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To: TheStockFairy who wrote (217511)8/26/2009 7:39:15 AM
From: Travis_Bickle
of 306829
Buy them for your kids and threaten to whip them if they complain. They have the woman's version on sale for $1 each.

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From: nextrade!8/26/2009 7:43:07 AM
of 306829
Bonner, Denning

From Dan Denning at the Old Hat Factory:

--What's this? Your regular editor returns from a nasty throat virus to find that the inflationists have been reappointed at the Fed to complete their destruction of the U.S. dollar. And in the meantime, the retail and commercial property markets in Australia show signs of fatigue.

--But first, we apologise for being away the last few days, although we can see our shoes have been ably filled by Money Morning editor Kris Sayce. Some sort of tonsil/throat virus has been making the rounds here at the Old Hat Factory. It's nothing a course of antibiotics can't wipe addition to wiping out all the natural bacteria in your digestive tract.

--However we feel cleansed. All the toxins in the system have been sent packing. From here, the road to recovery begins with yogurt. Maybe we'll send a note to Fed Chairman Ben Bernanke, who has been nominated for second four-year term by U.S. President Barack Obama.

--Why is the biggest story of the day? Because Ben Bernanke is a well-intentioned arsonist. Bernanke inherited an American and global economy built on an upside down pyramid of debt, with a very small asset base. When the entire edifice began to collapse in 2007, the Fed Chairman was slow to react.

--But by the end of 2008, the Fed had expanded its balance sheet to over $2 trillion. It accepted toxic collateral from banks in exchange for U.S. Treasury bonds and notes. It set up new liquidity and credit facilities to keep over-leveraged financial firms afloat. And it began monetising mortgage and Treasury debt by creating new Fed money to support the U.S. housing market and the criminally reckless spending policies of the U.S. government.

--Everything else in the financial markets flows, in one way or another, from the Fed's actions. Commodities first inflated, then deflated, and are now slowly inflating again as the U.S. dollar is systematically weakened by the Fed's actions. Investors are forced to speculate as well.

--If there's one good result from the Fed's campaign to save housing by destroying the dollar, it's that investors have begun to realistically evaluate their alternatives outside the greenback and dollar-denominated assets. Emerging markets? Maybe. Energy? Probably. Precious metals? Definitely.

--What about commercial property or retail stocks? Probably not. Scratch that. Definitely not!

--Property group and retailer Westfield announced a $708 million net loss for the first six months of the calendar year. The good news is that met expectations by analysts. The bad news is that it doesn't really matter what analysts expect: that's a $708 million net loss.

--If Westfield were married to America, it would ask for a divorce. Nearly one third of its revenue comes from its 55 U.S. shopping malls. But the company said sales per square foot at its U.S. properties fell by 6.2% from the same time last year. Conversely, sales at its Aussie properties were up 5.1%.

--The company also took a $2.9 billion write down on asset valuations. Par for the course. Many of the assets purchased with debt at the height of the credit boom are deflating. It could have been an even larger write down, but the company booked a $932 million gain on financial instruments. We'll investigate just what those were and get back to you on it.

--Retail is a terrible business to be in during a recession. Australia, backed by $50 billion energy deals and a committed faith in property, sports a lot of consumer confidence. That backs retail sales. But don't forget the primary economic and social trend right now: people are reducing their debts. They are cutting back, becoming more frugal, and learning to live within their means.

--Of course, we think this is happening. But it could be totally wrong. Maybe the credit cards are finding their second wind and consumers are gearing up for one last credit bender. But our suspicion is that you are in the middle of a generational/cyclical shift in the attitudes toward debt and that this is generally bad news for retail stocks.

--By the way, a few readers wrote in claiming your editor had it all wrong about Costco. Costco treats its employees well, sells at a fixed mark-up to its wholesale price, and operates on much different principles than, say Wal-Mart. Enough people wrote in that we thought we should mention this.

