Now What?

Jim Kunstler asks a very good question. And Peacenik is afraid that the answer is that there is no answer. Politicians in the U.S.A are not able to solve the problems that Kunstler lists in the article below. And the soon too be elected Tea Partiers only offer solutions that will make the problems worse. Peacenik thinks lots of Tea Partiers will get elected tomorrow. Is this the beginning of this sucker going down bigtime? Can the U.S.A and world economy be saved? Peacenik doesn't think so. Do you?

By James Howard Kunstler

On Tuesday, when the Republican Party and its Tea Party chump-proxies re-conquer the sin-drenched bizarro universe of the US congress, they'll have to re-assume ownership of the stickiest web of frauds and swindles ever run in human history - and chances are the victory will blow up in their supernaturally suntanned, Botox-smoothed faces.

But don't cry for John Boehner, Barack Obama.

The President and his Democrats may have inherited this clusterfuck from the feckless George Bush but they flubbed every chance to mitigate any part of it, ranging from their failure to restore the rule of law in banking (by prosecuting the executives of major banks who oversaw the systematic swindle), to mis-directing our dwindling resources toward ends (such as "shovel-ready" new super-highways) that won't promote a credible future for this society, to misleading the public in the fantasy that alt-energy will offset the disruptions of peak oil (and allow us to keep running suburbia, the US Military, and WalMart by other means).

Read on...

It’s that simple

Peacenik was up early this morning and thought Peacenik would check a few blogs while Peacenik's English muffin toasted in the toaster oven. And the finanical news was all bad. Garth, Mish, Ilargi, Denninger. They all portend a crash...sooner rather than later.

But Peacenik was also listening to News570 a Rogers all news radio station in Kitchener. At 5:29 every morning the financial pundit/reporter/cheerleader always has a one minute business report. The cheerleader was cheerful. The futures market today was pointing up.

Garth mentions it in his post today and Peacenik recalls it from other articles. When empires collapse, they collapse very quickly. And black swan events can bring on a rapid collapse. And this impending collapse may not even need a black swan trigger. Who you gonna believe? Garth? Ilargi? or Rogers' pundit? By the time Peacenik gets home from work today investors may well be fricasseed. Have a good weekend.

by Garth Turner

Ont Treasurer Dwight Duncan: busted

It’d be hard to make this stuff up.

* One of Canada’s biggest banks is slapped with a debt review and a likely credit downgrade.

* The country’s biggest province says half its business taxes vanished, and doubles its deficit. It, too, gets a debt downgrade.

* And it’s taken a mere 12 months for Ontario and Canada itself to pile $83 billion more in debt on taxpayers’ shoulders. In fact Ontario alone figures new debt will hit $70 billion over the next three years, while the national government heaps on $200 billion.

Was it only a year ago we heard this: “We will not be running a deficit. We will keep our spending within our means. It is that simple. The alternative is not a plan. It is just the consequence of complete panic, and this government will not panic at a time of uncertainty.”

Read on...

One Hand Clapping Theory Analyzed

This article by Chris Martenson is at the core of Obama's,and Harper's economic policy. Pretend that the debt that exists on bank balance sheets and in the books of corporate America, doesn't exist.

This is the foundation upon which the present stock market rally, and all the talk about greens shoots exists. If you have investments in the stock market, they are dependent upon everyone continuing to pretend that all is well. What happens when the pretending stops? Recall that insiders have been outselling outsiders 30 to one over the last months. What happens when the rush to the exits starts? When the herd senses danger. The brokers will probably get out. The big players. The insiders. But what about you, and your measley mutual funds stuck in an RRSP. Think you'll get out in time? Pretend. Pretend you have money in your bank account. Pretend. Pretend your credit cards have zero balances. Pretend. Pretend it all isn't about to come crashing down. Feel better? Peacenik doesn't.

by Mish Shedlock

Numerous people have asked me to comment on Chris Martenson's article The Sound of One Hand Clapping - What Deflationists May Be Missing.

