Michael Scheuer (formerly known as "Anonymous") new work on the Islamists on Asia Times

Asia Times Online :: Middle East News, Iraq, Iran current affairs

  His books were good, his articles are good. He's always worth reading. He discusses how the Iraq Attack allowed ultra-extremist Saudi-supported Salafist al-Queda-associated jihadis to spread thru Syria, Lebanon, Jordan and on into Palestine and Israel. Sow the wind, reap the whirlwind.

McClatchy: Was 2008 the beginning of another Great Depression?

McClatchy Washington Bureau | 12/28/2008 | Was 2008 the beginning of another Great Depression?

  Good article. Good question.

Obama should give David Duke a Cabinet Position

The Raw Story | Frank get 'post-partisan depression' over Warren inauguration invite

Rep. Barney Frank, the only openly gay member of Congress, feels that president-elect Barack Obama has made a "serious mistake" in asking pastor Rick Warren to deliver the inaugural invocation.....

Rev. Rick Warren leads a southern California mega-church, and is author of the multi-million selling self-help book, "The Purpose Driven Life." Warren and his congregation were instrumental in supporting Proposition 8, a ballot measure passed in Nov. which banned gay marriage in the state.

Obama has maintained that his inclusion of Rev. Warren is part of his efforts to bring separate groups together around common causes.

"That dialogue is part of what my campaign is all about," said the President-elect.

  Obama's right. We should all embrace his new spirit of inclusiveness and diversity (except of course where gays and lesbians are concerned). And in order to show that he's not just the stereotypical gay-bashing black male and only appears to be a black male, he should invite David Duke to his inauguration, or maybe make him ambassador to Austria or something. I heard him interviewed by Michel Martin, who I really like, and I had to give them both high marks for the interview: they baited each other in a genteel sort of way but they kept it civil and interesting. Obama appears so determined to let the Neocons and Bible-Beaters and Wall Street Ponzi-schemers financiers we thought we defeated in the last election snatch victory from the jaws of defeat that he should probably give Duke a Cabinet position dealing with race relations or equal opportunity or something.

FW Engdahl: Federal Reserve sets Stage for Weimar-style Hyperinflation

Hyperinflation

In the period from August 1929 until he left office President Herbert Hoover oversaw a 43-month long contraction of the US economy of 33%. Barack Obama looks set to break that record, to preside over what historians could likely call the Very Great Depression of 2008-2014, unless he finds a new cast of financial advisers before Inauguration Day, January 20. Required are not recycled New York Fed presidents, Paul Volckers or Larry Summers types. Needed is a radically new strategy to put virtually the entire United States economy into some form of an emergency 'Chapter 11' bankruptcy reorganization where banks take write-offs of up to 90% on their toxic assets, that, in order to save the real economy for the American population and the rest of the world. Paper money can be shredded easily. Not human lives. In the process it might be time for Congress to consider retaking the Federal Reserve into the Federal Government as the Constitution originally specified, and make the entire process easier for all. If this sounds extreme, perhaps revisit this article in six months again. [emphasis added]

  Hr. Engdahl tends to be right. Just check his writing over the last year and compare it with the consensus view at the time of writing.

Karl Rove Rap-Sheet: Add Murder to Treason and Sedition

The Raw Story | GOP consultant killed in plane crash was warned of sabotage: report

Arnebeck said that he received confidential information that Republican operative Karl Rove threatened Connell and his wife if Connell told all that he knew.

  Since the plane crash is being investigated by the FAA, and Bush is still in the White House, any evidence will be destroyed, but maybe once Obama is in the coverup can be exposed. Not that I really expect Obama to do anything about any of this, so probably not. The Banana Republicans have already gotten away with massive treason and sedition; what does another murder or two matter? As for Rove, he'd already hang ten times over if he was ever brought to justice, so he has nothing to lose. Offing anyone who might testify against him is just good business.

Let the hangings begin

The Raw Story | Prominent neoconservative: 4,000 Americans 'had to die'

"My position is that it's regrettable that any Americans died. And it is regrettable that they had to die, but I believe they did have to die," said Gaffney. "The threat we did know about is the chemical capability Saddam Hussein used against his own people.... The danger was that inaction could have resulted in the death of many more Americans than 4,000."

   Since Gaffney does not appear to have had a government position, perhaps he is just more of an Israeli spy or unregistered foreign agent and should be shot or deported. Cheney is without a doubt guilty of high treason. Bush is too retarded to hang, but his administration was rife with high treason, the penalty for which at least used to be hanging. If was good enough for the Nazis at Nuremburg, it's good enough for the Neocon traitors.

Feds to Old People and U$D to Reality: Get Lost!

Bloomberg.com: Worldwide

Dollar Falls Most Against Euro Since 1999 Debut on Fed’s Rate

By Jamie McGee and Michael J. Moore

Dec. 17 (Bloomberg) -- The dollar declined the most against the euro since the 15-nation currency’s 1999 debut and sank to a 13-year low versus the yen as near-zero interest rates and rising budget deficits led traders to abandon the greenback.

The greenback extended its drop against a gauge of currencies of six U.S. trading partners, falling 11 percent from a 2 1/2-year high reached Nov. 21. Investors including hedge funds reversed bets that the dollar will appreciate to minimize losses as the end of the year approached, traders said.

“This move is historic,” said Russell LaScala, New York- based head of North American foreign exchange at Deutsche Bank AG, the world’s biggest currency trader. “It’s just going to keep going until the last bit of pain stops. I would not be shocked to see $1.50.

  Surprise, surprise! Dollar already going down the tubes. Who knew?

The Feds have decided to destroy the value of the dollar to protect the market capitalisation of their friends at GS, CITI, BAC etcetc Save the World! Old people on fixed incomes will just have to eat cheaper pet-food. Lucky for them, soon Chinese pet-food will be unaffordable, so they might not get poisoned. And all those low-wage workers for whom deflation would be their first real pay-raise in decades can get lost too. Old people, poor people, U$D debt-holders: Get Lost!

  Wonder what will happen to the value of the dollar when the rest of the world figures out that not only are we deliberately hyper-inflating our currency as an alternative to default, but we also consume more than anyone else, have more debt than anyone else, and produce less per capita of anything of value (meaning forget financial services, Hollywood crap, etc.) than anyone else except maybe places like Somalia?

Clusterstock: Time For A Gas Tax

Time For A Gas Tax

   I've been saying this for months. Henry Blodget wants a price target of $4 and not to start it until 2011. I would set a nearer-term target of $3 and start drifting the price up to that target immediately, then start raising the target to $4 and beyond. Gas below $2/gallon is just plain stupid. Let's get it back up to at least $2.50 by the summer before people start thinking of anything over $2 as being high.

  The target should work as a price-band, using tax cuts and even short-term subsidies to smooth out price-swings. Economic actors can't be expected to act rationally and efficiently when the price of oil can be anywhere between $25 and $250/barrel.

  Measures, up to and including public flogging, would have to be taken to ensure oil companies didn't simply push their profit-margin up to reach the target price.

  The money raised by this tax could be used for things like bailing out the automakers while turning them more into mass-transit makers, upgrading rail roadbed and building more, including urban light rail, and so forth. This could fit nicely into Obama's infrastructure plan while actually adding a funding source other than the Chinese and other creditor-nations.

F William Engdahl: NATO scuttles US plan to encircle Russia

 As any student of WWII history knows, the war against Germany mostly took place in Russia, Western Europe being a sideshow and US participation a laudable afterthought. If not for General Winter and the T-34, Germany and Japan would have divided Eurasia and Africa and here in the US only the ocean might have saved us. Whether one likes Russia or not and whatever their government happens to be, they are right up there with Vietnamese as people one should absolutely not start trouble with. Anyone who tells you otherwise is just plain stupid, like for example George W. Bush and the horse he rode in on. The French, Chinese and US can tell you what happens if you mess with Vietnam, and the French and Germans can tell you all you need to know about messing with Russia. Much better to have them as friends than enemies.

  Me, I'm hoping the pirates in Somalia and the Strait of Malacca mess with the Russians. They won't fuck around with hand-wringing and whine about human rights and so forth. They'll zorch them, their familes, their friends, their homes and their whole fucking countries until it stops, and despite all the clucking and tut-tutting, the world will be a better, happier place. We have enough problems without stinking pirates from non-nations. Historically, human rights have never applied to pirates. String 'em up from the yard-arm; it's just that simple. Or mine their ports and cluster-bomb their cities. Whatever does the job.

