastrophic Hyperinflation is increasing

Read on...

Hope? Peacenik had Duke and Memphis in the final four. Hope? The Guelph Storm got swept in four games. Hope? Peacenik doesn't have a Super 7 ticket for tonight. Hope? Peacenik doesn't have any cold beer in Peacenik's fridge. Dan W's 50 truths gave Peacenik's hope quotient a real hammering. Hope? The Banks? The Economy? Society? Not so much. Have a good weekend.


Economic Quagmire: What does Punditman think?

punditman says...

For months now, there has been much chatter around here about complete economic collapse, especially since the misnamed Peacenik arrived and started gathering up prognostications from the best of the online doomers and peak oilers. Though he started his Punditman career by posting about a possible US attack on Iran along with the ongoing quagmires in Afghanistan, Iraq etc., Punditman wonders if this was simply a means of infiltrating the content side of this blog, because it is clear where Peacenik's priorities lie: He is a "Peacenik" in a class warfare/survivalist sort of way (whatever does that mean?).

Still, Punditman does not blame Peacenik for closely monitoring the largest economic downturn in 80 years, in fact he is thankful to have such a razor sharp doomer analyst on board. He just wishes he would change his moniker.

That aside, what exactly does Punditman think about all this talk of economic collapse?

Punditman believes that "doomsday" is a relative concept. It depends on the country, the region, the sector, the business and ultimately the individual.

For instance, in the underdeveloped world, doomsday has been the norm for decades. Ditto for war zones. Suddenly a little karmic discomfort in the First World and everyone is screaming that the sky is falling.

Okay, so things are bad enough. But how bad can/will this crisis get? Well, I just got an email from a friend out West who said his wine class sales are booming. "Things are crazy busy," says he. Seems one person's doom is another person's dollar.

On the other hand, if you lose your job, your house, your business, your
wine collection, well then it's certainly doomsday for you. Punditman wishes he had a fine Merlot collection to lose.

Anyway, doomsday estimations are dependent on how stupid the estimator thinks politicians who are beholding to entrenched interests have become. Granted, they appear pretty clueless lately. Peacenik apparently thinks they are really stupid and will let the whole house of cards collapse all around them and do nothing to save their political hides or the actual hides of their rich business friends (especially if they live in France), as hordes of pitchfork wielding peasants and workers storm the corridors of power. Thus Peacenik is forming his own militia, just in case.

On the other hand, Punditman thinks that the powers that be fear the above scenario more than anything and that even their greed and ignorance is not as great as their fear of revolt.


With the past as our guide, we know that elites do not give away power willingly, nor, in a touch of great historic irony, do they change direction even when the train is seemingly headed off the tracks---unless there is concerted pressure from below that addresses the needs and demands of the common folk.

If you want, you can call that hope. Hopefully a guy named "Peacenik" has similar hopes.

Japan Caught In Deflationary Spiral; Exports Plunge, Prices To Follow

Recessions have taken their toll on Asia exporters. Inquiring minds are reading Japan Exports Drop Record 49% as Global Slump Deepens.

Japan’s exports plunged a record 49.4 percent in February as deepening recessions in the U.S. and Europe sapped demand for the country’s cars and electronics.

Shipments to the U.S., the country’s biggest market, tumbled an unprecedented 58.4 percent from a year earlier, the Finance Ministry said today in Tokyo. Automobile exports slid 70.9 percent.

The collapse signals gross domestic product may shrink this quarter at a similar pace to the annualized 12.1 percent contraction posted in the previous three months, the sharpest since 1974. Prime Minister Taro Aso is compiling his third stimulus package as companies from Toyota Motor Corp. to Panasonic Corp. fire thousands of workers.

Read on...

Peacenik has to confess that Peacenik had doubts this morning on the long bus ride to work. Peacenik doubted that things were going to get as bad as Peacenik has been thinking they will get. Peacenik admits that the Baltic Dry Index is up. And truck tonnage increased in February. And new home sales may have bottomed in the U.S. And Larry Kudlow said on TV that we are at the start of a new bull market. There are lots of signs. Peacenik looks for signs. Not just headlines. For example, if things were going to be very very bad, wouldn't Obama, who has access to all the data, all the information, all the secret reports, wouldn't Obama's hair be white by now? It is not. There are other small signs. Sold signs on houses. Big crowds at the Storm hockey games. Packed pubs. Maybe just maybe the bottom is in, or near.

But then Peacenik checked the news this morning. And reality started to ebb back into Peacenik's confused mind. Peacenik read this: EU presidency: US stimulus is 'the road to hell'. And Peacenik read this: IBM To Cut 5,000 Jobs In The US. And now Peacenik is back to staring into the black hole. But not without some doubts, and some hope.


GAO: More Expensive to Leave Iraq Than to Stay

Even Ending a War Can't Be Done on the Cheap, GAO Warns

Posted March 24, 2009

The Government Accountability Office (GAO) issued a report today (PDF) examining the ongoing costs of the Iraq war. The report concludes that despite the enormous costs associated with fighting the Iraq war over the past six years, Congress should expect costs to actually increase as the Obama Administration moves through its so-called pullout plan.

The Obama plan would reduce the current troop commitment from 138,000 to roughly 50,000, who would remain indefinitely. Yet the costs associated with withdrawing the troops and turning over the hundreds of American bases to the Iraqi government would be “significant,” the report concludes.

The report will likely shoot enormous holes in the Obama Administration’s budget, as they had projected enormous savings over the next few years and were budgeting $50 billion, roughly a third of what it will be this year, past fiscal 2010. The report indicates that this is beyond wishful thinking.

punditman says... This is what happens when you have a "withdrawal plan" that is not really a withdrawal plan. An analogy: when you decide to not go out to restaurants and pubs as often and stay home instead, you don't expect it to cost you more--unless of course you train and pay someone to work in your kitchen and pay someone else to deliver beer to your door.

Maybe Obama has to rethink his Iraq strategy? Maybe he should make it a real withdrawal plan? Maybe the Congress of the United States should do what they did during the Vietnam era and finally decide to cut off funding for this sucky war? It may not be a pretty scene when the last helicopters leave the Green zone, but leave they will. It is only a question of how much more money is first thrown into yet another black hole.

Do the Secret Bush Memos Amount to Treason? Top Constitutional Scholar Says Yes

By Naomi Wolf, AlterNet. Posted March 25, 2009.

Legal expert Michael Ratner calls the legal arguments made in the infamous Yoo memos, "Fuhrer's law."

In early March, more shocking details emerged about George W. Bush legal counsel John Yoo's memos outlining the destruction of the republic.

The memos lay the legal groundwork for the president to send the military to wage war against U.S. citizens; take them from their homes to Navy brigs without trial and keep them forever; close down the First Amendment; and invade whatever country he chooses without regard to any treaty or objection by Congress.

It was as if Milton's Satan had a law degree and was establishing within the borders of the United States the architecture of hell.

Read on...

Peacenik knows there is a big financial crisis going on. Peacenik also knows the corporate media cheered for Bush for eight years as he destroyed civil liberties in the U.S. The same media that frets about Michelle Obama's biceps, just aided and abetted the march to dictatorship in the U.S. Will Obama turn any of this around? Will Yoo or Bush or Cheney be prosecuted? Peacnenik watches the complete corruption of Wall Street and the complete corruption of the U.S. constitutional system. Peacenik wonders if such a sick society can be saved...or deserves to be saved.