Chris Writes:

The hot topic of the day is "Inflation or Deflation?" and the camps are firmly divided into groups of inflationistas and deflationistas. When asked which camp I am in, I reply "Yes." Some would say that puts me in the confusionista camp, but I actually have an explanation for why are living in a world encompassing both.

From a technical perspective, we are absolutely in one of the most powerfully deflationary periods in history, yet, besides housing prices and a few over-produced consumer goods, we find that stocks, bonds, and commodities are all well-bid at the moment.

Read on...

Americans Have Been Taken Hostage

It looks like the "official" stats will show the recession in the U.S. is over. Peacenik doesn't believe it. The publicly funded stimulus has artificially inflated a few stats so that the pump and dump artists on Wall St. and Bay St. can keep the party going for a bit longer. The ghost fleet of tankers off of Malaysia and the Baltic Dry Index tell another story.

The economy will never recover. There will be no growth. Until the black hole of debt is filled in or defaulted on, the global economy will be a phony economy. And getting rid of that black hole of debt is going to change the global economy in ways not yet imaginable. Dylan Ratigan's article is a nice simple summary of some of the problems....that are unsolvable.

Dylan Ratigan

The American people have been taken hostage to a broken system.

It is a system that remains in place to this day.

A system where bank lobbyists have been spending in record numbers to make sure it stays that way.

A system that corrupts the most basic principles of competition and fair play, principles upon which this country was built.

It is a system that so far has forced the taxpayer to provide the banks with the use of $14 trillion from the Federal Reserve, much of the $7 trillion outstanding at the US Treasury and $2.3 trillion at the FDIC.

Read on...

"Recession's Over, Recovery Underway": What's Missing in Action

Peacenik has been consistent in Peacenik's belief that the economy is still in big trouble. But the TV pundocracy has been unrelenting in declaring all is well. This article by Charles Hugh Smith is a nice summary of why all the good news may just be a smokescreen. But a smokescreen for what? A smokescreen for whom? Peacenik sees through the smokescreen. Peacenik sees the biggest transfer in history of wealth from the taxpayer to the corporate elite continuing unabated. Aided and abetted by our political and financial leaders.


U.S. economy

by Charles Hugh Smith

The mainstream media is gleefully hyping "the recession is over, the recovery is underway." Nice, except for everything that's missing in action.

"The recession is over, the recovery is underway." Exactly what will be driving this fabulous "recovery"? Let's check in on the usual forces which have powered previous recoveries:

1. Autos/vehicles: missing in action (MIA). Annual sales have plummeted from 17 million vehicles a year to about 9 million a year, and the U.S. probably contains about 30 million surplus/lightly used vehicles ( a number snagged from economist David Rosenberg's latest report). Modern vehicles can easily last 15-20 year, so the "need" to replace vehicles is rather low. Actual "necessary" replacement might require as few as 5 million vehicles a year.

With unemployment at 16%, assets down by $10 trillion and the FIRE economy (finance, real estate and insurance) in disarray, where does anyone think the consumer borrowing firepower will come from to finance an extra 8 million vehicles a year?

Read on...

Orwellian Comments - Vice President Biden: ‘We Have to Go Spend Money to Keep From Going Bankrupt’

This article by Mish is interesting for a number of reasons. Not the least of which is the Vice President of the United States raising the spectre of the U.S. going bankrupt. That should really help consumer confidence.

But it was the history about William Calley that really got Peacenik's attention. Peacenik thinks war crimes should be prosecuted. It's called deterrence and justice. But look what happened to William Calley of My Lai infamy. Two days in jail. Three years of loose house arrest. And a lifetime of celebrity status on the right wing hate circuit. 30 years later the U.S. can barely be bothered investigating war crimes. And the right wing hate circuit dominates public discourse.

