Zimbabwe to make 200 million notes

It's hard to balance a family's budget if hyperinflation makes their money almost worthless everyday:

http://cnnwire.blogs.cnn.com/2008/12/06/zimbabwe-to-make-200-million-notes/

Burning Down The House: What Caused Our Economic Crisis? Bombshell

This video is definitely worth the time to watch:

Tax Code Encourages Sending Jobs Offshore

The tax code is designed to send jobs offshore. This is an outrage to say the least:

http://www.usatoday.com/money/perfi/taxes/2008-03-20-corporate-tax-offshoring_N.htm

http://www.interesting-people.org/archives/interesting-people/200403/msg00121.html

http://www.republicbroadcasting.org/index.php?cmd=news.article&articleID=1513

http://www.smartmoney.com/personal-finance/taxes/why-our-tax-code-is-so-confusing-23841/

Apparently this tax strategy has been going on for awhile:

http://query.nytimes.com/gst/fullpage.html?res=950DE6DC1F3DF935A35750C0A96F948260

It's official: Recession since Dec. '07

The economy has been in recession for a year:

http://money.cnn.com/2008/12/01/news/economy/recession/index.htm?cnn=yes

American Slaves

Money should not be the master but the servant of mankind:

Part 1:



Part 2:

Eve of Destruction: How the Financial Crisis Was Built Into the System

Robert makes some good points about the current economic crisis:

http://finance.yahoo.com/expert/article/richricher/124339

Economic Crisis Will Bring New World Order, Global Governance

Why can't these morons understand that the New World Order is already here. It's called freedom! What is he talking about in the article? Does he really believe that his family and friends can control everyone like animals?

http://www.thenational.ae/article/20081106/BUSINESS/167536298/1005

Paulson says troubled assets will not be purchased

This is absolutely incredible mismanagement or should I say criminality. I think that all of this nonsense is nothing short of criminal. Who is going to jail for these crimes?

http://news.yahoo.com/s/ap/20081112/ap_on_bi_ge/financial_meltdown

Circuit City to close 20% of stores

Circuit is closing shop on a lot of stores. This is another sign that the economy is not doing well at all:

http://money.cnn.com/2008/11/03/news/companies/circuit_city.ap/index.htm?postversion=2008110309

Inflationary Holocaust

Where are you spending your money as an investor? Why are we bailing out a bunch of 29 year olds driving Mazoradis? Jim Roger's common sense is incredible. There's a pretty good reason why he's rich. He understands the fundamentals of the economy:

The Government's Actions are Making the Financial Crisis Worse

George Washington's blog is right on target again!

http://georgewashington2.blogspot.com/2008/10/governments-actions-are-making.html

Exxon Mobil: Biggest profit in U.S. history

I guess the economy is not doing so bad if Exxon is posting the biggest profit on record in US history:

http://money.cnn.com/2008/10/30/news/companies/exxon_earnings/index.htm?cnn=yes

The credit crunch claims its biggest victim - Argentina

http://www.moneyweek.com/news-and-charts/economics/the-credit-crunch-claims-its-biggest-victim-argentina-13892.aspx

The credit crunch claims its biggest victim - Argentina

http://www.moneyweek.com/news-and-charts/economics/the-credit-crunch-claims-its-biggest-victim-argentina-13892.aspx

GAO Declares USA Bankrupt America Needs To Get Mad As HELL!

Is he right? If so, what can I do about it?

Rober Kiyosaki - Rich Dad, Poor Dad

Was he right back in April 2007 on Fox News?

Pause for Thought about the Bailout

Where did all of the money go?

U.S. National Debt Clock

Here's the link to the U.S. National Debt Clock:

http://www.brillig.com/debt_clock/

More info on debt:

http://www.cedarcomm.com/~stevelm1/usdebt.htm

http://www.greatreality.com/DebtFAQ.htm

Federal Reserve Notes are Unconstitutional

Interesting court case shown in the link below. Only God can create something of value out of nothing:

http://usa-the-republic.com/banks/bank_1.html

Record Rate of Repos in 2008

Is this a sign of the times to come?

http://www.autoblog.com/2008/10/14/record-rate-of-repos-in-2008/

Money As Debt

What are your thoughts about money as debt?

1 of 5




2 of 5



3 of 5




4 of 5



5 of 5

Shattering the Glass-Steagall Act

William Kaufman explains why we're in this mess today. Did you know that Phil Gramm was McCain's chief economic advisor?

http://www.counterpunch.org/kaufman09192008.html

Glenn Beck Warns of New World Order

What is this New World Order nonsense?

Restore Glass-Steagall!

Restore the Glass-Steagall standard:

$700 Billion Bailout LAW - YOU WERE ROBBED

Wow, this is shocking!

America's $53 trillion debt problem

David M. Walker served as comptroller general of the United States and head of the Government Accountability Office (GAO) from 1998 to 2008. He explains the $53 trillion debt problem that our country needs to get a grip on before it's too late and the government or economy goes belly up:

http://www.cnn.com/2008/POLITICS/10/06/walker.bailout/index.html

Economic Videos from the Chicken

The following link shows some good videos about our economy:

http://chickensmith.wordpress.com/videos/

US Has Negative Savings Rate for 2006

American have a negative savings rate as of 2006! Here's a few good articles that explains the savings rate:

http://commonlaw.findlaw.com/2007/02/us_has_negative.html

http://www.nuwireinvestor.com/articles/americans-negative-savings-rate-51005.aspx

http://chickensmith.wordpress.com/2007/05/01/us-consumers-negative-savings-trillions-in-debt-negative-equity-disaster-ahead/

Ron Paul and Peter Schiff - America Financial Meltdown

Good video!

