Tisk, Tisk

New York Attorney General Andrew Cuomo released a study today telling us all what we already knew, and what the bloggers have been telling the world for years now. The banks, mired in toxic debt, logging staggering losses and on the public dole for billions still somehow managed to pay out billions more in bonuses. You get bonuses for losing money in that industry. What a job! They engineered the greatest financial boondoggle in history, required trillions in Government and Fed funds to keep the whole system from collapsing, and then sat down and wrote themselves nice fat bonus checks.

The Street.com reported: "Citigroup and Bank of America's Merrill Lynch, two firms that remain in the crosshairs of the bonus debacle, got the brunt of Cuomo's criticism. He notes that Citi distributed $5.33 billion while Merrill paid out $3.6 billion in bonuses. Those two firms lost a combined $54 billion last year, and required government bailouts totaling $55 billion."

When you read things like that you have to wonder what kind of men rise to the top of this business, all prim and proper in their three piece suits. They live lives of comfort and extravagence, some making more each week than the average annual salary of most Americans. Like Wall Street itself, they are completely disconnected from the daily realities of what it is like to struggle to make a real living. All their millions come to them largely unearned, generated by a few keystrokes on a computer. Some garner their big bonus money by devising digital schemes to trade stocks a few milliseconds before everyone else gets to see the ticker, the so called "front running" of the market that should be patently illegal.

So Cuomo's report comes as no surprise. And attorney general or not, my bet is that nothing much will come of it beyond some nasty press for a few news cycles. No one will be prosecuted. The system will continue on as it always has. The wealthy men that run it, and by so doing run this country, will simply say "tisk, tisk," and go about their business of hiding losses, reporting phoney profits, and bilking the public trust of billions more. These men at the top of the financial pyramid really have no fear of firebrands like Cuomo. Oh, occasionally one of their own is thrown to the sharks, like Bernie Madoff, but by and large the culture on Wall Street remains unrepentant, unregulated, and as ruthless as ever.

How did we get here, staring into the abyss of yet another economic collapse, and one to possibly rival or even eclipse the Great Depression of the 1930s? Is it all the fault of extravagant “consumers,” the millions of Betas and Deltas in the soma ridden shopping malls of our Brave New World? Or perhaps we should blame those further down on Society’s ladder of privilege, the “sub-prime” Gammas and Epsilons who were unable to escape the Alt-ARM reset traps the bankers set for them in their “home loan.”

No. We must look higher up if we are to find the real culprits. The real damage to Society did not occur in the copper gutted neighborhoods of Cleveland and Detroit, but in the glitz and opulence of Wall Street, with John Thain’s $80,000 area rugs and $1400 trash cans the accepted norm. The shiny new corporate jets that the CEOs of GM, Ford, and Chrysler used when they first flew to Washington to beg for money are another clue, along with the $50 million addition to Citigroup’s corporate jet fleet after that bank received over $50 billion in free taxpayer money. The half million dollar party AIG threw after it received its $90 billion was yet another clue. Or perhaps we should look to the $13 million dollar estate of ex-Lehman Brothers CEO Richard Fuld, quietly sold to his wife for a sum of a hundred dollars to make sure it stays in the family… or to the millions in diamond studded jewelry Bernie Madoff tried to slip into the mailbox to his relatives and friends.

No, my friends. If we want to point the finger of justice at anyone, we must look first to the very top, where our Alpha-Plus executives sit in their mansions and multi-million dollar office suites—the men who have brought some of the largest and most powerful institutions in the nation to the brink of bankruptcy through their excessive greed, incompetence, lack of prudence and foresight, and downright corruption. Now they are looting the public purse as well, heedlessly, and well protected from any negative effects of their wrongdoing by their multi-million dollar salaries and golden parachutes.

"Tisk, tisk."

The Rothchilds said it well enough years ago: "Give me control of a nation's money and I care not who makes the laws."

Previews of things to come

Ever notice how a host of ominous things is always just about to occur, but never seems to really manifest as expected? The mid-summer doldrums seem to have settled over the news cycle these days. All the dire headlines are still out there, but I get the feeling of one stuck in a movie theater watching previews while the main feature never seems to hit the big screen.

A casual browse around the net will still find all the gloomy predictions. I write about them, along with so many others, but the various waves of the "long emergency" are building like a slowly rising tide--it keeps coming but never seems to get here. At the moment we are being warned of all the following:

1) Rising unemployment pushing at Depression era numbers.
2) Housing values still searching for a bottom and and foreclosure spike imminent.
3) A massive $3 trillion default wave in commercial real estate.
4) Rising defaults in consumer and credit card loans.
5) 1000 more bank failures possible in "the coming years."
6) 50% of Americans just one month from destitution.
7) Dollar heading for "sudden" devaluation.
8) Bank holidays coming.
9) Farmers cutting back dramatically on crop plantings=food shortages ahead.
10) Swine flu about to return in a mass epidemic.

I even saw one article talking about all this in the context of a deliberate plan to cause depopulation and bring the total numbers down from 6.5 billion to about 500 million. Now that's real gloom and doom. These stories run like race horses around the news and blog tracks on the Internet, but never reach the finish line.

This was just from today's headline browse, all things that are impending, imminent, looming on that dark horizon out there. But it never seems to get here! The system, and "daily life" just seem to be going along as always. Sure there are more vacant storefronts and for rent signs out there, and some cities feel the pain more than others, but by and large things all run pretty much as normal. 50% of Americans aren't destitute. The dollar hasn't collapsed. Bad securities or not, the big banks are still open for business. The stock market has been manipulated up by slick algorithms and other trading ploys. Oil prices seem to have stabilized. I can still buy anything I want to the local grocery store. The dread "Swine Flu" was so mild that it logged a kill ratio far smaller than our typical seasonal flu--yet the government and WHO seem hell bent to create a vaccine and start mass inoculations. Why?