Orwellian Comments - Vice President Biden: ‘We Have to Go Spend Money to Keep From Going Bankrupt’



My Lai Massacre

Inquiring minds are flabbergasted over the latest comments from Vice President Joe Biden: ‘We Have to Go Spend Money to Keep From Going Bankrupt’

Vice President Joe Biden told people attending an AARP town hall meeting that unless the Democrat-supported health care plan becomes law the nation will go bankrupt and that the only way to avoid that fate is for the government to spend more money.

“And folks look, AARP knows and the people with me here today know, the president knows, and I know, that the status quo is simply not acceptable,” Biden said at the event on Thursday in Alexandria, Va. “It’s totally unacceptable. And it’s completely unsustainable. Even if we wanted to keep it the way we have it now. It can’t do it financially.”

“We’re going to go bankrupt as a nation,” Biden said.

Read on...

Is the Bear Market's Most Violent Decline Right Around the Corner?

Peacenik was scanning the news this morning and was thinking about posting something about Dick Cheney or about swine flu, or about Iran or about Honduras or about CIT or about Sarah Palin. But then Peacenik saw this article. When Wave 3 hits, all other worries will be dwarfed, and washed away. When you and Peacenik no longer have a pot to piss in, you and Peacenik will be totally focused on surviving. Wave 3. Is it coming?

Is the Bear Market's Most Violent Decline Right Around the Corner?
7/10/2009 11:00:00 AM

Is the most powerful of all waves right around the corner?

The short answer is "YES."

The long answer will help you anticipate where and when

First, let's describe wave 3.

If wave 3 was a superhero, he'd probably be The Flash (though he could be The Hulk).

Like The Flash, there's no mistaking wave 3's characteristics:

* It gets to where it's going in a hurry.
* It usually catches everyone by surprise, and
* You'll know it when you see it.

Read on...

Debt

Peacenik has been writing about the black hole of debt for a while. Trillions upon trillions of dollars of debt that has to be dealt with. It can't be forgiven. It can't be forgotten. It can't be ignored. But that's what our leaders are doing. Why are governments and corporations and banks and Wall Street ignoring their debt? Because they have no solution....other than going further into debt. Can you ignore your debt? Peacenik can't ignore Peacenik's.

June 10 2009: One simple four letter word.

Ilargi: You can talk about the economy till you’re blue in the face, make a case for or against a possible recovery, bottoms and tops, green shoots, yellow weeds, whatever tickles your fancy and your preferred belief system. And you're sure to find at least a few handfuls of kindred souls and spirits while you’re at it. After all, with worsening data continuing to spout from the real economy, the one that pays your salary if you still have one, which pays your mortgage if you still have one and so on, while stock markets seem to be going up, there is enough confusion to go around for everyone.

But in the end, when all the convincing sounding arguments have been made in the heated discussions that fill hour after hour of street corners, TV screens, worried kitchen tables, barrooms and bordellos, day after confusing day, it all comes down to one simple four letter word. Debt.

Read on...

Schwarzenegger declares 'day of reckoning'; Wells Fargo CEO says California in 'financial ruin'

California is in dire straits. Hoping to find opportunity amidst the angst, Schwarzenegger declares 'day of reckoning'.

Declaring that "California's day of reckoning is here," Gov. Arnold Schwarzenegger said today the state should turn its dire budget straits into an opportunity to make government more efficient.

Speaking to a relatively unusual joint session of the Legislature and other constitutional officers, Schwarzenegger acknowledged the billions of dollars in spending cuts he has proposed to close a $24.3 billion hole in the budget will be devastating to millions of Californians.

"People come up to me all the time, pleading 'governor, please don't cut my program,'" he said. "They tell me how the cuts will affect them and their loved ones. I see the pain in their eyes and hear the fear in their voice. It's an awful feeling. But we have no choice.

Read on...

Meanwhile in Russia unemployed workers are blocking a major roadway in St. Petersburg. In Canada the TD Bank is projecting a $170 billion federal shortfall. And the fallout from GM's bankruptcy has barely started. And the public's apparent reaction? The stock market soars. Peacenik said it before, the collapse of California is a preview for the rest of North America and the world.