  Same goes for the Pakis that hit Mumbai. Give Pakistan a reasonable chance to deal with it, then toss a little nuke into their 'tribal area' if they need some motivation,something small but very dirty, render a valley uninhabitable forever. Enough already of these Stone-Age savages in this 'tribal area'. It might make a suitable worldwide nuclear waste repository and toxic-waste dump. Fuck'em.

Asia Times Online :: Central Asian News and current affairs, Russia, Afghanistan, Uzbekistan

..... Translated into real political language, Washington has undergone a stunning setback in its agenda of encircling Russia with NATO. Despite the fact that president-elect Obama retained Bush Administration Defense Secretary Robert Gates, and named a person to be Secretary of State, Hillary Clinton, who has strongly supported bringing Georgia and Ukraine into NATO, key European NATO members, led by Germany and France, blocked what must be a unanimous membership decision. .....

Dream on, White Trash. Go back to your Fuhrer-bunkers and drink your Kool-Aid: you're done

McClatchy Washington Bureau | 12/02/2008 | Palin shows she's still got star power in Georgia

  Hey Bible-Beaters: You're done. When the Latino vote went for Obama, it was over for you. I'd suggest you leave the country and move to some fascist redoubt for your last stand, but ever since Apartheid fell, the Bible Belt was about it. Alaska, maybe? Anyways the Latino percentage of the electorate is only going to get bigger, and they are basically decent people, meaning they will always vote against your candidates. You're done; it's over; you lose.

McClatchy Washington Bureau

Posted on Tue, Dec. 02, 2008

Palin shows she's still got star power in Georgia

Liz Fabian | Macon Telegraph

last updated: December 01, 2008 04:09:03 PM

Sarah Theus blew her perfect attendance record at Porter Elementary to go Monday to see Sarah Palin in Perry.

The 11-year-old from Macon wore a hot pink "Sarah" headband that caught Palin's eye as she took the stage at a rally for Senator Saxby Chambliss on the eve of the run-off.

"Our candidate did not win the election but she won our hearts," said Sally Theus, Sarah's mother, who gave in to her daughter's begging to attend the rally.

Theus drove down to Perry with her sister-in-law Tammy Hawkins and 9-year-old niece Hailey Hawkins, who missed a day at Covenant Academy.

They were the first to arrive at the Miller-Murphy-Howard building of the Georgia National Fairgrounds and Agricenter in Perry about four and a half hours before the Alaska governor was expected to speak.

"We wanted the girls to see a fine, upstanding, Christian woman with five kids and a good career," Tammy Hawkins said. "We just wanted them to see you can succeed."

The men seemed to have slightly outnumbered the women in the crowd as chants of "Saxby, Saxby, Saxby" filled the room and got Palin's attention.

"Saxby," she echoed while nodding her head. "You betcha," she said to a roar of cheers. While comics have stereotyped Palin's phrases and dialect, the Republican vice presidential candidate's voice and message ring true for conservatives.

Korean War veteran Chuck Griggers of Macon said he came down to see what he called the "conservative side of the so-called Republican party."

"I saw the what-you-call the middle of the road in McCain," Griggers said. "But this gal, she has the moral standard to breathe new life into the Republican party."

Neal Cowan of Warner Robins said he doesn't stand up for more than an hour waiting for just anybody.

"Now she's something," Cowan said of Palin. "Just a fresh face. I think she will hang in there and do what she says she'll do."

Pam Sena drove her 7-year-old granddaughter from Locust Grove to see the young girl's role model. Morgan Sena took it hard when McCain-Palin lost the election, Pam Sena said. Her granddaughter thought Palin should have been at the top of the ticket.

When asked why the youngster thought Palin should be president, Morgan turned her eyes to the ceiling as she considered her response. Her shoes wobbled as she perched on the metal railing of the barrier behind the press platform while she thought.

"She's good," Morgan said softly and then added, "Cause she's pretty."

Others in the audience found Palin's principles just as attractive. Palin's smiling face adorned a campaign button on Mary Kimberly's red sweatshirt with "America" emblazoned across the chest.

"We like Palin because she's pro-life," said Kimberly, of Macon.

"I think she's the average American," Pam Sena added. "She's your Josephine the plumber or Sarah the fisherman."

Red, white and blue painted signs on the stage drew applause with their printed punchlines: "Read my lipstick - vote for Sax", "Keep your Change" and "Palin-Chambliss 2012".

After Palin left the room, Sarah Theus and her cousin Hailey Hawkins were giddy with excitement. They carried Palin's autographs as they left the room in their over-sized pink sweatshirts.

"She touched this," Sarah said with a fresh signature on her pink fleece "Sarah" headband.

"She touched my finger. She touched my finger," Hailey said while jumping up and down.

The 9-year-old hunter hadn't been this excited since she killed her third wild hog over the Thanksgiving holiday.

Now Hailey's mother hopes Palin's appearance will help her daughter continue to aim for success in the future.

Spitzer targeted for takedown by Feds? House Financial Services Committee wants to know.

Congressional Panel Seeks Inquiry on Roots of Spitzer Scandal - NYTimes.com

November 26, 2008

Panel Asks How Inquiry Began on Spitzer Banking

By DANNY HAKIM

ALBANY — Eight months after a federal investigation into a prostitution ring brought about the downfall of Gov. Eliot Spitzer, the question persists in some circles: Was the federal government out to get Mr. Spitzer?

No evidence has surfaced to support such an assertion, and the prosecutor in the case has said that politics played no role in the pursuit of Mr. Spitzer, a Democrat. But that has not put to rest suspicions, expressed on left wing blogs, that Mr. Spitzer, a zealous pursuer of Wall Street wrongdoing who some thought could one day be president, had been singled out.

Now, a congressional committee is pursuing what would be the first public examination of the events that prompted the initial inquiry into his bank transactions, which showed he was sending money to a front company for Emperor’s Club V.I.P.

The House Financial Services Committee intends to take up the matter early next year and tentatively plans to hold hearings that could include testimony from the United States Treasury’s law enforcement unit, along with Mr. Spitzer’s bank, North Fork, and HSBC, a bank used by a company connected to the prostitution service.

“The question was: Why were they looking for this? Is this political retribution?” said Representative Michael E. Capuano, a Massachusetts Democrat and a member of the committee who has been critical of the increased scrutiny of banking transactions, which increased greatly under the passage of the Patriot Act.

“It raises questions in my mind that he may have been targeted for political purposes,” he said, adding that he had no evidence that suggested as much. ....

One of Mr. Spitzer’s last appearances in Washington was before a subcommittee of the House Financial Services Committee — a hearing on bond insurance.

It was on that trip that Mr. Spitzer stayed at the Mayflower Hotel in Washington, where he had the encounter that would lead to his resignation a month later.

   Of course they "assassinated" him. It was obvious at the time.

8500: The New 9000

  I've sold all of my calls and loaded up on puts. I love dead-cat bounces, but this dog don't hunt. Massive federal bailouts of bankrupt banks: good for a bounce, but no way to run a country. Go ahead and keep it bouncing, Fed Boys, 'cause you're going to get about a third of all the cash I'm raking in anyway.

Boo Hoo, White Trash: You Lost! Time to hide in your Bible-Bunkers and tornado-bait trailer-parks!

Asia Times Online :: Asian news and current affairs

.... During the presidential campaign, most of the country seemed to have accepted the possibility of an African-American president, with the possible exception of a narrow band of the nation that stretched in an arc from southwestern Pennsylvania across the deep south to Oklahoma.

This area, (along with parts of Republican Senator John McCain's Arizona and most of governor Sarah Palin's Alaska) were the only parts of the country that voted more Republican than in 2004; these places will suffer the culture shock of having to accept a president who looks nothing like their favorite NASCAR racing hero.

Although this is not really the change I'm talking about, it will also be a welcome difference that government policy in all matters of science policy, from stem-cell research to the search for intelligent life in the universe, will no longer have to be vetted by focus groups comprised of high school graduates bused in by Karl Rove from the Bible-belt megachurches....