--Fair enough. Our point wasn't to disparage the Costco brand. The main point was that massive retail outlets with bulk goods are only possible in a world with cheap energy and cheap labour. Maybe it's sustainable. But we have some serious doubts. Still, it looked like an awful lot of people queued up last weekend.

--That's it for today. Good luck Ben Bernanke. "There's a lot of ruin in a nation," Adam Smith once quipped. Four years is not much time in the scheme of things. But the Fed can ruin a lot. Watch it try.

And now over to Bill Bonner in Ouzilly, France:

Pity the poor rich! Pity the poor! Pity us all!

Here at The Daily Reckoning, we always take the part of the humble...the despised...the oppressed...and the misbegotten.

Today, that means the rich...

Yes, dear reader, the rich are getting beaten up. Maligned. Mistreated.

Their governments all have in it for them...taxes on 'the rich' are rising. The Democrats are talking about financing the entire nation's health care system on the backs of the super-rich.

And prosecutors and politicians are targeting their salaries. No more million-dollar paydays...not with the feds looking over their shoulders. Oh...and their investment earnings are down too. The dividend yield on the stock market is scarcely 3% - try living on that, you rentiers! As for the 10-year T-note, the yield is only 3.5%.

And capital gains? Fugetaboutit. Stocks have been rallying (bouncing) since March 9th. The bounce has helped investors recover about 45% of what they lost. But, overall, there have been no gains in the stock market for more than 10 years. None. Factor in the effect of inflation and the story is worse; investors have lost about 25% to 30% of their money.

But everyone is pointing a finger at the rich - as if they were to blame for the financial debacle of the last few years. Some economists even blame the "growing inequality of incomes" as a cause of the crisis.

This is completely unfair. The rich didn't cause the problem - they merely took advantage of it as best they could. It was a time when 'financialization' was on the rise...when money made money, at least in theory. Speculation and lending paid off. Obviously, you have to have money if you're going to lend or speculate. Some of 'the rich' - those in the financial industry - cleaned up.

But come the revolution of '07-'08 and the rich lost their heads. Who lost $50 trillion in stock and real estate? It wasn't the poor. Whose derivative positions went belly up? Whose stocks went down? Whose mega McMansions got re-priced as cracker shacks?

On this last point, we have new information. The housing crisis may have begun in the subprime trailer part of town. But now it's in the older suburbs - it's the prime and super-prime homeowner whose back is to the garden wall. A third of foreclosures in the 2nd quarter were of houses financed by prime, fixed-rate mortgages. Of prime borrowers, 41% are expected to be underwater by 2011, says a forecast from Deutsche Bank - nearly three times as many as at the beginning of 2009.

And now nearly half of all jumbo mortgages are underwater. Yikes, the rich...and bourgeois classes...are up to their necks.

And now this sad report from The New York Times:

"Last year, the number of Americans with a net worth of at least $30 million dropped 24 percent, according to CapGemini and Merrill Lynch Wealth Management. Monthly income from stock dividends, which is concentrated among the affluent, has fallen more than 20 percent since last summer, the biggest such decline since the government began keeping records in 1959.

"Some of the clearest signs of the reversal of fortunes can be found in data on spending by the wealthy. An index that tracks the price of art, the Mei Moses index, has dropped 32 percent in the last six months. The New York Yankees failed to sell many of the most expensive tickets in their new stadium and had to drop the price . In one ZIP code in Vail, Colo., only five homes sold for more than $2 million in the first half of this year, down from 34 in the first half of 2007, according to MDA Dataquick. In Bronxville, an affluent New York suburb, the decline was to two, from 17, according to Coldwell Banker Residential Brokerage."

And so, we pause to wonder. What does it mean? Where does it lead? Who gives a flying fig?

At a certain level, all of this concern about who earns what...and who has just so much envious claptrap. For most of us - who have enough to eat and a roof over our heads - money is just sport. We aim to win, just as we would try to win a croquet match. But what difference does it make?

We don't know. So we turn back to the game. How can we get more wealth than our neighbors?

And here...a bit of perspective...