British Pubs May Be Becoming An Endangered Species

LONDON -- Nothing can stay the same forever although Britain is one country where they try like the Dickens to fight that basic truth. The lyric of an old World War I song said it best:

There'll always be an England
While there's a country lane,
Wherever there's a cottage small
Beside a field of grain.

And down the lane from that cottage beside the field of grain there will always be a pub serving imperial pints (20 ounces) of beer. Well, that is changing rapidly. (Although you can still find some authentic pubs.)

Rural life is unrecognizable from 20 years ago and British drinking habits have undergone a sea change, as well. Both of these factors have led to a crisis for British pubs. Thirty-nine a week are going out of business forever.

Read on...

Peacenik calls for a bailout of all pubs, wherever they are.

The Real Criminals are Neither Lynndie England nor the AIG Traders

by Thom Hartmann

Whenever a politician or commentator bloviates about the brokers at AIG who are getting bonuses, we should all be remembering Lynndie England and Charles Granger. AIG brokers are to the financial meltdown what England was to the Iraq war.

Certainly she did things that were deplorable. But she thought they were legal (England, operating under orders to "soften up terrorists," even thought she was helping defend our nation). And to the extent that John Yoo's memos were law, arguably her actions were legal (although the Bushies never wanted it tested, so threw them to the wolves).

But the important point is that the real criminals of the Iraq War were not those like Lynndie England: they were George W. Bush, Dick Cheney, and Donald Rumsfeld (and their neocon buddies).

Read on...

Yes, this is the ultimate irony. The financial crisis the world now faces was the ultimate goal of the powers that be. They succeeded in "starving the beast". The succeeded in "drowning the gov't in the bathtub." They succeeded beyond their wildest dreams. The U.S. will be lucky to be able to afford food stamps for the hungry. Tent cities are already exploding all over the country. The precious private health care system will remain private. But no one will be able to afford it. The pharma industry will remain unregulated. But no one will be able to afford the drugs. They succeeded and now they are scared shitless. Unanticipated and uncontrollable consequences. Just a little revolution, and some riots and mayhem. A bit of anarchy.

It's all coming to you courtesy of the Republicans and their Democratic enablers. The same Democratic enablers who are getting all the airtime pushing the Blue Dog bullshit. Peacenik doesn't think the world deserves what is coming. But Peacenik understands why.

US Will Appoint Afghan 'Prime Minister' to Bypass Hamid Karzai

White House plans new executive role to challenge corrupt government in Kabul

by Julian Borger in Brussels and Ewen MacAskill in Washington

The US and its European allies are ­preparing to plant a high-profile figure in the heart of the Kabul government in a direct challenge to the Afghan president, Hamid Karzai, the Guardian has learned.

The creation of a new chief executive or prime ministerial role is aimed at bypassing Karzai. In a further dilution of his power, it is proposed that money be diverted from the Kabul government to the provinces. Many US and European officials have become disillusioned with the extent of the corruption and incompetence in the Karzai government, but most now believe there are no credible alternatives, and predict the Afghan president will win re-election in August.

Read on...

Remember all that talk by our Prime Minister Harper about how democracy was being restored in Ahghanistan.? Remember how Karzai attended Bush's "State of the Union Address"? Karzai sat with Laura Bush forchrissakes. Remember how Karzai addressed a joint session of Congress and virtually campaigned for Bush's re-election.? Remember all those purple fingers? And all the schools and water filtration plants the West was supposedly building? Remember how women were being emancipated in Afghanistan.? Remember how NATO's mission in Afghanistan was crucial to Canada's security.?

Fergeddaboutit. All that was simply bullshit. Karzai never had any popular support. He was a former CIA retainee ferchrissakes. Needed a brigade of Blackwater mercenaries to just keep him alive in Kabul. So remember readers: when Harper or Bush/Obama tell you anything about Afghanistan, they are lying. Peacenik says bring the troops home now.


George Galloway banned from Canada while George W. Bush is welcomed

punditman says...

Punditman had barely recovered from last week's fiasco in Calgary, whereby Dubya was given the red carpet treatment, and then this story hits the headlines. Let's see: George Galloway is a British member of Parliament, albeit a controversial one. He is an outspoken opponent of the war in Iraq, the occupation of Afghanistan, the occupation of Palestine and Israel's attacks in Lebanon and Gaza. In other words, his views are in sync with millions of others, which is no reason to ban him from entering Canada for a speaking tour. Especially since there is no evidence that he is a "financial supporter of terrorism." The politicized allegations against him have not been proven in a court of law. Obviously this is a total affront to free speech.

Meanwhile, George W. Bush is more than controversial; by any sane standard, he's an international criminal of mammoth proportion---yet the Harper government and the Calgary Chamber of Commerce saw fit to greet him with open arms and an open wallet. Utterly disgusting. Such is the mentality of the neo cons who rule this country. To see what Galloway is really all about, view the above video. Then kiss your free speech goodbye.

Financial Policy Despair

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.

Read on...

Peacenik was getting bummed out by some of the hockey results on the weekend. Habs lose to the lowly leafs. Canucks lose to the lowly Coyotes. And Peacenik isn't winning the March Madness pool. Then Peacenik read the reviews for Obama's "new" rescue of the banks and their toxic assets. Then Peacenik sees on the front page of this morning's Globe that Ottawa and Canadian banks are taking action on mortgages. But Ottawa just told Peacenik that there were no problems in Canada. That Canada was special.

The black hole of financial armagedden is staring Peacenik and the world in the face this cool Monday morning. Krugman thinks the world may be down to its last chance. Read Taibbi in the Rolling Stone, or this from Naked Capitalism. Wall St. and the banks don't deserve to be rescued. They deserve to be in jail. But Wall St. will probably rally a bit on Obama's rescue plan. Then reality will bite hard. The banks can't be rescued. The economy can't be saved. The black hole wins.


I Don't Know Exactly When...

...But I do know why, and I do know how.

It's pretty straightforward.

People bought stuff with hundreds of trillions of dollars of debt (credit, not capital). This debt-spending inflated the prices of assets (Stuff. Mortgage Backed Securities and CDO's and all kinds of stuff.) to levels that did not in fact reflect real worth. Why? Because debt that cannot be serviced with real productive capital is worthless!!! You can write me an IOU for a million dollars for my 2000 Toyota Echo, but if you don't have a penny to your name---in fact, if you yourself are in debt up to your eyeballs---your IOU ain't worth poop. And neither is my Echo.

Read on...

Peacenik likes posts that explain what is happening in simple language. Dan W. lays it out in this post. All the bailouts are to protect the wealthy, special interests. All the bailouts are to redistribute money from you, the taxpayer, to the already wealthy. But it won't work. They'll take the taxpayer money. But it will all come crashing down. Think back three years ago, and the public didn't give a hoot about $100 million dollar salaries for executives. Because everyone was rolling in phony money. But it was phoney money, phoney wealth. Executives now need bodyguards to go to the corner store. Peacenik gets discouraged when Peacenik reads and sees how corrupt the whole system is. Peacenik is going to have a real beer. Paid for with real money. And Peacenik is checking Ebay for pitchforks.

Update: Three banks failed on Friday and two credit unions. Did yours?


Does America Face the Risk of a Fascist Backlash?

