Iceland Shows The World

This would have been the perfect gift for the country to give to its people on the joy of the season……start putting the thieves that work at banks in prison…….wishful thinking I know but at least one country has done the right thing…….(read on)…..

There has been lots of mumbling and grumbling about what the bankers were allowed to get away with when they caused the economic meltdown of 2008……..they have made obscene bonuses and still walk among us even after about 50% of the population lost lots of their coveted nest egg that they were depending on for a comfortable retirement….the American Dream was crapped on by the banks and the thieves they employ……some Americans have called for these crooks to be jailed for they basically robbed the population of their funds….but so far they got bigger bonuses and are not help responsible for their actions…….what to do…..what to do?

The small island country of Iceland has shown the world what should be done to these cons……

(Newser) – Iceland has done something highly unusual with some of the bank chiefs blamed for the country’s 2008 financial collapse: put them on trial and sent them to prison. Four former Kaupthing Bank bosses have been sentenced to between three and five years for market abuses relating to a deal where a Qatari sheikh bought a confidence-boosting stake in the bank with money that had been provided by the bank itself, the BBC reports.

Prosecutors said the loans, made soon before Kaupthing collapsed under massive debts, were made solely to boost the bank’s share price, reports Reuters. The bank’s former chief executive and chairman of the board received prison terms, along with one of its majority owners and the chief of its Luxembourg branch. The sentences are the heaviest Iceland has ever handed down for financial fraud, but prosecutors say a bigger case against Kaupthing is in the works

And that my friends is how you hold con artists responsible for their actions……America should follow suit….but NO…we fine them and let them return to the actions they were doing that caused the economic collapse……where is the logic here?

Road To Ruin

Here we go again…..and again…….

By now we all have had enough of the crap that Congress spreads……we can debate who is to blame…..but the truth is ………..WE ARE TO BLAME!  By we I mean us voters that keep electing the same morons year after year and then we cannot understand what went wrong….

But while we are scratching our heads and bitching about those damn Dems or Repubs or the Tea Partyers the economy is losing ground quickly….and that cannot be a good thing no matter where you stand or who you listen to on the radio……

(Newser) – As lawmakers scramble to strike a last-minute deal that would allow the government to keep borrowing money, Fitch Ratings issued a shot across the bow this afternoon: It put the nation’s AAA on a “negative” watch, reports MarketWatch, meaning a downgrade is possible unless things get resolved soon. “The prolonged negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the US dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the US.” (Full text here.) The nation hits its debt-ceiling limit on Thursday. For the record, Fitch and Moody’s still have the US at the highest AAA rating, though Standard & Poor’s downgraded its rating during the 2011 crisis, notes Business Insider.

Pat yourself on the back….you have f*cked the country……and GOOD!

Why Detroit? Part 2

We all have seen the news about the demise of Detroit….at least the filing for bankruptcy……but what solutions if any are there open to the city and the state?

Actually my first thought was….will the taxpayer be on the hook for the bankruptcy?  But alas, I do not see the government stepping in to help Detroit.  Why?  Too many other cities are near the same situation as Detroit and a precedent cannot be set….no matter how good it would be……just cannot have the government involved in any bailout.

My first thought for a solution was mediation…….I would imagine that those on the Right would not like this because it would most likely include unions and we all know what the Right thinks about them……well the lies they believe……but mediation?  What is mediation?

First, you identify the problem….get parties together and see what the biggest problem is for them both……then there is the information gathering phase where mediators accumulate as much info as possible on the two sides……next,identify the biggest problem…….move on to meeting with the two sides and let them voice their ideas and then move on to solving the problem.

I like this because both sides have an equal voice and an equal chance of success……probably not gonna work for Detroit…..the problem is money and there is NONE.  So, this solution is out of the question…..

In today’s climate…the most obvious at least for Michigan, is the emergency manager, which has been used on numerous occasions by Gov. Synder….if you are not from Michigan may not know what an emergency manager is……but guess what?  I will tell you…….!

An emergency manager can:

  • Hire/fire local government employees
  • Renegotiate, terminate, modify labor contracts with state treasury approval
  • Sell, lease, or privatize local assets with state treasury approval
  • Revise contract obligations
  • Change local budgets without local legislative approval
  • Initiate municipal bankruptcy proceedings
  • Hire support staff

An emergency manager cannot raise taxes.

My guess is that the EM will push hard for the bankruptcy……..I do not see where this will solve Detroit’s problems.