Obama's one-trick wizards

Asia Times Online :: Asian news and current affairs

....
The one-trick wizards of Wall Street had one idea, which was to ride the trend and pile on as much leverage as credulous investors and crony regulators would allow. It has gone pear-shaped, and those who didn't cash out early along with the cynics are poor. Fortunately for them, Obama will let them play with the budget of the US federal government for the next four years.

Failed financiers run the Obama transition team. It used to be that the heads of great industrial companies got the top Cabinet posts. Now it is the one-trick wizards. After George W Bush fired former Treasury Secretary Paul O'Neill, who had run Alcoa, the last survivor of the species was Vice President Dick Cheney, the former CEO of Halliburton. Obama's bevy of talent comes from finance. American industrialists have become figures of ridicule, like the pathetic chief executive of General Motors, Rick Wagoner, begging for a government loan. ....

For a quarter of a century, the inbred products of the Ivy League puppy mills have known nothing but a rising trend in asset prices. About the origin of this trend, they were incurious. The Reagan administration had encountered a stock market in 1981 trading 50% below its the long-term trend. Reagan restored the equity market to trend by cutting taxes, suppressing inflation and easing some regulations. The private equity sharps were fleas traveling on Reagan's dog. They simply rode the trend with the maximum of leverage. ....

That explains how a Washington political operative like Rahm Emanuel, now Obama's chief of staff, who studied ballet rather than balance sheets, could earn a reported $16.2 million in two-and-a-half years at Wasserstein Perella, the mergers and acquisitions boutique. At the height of the bubble, Bruce Wasserstein's firm sold out to Germany's Dresdner Bank for the fairy-tale sum of $1.6 billion. Even the crumbs from Wasserstein's loaf could make a Chicago politician rich.

Without leverage, the clever folk around Barack Obama are fleas without a dog. None of them invented anything, introduced an important new product, opened a new market, or did anything that reached into the lives of ordinary people. They wore expensive cufflinks, read balance sheets, exercised regularly, sat on philanthropic boards, and assumed that their flea's ride on the Reagan dog would last forever.

All they knew was leverage, and now that the world is de-levering, they are trying to put leverage back into the system. One almost can hear Mortimer Duke, Don Ameche's charcter in Trading Places, shouting, "Now, you listen to me! I want trading reopened right now. Get those brokers back in here! Turn those machines back on!"

Of course, nothing excludes the possibility that Obama's team will come up with something constructive. But there is no reason to expect a drastic change from the crisis response of the same sort of people (starting with Treasury Secretary Paulson) in the Bush administration. They will bail out incompetent, failing firms and drop money from helicopters and call it a stimulus package. And it will turn out no better than it did for the humiliated Republicans.

What Barack Obama Needs to Know About Tim Geithner, the AIG Fiasco and Citigroup

Institutional Risk Analytics

The only way to deal with this ridiculous Ponzi scheme is bankruptcy. The way to start that healing process, in our view, is by the Fed emulating the FDIC's treatment of DSL, withdrawing financial support for AIG and pushing the company into the arms of the bankruptcy court. The eager buyers for the AIG insurance units, cleansed of liability via a receivership, will stretch around the block.

By embracing Geithner, President-elect Barack Obama is endorsing the ill-advised scheme to support AIG directed by Hank Paulson et al at Goldman Sachs and executed by Tim Geithner and Ben Bernanke. News reports have already documented the ties between GS and AIG, and the backroom machinations by Paulson to get the deal done. This scheme to stay AIG's resolution cannot possibly work and when it does collapse, Barak Obama and his administration will wear the blame due through their endorsement of Tim Geithner

 Sounds like all that Big Money Money paid to Rahm Israel Emanuel and others is going to turn out to be a good investment. The US will end up bankrupt and in default, but by then the usual suspects will have cashed out of their bailout-rescued investments and moved into Swiss francs and gold. I got more puts today, on GS XOM and CVX, and on MSFT just because I hate them. I'm making money like crazy off of this mess of waste, fraud and corruption. I just need to remember to get it all out of USD before the plug gets pulled.

"....a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000."

The End

by Michael Lewis Nov 11 2008

The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong.

Found this via Clusterstock. Lots of great quotes in this, a good read.

“The single greatest line I ever wrote as an analyst,” says Eisman, “was after Lomas said they were hedged.” He recited the line from memory: “ ‘The Lomas Financial Corp. is a perfectly hedged financial institution: It loses money in every conceivable interest-rate environment.’ I enjoyed writing that sentence more than any sentence I ever wrote.” A few months after he’d delivered that line in his report, Lomas Financial returned to bankruptcy.

In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.

“With all due respect, sir,” Daniel told the C.E.O. deferentially as they left the meeting, “you’re delusional.” This wasn’t Fitch or even S&P. This was Moody’s, the aristocrats of the rating business, 20 percent owned by Warren Buffett. And the company’s C.E.O. was being told he was either a fool or a crook by one Vincent Daniel, from Queens.

Truth to tell, there wasn’t a whole lot of hand-wringing inside FrontPoint either. The only one among them who wrestled a bit with his conscience was Daniel. “Vinny, being from Queens, needs to see the dark side of everything,” Eisman says. To which Daniel replies, “The way we thought about it was, ‘By shorting this market we’re creating the liquidity to keep the market going.’ ” “It was like feeding the monster,” Eisman says of the market for subprime bonds. “We fed the monster until it blew up.”

I've just started reading that "1421" book about how the Chinese discovered the world. Apparently even back then they liked to sell their goods cheap and on easy credit to their trade partners, who were thus kept indebted and presumably also hooked on the nice cheap cobalt-blue porcelain and so forth. Maybe the Chinese invented "feeding the monster". I wish they would learn Spanish before they take over the world. Spanish, while not the most beautiful-sounding language (neither is English by any means) has the remarkable advantage of having an exact correspondence between how it is spelled and how it sounds (excepting my beloved Argentines, who have to do everything in their own style including speak Spanish). There are plenty of highly intelligent people who sound like idiots if they write anything because they are not wired to remember the arbitrary and capricious, not to say cruel and unusual, relation of lack thereof between spoken and written English (I do have such hardware, but would much rather have hardware suitable for Quantum Gravity that Goddamn English spelling). Chinese, being a tone-system language and not even standardised within China as far as I know, is singularly unsuitable for the role of universal language (except for the fact that billions of Chinese already speak it, of course). I suspect that Western Barbarians such as myself are lacking the hardware to properly learn Chinese even had I been born there. So please learn Spanish, Chinese, before you take over what is left of the world after the current bunch of schmucks get done f*cking it up.

MI6 Hiring

Operational Officer - jobs from exec-appointments.com One of many reasons I love FT.com... Where else would I see MI6 job postings?

Salary on application London, and Worldwide Operational Officer MI6 Become an Operational Officer at MI6 and you’ll be faced with a career opportunity like no other. We’re looking for impressive, experienced professionals with political curiosity, an international perspective and the qualities to collect and assimilate secret foreign intelligence. Do so and you’ll help the Government protect the UK’s security, stability and prosperity. MI6 exists to tackle threats to the UK including terrorism, regional instability, the proliferation of weapons and drug trafficking. We look for resourceful, adaptable, impactful people from the widest possible range of UK cultures and backgrounds. There are three types of Operational Officer. Our Case Officers plan and carry out secret operations overseas. The Targeting Officers build up intelligence pictures of different areas of interest and identify potential target agents. Finally, our Reports Officers, based mainly in London, assess, validate and deliver intelligence to the Government. They’re all roles in which you can have a major impact on the UK – and develop a fascinating, long-term career. If you think you have the qualities we’re looking for, please click on 'Apply Now' Please note, we only accept applications from British citizens. You should not discuss your application with anyone. job ref OO Apply Now

Obama the first Jewish President?

Rahm Emanuel - Wikipedia, the free encyclopedia From his Wikipedia page:

Emanuel has been described as a “strong Israel partisan”^[26] and a “convinced Zionist” and “prominent figure in the US Jewish lobby.”^[27] A strong supporter of AIPAC, he personally introduced fellow Chicagoan Barack Obama to the organization's directors during the 2008 presidential campaign.^[28] A November 2008 article claimed that while expressing empathy for Palestinians, Emanuel has explicitly condemned their leaders.^[29]

Who Is Rahm Emanuel? Clusterstock.com tells us that in addition to representing AIPAC, Rahm Israel Emanuel is the biggest recipient of Big Money money. What a surprise. Big Finance, AIPAC, and his middle name literally is "Israel". Let's just quit having elections here and let the Knesset pick for us. Save a bunch of time and money that way.