By Robert Freeman, AlterNet
The Right's ability to capitalize on people's sense of grievance must not be underestimated.

In early 1919, Germany put in place a new government to begin rebuilding the country after its crushing defeat in World War I. But the right-wing forces that had led the country into the War and lost the War conspired even before it was over to destroy the new government, the "Weimar Republic." They succeeded.

The U.S. faces a similar "Weimar Moment." The devastating collapse of the economy after eight years of Republican rule has left the leadership, policies, and ideology of the right utterly discredited. But, as was the case with Germany in 1919, Republicans do not intend to allow the new government to succeed. They will do everything they can to undermine it. If they are successful, the U.S. may yet go the way of Weimar Germany.

Keep Reading...

punditman says...The link above is a long read for you, dear readers. But hey, it's the weekend and what better way to spend time than contemplating the consequences of a Republican/fascist resurgence?

Fed Moves Spark Refi Madness!

by Mike Larson 03-20-09
Mike Larson

The Federal Reserve has done it now. In poker terms, it’s gone “all in.”

Specifically, the Fed said this week that it will ramp up its purchases of Fannie Mae and Freddie Mac Mortgage Backed Securities (MBS) from $500 billion to a whopping $1.25 TRILLION in the coming months. The Fed is also going to double its purchases of Fannie Mae, Freddie Mac, and Federal Home Loan Bank bonds to $200 billion from $100 billion.

And for the icing on the cake …

The Fed will buy as much as $300 billion in longer-term U.S. Treasury securities. It’s going to focus on Treasuries with maturities between two and ten years, and make purchases two or three times a week.

Read on...

Peacenik sees these latest moves as more desperation from Obama. Obama desperately wants to re-inflate the housing bubble, or any bubble for that matter. Obama still can't accept that the status quo will never return. Peacenik doesn't offer financial advice other than to bury cash in your back yard. In this post Mike offers some insights on re-financing or buying a house. Meanwhile it is Friday and the bank death watch continues. (Banks die on Fridays) Do you have enough cash to get through the weekend?

Doomer Dinner Party - Challenge

One of my friends recently joked that we should have a Doomer Dinner Party - a meal made only of our preserved foods, food storage, and what is currently growing in the garden. Food storage + party? = a great idea in my book! Of course, in the spirit of Transition Towns it should probably have some sort of upbeat, positive name - like New Opportunities Dinner Party or Support Local Food Dinner Party, but I think Doomer Dinner Party is catchy and funny, so I'll stick with that name.

This is basically a variation on the theme of "Prep Practice", when a family shuts off the breakers and pretends no gas is available... but with guests. I think it would be fun to get together and have some peak chat, swap recipes and discuss how we can help each other and our community. I want to do it!

Read on...

By golly does this sound like fun or what? Peacenik is going to start studying, and practising and planning. Peacenik has a wide window cell that gets lots of sun. Peacenik is going to plant some food. If Peacenik ever gets invited to a Doomer Dinner Party, Peacenik will be prepared. Now if only Peacenik knew some doomers. Have a good weekend.


Preparation For The Great Indoorsman

I happen to think that this coming summer is gonna be rough. As such, I am continuing my preparations viz keeping my family fed, clothed, sheltered, cool, and safe.

Many of us are not "survivalist" types. I'm certainly not. A day outdoors for me is usually spent watching a high school baseball game whilst relaxing in a lawn chair and sipping on some iced coffee. I don't hike. I CERTAINLY don't camp. Why the hell would I sleep in a tent when a warm bed beckons?? I HATE mosquitoes. I'm afraid of bears. So, my preparations are geared toward trying, on some level, to honestly approach the task in admitting my non-outdoorsmen nature.

Peacenik was going to photoshop Peacenik's face onto the picture that the above link will take you to. But Peacenik doesn't have photoshop software. Peacenik has periodically posted articles that can help you in the coming chaos. This post is for the non-survivalist. Interesting what Dan W. thinks is important. Peacenik will review his supplies after reading this article. Peacenik may have to stock up on smokes. And Peacenik doesn't even smoke!

"Civil War in the United States?"

by Immanuel Wallerstein

We are getting accustomed to all sorts of breakdowns of taboos. The world press is full of discussion about whether it would be a good idea to "nationalize" banks. None other than Alan Greenspan, disciple of the superlibertarian prophet of pure market capitalism, Ayn Rand, has recently said that we have to nationalize banks once every hundred years, and this may be that moment. Conservative Republican Senator Lindsay Graham agreed with him. Left Keynesian Alan Blinder discussed the pros and cons of this idea. And while he thinks the cons are a bit bigger than the pros, he was willing to spend public intellectual energy writing about this in the New York Times.

Well, after hearing nationalization proposals by arch-conservative notables, we are now hearing serious discussions about the possibilities of civil war in the United States. Zbigniew Brzezinski, apostle of anti-Communist ideology and President Carter's National Security Advisor, appeared on a morning television talk show on February 17, and was asked to discuss his previous mention of the possibility of class conflict in the United States in the wake of the worldwide economic collapse.

Keep Reading...

[Copyright by Immanuel Wallerstein, distributed by Agence Global. For rights and permissions, including translations and posting to non-commercial sites, and contact: rights@agenceglobal.com, 1.336.686.9002 or 1.336.286.6606. Permission is granted to download, forward electronically, or e-mail to others, provided the essay remains intact and the copyright note is displayed. To contact author, write: immanuel.wallerstein@yale.edu.

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Peacenik says...Look whose name pops up in this commentary above...Ann Rand. Peacenik thinks it is time to stamp out Randism. Back not too long ago Peacenik thought the world, and North America was civilized. Peacenik thought North America was beyond the type of violence that exists in Africa, or in the Middle East, or in the old Soviet Union. But now major mainstream pundits/players are acknowledging that it is possible. In just a few short years Canada has gone from a country that was proud of its record for peacekeeping to a country that is inundated with militarist advertising to join the military and FIGHT. In Canada now one has to be careful when they say "bring the troops home now!!" The U.S. is already fighting a cultural civil war throughout the country. Will the U.S. devolve into a fighting civil war? Could Canada? Peacenik wants to go on a peace march. But Peacenik may have to start Peacenik's own militia.

Scott Horton Interviews Gareth Porter


Gareth Porter, independent historian and journalist for Inter Press Service News Agency, discusses the Obama administration’s attempted duplication of Gen. Petraeus’s Iraq “success” in Afghanistan, the difficulty foreign occupiers have in overcoming the Pashtunwali code, the possible changes in U.S. military planning when the Quadrennial Defense Review is completed and Saudi Arabia’s diplomatic attempt to separate the Taliban and al Qaeda.

MP3 here. (27:43)

Gareth Porter’s articles appear on the Huffington Post, Inter Press Service News Agency and on Antiwar.com.

punditman says...Vice President Joe Biden thinks that 70% of the insurgents are just doing it for the money, and therefore all the West has to do is buy them off and we're home free.

Malarky, says Porter--and anyone else who knows anything about the region. They will fight because they will not accept foreign occupation--ever. They will fight because the Pashtun code of conduct dictates that they must avenge the deaths of their relatives. And since NATO is doing a great job at killing lots of innocents, then the war will go on as long as foreign troops occupy, end of story. Listen to this interview and then compare it to what we are told about Afghanistan in the mainstream media.