When the Great Khans road across the heartland of Eurasia in the 13th and 14th centuries, nothing could stop them...or so it seemed. Their soldiers were practically born in the saddle. From childhood they learned how to ride, and fight...and little else. Europe's population, meanwhile, was more settled...and more soft.

But Europe was hardly the brightest bauble on the tree. The Mongols had their pick. West - to conquer Europe. South - to conquer India. Or East - to conquer China.

They attacked Europe, but only half-heartedly. Instead, they devoted most of their efforts to India and China. Why? India and China were richer! There was more stuff to steal.

It's hard to make comparisons. But, at the time, the East was at least as rich as the West. But then, along came the Industrial Revolution and the East was left behind. People in the West learned to save...and to invest their savings in capital improvements - machines, factories, canals, railroads, mines, ships and all the other things that allow people to be more productive. This extra production made them rich. Not to put too fine a point on it, but they could make more stuff!

Then, with the ability to produce more and better stuff came the ability to produce the kind of stuff that you can kill people with. So, pretty soon, they were making machine guns. And pretty soon, the horse- mounted warrior of the steppes was as archaic and irrelevant as the Roman legions. He could still charge with great élan. He could still raise his saber and his bow...providing a rich subject for artists and poets. And he could die so well! All you had to do was to open up with your new, factory-made 50-caliber machine gun and down he went.

But what goes around comes around. Who's saving now? The Chinese save 25% of their earnings. In America, the rate is rising...from zero to five percent!

Who's building factories? Who's harnessing the industrial revolution? Who's getting rich? Who's innovating? Who's building cities?

Who's the world's biggest creditor? Who's got the biggest pile of money?

Oh, dear already know the answer...

"West will languish; Asia will lead..." says a headline in Barron's this week.

And what's this?

"China commercial property sales higher than US," says a headline at Bloomberg.

Yes, dear is the way of the world... Losers become winners. Winners become losers. Day yields to night; summer gives way to winter. Life goes on...always as it always was...but never the same.

And we leave you with that philosophical reflection...and go back to the financial world...

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To: James Hutton who wrote (217495)8/26/2009 7:45:59 AM
From: James Hutton
of 306829
EGO buying SIOGF.

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To: nextrade! who wrote (217513)8/26/2009 7:59:54 AM
From: DebtBomb
of 306829
Swelling US deficit threatens Obama reforms
by P. Parameswaran P. Parameswaran
Wed Aug 26, 12:16 am ET

WASHINGTON (AFP) – A ballooning US government budget deficit that could reach nine trillion dollars over a decade threatens to dent President Barack Obama's reform plans and thwart long term economic growth.

Forecasts by the White House and a congressional financial watchdog showed persistent large budget deficits even after the recession gripping the world's largest economy ends possibly this year.

The White House projected a whopping 9.05-trillion-dollar deficit for the 2010-2019 period, a two-trillion-dollar increase from the February estimate made a month after Obama entered office and inherited a gaping deficit from his predecessor George W. Bush.

The Congressional Budget Office (CBO), the financial watchdog of Congress, meanwhile, offered a more optimistic projection -- 7.13 trillion dollars -- assuming all Bush administration-imposed tax cuts expired in two years.

The White House, however, trimmed the 2009 fiscal budget deficit projection to 1.58 trillion dollars from the previous estimate of 1.84 trillion dollars.

Still, the deficit, stemming mostly from aid to the financial system and fiscal stimulus to jolt the economy from recession, represents more than 11 percent of gross domestic product (GDP), the largest as a share of the economy since World War II, analysts pointed out.

Under assumptions by both the White House and the CBO, the United States will consistently run up large deficits of around three to four percent of GDP.

"Permanent deficits of this size are a real negative for long-run economic growth, pushing up interest rates and reducing the amount of capital available for private investment, ultimately reducing productivity growth," warned Augustine Faucher, director of macroeconomics for Moody's

"And the problem will only get worse as baby boomers retire, requiring greater federal spending" on health care and social security, he said.