Fear Mongering exposed by Mr. Sherman on CSPAN

He got it right!

The Inevitable Collapse of the Dollar

When will the music stop and the dollar collapse? Is the dollar collapse inevitable?

Bailout Bill

Here's the bailout bill:

http://banking.senate.gov/public/_files/latestversionAYO08C32_xml.pdf

Senator Bunning: Crisis Caused by the Federal Reserve

Is Senator Bunning right on the money?

KILLBILL - TARP Same bailout plan with lipstick on it - Defazio

Paulson is wrong again!

Henry Paulson: Economy Czar

I wouldn't trust Henry Paulson with my checking account. Would you trust Paulson?

Paulson is at it again!

Hanky panky Paulson:

America's Chilling Future

This is a good article from the MSM. I don't have high praise for the MSM, but I think that they probably realize by now that most people feel the same way. However, there may be hope for them after all:

http://www.cnn.com/2008/POLITICS/10/01/beck.future/index.html

Dick Armey Discusses the Dodd/Frank Bailout Bill

Dick Armey gives a good explaination of the bailout problem:

The Real Reason for the Bailout

Foreign investors are being bailed out!

Jim Rogers - Fannie Mae / Freddie Mac / US Federal Reserve

Jim Rogers understands this problem very clearly:

HR 3221: The Housing Bailout Bill

Is he right?

Fannie Mae Eases Credit To Aid Mortgage Lending

Interesting article for the NY Times that explains how Fannie eased credit requirements to help homeowners back in 1999:

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=1

Financial Planning in a Market Meltdown

What do y'all think about this type of financial planning?

Actually, if the market is behaving healthily, the DJA will decline to 8000. A normal sine cycle would fluctuate around +/1 2000 on a baseline of 10000. This cycle should continue for at least another 30 years before moving up to a baseline of 18000 wherein it will cycle for another 40 years.

So, if you’re doing your financial planning, here is what to do, because the time is getting close.

1. Convert 90% to cash for the moment. Savings accounts or savings funds are good. Very little interest but it’s a down market and you’re not losing money.

2. When the market hits 8000, convert to equities.

3. The market will fluctuate between 8000 - 10000, and you can surf on the swells. Big bursts of money making surges.

4. When bank stocks start rising, go all in. The market will again go on a 5-6 year surge up to 12000-14000. You can triple or quadruple your money during this phase.

5. At 14000, begin to convert to cash, but there will still be pockets of equity opportunities as the DJA goes down 5-7 years to 8000 again.

6. At 10000 begin to take your profits and convert to cash or tangible assets.

7. At 8000 the cycle will begin again until we reach the year 2040.

Lies and More Lies from the Democrats

Shocking video that shows Democrats in their own words covering up the Fannie Mae, Freddie Mac scam that caused our economic crisis:

Paulson Bernanke 700 Billion Dollar Bailout Explained

Good Explanation!

Run on Bank Helped Kill WaMu, But Your Money Is Safe

Classic "run on the bank" killed WaMu:

http://finance.yahoo.com/tech-ticker/article/73415/Run-on-Bank-Helped-Kill-WaMu-But-Your-Money-Is-Safe?tickers=WM,JPM,XLF,WB,%5EDJI,%5EGSPC

WaMu becomes biggest bank to fail in US history

This is the largest bank in US history to fail:

http://news.yahoo.com/s/ap/20080926/ap_on_bi_ge/washington_mutual_future

Financial Meltdown Timeline

Here's another good video that explains what is going on:

http://www.reuters.com/news/video?videoId=91276&videoChannel=5

Dirty Laundry

This guy sums it up!

http://digg.com/business_finance/This_is_a_financial_controlled_demolition

Bank of America Acquires Merrill

No. 2 BoA acquires No. 3 Merrill. Wow! This is an unprecedented level of consolidation. What are your thoughts?

http://money.cnn.com/2008/09/15/news/companies/barr_merrill.fortune/index.htm?cnn=yes

Gas Stamps

What are your thoughts about this latest plan from the Democrats?

http://thehill.com/leading-the-news/democrats-latest-idea-gas-stamps-2008-09-11.html

Wall Street on Red Alert

This is another sign that the economy is heading into a depression:

Lehman says it will file for bankruptcy. Fed and 10 strong banks expand lending to weaker players. Plus: Bank of America and Merrill strike a deal.

http://money.cnn.com/2008/09/14/news/companies/lehman_brothers/index.htm

Bailouts Will Push US into Depression: Manager

This has been my view for a while now. If the markets can/will not bail out the government, then the dollar may collapse and the US may experience another depression. This may set up the conditions for the government to bring in the Amero and the North American Union which I think has been the plan all along:

http://www.cnbc.com/id/26656750

Lehman suffers nearly $4 billion loss

Will any investors help out Lehman or will they meet the same fate as Bear Stearns?

http://money.cnn.com/2008/09/10/news/companies/lehman/index.htm?cnn=yes

Here's an email that I received about this situation:

"Lehman Brothers’ shares are crashing. The stock closed at 16.20 on Friday. As we write this alert, it’s trading at $9.80, signaling a major new collapse could be on the immediate horizon. If we’re right, this debacle is going to be several times worse than the Bear Stearns disaster of last March. In a last act of desperation, cash-strapped Lehman was in meetings with the state-owned Korea Development Bank trying to sell its profitable Neuberger asset management unit. But those meetings have now broken down. Its last hope for survival seems to be down the tubes. But Lehman isn’t alone ...Washington Mutual to its CEO: “Pack up your desk. You’re FIRED!” Kerry Killinger, the CEO responsible for nearly bankrupting the bank was canned yesterday. At almost the same time, WaMu took the first step towards failure, filing a memorandum of understanding with the U.S. Office of Thrift Supervision.Unsurprisingly, Washington Mutual stock plunged, bringing its total losses for the year to 70% of its market value.Wachovia admits to bigger woes in its $122 billion options ARMs portfolio. In a shocking revelation, Wachovia announced that 23,600 of its loans are going bad, and a whopping two-thirds of borrowers with options ARMs are opting not to pay the interest and principal due each month."

Homestead Strike

I thought that I would add this to this blog for a good history lesson about strikes in America. I didn't realize that management in these industries could be so cold blooded toward the workers back then:

http://en.wikipedia.org/wiki/Homestead_Strike

More history details about yellow dog contracts:

http://en.wikipedia.org/wiki/Yellow-dog_contract

U.S. seizes Fannie and Freddie

What are the implications to the economy as a result of the Feds taking control of Fannie and Freddie?

http://money.cnn.com/2008/09/07/news/companies/fannie_freddie/index.htm?cnn=yes

If the Economy’s so Bad, Why Is the Unemployment Rate so Low?

The following article is a good discussion about the current economy and the misleading unemployment numbers:

"In short, by expanding the prison population, we have removed more and more young men from our labor market count. This reduces aggregate unemployment rates and raises employment shares, since these are often persons who would have difficulty finding jobs if they were not in prison."

http://www.epi.org/content.cfm/webfeatures_viewpoints_testimony_blank2

Bankruptcy filings surge to 1 million - up 29%

Another bad indicator for the U.S. economy:

http://money.cnn.com/2008/08/27/news/economy/bankruptcy/index.htm?cnn=yes

N'il-flation Strikes The Dow - Earnings Plummet Into The Red

Is this cause for alarm?

http://caseyresearch.com/displayCcs.php?e=true

UK Cashless Society

Do you still think that the cashless society is a conspiracy theory? The banks would like it very much if you would give up your cash:

A History of Fractional Reserve Banking

Good discussion at Digg about the Federal Reserve:

http://digg.com/educational/A_History_of_Fractional_Reserve_Banking_and_Why_Monetary_Policy_Matters

Lewis vs. US

If you're still not convinced that the Federal Reserve is private, then take a look at this court case and you'll understand. The Court of Appeals, Poole, Circuit Judge, held that federal reserve banks are not federal instrumentalities for purposes of the Act, but are independent, privately owned and locally controlled corporations:

http://www.geocities.com/chrisforliberty/lewis.html

Texas Governor 2010 - Federal Reserve is private

More discussions about the Federal Reserve from a candidate for governor in Texas:

JFK, Executive Order 11110, And The Federal Reserve

There are some people that still believe that the Fed is federal like a government corporation. What are your thoughts?

Federal Reserve - A Private Corporation

Our economic woes center on the actions of the Federal Reserve. Here's a good history lesson on the Federal Reserve:

The Law of Property

A good video discussion of property rights:

Zeitgeist - The Movie: Federal Reserve

What are you thoughts on this controversial movie?

Major Retailers Closing Lots of Stores

More signs of bad economic times:

http://phillyfreedom.blogspot.com/2008/08/major-retailers-closing-lots-of-stores.html

The Inflation Calculator

Here's a good inflation calculator as a reference for the value of the dollar:

http://www.westegg.com/inflation/

Casey's Charts

Re-inflating the Debt Balloon

Once again, America owes far more than it produces. With the debt balloon re-inflated to new extremes, how much greater will the next depression need to be to fulfill this business supercycle? For the answer, we need to take a long look back at the last time the debt-to-GDP ratio spiked, and the consequences that followed...

http://caseyresearch.com/displayCcs.php?e=true

Milton Friedman on Libertarianism

Milton Friedman explains what it means to be a Libertarian:

http://www.youtube.com/watch?v=0PaN9M4WwHw&feature=related

The Role of Gold and the Depression

Milton Friedman explains the causes of the depression:

http://www.youtube.com/watch?v=O7pnjzCuSv8&NR=1

The Ultimate American Dollar Collapse

This is a pretty good explanation of the decline in the value of the dollar:

http://www.youtube.com/watch?v=3RhnHo3RDfg&feature=related

http://www.youtube.com/watch?v=wvTbOnuBHiQ&NR=1

Schwarzenegger orders pay cuts, layoffs for state workers

California is forced to take drastic action:

http://www.mercurynews.com/ci_10065147?source=most_viewed

Federal Reserve: Illegal or Legal per the US Constitution

This is an interesting website as it relates to the Federal Reserve:

http://www.wtv-zone.com/Mary/BIGGESTSCAMINHISTORY.HTML

Climate Change Fraud

This is really a good website for climate change fraud:

http://www.climatechangefraud.com/

What are your thoughts?