Education? Forgeddaboutit. Health care? Forgeddaboutit. Retirement? Forgeddaboutit. The Environment? Forgeddaboutit. What will it take to wake the sheeple up? How about no food on the table or no gas at the gas station. What does Jim Cramer think? Last night he said that we are in a new bull market. That all is well. That's comforting.

Ireland 'hit worst by recession'

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

By FIONNAN SHEAHAN
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.

Read on...

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.

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.

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.

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.

Read on...

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?

March 3, 2009: Sometimes I sit up in the darkness

Ilargi: President Obama must be starting to sweat, maybe hyperventilate and perhaps even panic. In a move that is prone to kill a political career if it turns out wrong (and it will), he suggested today that this may be a good time for Americans to buy stocks. Now, I don't care if he really thinks that or not, the fact remains that it's a highly risky and volatile thing for a politician to say. It feels like he's moving ever closer into W territory, it sounds like something that Bush 43 would have said, like when 8 years ago he urged Americans to go out and buy a home. Where's the difference?

President Obama also insisted that he's convinced the economy will rebound. And while there will of course be some kind of bounce somewhere down the road, no matter how small, what exactly will be the good that comes from it when it happens with the Dow at 1000? I know, that's probably not what the president thinks. Or hopes for.

Read on...

Peacenik contemplated the state of the present on the bus trip to work this morning. It screamed normal. Peacenik went to the Borealis, a new, upscale, southend restaurant, for dinner on Saturday. It was full. The local pub, the Wooly, continues to be busy. Peacenik got tickets to a soldout concert at Folkway Music for Friday. There doesn't seem to be an increase in the number of street people on the streets of Guelph. The grocery store and Canadian Tire seemed busy. BCE showed some confidence in the mall-based economy and bought the Source. The city of Guelph reached a tentative agreement with its outside and library workers. Punditman continues to work hard and play hard. Life seems good.

But. But there are some signs of a disturbance in the state of the present. There are a lot of real estate listings in the Guelph Mercury. The Kitchener employment insurance office is apparently very busy. There are no wait times in the ski lift lines at Chicopee Mountain. There seems to be a paper towel and toilet paper price war going on in the local grocery stores. GM sales were down more than 50%. The median price of a house in Detroit is $7500. Can southwestern Ontario become like upstate Michigan? Can Guelph become Detroit? The Toronto Star this morning front paged a story about 1500 Canadian steelworkers losing their jobs.

Then Peacenik turned Peacenik's thoughts to Ilargi. Ah, Ilargi. The name that strikes fear into sentinent humans. Ilargi, the scary one. If your state of mind is dependent on psychotropic drugs, or if you are in a fragile state of mind, or if you are fearful of tomorrow, do not follow the link. Do not read Ilargil. Life seems good. But after reading Ilargi, Peacenik wonders how much longer life will seem so good.

Beginning Now: The Panic Phase of the Collapse

by Martin D. Weiss, Ph.D. 03-02-09

If you missed our latest video, “The 11 Laws of Bear Market Success,” or you want to watch it again, click here now for the recording.
The timing couldn’t be better. Indeed …

Just as the Obama Administration launches a triple tirade of new initiatives — a record stimulus package, a bigger round of rescues, and the largest deficit financing of all time …

Just as the Treasury Department doubles down on its bailouts for sinking giants — Fannie Mae, Freddie Mac, AIG, General Motors, Chrysler, and Citigroup …

Read on...

Peacenik watched CNBC when he got home from work yesterday. Peacenik could see the panic in the faces of the pundits and their guests. Jim Cramer was sorrowful. Even Larry Kudlow was having a hard time pretending to be optimistic. But the crazy thing was that everyone was blaming Obama. It was like 30 years of neo-conservative malfeasance didn't happen. Peacenik isn't sure why such unbalanced, unfair and dishonest TV coverage is allowed. It was a 3-hour commerical for neo-con wingnuts.