To close the deficit and boost long-run growth, he said, policymakers would need to raise taxes and cut spending, steps they have been unwilling to take.

The White House acknowledged the alarming fiscal situation but blamed the Bush administration for the mounting deficit.

"Overall, it underscores the dire fiscal situation that we inherited and the need for serious steps to put our nation back on a sustainable fiscal path," said the White House's Office of Management and Budget director Peter Orszag.

Administration officials argued that if the Bush administration had abided by budget guidelines, the projected 10-year deficit would be five trillion dollars smaller.

But Obama's Republican critics stepped up their calls for the president to abandon his key reform plans to remake US health care and combat climate change that some estimate could cost several trillions of dollars.

"It?s time for the administration and congressional Democrats to face the consequences of this dangerous fiscal agenda and change course," said John Boehner, Republican minority leader of the House of Representatives.

"The alarm bells on our nation?s fiscal condition have now become a siren," added Senate Republican leader Mitch McConnell.

But Orszag pointed out that seven months of Obama administration policies had already seen the estimated deficit for the 2009 fiscal year, which ends September 30, trimmed by 262 billion dollars.

"We now expect that the policies put in place to repair the financial system are likely to cost taxpayers less than previously anticipated," he said.

The government has pumped hundreds of billions of dollars into the fragile financial system battered by a crisis stemming from a home mortgage meltdown that plunged the world's largest economy into recession.

The CBO, a nonpartisan statutory watchdog which plays a critical support role to lawmakers by providing cost estimates, also warned that large deficits and resulting increases in federal debt over time would reduce economic growth.

The total US public debt outstanding is currently at 11.6 trillion dollars.

In its economic forecast, the White House projected that US gross domestic product (GDP) would shrink by 2.8 percent this year as it shakes off a prolonged recession, revising its previous forecast of a 1.2 percent decline.

It expected growth to turn a positive 2.0 percent in 2010, accelerate a year later to 3.8 percent and exceed 4.0 percent per year in the 2012-2014 period.

The Obama administration and the CBO also warned of continuing job layoffs even as recovery seems imminent, expecting the unemployment rate to peak above 10.0 percent next year.

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From: DebtBomb8/26/2009 8:03:03 AM
of 306829
US debt a challenge for Obama
Reuters Last updated 07:49 26/08/2009SharePrint Text Size Relevant offers

WorldObama renominates Bernanke US debt a challenge for Obama Westfield sticks to guidance A$55m loss for Transfield JPMorgan eyes physical metals trade ANZ broke Cuba, Sudan sanctions ASX eyes 60 companies for de-listing CBA 'fully appraised' of Storm model Clinton fundraiser accused of fraud ‘Clunkers’ swamp car dealers The US national debt will nearly double over the next 10 years, government forecasts showed, challenging President Barack Obama's economic and healthcare overhaul agenda.

The White House midsession budget forecast and the non-partisan Congressional Budget Office both forecast that government revenues will be crimped by a slow recovery from the worst recession since the 1930s Great Depression, while spending on retirement and medical benefits soars.

The White House projected a cumulative $9 trillion deficit between 2010 and 2019, while the CBO took a more optimistic view, pegging the deficit at $7.1 trillion because it assumed higher revenues as tax cuts expire.

The spending blitz could push the national debt, now more than $11 trillion, to close to $20 trillion. The debt is the sum the government owes, while the deficit is the yearly gap between revenues and spending.

"The alarm bells on our nation's fiscal condition have now become a siren," said Senator Mitch McConnell, the Republican leader in the Senate.

"If anyone had any doubts that this burden on future generations is unsustainable, they're gone," McConnell said, adding that economic stimulus funds should be diverted to pay down U.S. debt.

However, both the White House and CBO estimates anticipate that the deficit, now at its highest level as a percent of economic output since World War Two, will decline relatively swiftly in the next three years as growth resumes and federal bailout programs shrink.

White House budget director Peter Orszag said the deficit was too high and cited this as a reason to pass Obama's healthcare overhaul plan, which is in trouble with lawmakers while opinion polls show it losing popular support.