In my opinion…..the EM is unconstitutional and undemocratic….any time that the elected reps are by passed by any government is, in my book…undemocratic….an outright assault on democracy…………..but since I do not live in Michigan I am not an expert….but if some one who does would like to comment…I am open to a debate…..

The solution is a hard one…..but eliminating the democratic solution  is NOT the answer.

Thoughts?

Why Detroit?

Have you heard enough about the royal larva about to be squirted out?  Do I sound uncaring?  I am!  We fought a revolution so I do not have to be concerned with what the royalty is doing….and I exercise my right!

By now you have heard about the bankruptcy of the city of Detroit…….whether you got it from MSM or papers or gossip….the statement is true….Detroit is in deep doo-doo……but what happened to force this decision…..and there are many…….

Detroit’s bankruptcy may not have surprised many people“this has been coming for ages,” one pained city worker tells the New York Timesbut it does have everyone talking. What went wrong? What happens next? We’re glad you asked.

What happened:

  • Much of the problem stems from the decline in the auto industry, which, according to The Week’s timeline, began in the ’70s, when the gas crisis spurred interest in more efficient imports. But things really sped up around 2000. Since then…
  • Unemployment has tripled, peaking at almost 28% in 2009. Today it’s at about 16%.
  • Crime has spiked, with homicide rates now at historic highs, USA Today reports. Police take an average of 58 minutes to respond to calls.
  • Many residents, particularly middle class ones, have fled in response; the city’s population has dropped 25% since 2000. That exodus has left 78,000 city structures abandoned.
  • All of which has led to a 30% plunge in tax revenue over a decade.
  • That’s made city services even worse. “There’s no way Detroit can afford to service 140 square miles anymore,” economist Eric Scorsone tells NBC News. “So for parts of the city if your streetlight’s out, they’re not going to fix it.” Indeed, 40% of the city’s streetlights don’t work.
  • And hanging over the city are massive unfunded pension obligations, currently totaling $18 billion, or $25,000 for every resident. The city’s top two creditors are its General Retirement System and Police and Fire Retirement System, the Detroit Free Press reports.

What’s next:

  • City officials have insisted that day-to-day city business will go on unimpeded; they’re free to use their cash on hand to fund public works.
  • Detroit will get an automatic stay on all its bills and all lawsuits against it, though it’ll still have to pay secured creditors, according to USA Today.
  • A judge will have to agree that things are bad enough to warrant bankruptcy. Assuming that happens, the city will craft a reorganization plan, hopefully with the support of creditors.
  • That will surely involve cuts to pensions, something the unions are staunchly against.
  • Whatever happens will be watched closely. “Everyone will say, ‘Oh well, it’s Detroit,’” Scorsone says. But “it’s the same in Chicago and New York and San Diego and San Jose. … They may not be as extreme as Detroit, but a lot of them face the same problems.”

Detroit is in deep doo doo…….but there may be a slight hiccup in the filing for bankruptcy…….for all you pseudo-constitutional wiz kigs…it could be…..wait for it…….unconstitutional!

One little snag emerged today regarding Detroit’s bankruptcy filing: A county judge declared the move unconstitutional and ordered the bankruptcy withdrawn, reports the Detroit Free Press. Judge Rosemary Aquilina also slammed the “rush to bankruptcy court” as unfair to the city’s pension boards, which were in the process of trying to block such a filing—in Aquilina’s own court. The judge said she’s worried that a federal bankruptcy judge, unbound by state law, will slash pensions, prompting this exchange:

  • “We can’t speculate what the bankruptcy court might order,” said an assistant attorney general.
  • “It’s a certainty, sir,” said Aquilina. “That’s why you filed for bankruptcy.”

The judge promised to make sure that President Obama sees her ruling, and she thinks he will make sure that existing pensions were honored. “I know he’s watching this.” Immediately after her ruling, the state’s attorney general filed an appeal with the Michigan Court of Appeals, reports the Detroit News. A quick decision is expected. It’s also possible that a federal bankruptcy judge will weigh in—even though the city filed for Chapter 9, a bankruptcy judge still must determine whether the city qualifies.

We can blame many things and most people do…..depending on your political orientation…..one of the most outstanding reasons at least in my mind is the……automobile!  Kinda ironic, huh?  And let’s not forget the American Dream also contributed…….I cannot wait for all the mental midgets that will take exception to this statement….I look forward to it!  Basically, Detroit suffered from mismanagement and a victim of its own success.