CBC: NEWS, Coverage of protest in Calgary March 17, 2009

punditman says...

This is totally mind boggling. Bush was sponsored by the Calgary Chamber of Commerce and paid $150,000 to deliver a speech entitled, "Eight Momentous Years in the Oval Office: Challenges Facing the World in the 21st Century." Even worse, 1,500 people paid $400 for a ticket. Who are these people?
Shame, shame!

Perp Walks Instead of Bonuses

by Robert Scheer

There must be a criminal investigation of the AIG debacle, and it looks as if New York's top lawman is on the case. The collusion to save this toxic company in order to salvage the rogue financiers who conspired to enrich themselves by impoverishing millions is being revealed as the greatest financial scandal in U.S. history. Instead of taking bonuses, the culprits should be taking perp walks.

I'm not just referring to the swindlers in the Financial Products Subsidiary of AIG who devised and sold those insurance policies on derivatives that brought the world economy to its knees. They do seem deserving of a special place in hell, and presumably the same divine power that according to Scripture labeled usury a high moral crime and threw the money-changers out of the temple will consider that outcome.

Does anyone think it funny that the Bernie Madoff prosecution is over? The biggest fraud in human history and they wrapped up the case in months. Peacenik smells a coverup. Thousands of financial crimes have been committed and no one is getting arrested. Just Bernie. Is anyone even investigating the crimes? Obama is more interested in pasting together a corrupt defunct financial system that fixing anything. It is laughable to hear and read the rosy predictions that all will soon be well. No one has gone to jail. No new regulations have been made. Zombie banks continue in a zombie state. Bankrupt companies are allowed to fudge their books to pretend to stay alive.

And the Globe today headlines that major Canadian companies can't meet their pension obligations. And Chrysler wants to pay Canadians Chinese wages or they'll pull out of Canada. Peacenik wishes someone would tell these companies to just fuck off.


Victory for the Left in El Salvador

Mauricio Funes's Election Win Means the Rights of the Country's Indigenous People will at Last be Recognised and Defended


El Salvador is the most tragic and oppressed country in the Americas, yet today it wakes up to a new dawn of hope and anticipation, with the election victory of Mauricio Funes, the candidate of a historic leftwing party, the Farabundo Martm National Liberation Front (FMLN). Funes himself is a journalist, a former television presenter and a moderate social democrat, but his party is the heir to the principal radical tradition in the country established over the past 80 years, years of extreme conservatism punctuated by periods of excruciating violence unleashed on the population by the most reactionary landed oligarchy in the Americas. The 500-year struggle in Latin America between indigenous peoples and white settlers from Europe is finally being won, and El Salvador will now take its place beside Venezuela, Bolivia and Ecuador as a country where the rights of the continent's indigenous peoples are recognised and defended.

The party of Funes takes its name from Agustmn Farabundo Martm, a member of that first generation of communist leaders in Central America in the 1920s that included Augusto Cisar Sandino of Nicaragua, the inspiration of the Sandinistas. Farabundo Martm took part in the famous peasant uprising of 1932, sparked off by the global economic crisis that led to a collapse of the coffee price, the country's principal export earner. The crisis was crushed by the US-backed military dictator of the time, General Maximilian Martmnez, in what was called "La Matanza", or "slaughtering" , in which 30,000 mostly indigenous people were killed.

Farabundo Martm was captured and shot, but his name was taken up by the guerrilla movement that emerged in the 1970s, to carry on the struggle against the successive military governments that dominated the country in the 20th century. That struggle, waged throughout the 1980s, was even more viciously crushed than "La Matanza" of the 1930s, and led to the deaths of more than 70,000 people. The war in El Salvador was one of the best-reported stories of its time in the international media, which highlighted the huge financial support provided by the Reagan government to the local military.

Keep Reading...

punditman says...If someone from the future had told Punditman 20 years ago, that one day the FMLN would have formed a government in El Salvador, he would have had happy thoughts. My, how some places change--others, not so much.
Yet another Latin American country veers leftward.

Ireland 'hit worst by recession'

Finance minister downbeat about upturn as jobless rate heads for 12pc

Tuesday March 17 2009

FINANCE Minister Brian Lenihan said last night the recession in this country is worse than in the rest of the world.

Mr Lenihan said Ireland is facing a "very difficult recession", but the country's membership of the eurozone will help us against the downturn.
He spoke shortly after Federal Reserve chairman Ben Bernanke said the recession in the US could end this year. Mr Bernanke's comments prompted a surge in global stock markets.

But Mr Lenihan was more downbeat about Ireland's immediate prospects.

Peacenik is thinking about drinking some green beer and wearing an Irish soccer shirt tonight. And Peacenik is thinking about the Irish economy. A couple of years ago Ireland's economy was seen as the wonder of the EU. Now it is in tatters. The headline to this post sounds kind of downbeat. Here's the headline from another Irish newspaper: Lenihan confident crisis can be tackled. It seems that Ireland has its own Stephan Harper. Talking up the economy while it is circling the drain. Bad news? Just read a different paper. But who cares? Green beer tonight.


Interpreting Last Week's Poll Results

punditman says...

Last week's Punditman poll posed the question:
How has the Global Financial Crisis Affected you Personally?

Twenty-seven votes were cast.

Two of you have actually lost your jobs as a result of the economic meltdown (7%), which is around the "official" unemployment rate. We wish you luck. Peacenik will buy you both a pint if he meets you, because he is part of the 38% of working Canadians who are covered by workplace pensions. He's also a nice guy––for a doomer.

Five of you know someone who has lost his/her job recently (18%). These laid off workers are obviously too busy pounding the pavement to participate in a Punditman poll, thus skewing Punditman's unemployment stats downward to government levels. In any case, you five should buy these unlucky folks a pint and wish them luck. Unless you are also one of the two who lost their jobs, in which case, as stated earlier, Peacenik will buy you a pint.

Nine of you said you have lost a lot of savings/investments, (33%) while six of you, including, Punditman said, "What savings/investments?"(22%). This is where it gets interesting. Economic crisis is the great equalizer, bringing about instant fraternity, equality and brother/sister hood. Mr. Lost Nest Egg meets Ms. Lower Middle Class. Mrs. Lost Investor meets Mr. Insolvency. Punditman says you nine should seek out us six and together we can all discuss our commonalities as we paint the town overdraft red. Separate bills for all.

Eleven of you are employed worker bee/worry wart types who said, "I am employed but I worry a lot" (40%). You should maybe seek counseling or drugs, while both still exist. Or ask Peacenik to buy you a pint.

One of you is unemployed but doesn't worry a lot (3%). That was meant as a joke, but more power to you. Peacenik will buy you a pint in exchange for tips on living off the grid, gardening and archery.

Speaking of drugs, we have four Pink Floyd listeners who got the "Money" song reference. The rest of you either have no sense of humour, are under the age of twelve or over the age of 112.

Finally, four of you scoundrels don't see a crisis at all (14%). First of all, put away the old Supertramp album.

Secondly, we think maybe you should stop snorting blow with those rolled up thousand dollar bills you found within the folds of your golden parachute.

Jokers. Peacenik will not buy you a pint.

Canada's dirty subprime secret

An investigation by Globe reporters uncovers a burgeoning subprime mortgage problem that many, including Prime Minister Stephen Harper, have insisted does not exist in Canada

Greg McArthur and Jacquie McNish
Saturday, March 14, 2009

From the ramshackle, plywood deck on Brad Goodyear's rural Vancouver Island home, most people see piles of trash, a mattress, abandoned appliances and heaps of salmon fishing nets.