"I know that there will be some who say this report proves that we cannot afford health reform. I think that has it backward," Orszag told reporters on a conference call.

"The size of the fiscal gap is precisely why we must enact well-designed and fiscally responsible health reform now."

Obama's healthcare plan, his policy priority, has run into opposition from critics who complain its $1 trillion price tag is too high and who worry it will limit consumer choice.

The debate is gaining steam as Republicans seek momentum for next year's mid-term elections, where they hope to chip away the dominant position Obama's Democrats enjoy in both the House of Representatives and the Senate.


The White House forecasts a record $1.58 trillion deficit in fiscal 2009, matching the numbers of the CBO, while it shows the deficit at $1.5 trillion in 2010, a touch higher than the $1.48 trillion projected by CBO.

But both estimates show annual deficits staying above $500 billion every year until 2019, compared with a then-record $459 billion last year. The White House shows the gap averaging 5.1 percent through 2019, compared with 3.2 percent last year.

Ad Feedback By 2019, it estimates that the ratio of national debt to gross domestic products will rise to 69 percent from 48 percent in 2009.

"The administration has always said that you have to get deficits under 3 percent of GDP to be safe. They now admit that they will not in the next 10 years," said Douglas Holtz-Eakin, a CBO director under Bush and chief economic adviser to Republican Senator John McCain for his 2008 presidential bid.

The budget news was overshadowed by Obama's surprise announcement Tuesday to renominate Ben Bernanke to a second four-year term as Federal Reserve chairman, a move seen as aiming for continuity at the central bank during a tentative stage of recovery.

"I'm stunned at how hard they have worked to bury this," Holtz-Eakin said of the White House's budget estimate timing.


One reason CBO and OMB can end up with different numbers is technical. The CBO employs a baseline method which only takes into account policies that have already become law.

On the other hand, the administration's forecasts can reflect the economic impact of policies it hopes to implement, even if they have not yet been approved by lawmakers.

For example, the CBO assumes the there would be no "patch" for the Alternative Minimum Tax, meaning millions more Americans would have to pay higher taxes, even though Congress has agreed to a temporary reprieve every year to prevent this happening. In addition, CBO assumes the tax cuts delivered by former President George W. Bush will expire at the end of 2010.

Orszag said that the White House numbers also assumed that some of the Bush tax cuts would be extended. Obama has pledged not to raise taxes on U.S. households earning less than $250,000 a year.

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To: James Hutton who wrote (217510)8/26/2009 8:06:38 AM
From: Think4Yourself
of 306829
It's a shame the group got away with it but maybe the next time the government will actually OBEY THE LAW instead of acting like they are above it?

Nah, that's probably too much to ask.

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From: DebtBomb8/26/2009 8:07:27 AM
of 306829
'Historic' deficit a political thorn

By Mimi Hall, USA TODAY
WASHINGTON — The federal budget deficit will hit a record $1.6 trillion this year, a figure that could threaten President Obama's agenda, complicate 2010 congressional campaigns and set up big political battles over government spending.
"We should all be extremely concerned about these numbers because they're historic," said former Texas congressman Charles Stenholm, a conservative Democrat known as a deficit hawk. "No country in the past has built up these kinds of debts and deficits and survived."

THE OVAL: White House says $9T deficit over next decade
The political themes were drawn as soon as the White House and non-partisan Congressional Budget Office released projections Tuesday of mounting deficits and debt, an unemployment rate that will hit 10% nationally and a shrinking economy.

House Budget Committee Chairman John Spratt, D-S.C., called the deficit projections "a legacy of the Bush administration and of the worst recession since the 1930s."

The White House said a dramatic drop in tax collections, combined with massive spending in an effort to jump-start the economy, is causing the budget deficit to more than triple from 2008's deficit of $459 billion. Nevertheless, the $1.6 trillion estimate for the fiscal year that ends Sept. 30 is lower than what was previously forecast because of reduced spending to help prevent bank failures.