Peacenik thinks maybe it is time to bring back the "fairness" doctrine. Peacenik thinks it is time for a whole new crop of pundits. Oh, and this morning: Toyota needs a bailout. And GE had to cut its dividend. And pension plans are crashing. Will the markets bounce back today? If investors read and believe the front page of the Globe and Mail today, "It's Not All Dooom and Gloom", then the market might rebound. Peacenik doesn't believe the front page of the Globe and Mail.

The Abyss Stares Back

Jim Kunstler

The public perception of the ongoing fiasco in governance has moved from sheer, mute incomprehension to goggle-eyed panic as the scrims of unreality peel away revealing something like a national death-watch scene in history's intensive care unit. Is the USA in recession, depression, or collapse? People are at least beginning to ask. Nature's way of hinting that something truly creepy may be up is when both Paul Volcker and George Soros both declare on the same day that the economic landscape is looking darker than the Great Depression.

Those tuned into the media-waves were enchanted, in a related instance, by Rick Santelli's grand moment of theater in the Chicago trader's pit last week when he seemed to ignite the first spark of revolution by demonstrating that bail-out fatigue had morphed into high emotion -- and that the emotion could be marshaled against public policy. The traders in the pit on-screen seemed to color up and buzz loudly, like ordinary grasshoppers turning into angry locusts preparing to ravage a waiting valley. "Are you listening, President Obama?" Mr. Santelli asked portentously.

Read on...

In August Peacenik thought some of Peacenik's doom and gloom posts were satiric and over-the-top. Today Peacenik is unable to imagine how bad things will be by the end of the day. The future has arrived in a hurry. AIG needs $60 billion to get through the week. Auto makers are putting a gun to the heads of world leaders and demanding a bigger bailout. The banking system stress tests which are supposed to determine which banks will survive the week are exposed as little more than kindergarten colouring tests. George Soros and Paul Volker have declared the financial system defunct. The DOW and TSX approach levels that only the fringe doomers dared predict. Today the DOW will probably crash the 7000 level, to the downside. Pensions, 401k's, RRSP's, REIT's, and mutual funds are evaporating. Unemployment is soaring. And the Leafs are only 12 points out of eighth place and are starting their annual push to almost make the play-offs. And it is sunny out. It is time for everyone to slowly, carefully, and quietly, step back from the abyss.

Europe's entire banking system on the edge of the abyss [Updated]

by gjohnsit Sat Feb 21, 2009 at 11:53:56 AM PST

This headline is scary enough.

European bank bail-out could push EU into crisis The article talks in vague terms about "secret reports". The problem is that the article has been changed. A Google search will reveal it's original headline which is much scarier.

European banks may need £16.3 trillion bail-out, EC document warns.

gjohnsit's diary:

The Telegraph changed more than the headline. They had also removed two paragraphs from the original news article. Fortunately other blogs had captured those missing paragraphs.

Read on...

It is the weekend, and Peacenik is enjoying Hockey Day in Canada, particularly Montreal playing well. Punditman encourages Peacenik to not post on the weekends. But when Peacenik sees the word "ABYSS" in a headline, Peacenik cannnot help Peacenik's self. The situation is so DIRE, (another word that Peacenik can't resist) that the media is censoring itself. That's right, the world is on the verge of PANIC (Peacenik like word). The BLACK HOLE OF DEBT (Peacenik's favorite) is insatiable. Peacenik hopes gjohnsit maybe had too much to drink on the weekend and is just being ALARMIST. But Peacenik continues to prepare for DOOMSDAY in any case. Go Leafs Go. And Peacenik thinks Sundin deserves to be cheered tonight.

Failure to Rise

By PAUL KRUGMANPublished: February 12, 2009

By any normal political standards, this week’s Congressional agreement on an economic stimulus package was a great victory for President Obama. He got more or less what he asked for: almost $800 billion to rescue the economy, with most of the money allocated to spending rather than tax cuts. Break out the Champagne!