White House Project Budget Deficits for 2009

Who is to blame for the government's financial mismanagement?

http://www.cnn.com/2008/POLITICS/07/28/2009.deficit/index.html

Ron Paul and The Housing Rescue Bill

There's more to the bailout bill than you think:

http://www.economicpolicyjournal.com/2008/07/ron-paul-housing-rescue-bill-has.html

Lovable, Moronic Capitalists

The following is a good article from Bill Bonner at Daily Reckoning. He makes a good point about this new generation of bankers and businessmen. There's no doubt that there will be a wild financial ride in the near future for America:

http://www.dailyreckoning.com/


The first economists – the two Adams, Adam Smith and Adam Ferguson – called themselves “moral philosophers.” They were studying the human economy as though it were an anthill -- to see how it worked. They figured it must follow rules – just like all other things under Heaven – and tended to see mistakes people made, such as spending too much money, as moral failings.
Modern economists are more like auto mechanics. They think they can control the economy with a screwdriver. And to some extent they’re right. Which is why the world economy is in such a mess; they turned the wrong screws. But it’s why we moral philosophers are having such a good time; finally, we get to laugh and say “I told you so.”

In the news last week was word that the Argentines are taking back their national airline – Aerolineas Argentinas. Back in the heyday of privatization – led by economists from the University of Chicago – they sold it to a Spanish group. But now the Iberians can’t seem to make a go of it – not with oil over $130 a barrel – so the Argentines are re-nationalizing it.
What is the likelihood that the heirs to Juan Peron will do a better job of running an airline than a private company? You might put the same basic question to Gordon Brown. What are the odds the Labor Party will run Northern Rock better than private owners? And in the United States of America – almost 30 years after the Reagan Revolution – the federal government is effectively nationalizing the biggest and most important financial institutions in the world, Fannie Mae and Freddie Mac. Between the two of them, Fannie and Freddie hold almost half the entire nation’s mortgages – equal to about a third of the US GDP. It probably won’t be too long before General Motors is nationalized too. Someone is going to have to pay GM’s pension bill. Even if the company isn’t nationalized, its health and pension obligations probably will be. But can America’s Republicans and Democrats do a better job of running a mortgage company or an auto company than card-carrying capitalists?

On the evidence, maybe so.

Milton Friedman warned that if you put government in charge of the Sahara there would soon be a shortage of sand. But the heirs to Friedman have some explaining to do. The smartest of them have crashed airlines, busted banks and wrecked builders. They’ve ruined businesses so simple that even a half-wit could have made a profit. Fannie and Freddie couldn’t win at their business, even though the deck was stacked in their favor from the very beginning. And the Friedmanites’ beloved markets -- which are supposed to “look ahead” and anticipate trouble before it happens -- must have shut their eyes years ago. They walked out into the blazing desert without a map or a hat; no wonder they’ve been acting strange.

To many of the world’s politicians and opinion mongers, the evidence of the last 12 months has proved what they always suspected – that capitalists are greedy s.o.b.s. But we would have spotted them that...and readily conceded that they are often morons too. Still, a system in which people get what they’ve got coming is infinitely better than a system in which people take only what government gives them. That’s the essential difference between capitalism and socialism: one yields to Armani-clothed fraud; the other to cheap-suit force. Both have their moral failings. But one is wicked; the other is merely dumb.

Want to know who caused Aerolineas Argentina’s bumpy ride...and who’s responsible for bringing down Fannie and Freddie? Follow the money. Before 1971, in the Bretton Woods monetary era, major economies used the dollar as a reference of value. The greenback was a North Star – helping businessmen and investors find their way. The U.S. dollar was reliable because it was tied to gold, which the U.S. Treasury promised to deliver to any country at a rate fixed at $42 an ounce. Then, on August 15, 1971, the U.S. Treasury reneged. Egged on by modern economists, the last link with gold was cut. Governments, investors and businessmen could still look to the dollar as a point of reference, but good luck to them. This disgraceful mischief caused even the stars to wobble.

Since then, the U.S. government could print almost as many dollars as it wanted. Arguably, it printed too many. For something – perhaps it was too much cash and credit in circulation – led American homeowners to think house prices would rise forever. They over borrowed, homebuilders overbuilt, and Fannie and Freddie – even with all their Ph.D. economists on the payroll – over-lent. And something – maybe it was the same thing – caused the price of oil to rocket upwards 400% in the last five years. The airlines hadn’t seen that coming either. So, the big lenders and the high fliers are in trouble.

Those are only two of a long list of today’s troubles that can be traced...directly or indirectly...to the world’s monetary system of the last 37 years. Businessmen, consumers and investors respond to financial signals. If interest rates are set too low, they tend to borrow too much. If the money supply expands too rapidly, they expand too rapidly too. To make a long story short, a bubbly supply of cash and credit led to bubbly markets. The U.S. and major foreign stocks market bubbled up to all-time highs in January 2000; then they headed down. In inflation adjusted terms, most never recovered. Then, in 2003, it was housing’s turn...followed by emerging markets...and lately, oil and commodities.

Sure, the capitalists are greedy. And sure, many of them make mistakes. But with feds rearranging the heavens, it’s a wonder they didn’t wash up more often.