On any given day you can take you pick from any of those ten headline categories above and read four or five articles on what is about to happen, what is coming, what is just around the corner in this endless round of the long emergency. But it really never happens. The massive societal collapse that all these articles hint at is just not ready for prime time yet. So go get some more popcorn with a big gulp soda and settle back into your seat for a while. The previews still have a ways to go before the movie starts.

Unsustainable Debt

As income and credit continue to diminish, most people are now painfully aware of the fact that they have taken on too much debt over the years when the good times were rolling. As long as easy credit, refinance options, home equity extraction were the order of the day, people could finance their life style by essentially spending money that belonged to someone else--money banks created at their whim when they "made" a loan. Like a shark that must always swim to get the oxygen it needs as water flows over its gills, the American consumer just kept on swimming in credit, until this economic crunch made them realize they were now simply drowning in debt.

Millions of homeowners are now "underwater," owing more on their homes than they can be sold for in this market. Their home has lost all its equity and is now a massive debt obligation. Thousands are walking away each month from situations that become unmanageable, making the difficult decision to cut their losses on the property and restructure their lives at a more sustainable level as renters. By the same token, millions of former "consumers" are now deeply mired in revolving credit card debt. For years they received ten or more credit card offers per week, and every time they shopped at Macy's, JC Penney or any other store, they were offered discounts if they bought on the store charge card. Nothing down and low easy payments was the mantra of retail sales for decades. Now all this access to fast credit has become unsustainable debt for individuals and families all across the U.S.

Barklays offered up some typically stupid mainstream media "good news" today, as Bloomberg reported: "The wave of "option" adjustable-rate mortgages recasting to higher payments, projected by some economists to represent a looming source of foreclosures that will hurt housing markets over the next few years, will be smaller than "feared" because many borrowers will default before their bills change." This is the sort of nonsense we get from the media, that also reported new home sales "surging" 11% in June when they actually dropped over 23% from June 2008. (They got their "surge" by comparing June's seasonally higher sales rate to the previous month of May. This is the duplicity, willful ignorance and outright deception that continues in the main stream media. Good news! We don't have to worry about defaulting Option ARMs, because they have already defaulted! They figured this out by discoverign that 40% of the people holding such loans are already in arrears. No good news there at all.

Like homeowners who take the hard step of walking away, consumers are doing the same with their credit card debt. Bank America reported an astounding 11.73% default rate, increasing from just 8.62% 90 days ago. When defaults surge 36% in just three months, the banks have a real problem. The customers they branded with FICO scores, and saddled with revolving debt through endless credit offers, balance transfer checks, teaser interest rate traps, rate hikes, fees and penalties, are now bucking in the pen and throwing off the stirrups and saddles. They are simply refusing to pay, and since the credit card debt is unsecured, there is little banks can do about it. Some play tough at first, hiking interest rates to 30% or more to punish customers who get behind, others offer to negotiate down the debt.

I said long ago that the reflexive punishments banks initiate to keep people in line would become a problem of their own design, like everything else in this crisis that was entirely created by the banks. When you hike interests rates to 29.99%, you effectively prevent a debtor from ever attacking the the loan balance, and lock them into endless revolving debt payments. Some people will look and realize they have credit card debt that exceeds their average annual income! In a system that allows this as a "best business practice" by the banks, the consumer's only sane option is to simply walk away. As the deflationary depression continues to grind forward, a person's greatest enemy is unsustainable debt. Yes, defaulting is frowned upon by "the system." Debtors who choose this option will sour their credit rating, but to my mind this is simple good riddance. Credit is debt, nothing more. The advantages of living debt free by far outweigh the fact that credit will be very difficult to obtain after default. But it will force consumers to live within their means--always a good thing--and restructure their lives to sustainable levels, something we must do as a nation if we are to ever recover from this ongoing debt crisis.

The great delevering of consumer and household debt is just getting started. Reuters quoted financial analyst Paul Miller as saying: "Growth in charge-offs and nonperforming assets still scares the daylights out of me." It should. Had the banks structured fair mortgage deals and offered fair interest rates in the first place, they might not be facing such a severe charge off, foreclosure, and default rates now. How about an adjustable rate mortgage that is keyed to the current market value of a house, where the payment gets lower as the house value declines instead of resetting to a higher level after an initial grace period? Such an idea would never enter a banker's mind, and this is why the default rates will continue to rise as more and more people "just say no," and walk away from their unsustainable debt to start over. All things must pass, whether the banks want it that way or not.

"Renunciation is not getting rid of the things of this world, but accepting that they pass away." -Aitken Roshi

Lies, Damn Lies, and Statistics

It has been said that there are little white lies, plain ordinary lies, damn lies, and then there is a category that tops them all--statistics!

1) Have you been out of a job for longer than one year?
2) Have you recently seen your unemployment benefits run out, but still find no work?
3) Are you out of work but so discouraged you haven't looked for a job in the last 4 weeks?
4) Have you lost your full time job and are you working part time to scrape by?
5) Are you in a trade or profession that has seasonal or chronic unemployment?

GOOD NEWS FROM THE GOVERNMENT!!! You're NOT unemployed!

Yes, you read that correctly. If any of the above conditions applies to you, according to the government you are NOT unemployed! Forget about the fact that you also do NOT receive a paycheck each week. That's a minor detail to the statisticians who compile the rosy employment data at the Bureau of Labor Statistics. When Uncle Sam counts heads for all folks he reports as unemployed in the official U-3 number, none of the categories above are tallied.