Let me qualify my assertions.  The auto industry made Detroit and most of Michigan…..it gave the people a good well paying job…..which in turn gave them more disposable income and that is where the American Dream kicks in….a house in the suburbs, 2 cars in the garage and a better life…….so basically, the auto made Detroit and is now killing it……..the people tool flight from the city in search of a better life and the auto made it possible…..so the auto help make them a better life and in turn they drove away from the city for the suburbs.  Thus slowly but slowly the quality of life in the city began to worsen to the point it is today.

I listed many things that contributed to the decline of Detroit….but to me it was the auto that drove (pun intended) the final nail in its coffin……..once revenues decline any city, even yours, can face the music of decline.

Part 2 of this post will be the solutions….at least as I see them…….please be patient as it is a doozy of a problem….;it make take a couple of days before the post….

Blow Made Them Do It!

I enjoy a good conspiracy theory as well as the next guy…..I mean we have had good ones over the years….the Grassy Knoll, all the 9/11 stuff, ancient aliens caused the plague, and so on……I’m guessing that my readers have a few that they like over others…..like I said I good conspiracy is very entertaining.

Recently, I read one that made me chuckle aloud…….

(Newser) – Forget all those complicated economic explanations. The real reason for the financial crisis was simple: Bankers were doing too much coke, says a professor and former UK government drugs adviser. The drug made bankers “overconfident,” prompting them to take “more risks,” says David Nutt. Cocaine fueled their “culture of excitement and drive and more and more and more,” he says. It’s not Nutt’s first controversial statement, the Telegraph notes: He was fired from the government after saying ecstasy and horseback riding were about even, safety-wise; he’s also claimed that alcohol is more dangerous than heroin.

I wish I could say something clever, but this is beyond lunacy……thoughts?

Do You Know What happened In 2008?

Yes, I am talking about the crash and the ensuing recession, the unemployment, foreclosures and the tune continues…….you may know that your 401k is not worth the paper it is printed on…..but do you know just how the crash happened?

I am guessing that most Americans either do not know or maybe they just do not give a crap……but if you are truly interested in educating yourself on how you were screwed….then by all means read on…….if not then maybe a good episode of “Jersey Shore” that teaches a lot about life is on MTV….if you do not care enough to learn what happen then keep thy mouth shut when it blows up again….and make NO mistake ….IT WILL!

A very good explanation has been written by Zeus Yiamouyiannis……..

Here is how the counterfeit value derivative con works.  It’s a game of “I pretend, you pretend, we all pretend, and the taxpayer will pay in the end”.

1) I’ll create an instrument, say a credit default swap (CDS), an unregulated insurance with no capital requirements, with a certain “notional” value. Notional value is just something I assign. It does not have to be attached to or backed by any real asset or actual money/principal, but I can pretend as if it is. (Notional amount.)

2) As a seller, I will just declare that this swap covers the full value X of this company, contract, etc. if credit event Y happens. I receive lucrative insurance premiums and fees for my unbacked promise. The CDS’s value is based in nothing more than my promise to pay. I don’t have to have adequate capital reserves on hand, but I can pretend as if I do perhaps with some mini-reserves based on objective-seeming risk ratios calculated by my mathematical models. (credit default swap.)

3) As a buyer, you can then buy as many of these CDS’s as you want, even for a single default. If you are really sure something is going to tank you can insure it 30 times over (or a 100 or 1,000) and get 30 (or 100 or 1,000) times the return when it goes bust! In regulated insurance it is unacceptable to insure beyond the full replacement value of the underlying asset. Not so with CDS’s. The seller has gotten 30x the premiums and the buyer gets 30x value in the event of default. As a buyer of this phony “insurance” you don’t have a stake in the affected properties, but you can essentially pretend you do.

4) As buyer and seller of CDS’s either one of us can assign our risks to a third party through another contract, and pretend as if we are covered in case our own game playing blows up in our faces. This allows us to retain even less reserve capital and spend freed-up funds on more high-risk, high-(pseudo) return speculation. (The monster that ate Wall Street.)

5) We can purchase and sell of these derivative contracts to each other at unlimited rates to generate massive volume and huge fees and profits. We can simply hyper-cycle risk and take our chunk each time.

According to the Bank of International Settlements, as of June 2011 total over-the-counter derivatives contracts have an outstanding notional value of 707.57 trillion dollars, ( 32.4 trillion dollars in CDS’s alone). Where does this kind of money come from, and what does it refer to? We don’t really know, because over-the-counter derivatives are not transparent or regulated.