Enjoy your weekend,

Bill Bonner
The Daily Reckoning

Federal Reserve, Inflation, and the Dollar Crisis in 60 secs

This is a short but to the point video explaining the economic situation that we're in today:

http://www.youtube.com/watch?v=9fv1DqIen28

Market Meltdown - Getting the US Economy Back on Track

Market meltdown:

http://www.youtube.com/watch?v=SNlDnkI2-98

The Week that America Woke Up to the Economic Crisis

Americans are beginning to wake up to the economic crisis that is currently unfolding:

http://georgewashington2.blogspot.com/2008/07/week-that-america-woke-up-to-economic.html

Ron Paul Lectures Bernanke: U.S. Moving Towards Fascism

Do you think that Ron Paul is right? Is America becoming fascist?

http://www.youtube.com/watch?v=Jbi-0Tg1b_g

Socialism Versus Free Markets

Here's a good debate of socialism versus free markets:

http://www.youtube.com/watch?v=g2kTy7glZ9s

Is Greed Bad?

Where are the masses worse off-with free enterprise or without free enterprise? Where do you find angels that will organize society for us if we don't operate on the principles of freedom and free enterprise. Milton Friedman explains it very clearly in this video:

http://www.youtube.com/watch?v=RWsx1X8PV_A

Regulators raid Wachovia Securities

Investigators look for documents revealing the company's sales practices.

http://money.cnn.com/2008/07/17/news/companies/wachovia_raid.ap/index.htm?cnn=yes

Jim Rogers on US Economy FED Ron Paul

Jim makes it clear that the Fed is trying to debase the currency:

http://www.youtube.com/watch?v=airxvVmGnqc&feature=related

The US Economy is Unsustainable

Most elected officials won't even talk about it:

http://www.youtube.com/watch?v=D6Q14HOBThM&feature=related

The Shocking Truth about Inflation

Government says rate is low, so why do food and energy cost so much?

http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=61663

Ron Paul Questions Ben Bernanke On U.S. Economy

Ron Paul is a completely right and Ben refuses to listen because he is the problem:

http://www.youtube.com/watch?v=eRTOvbrmlQk&NR=1

The Declining Value of Your College Degree

This article is completely misleading. The authors place blame on employers for being picky and looking for more specialized skills. The author tries to say that it's not because there's a lack of economic growth! That's crazy! Read for yourself about how deceptive this argument is in the following article:

http://online.wsj.com/article/SB121623686919059307.html?mod=yhoofront

Ron Paul on the Economic Collapse!

The Congress created the problem and they can stop it. The Federal Reserve manipulates the currency for political gain:

http://www.youtube.com/watch?v=MCt2yRqlCcQ

The Collapse Of The U.S. Dollar

Dumping the dollar may be better for Russia and Iran as this video explains:

http://www.youtube.com/watch?v=-zy9W9kB-mg&feature=related

FBI probes possible home-loan fraud at IndyMac

It could a lot worse before it gets better:

http://ap.google.com/article/ALeqM5hT1oSaa5zGcVzjgbZMWTW6eYOPTwD91V6EUO1

US spells out Fannie-Freddie backstop plan

The banking crisis is deepening:

http://news.yahoo.com/s/ap/20080714/ap_on_bi_ge/mortgage_giants_crisis

The Money Masters - How Bankers Gained Control of America

We must reform our banking system in order to eliminate the debt:

http://www.youtube.com/watch?v=OnwLgrSJZKs

Lindsey Williams - The Energy Non-Crisis

The energy crisis is not real:

http://www.youtube.com/watch?v=NbakN7SLdbk&feature=related

The US is Broke.

Good explanation about the nature of our economic system:

http://www.youtube.com/watch?v=Nfsl9sp8vek&feature=related

Michael Badnarik on the Federal Reserve System

This is awesome! The real deal about the Federal Reserve:

http://www.youtube.com/watch?v=rpOhWvOoraw&feature=related

Fed chief: Empower financial regulators

By JEANNINE AVERSA, AP Economics Writer
WASHINGTON - Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson told Congress Thursday that new regulatory powers are needed to insulate the national economy from damage if a big Wall Street firm collapses.