Let's sharpen a pencil and add things up...
1) About 4,400,000 have been out of work over a year--but they are no longer counted.
2) About 750,000 saw their benefits run out in June--out of work, but not counted.
3) About 1,400,000 didn't look for a job in June--out of work, but not counted.
4) About 9,000,000 can't find a full time job at all--not counted as unemployed.
5) Tens of thousands of seasonal workers have no current work--but they are not counted.

Add to this the fact that tens of thousands of former small business owners, who could not claim unemployment insurance when their business failed, are also not counted.

And all those workers at state offices closed to save money, and all those workers sent home without pay for a week in companies all across the nation... not even in the Fed spreadsheet. Not counted.

Then consider that the government just did a "statistical sample" and added 185,000 new people to be counted as "employed" last month, even though no data exists to prove any of these people were real, or that they actually landed a job.

Don't you just love the way the government crunches numbers? This is the same sort of basic intellectual denial that sees all sorts of "green shoots" sprouting up when in fact there is no sign of any economic recovery underway now at all. Zero, zilch, none. So after heavily fudging its numbers the Federal government reports only 10.5% unemployed (BLS Number for June '09) when in actuality the real number is about double that.

Statistics are like bathing suits: they reveal just enough to be interesting, while concealing that which is essential. In this case the essential truth is what is being concealed. That truth is that one in five American workers are out of work, or underemployed, about 20% of the workforce now. Spin that any way you want, but it is near depression level unemployment, and it arrived 24 months sooner than it did in the 1930s.

Wave Two

According to Bloomberg, Ben Bernanke admitted that: "a potential wave of defaults in commercial real estate may present a “difficult” challenge for the economy." Note to Ben, it's not a "potential" wave, it's a 100 foot monster cresting just off shore and ready to roll in on the banking and financial system with a vengeance. The first wave, sub-prime housing loan defaults, was only the initial storm surge before the hurricane of real estate distress out there. Yet it was able to knock down Bear Stearns and Merrill Lynch, run Morgan Stanley to high ground, flood out WaMu and Wachovia, all but topple AIG, and inundate Fannie Mae and Freddi Mac under twenty feet of malarial toxic waste water. If that wasn't bad enough, it so stressed the housing market that millions of "homeowners" saw their house values decline to a point where they were also "underwater," unable to sell without taking a loss. Here's what is just off shore for us:



We've seen chart after chart showing the next big wave building in the residential markets. Look at how all the exotic trick mortgages are scheduled to reset to higher payment levels and then tell me things are anywhere near a bottom in residential real estate--they aren't. The waves of pain are spread out well into 2012. But now we are seeing an upswelling in the commercial paper market, and the outlying towers of the remaining banking industry are sounding the alarm sirens.

Financial Times reported today: "Two of America’s biggest banks, Morgan Stanley and Wells Fargo, on Wednesday threw into sharp relief the mounting woes of the US commercial property market when they reported large losses and surging bad loans...Wells Fargo saw non-performing loans in commercial real estate jump 69 per cent, from $4.5bn to $7.6bn in the second quarter as the economic downturn caused developers and office owners to fall behind in their mortgage payments." Bernanke noted that the market for commercial mortgage backed securities had “completely shut down,” meaning banks have no way to pass the risk of default off to some other dupe in the system. This means that as all the commercial loans mature and need refinancing, the bankers won't be so friendly. It also means that we will see more and more commercial defaults, more empty office towers, strip malls, and vacant apartment complexes. It's the worse possibe time to be a commercial real estate developer/investor.

All of this, the sub-prime, ALT-A, Option ARM and interest only loans, the no-doc, low-doc, liar loans that were written and approved, all of it was the creation and cash cow of the banking system. The crisis we have now with all these loan resets triggering defaults and bank foreclosures is entirely "Made in America" by the US banks. The notion of modifying the loans never seems to occur to the banks. They can't imagine any solution that doesn't fatten their bottom line.

When Hurricane Katrina devastated New Orleans in 2005 I saw the event as a grand metaphor for America as a whole in my article "Bye, Bye, Big Easy." That was at the very height of the housing boom, and the good times were rolling all across the country, yet back then, as gasoline pushed past the $4 mark in places, I wrote: "The Big Easy is gone in other ways for America as a whole. The shock this disaster gives to our energy system should be enough to awaken in us a realization that we simply cannot go on with our Mardi Gras lifestyle in this country. Something has to change. We have built our levees to protect us all these years: our powerful military to secure the oil we need, a vast outpouring of home equity and consumer credit to keep our economy running. In many ways we, as a nation, are much like New Orleans—a city below sea level that may soon be well over it’s head in the flood tide that is coming. The challenge now is not to rebuild in the same old ways, the same old place—but to create something new in this country that will address the really impending crisis ahead."

Impending crisis ahead? No one I talked to back then could hear or imagine that the life they were leading could ever be threatened. Now they squint at the ever rising tide of mortgage defaults and wonder if the good times will ever be back in this country.

Footsteps to War?

I've been quietly following the news on the old Israel vs Iran thing, largely eclipsed these days by the upwelling of civil protest in Iran. But behind the scenes both sides continued to trade harsh words and make real preparations and deployments for an inevitable conflict.

Here's a light summary of some things you may have missed:

March 2009 - Jerusalem Post reveals that four key strategic considerations have changed in the Iran equation. I quote them here: “ First, Iran has proven it can successfully launch a satellite into outer space as it did on February 2.... Second, the International Atomic Energy Agency last week admitted that it had underestimated Iran's nuclear stockpile by about one-third. ... Third, Iran has ramped up its enrichment program with thousands of new homegrown, highly advanced centrifuges. ...Fourth, Binyamin Netanyahu has just become prime minister of Israel. He is determined to take action before - not after - Iran achieves its nuclear potential. This creates a volatile, hair-trigger situation that could explode at any moment.”