White House budget director Peter Orszag said the combined deficit projections for 2010-19 — ranging from $7.14 trillion to $9 trillion — highlight the urgency to overhaul the nation's health care system, Obama's top domestic priority.

"I know there are going to be some who say that this report proves that we can't afford health reform," Orszag said, referring to proposals to spend $1 trillion or more on a health care overhaul. "We simply can't afford to wait."

Long-term projections, required by law, often are off base because they can't take into account major events that impact the economy, such as the 9/11 terrorist attacks or Hurricane Katrina.

Outside analysts said the deficit numbers reflect the recession's depth and the vast economic recovery efforts of Obama and his predecessor, George W. Bush.

Regardless, "the responsibility for dealing with it will fall unambiguously in Barack Obama's lap," said budget expert Stan Collender of Qorvis Communications. He said he expects the numbers to fuel "the biggest fight over the budget and fiscal policy in U.S. history" next year.

Republicans seeking to gain seats in next year's congressional elections outlined likely campaign themes shortly after the projections were released. "Today's reports confirm what the White House has been trying to hide: The Democrats' out-of-control spending binge is burying our children and grandchildren under a mountain of unsustainable debt," House GOP leader John Boehner said.

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To: Think4Yourself who wrote (217517)8/26/2009 8:14:18 AM
From: DebtBomb
of 306829
Colonial BancGroup files for Chapter 11 protection
Colonial BancGroup, whose banking unit was shut down earlier this month, files for bankruptcy
On Wednesday August 26, 2009, 7:03 am EDT
MONTGOMERY, Ala. (AP) -- Colonial BancGroup Inc., the Montgomery-based real estate lender whose banking unit was shut down by the government and sold to BB&T Corp. earlier this month, has filed for Chapter 11 bankruptcy protection.

The company listed debts of $380 million and assets of just $45 million in its Tuesday filing in U.S. Bankruptcy Court in the Middle District of Alabama. A list of creditors holding the 20 largest unsecured claims shows that Bank of New York Trust Co. has a $253.7 million claim and Bank of New York Trust Co. of Fla., a $104.1 million claim.

With about $25 billion in deposits, Colonial Bank represents the largest U.S. bank failure so far this year, and the sixth-largest in U.S. history. The FDIC sold most of its deposits, 346 branches in five states and about $22 billion in assets to BB&T. Colonial Bank's collapse is expected to cost the insurance fund $2.8 billion.

Colonial BancGroup remains under criminal investigation by the Justice Department over alleged accounting irregularities at its mortgage warehouse lending unit in Orlando, Fla. It also was the subject of a Securities and Exchange Commission investigation related to its bid for federal bailout funds and its accounting for loan loss reserves.

The company posted losses for several straight quarters, as it wrote off millions in residential construction and mortgage loans, most tied to hard-hit markets in Florida. Delinquencies on commercial real estate loans remain a hot spot of potential trouble for many regional banks, as many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans.

Taylor, Bean & Whitaker Mortgage Corp., one of the nation's biggest independent mortgage bankers, said Monday it filed for bankruptcy protection in the wake of Colonial Bank's failure. Colonial, which for years had been Taylor Bean's primary bank, froze about 100 of its accounts earlier this month.
Copyright © 2009 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press.

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To: nextrade! who wrote (217513)8/26/2009 8:26:16 AM
From: DebtBomb
of 306829
Dismantle Bernanke's 'Happy Conspiracy' ... now!
6 reasons more power for the Fed will destroy capitalism and democracy
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) -- At last week's annual Jackson Hole meeting of Fed execs, Boss Ben Bernanke's braggadocio about saving the world from another Great Depression had the feel of an egomaniacal dictator trying to cement his legacy in history.

Any good behaviorist would tell you Bernanke's got some dangerous biases isolating him from reality (remember two years ago when he was denying the meltdown). His brash claims and radical, secretive policies present a grave danger to American capitalism and democracy.