It was clear that Hilary would have been at least as rabidly Zionist a president as Joe Lieberman, and McPalin needs no comment. It looks like a choice regarding Middle East policy was never on the ballot except for the third-party candidates, and never will be. I voted for Obama, but I sure am glad I didn't give him any money or put much effort into him. To be fair, Rahm Israel Emanuel doesn't sound completely rabid: he apparently supported the Oslo peace process. But give me a break here: Obama's first pick is a guy whose middle name is Israel, has or had dual US-Israeli citizenship, volunteered with the IDF during the first Iraq Attack, has Israeli family and spends his summers there, and is awash in Big Money Money, and about whom there is considerable chatter linking him to Mossad... Really, I couldn't make this stuff up if I tried... I would have left the country in a hurry if McPalin won, and now my wait-and-see attitude is already moving towards concluding there really is no alternative for the US but bankruptcy and implosion in the service of our various enemies and masters, foreign and domestic, so I think I'm still out of here, just in a more leisurely fashion.

Let the Big Three bite the Big One

Don't Do It, Obama. Don't Save Ford (F) And General Motors (GM)

   Instead of giving these shitheads money to build more fall-apart guzzlers, let's allocate the money for mass transit projects like light rail and so forth and then see if the Big Three can manage to contribute. Oil will be heading back to $200/barrel once economies recover if not before. The last thing we need is more cars. We need mass transit, and it should be subsidised so that everyone driving is also paying for someone to ride mass transit for free. Otherwise the whole country crashes when oil goes over a certain price: no more food in supermarkets, nothing, over and out.

Down with Utah!

Utah faces boycott after Mormon work for Prop 8

Utah faces boycott after Mormon work for Prop 8

By BROCK VERGAKIS, Associated Press Writer

Friday, November 7, 2008

(11-07) 16:32 PST Salt Lake City (AP) --

Utah's growing tourism industry and the star-studded Sundance Film Festival are being targeted for a boycott by bloggers, gay rights activists and others seeking to punish the Mormon church for its aggressive promotion of California's ban on gay marriage.

It could be a heavy price to pay. Tourism brings in $6 billion a year to Utah, with world-class skiing, a spectacular red rock country and the film festival founded by Robert Redford, among other popular tourist draws.

  I think this is a great idea, and should be generalised to include Alaska and all the deep-red states, which tend to be backwards economically as well as in other respects. Let's drive the Bible-thumping bastards into bankruptcy! Send the Bible-beaters back to their bunkers and put The Fear into them so they never emerge to plague the rest of us again!

'Serious concerns' over Lieberman's future

The Raw Story | Reid: 'Serious concerns' over Lieberman's future

  Get rid of him. If the Republicans don't want him, send him to Israel. It's clearly really his country more than the US anyway.

Maxing out the plastic

Broke Consumers Hit Credit Cards For A Few Last Pennies

  From Clusterstock:

Spending plunged in Q3, and it's likely to continue to get worse. Why?
Because U.S. consumers are broke, and the number of folks eager to lend
us money despite this condition has gotten a lot smaller.

We were broke in 2000, but we were able to borrow money to spend by
tapping the "equity" in our houses. Now we can't tap that equity
anymore (because it's gone), so we've moved on to credit cards. Lenders
are wising up to this, though. And then where's our spending money going to come from?

Soros: America must lead a rescue of emerging economies

FT Alphaville
....

The US must show the way in protecting the peripheral countries against a storm that has originated in the US, if it does not want to forfeit its claim to the leadership position. Even if Mr Bush does not share this point of view, it is to be hoped the next president will – but by then the damage will be much greater.

...Yeah, what he said... Soros is cool. Let's hope Obama offers him an important very senior post.

On Fire

Humans made fire 790,000 years ago: study | Science | Reuters

Humans made fire 790,000 years ago: study

Mon Oct 27, 2008 9:34am EDT

JERUSALEM (Reuters) - A new study shows that humans had the ability
to make fire nearly 790,000 years ago, a skill that helped them migrate
from Africa to Europe.

  Some decades ago, I had a personal relationship with Fire perhaps akin to that some claim to have with Jesus. This was not the result of premeditation or volition: the organisation of my consciousness moved from its normal mental-egoic intellectual configuration to one dominated mostly by some combination of Jung's Intuitive, Feeling and Sensing functions. During this period I spent a great deal of time in the mountains and along rivers and so forth, and often felt moved to build and gaze a fire. I had experiences involving the Salamander and many others in general conforming to mystical traditions I had a complete lack of exposure to. It was as a result of these experiences that I read a great deal of Jung and eventual found my way to Michael Washburn, whose "Ego and the Dynamic Ground" provided a very satisfying intellectual framework enabling me to try to sort of get my mind around what I had wandered into.

  This was all some decades ago, and these days I am thinking much more about Money in the broad sense than anything mystical, but I never either explained or dismissed that most intense period of my life.

  Reading that human fire-making goes back about 800 thousand years, it struck me that that should be long enough for evolutionary processes to have created a biological basis for the archetypes related to Fire. Subjectively, constellation of an archetype is perceived as contact with something not only independently existent, but more real than reality itself, so to speak. I remain agnostic on the question of whether for example there is a God, elemental spirits, the Old Ones and the Other Side, or whether experiences of these things are just externalisations of basic human psychic hardware developed during millions of years of evolution.

  And now back to Money. While I remain agnostic about the reality of the King of the Salamanders (the damn things are like cats: each one will give you to understand it is the King of them all, the One True Salamander [and I will note that the Old Testament God Jehovah is to me nothing more than a Fire Being with delusions of grandeur: a jealous, passionate angry and above all hungry being]), my opinion of the today's Big Bounce is that I will be shopping for put options tomorrow.

The Fund must act to protect emerging markets

FT.com / Comment & analysis / Comment - The Fund must act to protect emerging markets

The Fund must act to protect emerging markets

  Hear Hear! And the writer is a senior Citigroup manager, no less. I have the impression that Citi has been one of the leading financial houses in exploiting the developing world, so they may be mostly concerned with protecting their investments, but perhaps there is some real concern for "the victims of financial stress that is both not of their making and is beyond their control."

By William Rhodes

Published: October 23 2008 19:26 | Last updated: October 23 2008 19:26

....

After the resolution of the crises of the 1980s and 1990s, many emerging markets implemented key reforms, pursued prudent macroeconomic policies, strengthened banking and financial institutions and built up significant central bank reserves. In spite of their reforms, many of these countries have been caught in the downdraft of this credit crisis. They are the victims of financial stress that is both not of their making and is beyond their control. It could affect their real economies. The situation is deteriorating; these countries should not be left adrift. It would be imprudent to risk undermining the efforts in the Group of Seven leading industrialised countries to stabilise conditions by allowing the strains in emerging markets to evolve into an acute situation. Now is the time to act.

....

The lesson of the Latin American debt crisis and Asian financial crisis is that mechanisms must be put in place rapidly to shore up these vulnerable markets. The International Monetary Fund must assume a leadership role as it has in the past.

The writer is Citigroup senior vice-chairman; chairman, president and CEO of Citibank and first vice-chairman of the Institute of International Finance

Block the Vote:Will the GOP's campaign to deter new voters and discard Democratic ballots determine the next president?

Block the Vote : Rolling Stone

Block the Vote

Will the GOP's campaign to deter new voters and discard Democratic ballots determine the next president?

ROBERT F. KENNEDY JR. & GREG PALAST

Posted Oct 30, 2008 11:10 AM

....

In state after state,
Republican operatives — the party's elite commandos of
bare-knuckle politics — are wielding new federal legislation
to systematically disenfranchise Democrats. If this year's race is
as close as the past two elections, the GOP's nationwide campaign
could be large enough to determine the presidency in November. "I
don't think the Democrats get it," says John Boyd, a voting-rights
attorney in Albuquerque who has taken on the Republican Party for
impeding access to the ballot. "All these new rules and games are
turning voting into an obstacle course that could flip the vote to
the GOP in half a dozen states."