Their recommendations were part of a broader debate before the House Financial Services Committee about the best ways to revamp the country's antiquated regulatory system. The idea is to brace the system to better respond to modern-day crises like the housing and credit debacles that have badly bruised the economy.
Both Bernanke and Paulson endorsed creating new procedures by which the government can guide an orderly liquidation of a failing investment bank in an effort to minimize any fallout that might be inflicted on the broader financial system and the overall economy. Such procedures, which are in place for commercial banks, might have made the dissolution of investment firm Bear Stearns more orderly.
"In light of the Bear Stearns episode, Congress may wish to consider whether new tools are needed for ensuring an orderly liquidation of a systemically important securities firm that is on the verge of bankruptcy, together with a more formal process for deciding when to use those tools," Bernanke said.
Paulson, who recently laid out such a proposal, said: "It is clear that some institutions, if they fail, can have a systemic impact." However, financial players need to be disciplined in managing risk and not expect the government to fly to their rescue, he added. "For market discipline to effectively constrain risk, financial institutions must be allowed to fail," he said.
The Fed's financial backing of JPMorgan Chase's takeover of the troubled Bear Stearns has drawn criticism from Democrats, who call it a government bailout that could put billions of taxpayer dollars at risk. Both Democrats and Republicans lawmakers said changes need to be made to protect taxpayers in the future should another big firm get into trouble.
Rep. Spencer Bachus, R-Ala., said a "shock absorber" is needed to make sure that "taxpayers are not holding the bag. ... This is a tall order."
The committee's chairman, Rep. Barney Frank, D-Mass., suggested it was more important for Congress to "do it right" rather than acting quickly on substantial legislative changes. Bernanke and Paulson agreed with that assessment. "Realistically it is going to be difficult to get things done this year," Paulson acknowledged.
The Treasury chief also sought Thursday to calm investor jitters about the financial health of mortgage giants, Fannie Mae and Freddie Mac. They are "working through this challenging period," Paulson told Congress. "Their regulator has made clear that they are adequately capitalized."
Shares of Fannie and Freddie sank further Thursday amid concerns that shareholders could be wiped out if the government is forced to rescue the two companies.
Of the broader financial system, Paulson said: "Right now we're going through a period of unusual turmoil" and the government's focus needs to be on stabilizing the situation. Bernanke echoed that sentiment.
Asked about the weakened value of the U.S. dollar, which has boosted exports but contributed to high oil prices, Paulson said: "We want a strong dollar. A strong dollar is in our nation's interest. ... We're going through a tough period right now."
Bernanke in recent days has called for stronger oversight of big Wall Street firms, which are regulated by the Securities and Exchange Commission. Those firms have been given unprecedented — albeit temporary — access to tap the Fed for emergency loans, a privilege that has been granted for years to commercial banks, which are more tightly regulated.
With credit problems persisting, the Fed may extend the lending privilege to investment banks into next year, Bernanke has said.
The Fed chief called on Congress to consider giving the central bank explicit authority to oversee systems that process payments and other financial transactions by investment firms as well as banks.
And, he recommended that Congress give a regulator the authority to set standards for capital, liquidity holdings and risk management practices for the holding companies of the major investment banks. Currently, the Securities and Exchange Commission's oversight of these holding companies is based on a voluntary agreement between the SEC and those firms.
The Fed and the SEC announced an information-sharing agreement on Monday aimed at better detecting potential risks to the financial system. With the Fed lending money to Wall Street firms, it needs to have a firm grasp of their financial shape.
Paulson has put forward an ambitious overhaul that would turn the Fed into a super cop in charge of financial market stability. But the plan would remove the Fed from day-to-day banking supervision, which Bernanke opposes.

America: From Freedom to Fascism

What are your thoughts on this controversial film?

http://www.youtube.com/watch?v=3ueEfRXZCVA

Why Oil Prices Are So High

How to explain the oil price? Why is it so high? Are we running out? Are supplies disrupted, or is the high price a reflection of oil company greed or OPEC greed. Are Chavez and the Saudis conspiring against us?

In my opinion, the two biggest factors in oil's high price are the weakness in the US dollar's exchange value and the liquidity that the Federal Reserve is pumping out.

The dollar is weak because of large trade and budget deficits, the closing of which is beyond American political will. As abuse wears out the US dollar's reserve currency role, sellers demand more dollars as a hedge against its declining exchange value and ultimate loss of reserve currency status.

In an effort to forestall a serious recession and further crises in derivative instruments, the Federal Reserve is pouring out liquidity that is financing speculation in oil futures contracts. Hedge funds and investment banks are restoring their impaired capital structures with profits made by speculating in highly leveraged oil future contracts, just as real estate speculators flipping contracts pushed up home prices. The oil futures bubble, too, will pop, hopefully before new derivatives are created on the basis of high oil prices.

There are other factors affecting the price of oil. The prospect of an Israeli/US attack on Iran has increased current demand in order to build stocks against disruption. No one knows the consequence of such an ill-conceived act of aggression, and the uncertainty pushes up the price of oil as the entire Middle East could be engulfed in conflagration. However, storage facilities are limited, and the impact on price of larger inventories has a limit.

Saudi Oil Minister Ali al-Naimi recently stated, "There is no justification for the current rise in prices." What the minister means is that there are no shortages or supply disruptions. He means no real reasons as distinct from speculative or psychological reasons.

The run up in oil price coincides with a period of heightened US and Israeli military aggression in the Middle East. However, the biggest jump has been in the last 18 months.

When Bush invaded Iraq in 2003, the average price of oil that year was about $27 per barrel, or about $31 in inflation adjusted 2007 dollars. The price rose another $10 in 2004 to an average annual price of $42 (in 2007 dollars), another $12 in 2005, $7 in 2006, and $4 in 2007 to $65. But in the last few months the price has more than doubled to about $135. It is difficult to explain a $70 jump in price in terms other than speculation.

Oil prices have been high in the past. Until 2008, the record monthly oil price was $104 in December 1979 (measured in December 2007 dollars). As recently as 1998 the real price of oil was lower than in 1946 when the nominal price of oil was $1.63 per barrel. During the Bush regime, the price of oil in 2007 dollars has risen from $27 to approximately $135.

Possibly, the rise in the oil price was held down, prior to the recent jump, by expectations that Democrats would eventually end the conflict and restrain Israel in the interest of Middle East peace and justice for the Palestinians.

Now that Obama has pledged allegiance to AIPAC and adopted Bush's position toward Iran, the high oil price could be a forecast that US/Israeli policy is likely to result in substantial supply disruptions. Still, the recent Israeli statements that an attack on Iran was "inevitable" only jumped the oil price about $8.