Read More…

The answer to your questions are not as difficult to understand as the msm and the economists want you to believe……..once you learn the facts then you can keep your bank and brokers in check….that is if you really give a crap……and Dodd-Frank is a blowjob….it does little to keep the financial sector from gaming the system again and causing another meltdown….personally, I want to see someone go to prison because of what has been done to the economy and beyond that I want to make sure these con men cannot either game the system again so that we, the taxpayer, give them an out…..let them ROT in their own deceitfulness!

Target Acquired!

We all know just how pissed off most people are over the realization that for decades they have been the tools used by the greedy to acquire massive wealth…..and we know that almost a third of the country is now considered near poverty or below poverty……

Based on the new measure, of the 51 million “near poor,” more than 50 percent were pushed down from higher income levels: more than eight million by taxes, six million by medical expenses, and four million by work expenses like child care and transportation, according to the Times.

In another revelation, using the new measure the percentage of seniors who are either poor or near poor rose from 22 to 34 percent, which is slightly less that the share among children, 39 percent. High medical costs are likely to account for the increase for seniors.

Now the banks were using taxpayer money and such as a casino for their secretive financial dealings and in doing so they alone crashed the economy and since these, at least some of them, were using questionable tactics you would think that the DoJ would be hot on the heels of those people that were acting in a shady way…..right?

Think again!

Going after criminal cases targeting fraud has come down to what’s easier to prosecute for the Obama administration.

While Americans of all stripes have clamored for justice in the wake of the financial crisis, the U.S. Department of Justice has chosen to not pursue jail time for banking executives whose decisions wreaked havoc on the financial industry and the economy. The reason: Building cases against bankers is just too hard to do and carries too much risk of failure in the courtroom.
Instead, the Justice Department has allowed the Securities and Exchange Commission to pursue civil cases directed at banks that can yield large financial penalties, but no criminal prosecutions.
With bank fraud out of reach, federal prosecutors have reached for lower-hanging fruit—namely, food stamp cheaters.
The lousy economy has resulted in a surge of Americans on food stamps and a corresponding increase in those fraudulently using the assistance, according to administration officials. More than 46 million people are receiving about $75.3 billion in help from the Supplemental Nutrition Assistance Program (aka food stamps). Of this amount, more than $750 million may be spent fraudulently, says Obama’s people.
Seven hundred and fifty million dollars is nothing to sneeze at. But compared to the total expenditure for food stamps, the amount of potential fraud going on amounts to only 1%.
–Noel Brinkerhoff

Obama Administration Targeting Food Stamp Fraud as Program Reaches Record Highs (by Ed O’Keefe, Washington Post)

This is just sick!  Fat Cats lounging around on a yacht or the place in the Hamptons with NO worry of prosecution………yeah, let’s worry about a family that gets $100 too much in food stamps and let the real criminals live in the lap of luxury with their ill gotten gains…..sounds like justice to me (that is sarcasm in case you missed it)……

If you like writing letters to the editor or congresspeople then by all means write and bitch….bitch so much they cannot ignore you….we need to take back the government from the bastards that are playing it like their personal game of Monopoly!

Get involved!  Make some noise!

What Are They Really Saying?

We have heard all the hoopla about the economy…..it looks slow but steady….it looks like a piece of bovine fecal matter….tax cuts will save us all…..without demand there is NO recovery….on and on….everybody has an opinion on the direction of the economy in the next year, maybe 5…….but what are the economic experts really saying about what is going to happen?

Michael Synder of blacklisted news.com has put together 17 quotes of what we can expect in the future……

The following are 17 quotes about the coming global financial collapse that will make your hair stand up….

#1 Credit Suisse’s Fixed Income Research unit: “We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks.”

#2 Willem Buiter, chief economist at Citigroup: “Time is running out fast.  I think we have maybe a few months — it could be weeks, it could be days — before there is a material risk of a fundamentally unnecessary default by a country like Spain or Italy which would be a financial catastrophe dragging the European banking system and North America with it.”

#3 Jim Reid of Deutsche Bank: “If you don’t think Merkel’s tone will change then our investment advice is to dig a hole in the ground and hide.”

#4 David Rosenberg, a senior economist at Gluskin Sheff in Toronto: “Lenders are finding it difficult to finance their day-to-day operations with short-term funding. This is a lot like 2008 but with more twists.”

#5 Christian Stracke, the head of credit research for Pimco: “This is just a repeat of what we saw in 2008, when everyone wanted to see toxic assets off the banks’ balance sheets”

#6 Paul Krugman of the New York Times: “At this point I’d guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France.”