April, 2009 - The London Times reports that Israel is training to carry out a strike on Iran on short notice, a matter of days or even hours after being given the go sign. Meanwhile, Harretz reported: “The Home Front Command is preparing to hold the largest exercise ever in Israeli history, scheduled to take place in about two months, in hopes of priming the populace and raising awareness of the possibility of war breaking out.” The nation wide exercise will last a full week and is scheduled for June, 2009. It appears Israel is determined to go to war to prevent Iran from the potential of obtaining a nuclear weapon. Israel is believed to have more than 100 nuclear warheads now. Analysts believe Iran would have only enough fissile material for a single weapon in the 2010 to 2013 time frame.

May, 2009 - Iran continued to arm itself with missiles, following a strategy that has been proven successful against the conventional military operations of nations like the US and Israel. Reports emerged that Iran was scaling back production of the liquid fueled Shahab-3 Missile in favor of the more stealthy solid fueled Sejil II. When mounted on mobile launchers provided by China, this missile will be difficult to find until launch compared to the Shehab, which takes hours of preparation prior to launch from fixed sites. Reports also came in claiming Israel was moving missile capable subs to the Persian Gulf, (which would seem to me to be a routine deployment).

June, 2009 - With the troubled reelection of Amadinijad and related protests, both sides continue to test and deploy military systems that would be used in any imminent conflict. Again China appears to be aiding Iran, sharpening her teeth with the sale of the HY2 Hai Ying “Sea Eagle” missile, a Chinese version of the deadly Russian designed Moskit 3M80 “Sunburn” anti-ship supersonic cruise missile. Traveling at speeds of 1500 to 1700 mph, the missile is a deadly threat to US carrier task forces, and was designed to defeat ships protected by the American Aegis missile defense system. On the Israeli side the US Pacific Missile Test Range centered on Naval Station Pt. Mugu will provide a range for the testing of the Arrow III ABM system off the California Coast in mid July. The teeth on both sides are sharpening.

July, 2009 - CampaignIran.org reports: “Two Israeli missile class warships have sailed through the Suez Canal ten days after a submarine capable of launching a nuclear missile strike, in preparation for a possible attack on Iran’s nuclear facilities.” Other news in the early summer included talk of European and US support for an Israeli attack on Iran in exchange for real Israeli compromise on Palestine after it all blows over. Iran continued to brush off Israeli threats and promised massive retaliation if attacked. In effect, nothing has changed. The tension on the spring continues to mount as a report of an Iranian nuclear capability inside of 6 months added fuel to the rumor mill.

If there is anything we have learned about the Middle East, it is to expect the worst of any potential outcome should war erupt there later this year.

Two Americas

"There are two Americas, not one: One America that does the work, another that reaps the reward. One America that pays the taxes, another America that gets the tax breaks. One America - middle-class America - whose needs Washington has long forgotten, another America - narrow-interest America - whose every wish is Washington's command. One America that is struggling to get by, another America that can buy anything it wants, even a Congress and a president." --Presidential Candidate John Edwards, 2004

So the banks got themselves into a mess with irresponsible lending, reckless leverage, a raft of shadowy unregulated securities, and equal measures of good old fashioned greed and fraud. They then got a massive bailout in both direct cash infusions, insurance payoffs, and generous support from Fed programs like TAFT, TALF and god knows what else. And it wasn't enough. After a commitment of more dollars than all past American national wars, the banks were still in a hole so deep that no one could fathom its true depths. So we told them to simply change all their accounting rules and re-value all the toxic "assets" at peak boom time levels. No more "mark-to-market." Who needs it now? The free market is dead and toe tagged. Let's pretend all the banks are still solvent and use these bailouts and accounting tricks to claim they have just logged some nice fat profits. This will sucker more money into the stock market, right?

Meanwhile, in that other America John Edwards was talking about foreclosure rates and unemployment hit all time highs--and the numbers reported are just a part of the real truth. The banks are holding over half a million more homes that are destined to fall into foreclosure, foot dragging the process for their own devious reasons, and the unemployment numbers don't count people who have given up trying to find jobs--by the millions. The official stats are fudged so bad they are really just another level of delusion, like the banks accounting tricks. But on the streets people know the real truth--stores closing, homes lost, jobs lost, bills mounting up, and many struggle just to feed themselves now.

The banks needed help? Why didn't the government just give the bailout bucks to the American people? It would have paid off every credit card and car loan, and brought every mortgage current in the nation. Every American would have a clean start, being out from under the usurious debt loads they have been carrying. The bailout bucks would have ended up getting deposited in the banks, right? Only this way the American people, who provided the money, would have had first use of the dollars to better their own condition and relieve their debt. Once done, we just turn off the credit card game altogether, by a mandate of law, so we never go to that debt hell again. With all their debt retired, the monthly income of people would have been freed up to keep spending levels high--though this time it is all cash and carry, no credit. Do you think we'd be mired in recession if the bailout had been given to the American people instead of the banks? As it stands now the money just seemed to vanish into a black hole. No one can really account for it all. No audits are allowed.

Yes, snooty economists will look at a suggestion such as this and talk about inflation and all--but they won't talk about the$500 trillion in securities, derivatives, and swaps floating around out there, all a creations of the banks. What really happened? We got a check for $300 from Uncle Sam, and then a bill for over $30,000 each to fund the bank bailout that produced little more than a false front of "profitability" that is nothing more than a lie. Nothing has changed. The big banks remain insolvent, and anyone who looks at the economy with any honesty will see there are really no "green shoots" either. We still have our two Americas, one getting richer, getting its way in anything it desires, the other getting poorer, getting left behind, and the people seem unready or unwilling to do anything about it.