Suppressing the vote has long been a
cornerstone of the GOP's electoral strategy...

  Well, there they go again... Expect the mother of all stock-market crashes if they manage to steal this one: should be good for about minus 3000 on the dow by following Friday.

ACLU questions Army unit’s NorthCom role

ACLU questions Army unit’s NorthCom role - Navy News, opinions, editorials, news from Iraq, photos, reports - Navy Times

The American Civil Liberties Union is questioning the use of an
active Army brigade as an on-call federal response force within the
U.S., arguing that the military is barred from any role in civilian law
enforcement and that the force could be used to help the Pentagon
conduct domestic surveillance.

On Tuesday, the ACLU filed Freedom
of Information Act requests with the Pentagon and Department of Justice
asking for “any and all records” related to the decision to align the
unit under U.S. Northern Command, which is responsible for homeland
defense of the U.S., and the “ongoing and possible use” of the unit,
“including but not limited to contemplated functions; duties;
surveillance activities; and relationship to existing civilian agencies
or personnel or the National Guard.”

The ACLU FOIA request cites a Sept. 30 Army Times online story,
“3rd Infantry’s 1st BCT trains for a new dwell-time mission,” and a
U.S. Army North news release, as its sources for the information.

....

The assignment, the ACLU said, “raises important
questions about the longstanding separation between civilian and
military government within the United States — a separation that dates
to the nation’s founding and that has been reiterated in landmark
statutes, most importantly, the Posse Comitatus Act.”

"The banks simply DONT HAVE THE MONEY TO LEND."

FT Alphaville

Time for the Darwinian flush

Oct 20 08:41
by Paul Murphy

Highlights from the latest Hayman Advisors letter to clients (i.e. the text in full):

October 14, 2008

‘The ultimate result of shielding man from the effects of folly is to people the world with fools.’ Herbert Spencer

What’s Next? It is the “what’s next” that scares us the most.....

Highlights from the latest Hayman Advisors letter to clients (i.e. the text in full):

October 14, 2008

‘The ultimate result of shielding man from the effects of folly is to people the world with fools.’ Herbert Spencer

What’s Next? It is the “what’s next” More…

"The US consumer is finally broke."

Why This Recession Will Be A Doozy

Why This Recession Will Be A Doozy

Henry Blodget | Oct 19, 08 10:22 AM

The last recession was mild. The stock market and corporate profits tanked, but consumer spending--long the major engine of the US economy--danced merrily on through. In recent decades, it has ever been thus: bearish analysts and strategists have been underestimating the voracious spending habits and resilience of the US consumer for 50 years.

Unfortunately, at risk of invoking the four most expensive words in the English language, "this time it's different."  This recession, to quote the great Julian Robertson, will be a "doozy."

Why?

Because the US consumer is finally broke.  For thirty years, we piled on debt and then spent almost every new penny we got.  This borrowing spree was made possible by a smorgasbord of no-money-down lending products and ever-appreciating asset prices. Unfortunately, the situation has now changed. The lenders who created those products have now been demolished, and asset prices are falling fast. And this is leaving American consumers with no choice but to cut back.

How finance, insurance, and real estate lobbyists bought a bailout

The American Conservative -- Fire Sale

  I really like these Paleocons. Conservatives trashing McCain, the Hanke-Panke bailout, lobbyists: what's not to like? Keep it up and they might give conservatives a good name.

How finance, insurance, and real estate lobbyists bought a bailout.

By Kelley Beaucar Vlahos

There was little in the federal bailout bill that most Americans could wrap their arms, much less their minds, around. What did strike a chord—and one of the rare notes of consensus—was that greedy executives of failed institutions should have to give up their high salaries and golden parachutes before getting a life raft from Uncle Sam.

But the CEO’s needn’t be too alarmed. The $2 billion their industry has invested in Washington politicians over the last 20 years will likely bring healthy returns. Pesky details like “who” and “how much” to penalize were kicked down the road or left wide open for interpretation—nothing a few fat friends on the right committees and a team of crack lobbyists can’t handle.

---

"highly likely that John McCain suffers from Traumatic Brain Injury (TBI) and Post Traumatic Stress Disorder (PTSD)

The American Conservative -- Head of State

Is there more to John McCain’s rage than just bad temper? A psychotherapist puts the candidate on the couch.

 Yeah, he's a whacko. Notice on the debates how he is really having trouble finding words? His brain hurts, we'll just have to have it out.

Duuuuuuuuuuuuuuuuuuuuuude... Congratulations! Hear Hear! Huzzah! Krugman for SecTreas or Fed!

  I would have just put a comment on his blog, but there are so many (18k) they turned them off. Let's hope Obama has a top job waiting for Paul "The Man" Krugman!

Economics 2008

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008

"for his analysis of trade patterns and location of economic activity"

Copyright © Princeton University
Paul Krugman
USA
Princeton University Princeton, NJ, USA
b. 1953

“The United States is now, in some very general sense, bankrupt”

FT Alphaville » Blog Archive » Kemp: “The United States is now, in some very general sense, bankrupt”

Kemp: “The United States is now, in some very general sense, bankrupt”

Here is a radical proposal from John Kemp, the former Sempra Metals economist, who seems to have had enough “resting” between jobs. His provocative ideas would appear to apply to the UK as well as the US.

First take a deep breath, and recall President Franklin Roosevelt’s wise advice that there is nothing to fear but fear itself.

Then let’s admit something painful: The United States is bankrupt, in the sense that it’s assets (housing stock, corporations and cash flow, plant and machinery) are now worth much less than its liabilities (in the form of mortgage-backed securities, other debt and loan instruments). In particular, large parts of the housing stock are now worth much less than the owners paid for them, and less than the outstanding value of the mortgages, or the collateralised bonds that have been issued against them.

  It is a longish article, and worth reading, so I won't quote bits of it here. He has an interesting global sort of mark-to-market plan to deal with the situation.

The battle lines drawn:There is an all-out war going on between the United States and the EU to define the future face of European banking.’

  Hr. Engdahl appears to be leaning towards deciding that the economic collapse is part of a long-laid plan by the usual suspects. I'm inclined that way also. I think it is possible that their plan has gotten away from them, rather like a biological weapon spreading beyond the target population. What Warren Buffett called financial weapons of mass destruction may turn out to be just that.