Debt and the DollarThe dollar is coming under pressure from U.S. monetary and fiscal policy, according to Chuck Butler of EverBank World Markets, who also talks about investing in currencies and precious metals. Jonathan Burton reports.
In fact, Bernanke now appears to be America's (and the world's) most dangerous man, far more dangerous than Hank Paulson and the "Goldman Conspiracy" ever was. He's now acting like the supreme dictator of that larger conspiracy Jack Bogle called the "Happy Conspiracy" in "The Battle for the Soul of Capitalism: How the Financial System Undermined Social Ideals, Damaged Trust in the Markets, Robbed Investors of Trillions -- And What to Do About It."

This indictment of Bernanke as a dictator leading Wall Street's "Happy Conspiracy" became clear after reading "Dismantling the Temple," William Greider's brilliant essay in The Nation magazine. Greider is the author of "Secrets of the Temple: How the Federal Reserve Runs the Country." Greider's essay is an absolute must-read for anyone interested in the future of capitalism, the decline of democracy, the next mega-meltdown, and the real "Great Depression 2" ... from which Bernanke cannot save us.

Why worry? Because the danger really is imminent. The same clueless Congress that did nothing when Paulson and the Goldman Conspiracy nearly bankrupted America is now about to give Bernanke's out-of-control "Happy Conspiracy" even more power, and another bigger chance to destroy our capitalism.

Here is a summary of Greider's history about how the Fed is sabotaging America:

•The Fed was created by Congress in 1913, "independent" from "the rest of government, aloof from regular politics and with one powerful exception: the bankers." However, the destructive ideologies of Greenspan and Reaganomics prove how the Fed is manipulated by and dangerously dependent on politicians.

•The Fed is "the black hole of our democracy -- the crucial contradiction." And the recent credit crisis blew "the Fed's cover." Voters and taxpayers have no "voice in these most important public policies" because the Fed "operated in secrecy."

•"The past year, the Fed has flooded the streets with money, distributing trillions of dollars to banks, financial markets and commercial interests. ... People and politicians are shocked ... confused ... angered."

•Where did the Fed get those trillions? They "printed it, out of thin air. That is what central banks do. Who told the Fed governors they could do this? Nobody, really -- not Congress or the president." The Fed "does not submit its budgets to Congress for authorization and appropriation. It raises its own money, sets its own priorities," keeps Congress and the American people in the dark.

•Wall Street bankers own the Fed, it's their private club. They "collaborate closely on Fed policy. Banks are the 'shareholders' who ostensibly own the 12 regional Federal Reserve banks. Bankers sit on the boards of directors, proposing interest-rate changes for Fed governors," serve on a "special advisory council that meets privately with governors to critique monetary policy and management of the economy." The Fed's a legal conspiracy making bankers very, very "happy."

•Congress is now "demanding greater transparency." Bernanke says "no," an audit would amount to "a takeover of monetary policy by the Congress." What a dictator. Greider quotes the Constitution: "The Congress shall have the power to coin money [and] regulate the value thereof." He adds that the Constitution "does not grant the president or the Treasury secretary this power. Nor does it envision a secretive central bank" acting as a megaphone for a president's political ideology.

•Bernanke's powers go far beyond anything Paulson demanded last year. And he's now fighting a turf war because the "Happy Conspiracy" needs secrecy: no audits, no supervision, no transparency, no oversight, and zero accountability to taxpayers. Why? That way they can steal from the American people at will.

•Greider's big warning: Recently Obama made a monumental mistake when he "proposed to make the central bank the supercop to guard against 'systemic risk' and set its own regulations. Obama's proposal gives the central bank even greater power" but does "not propose any changes in the Fed's privileged status."

Giving the Fed more power to self-regulate in secrecy is a guaranteed set-up for a bigger mega-meltdown around 2013, the Fed's centennial anniversary. Now is "a good time to dismantle the temple" warns Greider. "Democratize the Fed. Or tear it down. Create something new in its place that's accountable to the public."