Mortgage lenders, however, have looked at the same property and, until recently, seen nothing but cash.

But after two decades of continually borrowing up – plowing through mortgages from Royal Bank, private lenders and credit unions, until settling on two subprime lenders – the 46-year-old fisherman has landed in a foreclosure proceeding.

Peacenik missed this article in Saturday's Globe and Mail. Peacenik has always thought it was strange that Canada seems to have missed the worst of the banking/real estate crisis. Peacenik went for a walk on Sunday and "sold" signs were popping up everywhere. Life seemed great. But remember this article. And don't forget that while Harper is touting the health of the Canadian banking sector, he conveniently forgets to mention that this same sector has already received $75 billion in taxpayer funded bailouts.

The auto industry has long been one of the main engines of the Canadian economy. The auto industry is shrinking. Where are new jobs going to come from? Who is going to buy Canadian resources when the world is in a recession? Are the banks telling Peacenik the truth? Is Stephen Harper telling Peacenik the truth? Peacenik doesn't think so.

Why It's Cutting

03.15.09 -- 11:02PM By Josh Marshall

Like you, I've been watching this AIG bonus story unfold over the weekend. And though I did not see it at first, I think it may prove to be a turning point, both for AIG and the government.
I don't believe the bonuses themselves are the heart of the matter, nor the fact that they're going to the very executives who caused AIG's implosion or even the galling reality that, since all money is fungible, they're being paid with taxpayer dollars. What's really driving this forward -- and what makes it such a dangerous moment for the White House -- is the jarring image of the administration's impotence.

Secretary Geithner found out about the bonuses. He told AIG CEO Edward Liddy it wouldn't fly. And Liddy, in a curiously imperial letter, tells Geithner that much as he is pained by the situation -- to blow it out his ass. Which he apparently proceeded to do.

So A.I.G. is legally obligated to pay billions in bonuses to the nitwits who bankrupted the company, the country and the world. And the politicians nod. Can't change a contract. What about GM's contracts with the autoworkers? What about GM's legally contracted pension obligations? The politicians didn't have any problem insisting that those legally obligated payments be abrogated. Peacenik wonders when the revolution will begin. How much are the people expected to take? A.I.G. obviously thinks there is no limit.

Time to Quit Afghanistan

by Eric Margolis

It's taken far too long for Prime Minister Stephen Harper to finally admit the war in Afghanistan cannot be won. Better late than never. Kudos to Harper for facing facts and telling Canadians the truth.

If the war can't be won, why risk lives of Canadian troops for nothing? Why stay in harm's way a day longer when the writing is on the wall in Afghanistan? President Barack Obama, who is sending 30,000 more troops to Afghanistan, ought to be asking himself the same questions.

We must think hard about waging an increasingly bloody war against lightly-armed mountain tribesmen who face the 24/7 lethal fury of the U.S. air force's heavy bombers, strike aircraft, helicopter and AC-130 Spectre gunships, killer drones and heavy artillery. Do we really want a test of wills against men who have the courage to endure cluster bombs with thousands of sharp fragments, white phosphorus that burns through flesh to the bone, fuel/air explosives that burst the lungs and tear apart bodies? Will Canada's use of Soviet helicopters and Israeli drones win Afghan hearts and minds?

Has anyone articulated a coherent reason why Canada is still in Afghanistan? Is Don Cherry running Canada's foreign policy? Is Canada in Afghanistan because of Hockey Propaganda Night in Canada? Margolis makes a pretty clear case for why it is time to leave Afghanistan. Peacenik says bring the troops home now.


Barack Obama, Meet Team B

By Scott Ritter

President Obama received a lesson in international gamesmanship last week, when his secret offer to trade the deployment of a controversial missile defense system in Eastern Europe for Russian assistance in getting Iran to back down from its nuclear program was publicly rebuffed. The lesson? You don’t get something for nothing, especially when the something you’re looking for is, itself, nothing.

If the members of the Obama administration would bother to take a stroll down memory lane, they might recall that once upon a time there was a document called the anti-ballistic missile treaty, signed in 1972 between the United States and the former Soviet Union, which recognized that anti-missile defense shields were inherently destabilizing, and as such should not be deployed. The ABM treaty represented the foundational agreement for a series of strategic arms limitation and arms reduction agreements that followed. President Obama was 10 years old when that treaty was signed. He was 40 years old when President George W. Bush withdrew from it, in December 2001, and set in motion a series of events that saw arms control between the U.S. and Russia completely unravel. The proposed U.S. missile defense shield, to be deployed in Poland and the Czech Republic, had the Russians talking about scrapping the INF treaty (which eliminated two classes of nuclear-armed ballistic missiles that threatened Europe) and deploying highly accurate SS-21 “Iskander” missiles within striking range of the proposed Polish interceptor site.

Russia did not create the missile defense system crisis. The United States did, and, as such, cannot expect to suddenly receive diplomatic credit when it puts this controversial program on the foreign policy gaming table as if it were a legitimate chip to be bargained away.

Russia has always, correctly, claimed that any missile defense system deployed in Eastern Europe can only be directed at Russia.

Keep Reading...

punditman says...If there were real justice in the world, Scott Ritter would have been offered an important post in the Obama administration.

Cramer -Vs Stewart Just got back from DS taping (UPDATED X3) W/ VIDEO

by mtosner

Thu Mar 12, 2009 at 05:36:14 PM PDT

I am not going to divulge any actual material from the show,
but will provide this general description:

Decision: Stewart by TKO
Cramer was still standing at the end, but Stewart annihilated CNBC.
And yes the latest tape does come out!

In case you missed it:

It is MUST SEE TV tonight.

Comedy Central should have thrown it up as a pay per view special.
They would have made a killing.

Read on...

Peacenik has to confess he watches CNBC. Peacenik watches Cramer's Mad Money, and Fast Money and Krudlow. Peacenik has never believed a word said on these shows. But some people have. Peacenik has commented before that the pundits on these shows are corrupt shills. Why does Peacenik watch these shows? Why does Peacenik watch the Leafs?

Jon Stewart does an precise takedown of CNBC. The network not only didn't keep its viewers informed about the current financial crisis, it helped create the crisis. The game is rigged. CNBC helped rig it. Watch some of the YouTube clips in this story. And think about them when you watch any tv "news" show. Have a good weekend.

Update: There is a ton of coverage of this story in the blogosphere today. Here is another link to another take: Jon Stewart creams Jim Cramer on the Daily Show


Surviving the Great Collapse

by Robert Kuttner

This economic crisis doesn't have to be a second Great Depression - if government does nearly everything right, and soon. But if government doesn't do more, and fast, this could be worse than the 1930s. Why? Three big reasons:

Finance: A Doomsday Machine. The financial system is in far worse shape than it was when the stock market crashed in October 1929. In the 1920s, there was a stock market bubble, mainly because people could play the market "on margin," borrowing to invest in stocks. There were also scams like the original Mr. Ponzi's. Like in the present decade, the Federal Reserve helped to enable the game, with low interest rates and few rules.

But today, thanks to "securitization" of loans and the ability of insiders to create exotic and unfathomable financial instruments, the speculative system makes buying stocks on margin look like child's play. In the aftermath of the crash of 2008, the process of sorting it all out and getting banks functioning again is something that markets simply cannot do.