Behind the Panic: Financial Warfare and the Future of Global Bank Power

Behind the Panic: Financial Warfare and the Future of Global Bank Power

By F. William Engdahl

Global Research, October 9, 2008

.... There is serious ground to believe that US Goldman Sachs ex CEO Henry Paulson, as Treasury Secretary, is not stupid. There is also serious ground to believe that he is actually moving according to a well-thought-out long-term strategy. Events as they are now unfolding in the EU tend to confirm that. As one senior European banker put it to me in private discussion, ‘There is an all-out war going on between the United States and the EU to define the future face of European banking.’ In this banker’s view, the ongoing attempt of Italian Prime Minister Silvio Berlusconi and France’s Nicholas Sarkozy to get an EU common ‘fund’, with perhaps upwards of $300 billion to rescue troubled banks, would de facto play directly into Paulson and the US establishment’s long-term strategy, by in effect weakening the banks and repaying US-originated Asset Backed Securities held by EU banks. Using panic to centralize power As I document in my forthcoming book, Power of Money: The Rise and Decline of the American Century, in every major US financial panic since at least the Panic of 1835, the titans of Wall Street—most especially until 1929, the House of JP Morgan—have deliberately triggered bank panics behind the scenes in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power. Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century. .... Paulson seems to have learned from his White House mentor. As co-chairman of Goldman Sachs according to a New York Times account, in 1998 he forced out his co-chairman, Jon Corzine ‘in what amounted to a coup’ according to the Times. Paulson, and his friends at Citigroup and JP Morgan Chase, had a strategy it is becoming clear, as did the Godfather of Asset Backed Securitization and deregulated banking, former Fed Chairman Alan Greenspan, as I have detailed in my earlier series here, Financial Tsunami, Parts I-V. Knowing that at a certain juncture the pyramid of trillions of dollars of dubious sub-prime and other high risk home mortgage-based securities would come falling down, they apparently determined to spread the so-called ‘toxic waste’ ABS securities as globally as possible, in order to seduce the big global banks of the world, most especially of the EU, into their honey trap. They had help. In recent testimony under oath by Mr Lynn Turner, Chief Accountant of the Securities & Exchange Commission (SEC) testified that the SEC Office of Risk Management which had oversight responsibility for the Credit Default Swap market, an exotic market worth nominally some $62 trillions, was cut in Administration ‘budget cuts’ from a staff of one hundred down to one person. Yes, that was not a typo. That’s one as in ‘Uno.’ Vermont Democratic Congressman Peter Welsh queried Turner, ‘... was there a systematic depopulating of the regulatory force so that it was impossible actually for regulation to occur if you have one person in that office? ...and then I understand that 146 people were cut from the enforcement division of the SEC, is that what you also testified to?’ Mr. Turner, in Congressional testimony replied, ‘Yes…I think there has been a systematic gutting, or whatever you want to call it, of the agency and it's capability through cutting back of staff.’ .... It now would appear that the Paulson strategy was to use a crisis—a crisis that was pre-programmed and predictable as far back as 2003 when Josh Bolten became head of OMB—when it exploded, to panic the more conservative European Union governments into rushing to the rescue of US toxic waste assets. .... If the allegation of pre-planned panic, a la the Panic of 1907 is accurate, and it is a big if, then the plan worked…up to a point. That point came over the weekend of October 3, coincidentally the national unification holiday of Germany .... The battle lines drawn What has emerged are the outlines of two opposite approaches to the unfolding crisis. The Paulson plan is now clearly part of a project to create three colossal global financial giants—Citigroup, JP MorganChase and, of course, Paulson’s own Goldman Sachs, now conveniently enough a bank. Having successfully used fear and panic to wrestle a $700 billion bailout from the US taxpayers, now the big three will try to use their unprecedented muscle to ravage European banks in the years ahead. So long as the world’s largest financial credit rating agencies—Moody’s and Standard & Poors—are untouched by the scandals and Congressional hearings, the reorganized US financial power of Goldman Sachs, Citigroup and JP Morgan Chase could potentially regroup and advance their global agenda over the coming several years, walking over the ashes of a bankrupt American economy made bankrupt by their follies. By agreeing on a strategy of nationalizing what EU finance ministers deem are ‘EU banks too systemically strategic to fail,’ while guaranteeing bank deposits, the largest EU governments, Germany and the UK, in contrast to the US, have opted for what will in the longer run allow European banking giants to withstand the anticipated financial attacks from the likes of Goldman or Citigroup. .... By initiating state partial nationalizations across the EU, and rejecting the Berlusconi/Sarkozy bailout scheme, the governments of the EU, interestingly enough this time led by the German, are laying a more sound foundation to emerge from the crisis. Stay tuned, it’s far from over. This is a fight for the survival of the American Century which has been bvuilt since 1939 on the twin pillars of American financial dominance and American military dominance—Full Spectrum, Dominance. ....   F. William Engdahl is author of the book, A Century of War: Anglo-American Oil Politics and the New World Order (Pluto Press Ltd) and Seeds of Destruction: The Hidden Agenda of Genetic Manipulation (www.globalresearch.ca) He may be contacted through his website, www.engdahl.oilgeopolitics.net.

Exploring the worst-case scenario | Reuters

Exploring the worst-case scenario

Sun Oct 12, 2008 3:10pm EDT

By Emily Kaiser

WASHINGTON (Reuters) - The global economy is drawing closer to a dangerous downward spiral and time may be running out for world leaders to find a way to stop it before it inflicts lasting damage.

Economists are beginning to warn of a depression-like cycle where an inability to obtain credit stalls growth, triggering more defaults and still tighter lending terms. Governments have unveiled one unprecedented move after another in the past three weeks to boost confidence and get banks back in business, yet so far nothing has been able to arrest the fall.

The world's richest nations agreed on Friday to do whatever it takes to restore normal order to credit markets that have essentially shut down, choking off the flow of money to borrowers who normally would have no trouble obtaining loans.

  That seems to be the key. Either they get credit moving very soon, or critical mass is reached and a chain reaction of insolvency starts.

  I am presently in Brevard, NC, in the large area of the southeast of the US that was very short on gasoline for a few weeks and essentially completely out for at least a few days or a week, a story that was conspicuously under-reported. Gas is back and has been for some time, and prices are now dropping to national norms (I saw $3.15/gallon today), but roads, stores and restaurants are eerily quiet. Doesn't look like there will be a big xmas sales season in these parts.

"With no desire to exaggerate, this might be considered the financial pre-conditions of a depression," Citigroup economist Steven Wieting wrote in a note to clients.

"Evidence suggests credit rationing is inhibiting day-to-day activities for many firms, with a harsh and worsening backdrop for consumers," he said. "Sadly, some risk exists that financial events could still unfold like a proverbial 'dam break.' This might leave policy-makers treating very serious and lasting damage to the financial system, rather than preventing further erosion."

  Critical mass and meltdown or not. Even if not, extensive damage has already been done.

CONSUMER SPENDING CAVES

Since the bankruptcy of investment bank Lehman Brothers and government rescue of insurer AIG (AIG.N: Quote, Profile, Research, Stock Buzz) in mid-September, U.S. consumer confidence has tumbled almost as sharply as stocks, and spending has slowed dramatically.

  All those retail stores that make two thirds of their money in xmas-season sales? They're gone. Shorting them will be a one-way bet if there is still anything left to short. Since the stuff they are selling mostly all comes from China, it won't directly hit what manufacturing there is in the US, but it should be obvious that seasonal hiring will be low to non-existent except perhaps at Mall Wart and the other major hawkers of the cheapest junk from China that helped dig the debt part of this whole. Then in January if not before, massive layoffs of retail workers is a given. More defaults on consumer debt, more foreclosures, giant sucking sound.

Consumer spending accounts for two-thirds of U.S. economic activity, so if it remains weak, the economy would surely sink into recession, dragging much of the world with it.

  What's with this 'would'? The economy is in recession, whatever the fake government stats say. Consumer spending will continue to slow even if the banking system is saved and the credit markets restart. As bone-dumb as many Americans are, judging by recent Presidential elections, they are not about to run out and spend everything they can right after a stock market crash that now ranks with and may exceed the crash of 1929. It will take six months or a year of stability after a halt to foreclosures and bankruptcies before non-essential expenditures regain favor. It's just that simple.

The bigger risk is that it reinforces and deepens the credit crunch.

Banks are already reluctant to extend credit, primarily because they are paying the price for previous lending mistakes. As that slows economic growth, companies are cutting jobs, which in turn means more people may miss payments on mortgages, credit cards and auto loans, driving up bank losses and forcing them to clamp down even harder on lending.

Once that cycle gets going, it is difficult to stop.

  It is already going. The question is just if it has gone critical or not.

Lena Komileva, head of G7 market economics at Tullett Prebon in London, said there was a risk policy-makers would have to "start again from scratch" if they cannot quickly turn investor sentiment around.

"If this scenario were to unfold, governments would have to effectively nationalize the entire flow of funds in G7 economies and start lending directly to businesses and consumers. Surely, they can do better than this," she said.

Can they? We should know soon. The FT headline is Scramble to avoid collapse. Seeing that headline at FT means it will be a very near-run thing if the radical measures described work, and no great surprise if they don't. In that event, what would be left other than a worldwide program of massive liquidity support (printing money) and direct provision of credit? And then if that doesn't work, it's just plain over and time to let the thing run its course as quickly as possible and make plans for a rebuilding, and most importantly restructuring, of the world economic system.

Soros: The game is out.

Soros sees end of US-led globalized market system | Markets | Bonds News | Reuters

Soros sees end of US-led globalized market system

Sun Oct 12, 2008 3:03pm EDT

By David Morgan

WASHINGTON, Oct 12 (Reuters) - Billionaire investor George Soros predicted on Sunday that the financial crisis would mean the end of a U.S.-led market system that has dominated the global economy with debt and deregulation since the 1980s.

"Globalization, America as the center of the globalized financial markets, was sucking up the savings of the world," Soros said in a CNN interview.

"This is now over. The game is out. It does mean a very serious adjustment for America," added Soros, a staunch backer of the Democratic Party.

  No big surprise, but Soros saying it makes it sort of official.