Here are his "six reasons why granting the Fed even more power is a really bad idea:"

1. More power rewards failure, creating 'moral hazard'
Get it? Under Greenspan and now Bernanke the Fed has been a dismal failure: "Like the largest banks that have been bailed out, the Fed was a co-author of the destruction," says Greider. "During the past 25 years, it failed to protect the country against reckless banking and finance adventures," blinded by the politics of Greenspan and Reaganomics. "The Fed did not see this disaster coming ... did nothing to warn people." Or they did see it and let it happen, blinded by Wall Street's greed.

2. Fed policies will continue destabilizing U.S. and global economies
Under Greenspan and Bernanke the Fed has dangerously destabilized the American economy and global credit, stock and currency markets. Greider warns: "Its extreme swings in monetary policy, combined with utter disregard for timely regulatory enforcement, steadily shifted economic rewards away from the real economy of production, work and wages and toward the financial realm, where profits and incomes were wildly inflated by false valuations" as "the Fed tilted in favor of capital over labor."

3. The Fed's not objective, cannot investigate its own systemic flaws
Wall Street owns the Fed and has a monstrous conflict of interest. Greider's example: "The Fed served as midwife to Citigroup, the failed conglomerate now on government life support. ... Now the Fed keeps Citigroup alive with a $300 billion loan guarantee," protecting "the banking behemoths that it promoted, if only to cover its own mistakes."

4. The Fed cannot be trusted to protect taxpayers against Wall Street
Rich Wall Street executives manage the Federal Reserve System. Only a fool (or a clueless Congress) will ever trust the Fed to protect taxpayers. The Fed needs independent oversight. Congress needs to take back its constitutional responsibility.

5. More Fed power means more companies want 'too big to fail' status
If Congress continues neglecting its constitutional responsibilities and gives Bernanke supreme dictatorial powers over the "Happy Conspiracy," Greider says "a new superclass of 40 or 50 financial giants will emerge as the born-again 'money trust' that citizens railed against 100 years ago. But this time, it will be armed with a permanent line of credit from Washington. The Fed, having restored and consolidated the battered Wall Street club will doubtless also shield" companies like GE "against failure."

6. The Fed will be a rich-man's club dominating everything from the top
The Fed will "dominate everything from the top down" if Bernanke is anointed absolute dictator over the "Happy Conspiracy." Obama's misguided proposal will "foster even greater concentration of financial power."

Every "large company left out of the protected class will want to join by growing larger and acquiring the banking elements needed to qualify." And "most enterprises in banking and commerce will compete with the big boys at greater disadvantage, vulnerable to predatory power plays the Fed has implicitly blessed."

If Congress is stupid enough to abdicate its constitutional powers to the Fed, God help America's democracy. And for capitalism, this will go down as the biggest blunder of Obama's presidency, worse that Clinton's dismantling of the Glass-Steagall Act.

And yet, Greider hints that the worst-case-scenario may be inevitable: "The obstacles to democratizing the Fed are obviously formidable. Tampering with the temple is politically taboo. But this crisis has demonstrated that the present arrangement no longer works for the public interest. The society of 1913 no longer exists."

Still, America "has a rare opportunity to reconstitute the Federal Reserve as a normal government agency, shorn of the bankers' preferential trappings and the fallacious claim to 'independent' status as well as the claustrophobic demand for secrecy."

But unfortunately, "many in Congress will be afraid to take on the temple and reluctant to violate the taboo surrounding the Fed. It will probably require popular rebellion." Why? Because Congress (like the Fed) dances to the bidding of Wall Street and its lobbyists who donate megabucks to their campaigns. So don't expect reform until the next crisis, a mega-meltdown around 2013, the centennial anniversary of the Fed.

Till then, you're on notice that the man most likely to destroy American capitalism is Ben Bernanke and his "Happy Conspiracy" of Wall Street bankers that own our Federal Reserve Banks.

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From: Travis_Bickle8/26/2009 8:33:45 AM
of 306829
U.S. July durable-goods orders up 4.9%

Apparently Doug Kass over at RM is saying the highs are in the year, could be a good day to enter some shorts.

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