"This is the way the world ends...not with a bang, but a whimper."

Goldman Parachutes

There's been a lot of talk on the net about Goldman Sachs, especially since Matt Tabbi's Rolling Stone article following the shadowy firm through every major Wall Street boom and bust cycle. Amazingly, Goldman always seems to come out on top. In our most recent crisis, leveraged up to their eyeballs in bad securities and ineligible for government bailouts because they were not a bank, presto-chango, Goldman morphs into a bank holding company overnight and gets a nice fat bailout check. Then, when the firm stood to loose big on a failing AIG, the massive US bailout of the insurance company saw another $13 billion quietly funneled to Goldman to pay of its securities at 100 cents on the dollar. The rich never take losses.

It's a strange formula. Wealthy men take enormous risks, they lose big, and poor men make good the losses by giving the rich free money. And since the rich own the media and pay off the politicians, they have cemented the idea in the public's mind that all this is "for our good." Meanwhile, Goldman announces a $2 billion quarterly profit, setting aside a cool $18 billion for future bonuses and employee compensation. How tactful of them. And this news comes on the heels of a cloak and dagger spy heist of proprietary Goldman trading code where Goldman representatives admitted that anyone who got their hands on it could "manipulate the market in an unfair way." Did anyone ever stop to consider what Goldman employees were doing with the code all along? Matt Tabbi has.

Ilargi over at Automatic Earth talked about the futility of getting to the bottom of a power center like this that seems to have its operatives placed at the very highest levels of the US government. "In the case of Goldman, if you would want to really go after the firm and its people, if you would want to dissect to the bone the books and transactions, the links, liaisons, and connections, the trades taking place on a daily basis over, on and under tables and counters, ... That is, if you hunt Goldman down, all the way down, you will wind up without a US government."

The NY Times cemented this point in an article where they showed how Goldman alumni leave the company, migrate to high government posts that set economic policy, then migrate back to the private sector again. Washington's Blog laid out the current list this way:

"The Times points out that Goldman alums include:

* Former treasury secretary Hank Paulson

* Paulson's bailout chief Neel Kashkari

* Interim Treasury investment officer Reuben Jeffrey

* Key Treasury players Dan Jester, Steve Shafran, Edward C. Forst, and Robert K. Steel

* Key New York Federal Reserve players Stephen Friedman (head of the New York Fed board of governors, who sat on Goldman's board and owned a substantial stake in Goldman while he was making official decisions), William C. Dudley (head of the New York Fed's unit that buys and sells government securities), and E. Gerald Corrigan (charged with convening a group to analyze risk on Wall Street)

And there are many more Goldman alums who have been - or are soon to be - appointed. For example, Obama has named Gary Gensler to head the Commodity Futures Trading Commission. And Geithner named Mark Patterson as his top aide last January."

And here you thought Barak Obama was running the show.

The Alfie Question

Enough about bad news today, time for some muse instead...

"What's it all about, Alfie? Is it just for the moment we live?" So went the popular song from the 1966 movie Alfie. Nothing like asking one of those fundamental, earth shaking, got-to-get-to-the-bottom-of-this questions, eh? It's the same question Buddha, Jesus, Mohamed and all the rest came to answer, and nobody gets through this life without asking it, or coming to terms with some sort of inner answer. There's an old Chinese proverb that goes: "He who asks a question is a fool for a minute; he who does not remains a fool forever." Very clever, these Chinese.

Most of the world's great religions are all about answering the Alfie question in some final or fundamental way. But if you think about it, you give your life energy to finding that answer every day, in one way or another. The Hindus came up with an interesting concept called the Chakras, reputed to be energy centers in the body arranged along the spinal meridian, each also having to do with ever more sublime energies as you move upward from root to crown. The 1st and lowest Chakra was survival, the energy we put out to simply maintain and protect ourselves as a viable life entity on good old mother earth. It involves working, planting, harvesting, eating, building a safe nest. That accomplished, we can move on to 2nd Chakra, pleasure, and eat things we like instead of bare subsistance food. We can enjoy the activities of life instead of performing them simply to survive. 3rd Chakra is power, the energy devoted to deciding, controling, dominating, directing, acquiring. It's a kind of obsession to always have more than just enough that also involves enlisting the energy of countless others to help you get what you want. Generals, dictators, bankers, business tycoons and politicians love this one.

There are seven Chakras in all, and some folks are busier on the higher Chakras, giving their energy to compassion, communication, intuition and enlightenment. These are the artists, poets, feelers, and givers in the world, people who may live their lives in service to others, or to some sublime art. You now them easily when you meet them. They just don't seem to be obsessed with getting ahead or getting more, being quietly content with what they have and do in life. They still do all the basic things to survive and enjoy life, but most of their energy goes into those higher Chakras. Yet they are rare souls.

If you think about it, most people on the planet are answering the Alfie question by focusing their life energy on one of those three lower Chakras: survival, pleasure, power. Billions struggle to scratch out a subsistance living in the "third world," while those in the higher tiers of civilization obsess in the pursuit of pleasure, power, and the acquisition of "stuff," as George Carlin might say, to give you the illusion that you've actually attained that state of pleasure, or that you are indeed actually powerful. This constant reaching for more is basic to human nature, or as the poet Browning said: "A man's reach should exceed his grasp, or what's a heaven for?" We are always reaching for more than we have. It's a reflexive drive, like an appetite, and some 600 years before Jesus showed up, a man named Buddha had an insight that it was the desires spawned by these appetites that were the cause of all human suffering.