#7 Paul Hickey of Bespoke Investment Group: “More and more, we are hearing anecdotal comments from individual and professionals that this is the most difficult environment they have ever experienced as the market is like a fish flopping around after being taken out of the water.”

#8 Bob Janjuah of Nomura International: “Germany appears to be adamant that full political and fiscal integration over the next decade (nothing substantive will happen over the short term, in my view) is the only option, and ECB monetisation is no longer possible. I really think it is that clear and simple. And if I am wrong, and the ECB does a U-turn and agrees to unlimited monetisation, I will simply wait for the inevitable knee-jerk rally to fade before reloading my short risk positions. Even if Germany and the ECB somehow agree to unlimited monetisation I believe it will do nothing to fix the insolvency and lack of growth in the eurozone. It will just result in a major destruction of the ECB‟s balance sheet which will force an ECB recap. At that point, I think Germany and its northern partners would walk away. Markets always want short, sharp, simple solutions.”

#9 Dan Akerson, CEO of General Motors: “The ’08 recession, which was a credit bubble that manifested itself through primarily the real estate market, that was a serious stress….This is much more serious.”

#10 Francesco Garzarelli of Goldman Sachs: “Pressures on Euro area sovereign bond markets have progressively intensified and spread like a wildfire.”

#11 Jim Rogers: “In 2002 it was bad, in 2008 it was worse and 2012 or 2013 is going to be worse still – be careful”

#12 Dr. Pippa Malmgren, the President and founder of Principalis Asset Management who once worked in the White House as an adviser to President Bush: “Market forces are increasingly determining what the options are and foreclosing on options policymakers thought they had. One option which is now under discussion involves permitting a country to temporarily leave the Euro, return to its native currency, devalue, commit to returning to the Euro at a better debt to GDP ratio, a better exchange rate and a better growth trajectory and yet not sacrifice its EU membership. I would like to say for the record that this is precisely the thought process that I expected to evolve,but when I proposed this possibility back in 2009, and again in September 2010, I had a 100% response from clients and others that this was “impossible” and many felt it was “ridiculous”. They may be right but this is the current state of the discussion. The Handelsblatt in Germany has reported this conversation, but wrongly assumes that the country that will exit is Germany. I think that Germany will have to exit if the Southern European states do not. Germany’s preference is to stay in the Euro and have the others drop out. The problem has been the Germans could not convince the others to walk away. But, now, market pressures are forcing someone to leave. Germany is pushing for that someone to be Italy. They hope that this would be a one off exception, not to be repeated by any other country. Obviously, though, if Italy leaves the Euro and reverts to Lira then the markets will immediately and forcefully attack Spain, Portugal and even whatever is left  of the already savaged Greeks. These countries will not be able to compete against a devalued Greece or Italy when it come to tourism or even infrastructure. But, the principal target will be France. The three largest French banks have roughly 450 billion Euros of exposure to Italian debt. So, further sovereign defaults are certainly inevitable, but that is true under any scenario. Growth and austerity will not do the trick, as ZeroHedge rightly points out. Ultimately, I will not be at all surprised to see Europe’s banking system shut for days while the losses and payments issues are worked out. People forget that the term “bank holiday” was invented in the 1930’s when the banks were shut for exactly the same reason.”

#13 Daniel Clifton, a policy strategist with Strategas Research Partners on the potential for more downgrades of U.S. debt: “We would expect further downgrades, a first downgrade from Moody’s and Fitch and possibly a second downgrade from S&P.”

#14 Warren Buffett on the problems in the eurozone: “The system as presently designed has revealed a major flaw. And that flaw won’t be corrected just by words. Europe will either have to come closer together or there will have to be some other rearrangement because this system is not working”

#15 David Kostin, equity strategist for Goldman Sachs: “The wide range of possible outcomes on both the super committee process and the unstable political economy in Europe drives our view that investors should assume the worst while hoping for the best.”

#16 Mark Mobius, the head of the emerging markets desk at Templeton Asset Management: “There is definitely going to be another financial crisis around the corner”

#17 Gerald Celente, founder of The Trends Research Institute: “The whole system is going down. Pull your money out your Fidelity account, your Scwhab accout, and your ETFs.”

So basically, what are these experts really saying (the simplified version)……

They are telling us that “time is running out”.

They are telling us that “there is definitely going to be another financial crisis”.

They are telling us that this “is going to be worse” than 2008.

They are telling us that “the whole system is going down”.

The time is NOW to remove your head from the sand….there is very little in the economic world that is GOOD news…..