Perhaps more difficult to understand than the high price of oil are the low US long-term interest rates. US interest rates are actually below the rate of inflation, to say nothing of the imperiled exchange value of the dollar. Economists who assume rational participants in rational markets cannot explain why lenders would indefinitely accept interest rates below the rate of inflation.

Of course, Americans don't get real inflation numbers from their government and have not since the Consumer Price Index was rigged during the Clinton administration to hold down Social Security payments by denying retirees their full cost of living adjustments. According to statistician John Williams, using the pre-Clinton era measure of the CPI produces a current CPI of about 7.5%.

Understating inflation makes real GDP growth appear higher. If inflation were properly measured, the US has probably experienced no real GDP growth in the 21st century.

Williams reports that for decades political administrations have fiddled with the inflation and employment numbers to make themselves look slightly better. The cumulative effect has been to deprive these measurements of veracity. If I understand Williams, today both inflation and unemployment rates, as originally measured, are around 12 per cent.

By pumping out money in an effort to forestall recession and paper over balance sheet problems, the Federal Reserve is driving up commodity and food prices in general. Yet American real incomes are not growing. Even without jobs offshoring, US economic policy has put the bulk of the population on a path to lower living standards.

The crisis that looms for the US is the loss of world currency role. Once the dollar loses that role, the US government will not be able to finance its operations by borrowing abroad, and foreigners will cease to finance the massive US trade deficit. This crisis will eliminate the US as a world power.