Buddha's message to the world was starkly simple: 1) There is suffering. The world was full of sharks, ebola, fire, hurricane, earthquake, drought, let alone the cruelty of humans in the way they treated others as they sought their pleasure and power. "A flower falls even though we love it and a weed grows even though we do not love it." That's life. There is suffering, but it was overlaid with another level of mental anguish and anxiety that arose from our unfulfilled desires. We want life to be all flowers and no weeds. So Buddha concluded: 2) the cause of suffering is desire, logical enough. You want that big house. You dream about it, fill it with new furniture in your mind and landscape it with terraced gardens in your thoughts. One day you finally apply for the jumbo loan at 5.25% and surprise, the loan is denied. There's a credit crunch on and the banks aren't lending. So you get stuck in your old home, deeply underwater as it loses value month by month, you lose your job, the bank forecloses, and you suffer--first for the loss of your desired new home, and then because you are stuck in a place and set of circumstances where you definitely don't want to be. It's a double whammy of desire-spawned suffering that makes Buddha's insight fairly transparent.

The next thing out of Buddha's mouth, however, was the real trick. It was really no great metaphysical hocus-pocus, or even a leap of faith. It had nothing to do with a benevolent God out there somewhere waiting to rescue you, and nothing to do with worship, ritual, supplication, offering, sacrifice or any of the other trappings of religion. It was just another simple progression of logic when he concluded: 3) the end of desire is the end of suffering. Imagine that! Suffering because you want that house? Then stop. Just stop, and let the house go. Yes, just let the desire go, house, furniture, landscaping and all. Impossible? Perhaps, but sitting under his Boddhi tree one day he claimed he was able to let all the desires of life go, and the suffering each one spawned suddenly went with them. Bingo, satori, enlightenment! So there he sat, unmoved by the urges and yearnings of human life, quietly present to the one moment he found himself in--this one--the here and now reality of life that holds the totality of all there is.

You're in that moment there with him as well, right now. Believe it or not, you are sitting under a bodhi tree this very minute, whether you are behind a desk at the office, standing behind a cash register, hammering a nail, or stuck in traffic on a freeway somewhere, you are right there in the one moment that holds it all. So Buddhism is replete with assertions such as this: "Your Treasure House is in yourself, it contains all you need," or "the only rich man is one who knows he already has everything he needs." And Jesus said: "The Kingdom of heaven is within you." At root, Buddha is asserting that you do indeed already have everything--because everything in this one moment, the only place you are at liberty to be now, is perfectly here, perfect in every way, and needs nothing else to make it so. Your problem is that you are not paying attention to that basic truth, said Buddha, and this paying attention was called mindfulness, a state of awareness that allows one to see the clarity and meaning of all this insight, free from the ten thousand things that entice, irritate, and distract us each day.

Release it all, quiet down, pay attention. This is the basic message of Buddhism. Do this and you will awaken, as from a dream that was filled with all your desires and striving and yearning, and you will suddenly realize that you are here, you are OK, you are perfect as you are, and that here is enough. Bingo, satori, enlightenment!

Admittedly, getting to Bingo is hard to do as you stare at those unpaid bills or swipe that credit card to make ends meet each month. It's hard to do if you are standing in an unemployment line, or facing foreclosure, or pondering your diminishing 401k. All these activities are about getting somewhere else--to a moment when you will feel yourself to be OK, safe, and "happy." But Buddha's insight was about telling you that moment is here and now, and if you cannot find a way to feel OK now, what makes you think you will after you get your big house?

So being happy is no great mystery. It doesn't take years of meditation, hours of prayer, incense or offerings. And it certianly doesn't take a big house, a big bank account, or a big ego either. It just takes one moment when you realize you are here, along with all of it, and it is all perfect just as it is. Get it? Zen doesn't care if you do or not, because nothing really changes. A Zen proverb goes: "If you understand, things are just as they are; if you do not understand, things are just as they are." So your insight or ignorance are really one and the same. The wise and deluded are just here along with all the rest. Nothing more, nothing less.

Perhaps you've had a moment of that feeling and insight, and the fundamental contentment it brings. It comes easily in moments of triumph, where you have realized some long sought after goal, but it can also come in the simple, ordinary moments that also hold everything if you pay attention to them. Some of these moments are easier than others to reach that place of contentment. You know them...those quiet moments in the dark when you hold someone dear to you, or sit with an old friend on a seaside bench, or walk hand in hand in the Farmer's Market with a newfound love. You have "happiness" by the tail in such moments. Can you also grasp it standing alone on Christmas eve, and looking out the window at the lights of the city where Santa visits everyone else, but seems to have forgotten you?

If you think about it, Alfie had it right from the very first. It is just for the moment that we live, that one moment that holds all things, and brings every contentment and chance of happiness if we but pay attention. This is the answer to Alfie's question. It's always here, never tomorrow or yesterday, and I hope you savor it.

Have some wine too!

Reality Bytes

Headlines today continue to be somewhat frightening. The total number of jobs in the economy has now fallen to where it was just before the turn of the millennium, which means all the new jobs created in the 21st century have now been lost. We're back at 20th century levels now, according to the Business Insider.

The effect of this on Main Street is being keenly felt as Bloomberg reports that a record 33.6 million Americans are now on Food Stamp programs. (11.5% of our total population). The loss of jobs, along with the loss of access to credit, has severely curtailed the average person's purchasing power, making necessities like food more and more difficult to afford.