As world leaders rushed to help banks weather the crisis that has sent stocks into steep decline, Soros blamed the  turmoil on the faith in market forces that began under President Ronald Reagan and British Prime Minister Margaret Thatcher a generation ago.

The notion that markets are self-correcting led to a massive expansion of debt financing that culminated in the sub-prime mortgages that epitomized the easy-money mentality at the root of the disaster, he said.

"This belief became the dominant creed. And this, then, led to the globalization of markets, the deregulation of markets and the increased use of leverage and all the financial engineering," Soros said.

"This whole enormous construct is built on false conceptions," he added. "You can go a very long way. But in the end, reality rears its ugly head and that's what happened now."

  Indeed. Reagan and W: a bankrupt ideology, and a legacy of bankruptcy. "Why did they hate America SO MUCH?"

Jeffrey Sachs, special adviser to U.N. Secretary-General Ban Ki-moon and director of the Earth Institute at New York's Columbia University, appeared to agree with Soros.

"The age of Reaganism is over," Sachs said in a separate CNN interview. "The no-regulation, low-taxes (philosophy) has broken the back of our economy. We now have to get serious about reconstructing normal government that pays its way and a normal financial sector that's properly regulated."

Treasury Secretary Henry Paulson's embrace of the same "market fundamentalist ideology" has made the Bush administration slow to respond to the crisis, said Soros, who blamed Paulson for not saving the Wall Street firm Lehman Brothers from bankruptcy.

"That's what actually kind of unleashed the current phase of meltdown," he said.

  I guess if Hank had had a $700mn options position in LEH instead of GS, things would have been different.

Soros said U.S. authorities could effectively address the crisis by recapitalizing banks, first with private money, and restructuring home loans to minimize foreclosures. (Additional reporting by David Lawder, Editing by Chizu Nomiyama)

  Which is what Soros and everyone else worth listening to has been saying all along, more or less. But the Bush crime family and their hired hands were too busy looting the Treasury to save the US from bankruptcy.  It appears they are making the right moves in Europe, and may start in the US; it should be clear within a few days if it is too late or not.

Feds listen to Roubini for a change, will support commercial paper market: this may actually help.

FRB: Press Release--Board announces creation of the Commercial Paper Funding Facility (CPFF) to help provide liquidity to term funding markets--October 7, 2008

From the Feds:

Press Release

Release Date: October 7, 2008

For release at 9:00 a.m. EDT

The Federal Reserve Board on Tuesday announced the creation of the Commercial Paper Funding Facility (CPFF), a facility that will complement the Federal Reserve's existing credit facilities to help provide liquidity to term funding markets. The CPFF will provide a liquidity backstop to U.S. issuers of commercial paper through a special purpose vehicle (SPV) that will purchase three-month unsecured and asset-backed commercial paper directly from eligible issuers. The Federal Reserve will provide financing to the SPV under the CPFF and will be secured by all of the assets of the SPV and, in the case of commercial paper that is not asset-backed commercial paper, by the retention of up-front fees paid by the issuers or by other forms of security acceptable to the Federal Reserve in consultation with market participants. The Treasury believes this facility is necessary to prevent substantial disruptions to the financial markets and the economy and will make a special deposit at the Federal Reserve Bank of New York in support of this facility.

The commercial paper market has been under considerable strain in recent weeks as money market mutual funds and other investors, themselves often facing liquidity pressures, have become increasingly reluctant to purchase commercial paper, especially at longer-dated maturities. As a result, the volume of outstanding commercial paper has shrunk, interest rates on longer-term commercial paper have increased significantly, and an increasingly high percentage of outstanding paper must now be refinanced each day. A large share of outstanding commercial paper is issued or sponsored by financial intermediaries, and their difficulties placing commercial paper have made it more difficult for those intermediaries to play their vital role in meeting the credit needs of businesses and households.

By eliminating much of the risk that eligible issuers will not be able to repay investors by rolling over their maturing commercial paper obligations, this facility should encourage investors to once again engage in term lending in the commercial paper market. Added investor demand should lower commercial paper rates from their current elevated levels and foster issuance of longer-term commercial paper. An improved commercial paper market will enhance the ability of financial intermediaries to accommodate the credit needs of businesses and households.

Commercial Paper Funding Facility (CPFF) Terms and Conditions (57 KB PDF)

2008 Monetary Policy Releases

  They are actually doing something! Maybe they don't want to crash the economy after all.

The Fed did nothing over the weekend, then announced ineffectual measures: Depression more likely.

RGE - The Fed keeps on wasting time while the mother of all bank runs is underway

Nouriel Roubini | Oct 6, 2008

Last Friday I pointed out in my “Financial and Corporate System is in Cardiac Arrest: The Risk of the Mother of All Bank Runs” that we were at the point of a risk of a systemic financial meltdown with the beginning of the mother of all bank runs: stock markets gave a vote of no confidence to the Senate passage of the TARP legislation (equities down 4% on Thursday) and to the House passage of the legislation on Friday (equities down 3% after the passage of the bill in the House). At the same time last week money markets, interbank markets, credit markets were all imploding with all interbank spread at new all time highs, credit spreads going up through the roof and the roll-off of the financing – via commercial paper – of the corporate system.

....

Indeed by last week a mother of all bank and non-bank runs was underway and even a well designed and well implemented TARP (let alone the poorly designed one passed by Congress) could not address the problem of a short term liquidity panic and run.

And with the liquidity and credit and banking crisis hitting European financial institutions this severe crisis was becoming global last week. I then suggested that only radical and urgent action could stop this mother of all runs such as the following ones:

....

- direct Fed lending to the corporate sector via Fed buying the commercial paper that corporates are not able to roll over; and possibly even lending to state and local governments that are a now also facing a roll-off of their maturing short-term liabilities.

 That's pretty much what I said here. Guess it wasn't such a crazy idea after all. One of the primary purposes of government is to keep essential services going. If that means government has to provide credit, then it provides credit. It's just that simple, folks.

- a coordinated 100bps reduction in policy rates by all major advanced economies central bank and, possibly, even some emerging market economies central banks;

Since the crisis of confidence and liquidity was becoming more virulent over the last few days and during the weekend in Europe one would have expected a radical response over the weekend along the lines suggested above by the Fed and other central banks. After all Bernanke stated on Friday that the Fed would do whatever was necessary to deal with the liquidity crisis.

Instead the Fed did nothing over the weekend (before the crucial opening of markets in Asia and Europe) and then announced steps this morning that don’t even start to address the liquidity problems of the financial system....

So the Fed wasted an entire weekend announcing nothing and then announced this morning a set of modest steps that does nothing to address the ongoing silent run on banks and the non-silent run on the short term liabilities of non-banks and of the corporate sector. This at a time when the markets was expecting – given the Friday statement of Bernanke – such radical and urgent policy actions. So no wonder that Asian and European equity markets collapsed at their Monday opening and no wonder that US equity markets are down 5-6% today (as of mid-day). So the time to move is now or, better, it was yesterday or a week or a month ago. Any further delay may lead to an implosion of the financial system and serious damage to the corporate system tilting a severe economic recession in a much more grave economic depression.

  Now we are back to the incompetence-or-intent question. I think incompetence is becoming less and less plausible with each passing day, and the possibility that the Bush thugs are deliberately destroying the economic system more plausible. The proximity to the election cannot be ignored, yet this seems to be hurting McCain; could the economy be crashed rapidly enough to create a state of civil disorder or some other pretext for indefinitely postponing elections? Or perhaps they are simply conducting a scorched-earth policy, with the side benefit that they end up with what money is left and can buy all classes of assets for next to nothing, meaning they end up owning the country regardless of who is President.

More Bank, Less Bucks: A Four Point Plan for the Rescue from Institutional Risk Analytics

These guys really seem to make sense. I'm no expert in this stuff, but they have a straight-out plain-spoken common-sense way of talking that makes me think they are down-to-earth people who really know their stuff.
Also I like that guy in the suit looking out the window on their website.  Reminds me of Detective Columbo, which seems appropriate.

Institutional Risk Analytics

More Bank, Less Bucks: A Four Point Plan for the Rescue
October 6, 2008

"Public opinion made [Herbert Hoover] the villain of the Great
Depression. In fact, the 31st president was a visionary -- but a hopelessly
inept politician… Until early 1931, midway through his presidency, Hoover had
waged a vigorous offensive against the Depression. International events pushed
him back onto the defensive. His overriding goals became damage control and even
national economic self-preservation, as it became clear that the Depression was
not just another cyclic valley, but an historic watershed. Hoover came to
believe that the root cause of the Great Depression was the Great War."