Read on...

After Punditman's interesting post about Ann Rand yesterday, Peacenik feels almost crass to be bringing up the collapse again. When this is all over historians may view Ann Rand as the 12 Monkeys of the present crisis. (12 Monkeys reference too obscure to explain. Rent the movie)

Today the Globe and Mail headlines "IMF dashes hope of short recession." Chrysler has threatened to pull out of Canada. Nortel may be breaking up. Its funny how quickly our lovely corporate citizens turn to threats as soon as the going gets tough. AIG: save us or we'll destroy the world. GM: save us or we'll be back in the stoneages. And on and on. Reading about Ann Rand and how Alan Greenspan was part of her "collective" made Peacenik want to ralph, again. And reading that Bernie Madoff is off to jail does not make things right. There are many more Benie Madoffs who should be in jail. And there are many more Ann Rand devotees pulling the strings in government and corporate America.


Punditman Goes Back to School for an Afternoon (Virtually)

Ayn Rand defends an ethic which is remarkable for its absence of any obligation towards others, only towards oneself. As if by magic, this spirits away multiple forms of interdependence, power relations, and abuses of power, and the violence and injustices which poison human existence and against which in real life the appeal to reason is ineffective.
-François Flahault
punditman says...

Punditman read the other day that Atlas Shrugged by Ayn Rand is flying off the shelves and this at first seemed to him counter-intuitive. Ayn Rand is the founder of the philosophy known as Objectivism. She was a Russian emigre who had witnessed and experienced first-hand, repression by the Bolsheviks. Her 1957 novel depicts persecuted, over-taxed, over-regulated capitalists, inventors and innovators as going on strike against society's socialistic unproductive leeches who are incapable of survival without these brilliant businessmen to lead them.

To refresh his hazy memory on this literary icon, Punditman embarked on a little research and by the end of it his head was ready to explode. Readers may find this link helpful in aquainting one's self with the Randian legacy. For all you lazy unproductive leeches who don't follow Punditman's links (sarcasm, ok?), here is a quote from Ayn Rand at the end of that article:
"Any free nation had the right to invade Nazi Germany and, today, has the right to invade Soviet Russia, Cuba or any other slave pen." “The invasion of an enslaved country," Rand maintains "is morally justified only when and if the conquerors establish a free social system."
She died in 1982. Would she have bought into the nonsense about bestowing freedom in Iraq, or would she have been smart enough to see through the statist-corporate lies?

Other research has revealed these choice quotes from Rand, hero to Ronald Reagan, Alan Greenspan, Brangelina, other Hollywood gliterati, sports stars and celebs everywhere:
"I am for an absolute laissez-faire, free, unregulated economy."

"If you separate the government from economics, if you do not regulate production and trade, you will have peaceful cooperation, harmony, and justice among men."
Rand also testified in 1947 as a "friendly witness" during the United States House Un-American Activities Committee (HUAC) hearings during the McCarthy era.

Rand's ideas still hold sway because there are those who believe that the current crisis is a result of over-regulation, not greed. Mystery therefore solved as to why her ideas resonate with some.

Thus Rand, who opposed altruism, foreign aid and philanthropy, would have also been against saving failed capitalists. According to many of her online disciples, she would have railed against the Bush and Obama bailouts of failed enterprises. That is about the only appealing Randian notion Punditman could find in his web sojourns, although he arrives at it from a completely different direction than the objectivist. One article quoted an acqaintance of Ayn Rand as saying she was not a nice person. Probably not.

Clearly, Ayn Rand was a no-holds-barred ideologue who felt that people were basically greedy and selfish and that egoism and "reason" should rule. There are many "objectivists" out there who still hang on her every thought. Some even tried to set up a society in Costa Rica, but failed.

Perhaps instead, the Randinistas should just drink beer with some of Punditman's old Marxist-Leninist associates from University days, because ideologues of all stripes seem to have a certain common personality trait: bullheadedness. But Punditman will not be joining their ilk; he no longer sits in a Grad lounge somewhere listening to two sides feign dialectics as they talk past one another while espousing largely impractical philosophies.

Does this mean Punditman is happy? Now there's a philosophical question worth pursuing.

Ten Years After - I'd Love To Change The World

punditman says...
Tax the rich, feed the poor, till there are no rich no more.
That hasn't been tried lately, unless you are an objectivist and a disciple of Ayn Rand.

March 10 2009: Dinosaurs the size of banks

Ilargi: The US government and the Federal Reserve indicate that they will not let a big bank fail. They also hint that the uptick rule will likely be reinstated, which is great for banks that someone might want to short (many someones want to). Moreover, the drive to change fair value rules (were they ever executed?) gets so strong that blogger Karl Denninger, who's spent months clamoring for fair value and mark-to-market, today does a 180 and argues for a suspension of the all-too-rational principle. Thinking of a career in politics? Any idea of the damage a suspension would do? I think you do, Karl.

To top off today's party cake, Ben Bernanke once more reiterates (I know that’s double) that the recession "might end this year". Now, I watched Jon Stewart dig into Jim Cramer last night. Reading Bernanke's words this morning, my first thought was that I hope The Daily Show will do a similar "timeframe truth test" of Bernanke. Shrinking Ben has made so many ridiculous claims about the economy's health and its upcoming recovery since he took over, it should be a feast for the eyes and ears.

Read on...

It seems that the financial crisis has many in a pensive mood. Mish today is talking about material things, LK is pondering loss and how big 50 trillion dollars is, and Peacenik was contemplating the value of stuff and things and ideas and how things are valued. What would be the value of a chunk of gold on a desert island. What is the value of 50,000 shares of the Royal Bank in an information vacuum. What is the value of a question mark or a can of tuna.

But the markets were up big time yesterday based in small part on the belief that the worst is behind us. Jim Cramer declared a bottom. The CNBC pundits, excoriated by John Stewart just days ago, were giddy. Is this the end of Doom? Is this how a crisis ends? Is this the beginning of a new society, a new economy? Ilargi doesn't think so. Peacenik doesn't think so. Peacenik will remain alert and alarmed.

In Search of Lost:

Looking for one Year's Worth of World Gross Domestic Product

by Library Karen

The news headline read “Global Financial Assets Lost $50 Trillion Last Year.”

Lost? Lost?

My mind keeps running over the word, trying to conceptualize “losing” $50 trillion dollars. I try to relate this “loss” to losses that I have experienced personally. I find no point of reference.

Once I lost a pair of hiking boots. They were beautiful; wine and burgundy leather. An old boyfriend gave them to me. I loved those boots. But one day I went looking for them and just couldn’t find them. Have never seen them since. Gone for all time. Perhaps left behind on a camping trip. They were lost.

Another time, while moving, I lost my bathroom scales. That one might not have been so much a “losing” as an accidental drowning. Although, they could still be under the drivers seat in the 1967 Chevy that served as my moving van that year. It is also “lost”, in the sense that I no longer own it but wish I did. Last I heard a guy who trains horses was using it on a track to pace fillies.