Bloomberg also reports that the number of Commercial properties in default has now doubled since January, with a total of $108 billion now in default. This is no surprise. When credit dries up properties cannot roll over their financing easily any longer. Then, as people lose purchasing power, the decrease in sales affects all commercial activity when small business tenants fail and fall by the wayside. You will see more and more "For Rent" signs on empty storefronts and office buildings. In the short term realtors representing these distressed property owners will be busy marketing, but lack of demand for sales and leasing will continue to crush this market like a slow vise.

International trade is way down. Naked Capitalism reports that shipping levels at key ports have fallen another 10% as demand from China begins to falter. Shipping rates are plummeting, with container fees off over 40%. Total trade traffic is off by 27 million fewer containers from 2008 levels. The American Trucking Tonnage index has now also fallen to year 2000 levels, so all the "growth" of the 21st century has been lost.

Apartment vacancy rates have reached a national 22 year high as bloomberg reports: "Job losses and falling wages are shrinking the pool of potential renters, defying forecasts that prospective homebuyers would rent rather that purchase as house prices decline." People who can't sell are renting their homes, yet tenants are thinning out as the cost of moving is still a great burden to those struggling just to pay bills and put food on the table. I have long argued that the old model of credit check, first month rent, security deposit, and a one year lease that is so common will come under more and more stress. Landlords who adapt and offer incentives to make it easier for new tenants to get into a rental will survive. Those that don't will see their vacancy rates continue to increase.

MSN Money has finally admitted that the nation's real unemployment rate is already at Depression era levels of 20%. In fact, more and more mainstream media outlets are finally realizing the true nature of our economic downturn, just as Joe Biden revealed in his interview last week. The damage was consistently underestimated by all but the intelligent bloggosphere. This is par for the course. The Nov 24, 1930 headline of Barron's foolishly read: "The End of the Business Retreat?" Now a Barrons financial editor is finally admitting we are heading into another depression that could prove to be as long and painful as that of the 1930s.

These were just a few news bytes from reality this morning. I hope your world is better than these headlines.

Pitchfork Time

The First Post in the UK made an interesting point about California’s deep budget crisis. “The 'Governator' (as Arnie is known) …wants even deeper cuts - a 10 per cent reduction in the income of all state employees; cuts to school funding of $5bn; the sacking of firemen and policemen; an end to financial aid for university students; early release of tens of thousands of convicts; elimination of subsistence aid for one million children living in poverty; closure of 80 per cent of the state's parks.”

Now just consider that for a moment… California is the world’s 8^th largest economy. It is $24.6 billion in debt and has had to issue IOUs instead of cash payments to its creditors. The US government glibly tapped taxpayers for nice fat $50 billion checks for each of the big banks, (BofA, Citigroup, JP Morgan Chase, Wells Fargo), and then cut $25 billion checks for a host of other prominent banks. This was all paid for by the citizens of this country, but there is no money for California, so now we will go without school funding, student financial aid, food for the hungry, police and firemen and they will shut down 80% of the state’s national parks and put criminals back on the streets instead. Amazing!

This is just insane. Why do the citizens of this country tolerate this appalling misallocation of funds? What did we get for all those billions funneled to the big banks? The credit crisis they designed, built and continue to perpetuate has not changed one bit. All the key statistics that affect the average Joe on the street have simply worsened: unemployment, foreclosures, business failures, and the banks have been tightening the debt saddle straps they have on everyone with their new tough love lending policies and credit destruction. All this talk about job creation, stimulus, getting consumer spending started again is a myth. None of it is happening, nor will it happen again anytime soon. We gave the banks truckloads of money, most of it printed at the whim of the Fed, (which is a another group of private banks), and all we got for the $13.8 trillion so far is lower credit lines and FICO scores and higher interest rates and fees.

It’s tar and feather time, folks. Now the same big banks who got free money from US taxpayers equal to twice what California needs won’t even accept the state’s IOUs. It’s pitchfork time! Where are we? Mourning Michael Jackson in an endless series of 2 hour specials? What is wrong with this nation that we tolerate this?

Death of an Icon

I suppose I should have expected it. This country has been so fascinated by celebrity icons, and the aspiration to become wealthy and famous with shows like "American Idol" and "Who Wants To Be A Millionaire" that it is no surprise that the death and burial of a pop singer commands top billing in the news. But we haven't seen this much hoopla since Elvis died and left the building. Today Michael Jackson moon walks his way to eternity, with all the media coverage of JFK's death, and then some.

In a nation of never ending distraction our media has piled on to the story with the typical frenzy that spells: "Big Audience Numbers Here." All the major news anchors have been flown in to lead the "team coverage." CNN tells us "The Web Braces For Michael Jackson Onslaught" forgetting that they are in the vanguard of the media shock troops leading the charge. Then they ask me these weighty questions this morning:

1) Q: How are you honoring MJ today? Answer: I'm not. I never honored him in life, so his death holds no particular meaning for me.

2) Q: Do I want to know places to go to honor Michael Jackson? Answer: No, I don't. Do you have any real news to report?

3) Q: Who do I think has appeared in a mysterious image in a tree, Jesus or Michael Jackson? Answer: I could care less And why is this ridiculous story on page 1 of your web site?

Folks, Michael Jackson was not a legend. He was just a pop singer trying to hold his life together with a cocktail of anti-depressants and and his own mini version of Disneyland on an estate mired in debt. He did what he did well enough to sell millions of records and build up a palatial playground he called Neverland where he could continue his bizarre, isolated Peter-Pan existence as he slowly morphed into a pale moon walking image of the Phantom of the Opera. I was never thrilled by "Thriller," nor did I ever buy or listen to a single album he produced--just a matter of taste.

Those that loved him can happily answer CNNs big three questions of the day, but this is all I can offer, a continued amazement that, with so many other issues of grave importance before us, the nation can stupidly focus it's attention on the death of one man. Congress itself is locked in a debate over whether to call the man a "lowlife pervert," or a "global humanitarian." According to NY Rep. Peter King, Jackson was glorified while the nation ignores the struggle and efforts of so many others: teachers, firefighters, police, veterans.