Don't Blame Hoover


Stanford Magazine


David M. Kennedy

Jan/Feb 1999

Watching the financial rescue legislation grind along to
a conclusion reminds us that democracy is not meant to be efficient or pretty.
The end result also makes us think of how our ancestors dealt with the
Great Depression. We think not of FDR, who most Americans associate with the
solution via the New Deal, but of President Herbert Hoover, a tragic figure but one of the
greatest technocrats to ever hold the office of the presidency

Hoover knew what was happening in the country in the early 1930s. He created many of the mechanisms that would be used to deal with it, including the Reconstruction Finance Corporation. But due to
poor communications and other factors, Hoover could not marshal sufficient
resources to act effectively. We've written about the attempts by Hoover to
negotiate with Henry Ford in the days leading up to the collapse of the Detroit
banks in early 1933 in a past issue of The IRA ("How's My Bank or Why One Rating Just
Isn't Enough"), but by then Hoover had been fighting the Depression for over three years. He wrote in the third volume of his memoirs, The Great Depression:

"If we had possessed adequate banking laws and a sound
financial system, we should never have needed the Reconstruction Finance
Corporation, the Home Loan Banks, and the half dozen other government props to
credit, which we were compelled to introduce later on… Our whole economic system
naturally divides itself into production, distribution and finance. By finance I
mean every phase of investment, banking and credit. And, at once I may say that
the major fault in the system as it stands is in the financial system… In this
system I am not referring to individual banks or financial institutions. Many of
them have shown distinguished courage and ability. One the contrary, I am
referring to the system itself, which is so organized, or so lacking in
organization, that it fails the primary function of stable and steady service to
the production and distribution system. In an emergency its very mechanism
increases the jeopardy and paralyzes action of the community… That it has been
necessary for the government, through emergency action to protect us (while
holding a wealth of gold) from being taken off the gold standard, to erect
gigantic credit institutions with the full pledge of government credit to save
the nation from chaos through this failure of the financial system, that it is
necessary for us to devise schemes of clearing-house protections and to install
such temporary devices across the nation, is full proof of all that I have said.
That is the big question. If we can solve this, then we can take in hand the
faults of the production and distribution systems - and many problems in the
social and political system. But this financial system simply must be made to
function first."

  It doesn't surprise me that they like Hoover. Seems right, somehow.

Here's our suggestion as to how to get the job done to
maximum effect for financial institutions and the larger economy.

First, the Treasury should become a market maker in both the assets and equity of solvent financial institutions. By being prepared to purchase illiquid assets, guarantee same or buy preferred equity
from solvent financial institutions, the Treasury can immediately put a floor
under viable but liquidity constrained financial institutions that are being
driven into default.

  Assuming, of course, that there is no plan afoot to drive them into default and/or into the gaping maw of Citi Bank of Goldman Morgan. They are obviously less cynical than I am. I applaud their optimism and practicality.

Second, the Treasury should display all of the assets held by the rescue fund in real time. Each day, the Treasury should conduct an auction for all of the assets in the fund. It is up to the discretion
of the Treasury whether to accept or reject any bid, but the aggregate results
of the daily auctions should also be published in real time, thereby creating an
indicative market for pricing these assets. Likewise, any preferred equity sold
to any financial institution participating in the program should be displayed in
real time and put up for bid. As former Fed Chairman Alan Greenspan said of the
GSEs several years ago, everything that can be sold should be sold - but at a
price that suits the objectives of the Treasury

  Touchingly optimistic. Real-time transparency. Maybe if Obama wins and his transition team is running the show, otherwise fuggedaboudit. Still, even if they are dreaming, by providing one of many preferable alternatives to the Hanke-Panke plan (which were never to my knowledge mentioned in the media or in Congress), and now that the H-P heist has taken place, providing a sort of critique-in-advance of its implementation, they are fighting the good fight.

Third, while the Treasury needs to run the market process, the FDIC should be given overall authority to manage the assets acquired or preferred equity purchased by the Treasury that is not immediately
sold. The FDIC has the operational experience and personnel to act as general
contractor for the Treasury, and in turn can direct the work of the tens of
thousands of FDIC personnel, other regulators and contractors from the top
accounting, consulting, forensic and IT services firms around the world who
already are being marshaled behind the FDIC's bank resolution efforts.

  I'm definitely with them here. I have no use for the Hanke-Panke crowd at this point, but have nothing against the FDIC. Let them run the show, and maybe the odd hundred-billion here and there will be saved from falling into the pockets of Friends of Hank.

Fourth, the whole point of this legislation is to use the credit of the US to buy time to resolve troubled assets, but the Treasury should not be shy about hitting a reasonable bid or making its fiscal operations aggressively
transparent and inclusive. By letting the markets begin to operate
under the aegis of the Treasury as market maker, it is possible to reverse the
current deflation in asset values and public confidence.

In order to achieve this end, limitations on short selling against financial institutions need to be removed. The best way to discipline unsafe and unsound short selling activity is to enforce existing rules on capital and margin requirements, or tighten same, as with the proposal by theState of New York to begin regulating the sales of credit default swap protection against hedged positions starting January 1, 2009. Once the Treasury creates a capital backstop behind the major banks, the pressure from short-sellers will lessen.

For the continuous auction process to function, the Treasury
and the participating institutions need to see both the longs and the shorts.
Likewise, whatever compromise approach is used by the SEC to modify the
accounting treatment of assets under the fair value accounting rule should be
reflected in the Treasury's auction process. That way we're all on the same
page, yes?

 Yes. Definitely.

It may strike some of you as odd for The IRA to be urging the
government to buy equity in private banks, but as we have argued in numerous
venues over the past several weeks, the probable realized loss rates facing US
banks in the next four quarters are well above 1989-1991 peak levels. The US
government can get involved now, in a way that keeps the majority of assets in
nominally private hands and encourages private capital to participate, or we can
recapitalize these banks in a receivership at 100% public expense. We think the
choice is obvious from a financial and public good perspective.

Just plain-speaking common sense.

As Hoover reflects in his memoirs, the problems facing the US
financial system then and today are practical, not political. If the next
President and the next Treasury Secretary want to fix the economy fast, make the
asset purchase program favor the sale of new equity first, then asset
guarantees, then finally the outright purchase of bad debt at significant
haircuts. The amount of public expenditures under an
equity-focused program will be less because instead of increasing the negative
weight of collapsing leverage, we can again make leverage our friend and help
expand bank balance sheets and the economy via new public and private equity
infusions.

  This sounds like a good long-term plan. I'm not sure it addresses the acute crisis in the credit markets, or rather lack thereof, but maybe it does. I'm no expert, in fact I'm very much learning as I go along, but if I understand the situation correctly a lot of otherwise perfectly viable business are going to start hitting the wall soon, missing their payrolls and falling behind on payables (and seeing the same thing happen to their receivables), if they can't get the affordable commercial paper that they live on. I imagine there are some businesses run by people like me who hate debt so much that they always have piles of liquidity available for normal operations, but probably not many. So while keeping some of the banks alive is all well and good, it is pointless if they don't immediately start providing normal credit both to businesses and individuals. If they won't,then to Hell with them. Any systemically essential enterprise, whether it provides credit, water or electricity, should be seized and government-operated as an emergency measure if they are threatening public health, wealth or stability.
 
  This may sound farfetched and probably is, but when you think about it, every corporation and taxpayer already has an account with the Feds, so the Feds could simply grant credit directly to individuals to pay their mortgages and to businesses to maintain their operations, and simply make the funds disbursed a long-term-payable debit on their tax accounts. Call it whatever you want, it may be preferable to the oncoming wave of bankruptcies and defaults that appear inevitable unless credit flow is resumed. Not that I like the idea, because governments are generally relatively inept compared to well-run enterprises (but there are some areas such as health care where efficient government operation has a much better cost-benefit profile), but given the alternative it's worth a try.

  Unless of course the alternative, an "economic Pearl Harbor" as Warren Buffett called it, is the culmination of a plan rather than an unforseen consequence of unrestrained greed. We should know within the next month or so.