On a more related vein, last year my co-worker “lost” $100.00 that was intended as a shower gift. It eventually turned up, in an interdepartmental envelope at a department for which it was not intended. So, in that case it was merely misdirected. Not actually lost, but we never did get it back…

Of course there are the many, many things I've lost that can never be recovered. Youth, virginity, all the money my T-4 says I earned last year, my waistline, and at least a few of my marbles. Generally I don’t feel so bad about losing those things as I did have a bit of fun in the process.

But losing 50 trillion dollars? I’m sorry but trying to imagine that is akin to trying to visualize “losing” the entirety of the universe. Or even just a galaxy. Can you imagine a headline that reads “50 Trillion Stars in Milky Way Lost.” Seems like a tough thing to misplace.

Lost? Lost? Apparently that is equivalent to losing one year's worth of world gross domestic product.

No, I really don’t think that is possible.

So, in order to be able to sleep tonight I think I will re-frame that $50 trillion not as “lost” but merely placed into some ginormous interdepartmental envelope which has somehow been misdirected to...well, let me know if you have any bright ideas (please don't say AIG.)

Let’s hope we get this one back...


Stocks Rise on Upbeat Memo From Citigroup

By THE ASSOCIATED PRESS Published: March 10, 2009

Stocks are rising after troubled Citigroup said it operated at a profit during the first two months of the year.

The Citi chief executive Vikram S. Pandit said the bank had an operating profit of $8.3 billion before taxes and special items through February. Word of the bank’s performance is breaking, at least for the moment, a torrent of bad news from the banking industry that has pounded financial stocks and in turn, the overall market.

Read on...

A leaked memo that shows a profit, before accounting for the black hole, and the market goes up 4% in an hour. On the one hand this demonstrates how desperate the investor is for "good" news. On the other hand it shows what idiots the investors are. Citigroup is one of the biggest parts of the black hole. Peacenik has not read anyone, other than the author of this memo, who thinks Citigoup can survive. After a few bagholders cash out their positions the market will continue its march towards zero. Was this leaked memo a criminal attempt to manipulate the market. Is anyone going to investigate. Yawn. It is so farcical that even this event can only draw a yawn. This is what the stock market has become.


Signs of Progress...And danger

by Justin Raimondo

I suppose progressives and others hopeful for a more rational foreign policy are going to have to be content, for the moment, with crumbs from the presidential table, such as Barack Obama's recent statement to the New York Times that we might consider negotiating with elements of the Taliban. This is, however, not entirely good news, because the counterinsurgency doctrine that animates this proposal aims at replicating our alleged "success" in Iraq, where the U.S. military allied with hard-core Sunni fundamentalists against largely foreign forces said to be affiliated with al-Qaeda. The blowback from this tactic has yet to hit the fan, but you can be sure that when the U.S. military begins to downsize its presence in Iraq, these soldiers of the "Awakening" – armed and subsidized by us – will move to fill the power vacuum and run straight into the Shi'ite militias. The resulting conflict will no doubt cause the Obama administration to think twice about leaving, as the Iraqi government asks us to intervene. Having planted the seeds of the coming civil war, we'll have ample pretext to renegotiate the status of forces agreement.

The two faces of the Obama administration illustrate the principle that foreign policy, far from being formulated with the solving of actual problems in mind, is almost entirely driven by domestic political concerns. On the one hand, we have the Good Obama – the one who says he's going to stop the practice of torture by U.S. military and intelligence personnel – except that Leon Panetta, his pick for CIA chief, says we're going to continue "renditioning" prisoners when we don't want to dirty our own hands by subjecting them to methods that, say, the Egyptians or the Saudis wouldn't blink at.

The Obama administration has made overtures to the Russians that we might be willing to forgo the anti-missile system Bush installed in Eastern Europe, which Moscow is up in arms about. On the other hand, the clueless Hillary Clinton's State Department can't get a decent translator. When she handed Russian Foreign Minister Sergei Lavrov a toy button, she thought it was labeled "reset." The idea was to follow up on Vice President Joe Biden's remarks in Munich, where he suggested that relations between the two countries needed to be reset on a new course – while demurring when asked if Obama intended to drop the missile-shield deployment. For a long moment, as Clinton presented the button to Lavrov, the mask of "competence" slid down to reveal the utter ridiculousness of the Americans: "We worked hard to get the right Russian word," burbled Hillary, smiling her most plastic smile. Her grin vanished as he answered, "You got it wrong." Instead of "reset," the word meant "overcharge." As Politico reports, she came back with

"'In a way, the word that was on the button turns out also to be true,' she argued. Though Lavrov had said that word on the button meant overcharge, Clinton suggested that that peregruzka could also be translated as overload."

I'll tell you what's on overload: my BS detector.

Keep Reading....

punditman says...

This is well worth reading through as a good primer on where things stand in the "speak out of both sides of its mouth" Obama administration. The War Party still very much has the upper hand, but various forces are at play.

Forget About "Recovery"

by Jim Kunstler

At the risk of confirming my critics' dumbest charge -- that I am a "doomer" -- the mandate of clarity requires me to ask: to what state of affairs do we expect to recover? If the answer is a return to an economy based on building ever more suburban sprawl, on credit card over-spending, on routine securitized debt shenanigans in banking, and on consistently lying to ourselves about what reality demands of us, then we are a mortally deluded nation. We're done with that, we're beyond that now, we've crossed the frontier and left that all behind, and we'd better get our heads straight about it.

I maintain that there are countless constructive tasks waiting to occupy us on a long national "to do" list for rebuilding a national economy, but they are way different than the ones currently preoccupying government and the mainstream media. The Obama White House, Congress, and The New York Times are hung up on exercises in futility -- "rescuing" banks and insurance companies that cannot be rescued (because they are hopelessly trapped in "black hole" credit default swaps contracts), and re-starting a "consumer" binge that was completely crazy in the first place, based, as it was, on a something-for-nothing standard-of-living.

Peacenik has wondered in many of Peacenik's posts if there will be violence. If there will be justice. If there is a way out of this mess. This is a must read article by Kunstler. Very entertaining and not totally pessimistic. Enjoy.

Buffett: Economy "has fallen off a cliff."

by CalculatedRisk on 3/09/2009 08:51:00 AM

Warren Buffett is on CNBC this morning ...

From the CNBC live blog, a few Buffett comments:

6:05a: Economy is "close to the worst case." Can't imagine it being much worse ... The economy "has fallen off a cliff."

Read on...

Peacenik thinks this will spook the markets. Big Time. The ticking of the Doomsday Clock is getting louder and louder. Peacenik is going to the ATM on Peacenik's coffee break and getting some CASH out of the bank. Peacenik hopes Peacenik is not too late. When the collapse happens, if it happens, it will be fast. When you hear on the news that there is a run on the bank.....it is too late. Tick. Tick. Tick.

Guest Post: More Debt Won't Rescue the Great American Ponzi

Submitted by Rolfe Winkler, CFA, publisher of OptionARMageddon.com

Policy-makers not only misunderstand the economic crisis, they continue to underestimate it. Consequently, solutions to date have not only failed to "fix" anything, they have made the problem worse. The problem isn't falling asset prices, it's not rising foreclosures, it's too much debt. With an assist from mark-to-market accounting,* too much debt inflated the asset bubble in the first place. Yves has it exactly right that the only "solution" to this crisis is price discovery, to allow asset prices to fall to whatever level they need to in order for markets to clear. This is bad news for over-levered balance sheets, but there's nothing else to be done.