By Paul Craig Roberts

Casualties of Financial Friendly Fire

The war continues. The unstoppable forces of inflation continue to smash into the immoveable lines of deflation. Caught between the two is the U.S. consumer...the American voter...and the lumpeninvestoriat.Yes, dear reader, we are getting shot to pieces from both directions. Prices are rising. And prices are falling. Mr. Market marks down prices for housing and stocks. Mr. Federal Reserve System pushes up prices for oil and food.Yesterday brought more hits, more near misses, and more casualties from “friendly fire.” But the big story was that after so many weeks of reporting huge gains by inflation, deflation is back in the news with a major counteroffensive. It had begun to look as though inflation was the clear victor. Prices are rising everywhere; everyone came to believe inflation was unbeatable. Analysts had begun talking about oil at $170...even $200.But yesterday, while the Dow rose 152 points – a weak bounce after a long streak of losses – both oil and gold fell. Gold dropped back $5, to $923. Oil lost $5 too – slipping down to $135. Commodities, generally, may be in retreat. More bad news comes from the housing sector too. Yesterday, it was reported that previously owned house sales fell 4.7% in May...more than expected. They’re down 14% from the year before. Also in the housing news was a report that repossessions are up 100% over 2007, while mortgage payment delinquencies are at a record level. Foreclosure filings are running 48% ahead of last year.With so much deflation in the housing sector, economists are just waiting for more of it to show up in the retail sales...and then spread to the rest of the economy. With no house price gains to spend, consumers will have to cut back. When they do, retail sales will fall...and so will the demand for goods and services all up and down the line. So far, we’ve seen a big drop in demand for automobiles – especially SUVs. GM shares are down 75%. We’ve seen a drop in driving too. And unemployment numbers are increasing. But, so far, no big drop in spending. Of course, part of the reason for that is simply that prices have risen so high, consumers need to keep spending every penny – even though they are getting less for their money. But soon, we should see a significant drop in sales, followed by a further drop in economic growth.Last week, we saw a report telling us that vacancies in retail space were increasing. The United States has ten times more retail space per person than France. When people spend less, much of this space will cease to be commercially viable. Soon, abandoned shopping malls will follow abandoned houses. “Suburban office space losing occupancy and value,” too, adds the Chicago Tribune .What this represents to Wall Street is a big drop in the value of its collateral...and its clients’ ability to service their loans. First, the borrowers can’t make the payments. Then, the lenders realize that their collateral is worthless. We’ve seen big hits taken in the subprime mortgage market. But what about other parts of the mortgage market? And what about credit card lending? Student loans? Commercial loans? In England, Bradford and Bingley, a big mortgage lender, got whacked yesterday. Its shares fell 18%, to less than $1. And a leading London stockbroker put out a target price for them of “zero.”U.K. mortgage lending is down 44% from last year. “London house price forecast deepens gloom,” reports the Financial Times . Back in America, the Fed says it will extend its PDCF program into next year. The program is simple to understand. It allows Wall Street to borrow from the Fed at 2.25% – or about half the level of consumer price inflation. It should be easy to make money. You just borrow at 2.25% and lend at...say, 5%. The borrower would be paying a real interest rate of only 1% or less. And the lender would be earning 2.75% on someone else’s money. What could go wrong?What could go wrong is what is already going wrong. Lenders put out too much money to too many people who can’t pay it back. Now they’re reluctant to lend to anyone. And who’s eager to borrow? Who wants to build more retail space? Who’s building more houses? Who’s setting up a new auto plant in the U.S.A.? Who’s expanding production of any sort?*** In a credit crunch, lending, spending, and borrowing all contract. The Japanese found that lending money even at a zero percent interest rate didn’t revive the ‘animal spirits’ of a booming economy. Deflation wins, in other words.But that doesn’t stop central bankers and central governments from trying. In this space yesterday, we reported a guess from Bridgewater Associates that the credit crunch could take $12 trillion of credit out of the economy. The authorities will try to make up this amount with a combination of fiscal and monetary policy. But you see, the amount is too great. And it doesn’t include the natural tendency of people in hard times – to draw back and save. If Americans suddenly started turning Japanese, and began to save money like the Japanese, it would take another $1 trillion out of the consumer economy every year. So the U.S. economy is probably in for some rough handling. But we keep pointing out that the United States is not Japan; it’s not as healthy. And the world economy has changed in a fundamental way in the last 20 years.When the Japanese tried to stimulate their economy with zero interest rate loans, the money often ended up in speculative bets on the US stock market in the ‘90s...or new factories in China. Now, when the feds try to stimulate the US economy, the speculators turn to oil and commodities. Prices rise, forcing Americans to pay more for imports...and driving up consumer inflation rates all over the globe. Result: inflation wins too.And so, the poor American takes it from both sides. He gets smacked by inflation...and booted by deflation as well.*** We filled up the car yesterday. The price of diesel fuel was 1.57 euros per liter. That works out to almost $10 a gallon. Curiously, the rising price of oil has done less damage in Europe than in America. Partly because people were already used to high fuel prices, partly because Europeans use less energy, partly because the euro has gone up against the dollar (making oil less expensive in euro terms) and partly because, since fuel is so heavily taxed, the increase caused by rising prices of the raw material is less as a percentage of the whole.Europe was designed before the machine age. Its dense, old cities – a few still surrounded by stone walls – were meant to protect people from Goths. Vikings, Huns – and the English. Now, those cities protect people from rising energy prices. People can walk to local shops. They take buses, metros and tramways to work. They live in houses with thick walls...shutters...and often double glazed windows. *** Ron Paul explains how we got into this mess:“There were several stages. From the inception of the Federal Reserve System in 1913 to 1933, the Central Bank established itself as the official dollar manager. By 1933, Americans could no longer own gold, thus removing restraint on the Federal Reserve to inflate for war and welfare. “By 1945, further restraints were removed by creating the Bretton-Woods Monetary System making the dollar the reserve currency of the world. This system lasted up until 1971. During the period between 1945 and 1971, some restraints on the Fed remained in place. Foreigners, but not Americans, could convert dollars to gold at $35 an ounce. Due to the excessive dollars being created, that system came to an end in 1971. “It’s the post Bretton-Woods system that was responsible for globalizing inflation and markets and for generating a gigantic worldwide dollar bubble. That bubble is now bursting, and we’re seeing what it’s like to suffer the consequences of the many previous economic errors. “Ironically in these past 35 years, we have benefited from this very flawed system. Because the world accepted dollars as if they were gold, we only had to counterfeit more dollars, spend them overseas (indirectly encouraging our jobs to go overseas as well) and enjoy unearned prosperity. Those who took our dollars and gave us goods and services were only too anxious to loan those dollars back to us. This allowed us to export our inflation and delay the consequences we now are starting to see. “But it was never destined to last, and now we have to pay the piper. Our huge foreign debt must be paid or liquidated. Our entitlements are coming due just as the world has become more reluctant to hold dollars. The consequence of that decision is price inflation in this country – and that’s what we are witnessing today. Already price inflation overseas is even higher than here at home as a consequence of foreign central bank’s willingness to monetize our debt. “Printing dollars over long periods of time may not immediately push prices up – yet in time it always does. Now we’re seeing catch-up for past inflating of the monetary supply. As bad as it is today with $4 a gallon gasoline, this is just the beginning. It’s a gross distraction to hound away at ‘drill, drill, drill’ as a solution to the dollar crisis and high gasoline prices. It’s okay to let the market increase supplies and drill, but that issue is a gross distraction from the sins of deficits and Federal Reserve monetary shenanigans. “This bubble is different and bigger for another reason. The central banks of the world secretly collude to centrally plan the world economy. I’m convinced that agreements among central banks to ‘monetize’ U.S. debt these past 15 years have existed, although secretly and out of the reach of any oversight of anyone – especially the U.S. Congress that doesn’t care, or just flat doesn’t understand. As this ‘gift’ to us comes to an end, our problems worsen. The central banks and the various governments are very powerful, but eventually the markets overwhelm when the people who get stuck holding the bag (of bad dollars) catch on and spend the dollars into the economy with emotional zeal, thus igniting inflationary fever. “This time – since there are so many dollars and so many countries involved – the Fed has been able to ‘paper’ over every approaching crisis for the past 15 years, especially with Alan Greenspan as Chairman of the Federal Reserve Board, which has allowed the bubble to become history’s greatest. “The mistakes made with excessive credit at artificially low rates are huge, and the market is demanding a correction. This involves excessive debt, misdirected investments, over-investments, and all the other problems caused by the government when spending the money they should never have had. Foreign militarism, welfare handouts and $80 trillion entitlement promises are all coming to an end. We don’t have the money or the wealth-creating capacity to catch up and care for all the needs that now exist because we rejected the market economy, sound money, self reliance and the principles of liberty.”
Until tomorrow, Bill Bonner

Financial Market Losses

Geneva - The global financial crisis could lead to losses of 1,600 billion dollars for financial institutes, according a report in the Swiss Sunday newspaper SonntagsZeitung. It quoted a confidential study by the hedge fund Bridgewater Associates as saying losses for banks holding risky assets could be four times greater than the 400 billion dollars previously estimated.