Or maybe not. These aren’t normal times, so normal political standards don’t apply: Mr. Obama’s victory feels more than a bit like defeat. The stimulus bill looks helpful but inadequate, especially when combined with a disappointing plan for rescuing the banks. And the politics of the stimulus fight have made nonsense of Mr. Obama’s postpartisan dreams.

Let’s start with the politics.

Read on...

It is Friday the 13th and the world economy still exists. Financial Armageddon has been avoided for another week. Peacenik feels a generalized sense of anxiety as Peacenik surveys the financial press. Krugman has a sick feeling in the pit of his stomach as he contemplates the stimulus and the economy. Peacenik is beginning to think that minus some Black Swan event, everything will just unravel, slowly. Just like all of George Bush's efforts were to prevent a total collapse until he was out of office, Obama's efforts will delay the end. Buy time. Hope for the best. But the psychology is locked in. Peacenik doesn't think the public thinks the good old days are coming back. Peacenik thinks more and more people are agreeing with Peacenik. And that is a very worrisome development, on Friday the 13th. Have a good weekend.

Insanity Prevails

The New York Times is reporting Geithner Said to Have Prevailed on the Bailout.

The Obama administration’s new plan to bail out the nation’s banks was fashioned after a spirited internal debate that pitted the Treasury secretary, Timothy F. Geithner, against some of the president’s top political hands.

In the end, Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions that were sought by presidential aides, including David Axelrod, a senior adviser to the president, according to administration and Congressional officials.

On Monday evening, new details emerged after lawmakers were briefed on the plan.

Read on...

Everyone knows Peacenik has already been mezmerized by foolishly looking in the black hole of debt. Trillions and trillions of dollars of debt. Debt that can never be repaid. There isn't enough money in the world to pay this debt. Peacenik thinks a better bank bailout plan would be to guarantee the deposits in these banks. Thus helping regular people. Guarantee the pension investments in these banks. Thus helping regular people. And let the risk takers, who gambled in the belief that the government (regular people) would bail them out, get wiped out. Then put the management of these companies in jail and confiscate their property and bank accounts, on shore and off shore. Shut the banks down. Promote tellers and janitors to positions of management and start over. They could not do a worse job. And regulate the financial industry so that it is not a casino but rather a place to deposit your paycheck and to borrow to buy something at a reasonable rate of interest. That's what Peacenik would do.

Stop Rearranging Deck Chairs on the Titanic and Nationalize the Damn Banks

By Joshua Holland, AlterNet. Posted January 30, 2009.

It's the best possible course to rescue our economy at this point; all the other options would be disastrous.

The painful but unavoidable reality of the financial crisis is that every dollar spent trying to prop up a failing bank is just good money thrown after bad; a taxpayer rip-off, short and sweet.

But in Washington, many are trying to avoid that fact nonetheless. Economist Paul Krugman wrote that the political establishment has "become devotees of a new kind of voodoo [economics]: the belief that by performing elaborate financial rituals we can keep dead banks walking." Goldman Sachs' economists estimate that those rituals might cost up to $4 trillion to perform.

It's time that the government stops flailing around with piecemeal bailouts and loan guarantees, takes over these institutions -- takes them out of private ownership -- sells off their good assets in an orderly way, trashes the toxic stuff and then resells them to the private sector down the road as leaner institutions that are dedicated to the primary purpose of banking: making loans and holding deposits.

Read on...

Peacenik doubts that nationalizing the banks is the perfect solution. There are too many dominoes falling all at once. But the banks are at the root of this crisis. Their management does not deserve a bailout. Their management deserves jail and poverty. But Peacenik thinks nationalizing the banks is part of a possible, painful, muddling thru scenario. It has to be done. The alternatives aren't working. The world is witnessing incredible real time experiments in global monetary policy. The results of these experiments are apparent within days. Shovelling money into the black hole of banking has failed. Will the muddling through scenario work? Its Friday. Peacenik says maybe. Have a good weekend.