And yet American policy-makers appear convinced that more debt can rescue an economy already drowning in it. If we can just keep the leverage party going, all will be well. $787 billion to fund "stimulus," another $9 trillion committed to guarantee bad debts, 0% interest rates and quantitative easing to drive more lending, new off balance sheet vehicles to hide from the public the toxic assets they've absorbed. All of it to be funded with debt, most of it the responsibility of taxpayers.

Did anyone one find any good economic news on the weekend or this morning? Peacenik looked and looked and looked. Peacenik didn't find any. Peacenik is trying to understand why this is happening. Peacenik is trying to understand what a credit default swap is. Peacenik just read the article posted above. It doesn't explain credit default swaps but it does make a compelling case for why the bailouts and stimulus plans will not work.

Peacenik will keep looking for good economic news. But in the meantime the DOW futures are down a lot. The Asian markets continued their march downward overnight. More and more people are contemplating collapse. Peacenik stopped by the Pub yesterday and was shocked to overhear three big believers of capitalism discussing survivalism. Actively planning survival. Peacenik needs to double check his inventory. And visit the seed store. Very Soon.

Pink Floyd - Money

Just remember, folks. It's only money.


Peacenik goes to school

Punitive attitudes toward criminals

Exploring the relevance of crime salience and economic insecurity

MICHAEL T. COSTELLOE, TED CHIRICOS AND MARC GERTZ Northern Arizona University, Florida State University and Florida State University, USA

Here are two paragraphs from the above article which was published in Punishment and Society, Vol.11(1): 25-49. 2009

..."Our data show that crime salience – when measured by concern about crime and
fear of crime – consistently and strongly predict punitive attitudes. Victim experience does not. The significance of concern and fear in this regard is manifest regardless ofthe sex, race or ethnicity of respondents. When economic insecurity is indicated by the expectation that one’s financial circumstances will not improve, but will stay the same in the coming year, there is little consequence for punitiveness. However, among those who expect their financial circumstances to get worse in the near future, support for punitive measures to deal with criminals is consistently elevated. This link between punitive attitudes and economic insecurity is found only for white males, and in particular, those white males who are less well educated and have relatively low income"....(pg.41-42.)
..."A related point is that when punitive attitudes toward criminals are continually expressed in political discourse and repeated by low income white males with low levels of education, the result, whether intended or not, is to reinforce racial divisions among members of the working and lower classes. Such divisions have historically weakened the prospect of a progressive political agenda (Egerton, 1994; Wilson, 1999) and they serve to deflect attention away from the actions of corporations – downsizing and outsourcing – and complementary government policies that are the fundamental cause of economic insecurity among blacks and whites alike"...(pg.43)
Sorry but there is no link to the full article. Readers will have to go to a library to access it.

Peacenik just happened to come across this article as he was browsing. The article is current although it is based on data from Florida in 1997. When Peacenik read this it made Peacenik think about the present economic insecurity. It made Peacenik think of Mad Max and the future. Will there be civil unrest? This article seems to provide a bit of empirical support for the idea. At the very least it suggests that many of the soon to be dispossessed by financial collapse will not go quietly into the night. By the way, both the DOW and TSX are in the red again today, with a couple of hours still to go before the closing bell. Oh yeah, Peacenik also read somewhere that when the economy goes down crime goes up.

What's Dead (Short Answer: All Of It)

Posted by Karl Denninger in Editorial at 09:57

Just so you have a short list of what's at stake if Washington DC doesn't change policy here and now (which means before the collapse in equities comes, which could start as soon as today, if the indicators I watch have any validity at all. For what its worth, those indicators are painting a picture of the Apocalypse that I simply can't believe, and they're showing it as an imminent event - like perhaps today imminent.)

All pension funds, private and public, are done. If you are receiving one, you won't be. If you think you will in the future, you won't be. PBGC will fail as well. Pension funds will be forced to start eating their "seed corn" within the next 12 months and once that begins there is no way to recover.

Read on...

Peacenik really wanted to post something upbeat for a Friday. Like Peacenik always does. Maybe Peacenik will find something upbeat later in the day. Maybe the world financial markets won't go boom before noon. Maybe Peacenik has just been dreaming and the world's financial system has not been imploding before Peacenik's eyes. Denninger sounds an alarm in this post. This is what is at stake. Everything. Everything. Have a good weekend.


Report: Israel ‘Seriously Considering’ Attacking Iran


Timeframe for Potential Attack Growing Shorter

A report issued today by the Washington Institute for Near East Policy (WINEP) warned that the Israeli government believes that it still retains the ability to destroy Iran’s nuclear program with a unilateral attack, and as the international community’s diplomatic path remains unsuccessful in stopping a weapons program or indeed proving that one exists, Israel is “seriously considering” attacking Iran.

The prospect of an attack is primarily in the near term, because the attack on Iran’s illusory secret nuclear weapons program would be seriously complicated by the prospect of the Iranian government acquiring an S-300 air defense system from Russia. Russia has repeatedly insisted that it doesn’t intend to give Iran the system, but the IAEA insists Iran doesn’t have the ability to make nuclear weapons either. The Israeli government is less interested in the reality of the situation than with what has been repeated over and over domestically: that Iran is an “existential” threat to Israel and has to be stopped with military force.

But the WINEP report points out that Israel isn’t the only one that stands to lose from such an attack: the US would pay an enormous penalty internationally because whether it is the case or not they will be perceived as having given Israel a green light for the attack.

punditman says...

Just when you thought the economy was the main problem in the world and were about to jump out of your basement apartment window as a result of all of Peacenik's doom mongering, Punditman urges you to pause and think. Consider that if you think we have problems now, imagine what an Israeli/Iran showdown would do to our current political and economic reality. In doing so, you will realize that these are indeed the good old days by comparison. In fact, Punditman always tries to look on the bright side of life, so he offers you the following link here and another here, as a means to act in the face of this potential global conflagration.

(Note: If you still decide to jump out of your basement apartment window, Punditman recommends you wear a ballistic vest so you don't scratch your torso as you take that quantum leap upwards).

Politicians, Meet Reality

Posted by Karl Denninger in Politics at 06:52

It would appear that our fine "politicians" have no intention of removing (or even tempering) any part of The Bezzle in our financial system.

As a consequence, the market will do it for us.
The bad news is that we've chained our ship to Europe, and they're in bigger trouble in this regard than we are:

"European banks face a US dollar “funding gap” of almost $2 trillion as a result of aggressive expansion around the world and may have difficulties rolling over debts, according to a report by the Bank for International Settlements. "

Bernanke, without the consent of Congress, has essentially guaranteed this rollover capacity through his provision of what amount to unlimited "swap lines" with the Europeans and others.

Peacenik risks more negative votes in Punditman's poll with this post. But Peacenik thinks a grasp of reality is more important than complimentary poll numbers. Denninger senses that yesterday's tiny rally in the DOW will lead to a big drop today....is leading to a big drop today. The Obama team continues to refuse to say who is getting the bailout funds. The market wants the truth. Obama thinks the market can't handle the truth. That's right folks. If you have any money in the markets, it is pure gambling. Peacenik has 5 lines on a Super 7 for Friday. Peacenik has more confidence that that ticket will provide for Peacenik's retirement than a bunch of bank stock would. That's right. Peacenik will not trade Peacenik's Super 7 ticket for a million dollars in Citi and Bank of America stock. Has Peacenik gone nuts?