I think the nation just would rather forget all the real news out there today, getting worse each week: the foreclosures, the job loss, the bills piling up, the credit card deliquincies at a record high, the empty shopping malls. Instead we indulge ourselves in this media love fest for the King of Pop, who now joins the King of Rock in the hallowed halls of all bygone celebrity demigods.

In his recent post "The Man In The Mirror" James Howard Kunstler tried to explain this strange national fascination for Jacko: "Eerie parallels resound between the sordid demise of pop singer Michael Jackson and the fate of the nation. Like the United States, Michael Jackson was spectacularly bankrupt, reportedly in the range of $800-million, which is rather a lot for an individual. Had he lived on a few more years, he might have qualified for his own TARP program...Like the USA, Michael Jackson was a has-been. He hadn't recorded a song worth listening to in over two decades...He existed strictly on image, an anorectic figure nourished by moonbeams of attention...In his last years, he even looked a bit like Nosferatu, the personification of the un-dead, and his fascination with ghouls was the basis for his biggest hit way back in the last century. A zombie nation deserves a zombie mascot. He was a poseur, vamping in weird military outfits as though he were a five-star general in the Honduran army."

So in some ways we can see the nostalgic attention paid to a pop singer as an image of our own pining for the old life we had here in America, a life that we can feel slipping away, month by month, and year by year. So today millions and millions will sit enthralled by the coverage, while I chide myself inwardly for taking the time to even write this post about the subject. I hate to be a killjoy, but the fate of Michael Jackson is just not important, not news, and not something a nation should mourn in this way. I suppose we have to wait ten years for the postage stamp now... Sigh.

Just my humble opinion.

Cloak & Dagger

Like those two Japanese "gentlemen" who were caught trying to smuggle a suitcase full of US Treasury bonds across the Swiss border, (and then conveniently vanished), another story cross the wire at Reuters this morning that would make a nice spy movie thriller. It involved the sudden disappearance of the world's #1 trading firm, Goldman Sachs, from the NYSE's daily post of the top 15 trading firms. How could Goldman, always #1, suddenly not even make the top 15? Then, mysteriously, the NYSE announces that it will no longer post this information, and with all the hoopla over Michael Jackson's death, no one noticed but a single intrepid blogger over at Zero Hedge, who complained about the secrecy and lack of much needed transparency in this shadowy world of securities trading.

Then it got interesting. The FBI arrested one Sergey Aleynikov, a computer specialist who had taken a post with a top "financial firm" to build real time trading software. After a short term of employment he suddenly leaves the company, but according to Zero Hedge:

"In the 5 days immediately preceeding his departure from "Financial Institution" (potentially GS), Sergey allegedly downloaded 32 megs of ultra top-secret quant trading proprietary code, that, according to Special Agent McSwain's affidavit, he then proceeded to encrypt and upload to a website in Germany, with a UK owner. One can only imagine the value of this "code" not only to Goldman but to the highest bidder. After all, from the affidavit: "certain features of the [code], such as speed and efficiency by which it obtains and processes market data, gives the Financial Institution a competitive advantage among other firms that also engage in high-volume automated trading.The Financial Institution further believes that, if competing firms were to obtain the [code] and use its features, the Financial Institution's ability to profit from the [code]'s speed and efficiency would be significantly diminished." Needless to say, many others are now also likely hot on the trail of the code."

So it looks like the Big Boyz got scammed, and the NYSE turned off the trading reports to cover up the story while Goldman was trying to sort out just how much of their secret trading code had been compromised. This story went from a blogger rant to possible big news when Matt Goldstein at Reuters posted on it this morning, (July 6). We'll see if it develops.

Buddy, Can You Spare A Dime?

In My December '08 "predictions" article I tapped unemployment to be the most severe problem on Main Street for 2009. The numbers, heavily fudged by the government, remain uniformly bad. While the "official" stat is now 9.5%, the U-6 figure is 18.7% and rising. This figure is the closest look at the real unemployment picture, because the official government number simply stops counting a person as unemployed once their insurance benefits run out, nor does it count underemployed or those forced to take part time work. It also has a strange guessing game formula for estimating cyclical job birth and death, not based on actual stats, but simply on a mathematical "guesstimate." Senior Psychometricians everywhere would certainly have a field day taking the government to task for their faulty statistics.

That 18.7% number means just over 30 million Americans are unemployed now, five people for every job opening now being reported! This is shocking unemployment. The numbers have blown away job loss figures from the last four recessions, which, by this time in the cycle, had already bottomed and were starting to show job growth. In fact, job loss is now accumulating at a pace that well ahead of that set during the Great Depression of the 1930s. Unemployment stood at 15.9% at the end of 1931, a full 26 months after the 1929 market crash--yet here we are, just 8 months after the great financial collapse of October '08, and our U-6 unemployment is already at 18.7%. Unemployment in the Depression didn't peak for two more years when it reached 24.9% in 1933, and stayed at 20% or higher until 1935. All bets now are that our own unemployment will challenge those figures as well, (with the U-6 stat).

The markets did not like the news today before the traditional 4th of July weekend barbecues. It dropped like a stone at the opening bell with the Dow losing 223 points in a session that closed 15 minutes late--with the ticker heading down in all of that overtime trading. The market has about squeezed all the juice it can out of the spring rally. It's reality time now.

Face it. You can have all the hope and optimism in the world, but the math for a recovery any time soon is just not there. We are in a situation now where the loss of your job brings you face to face with your own personal Great Depression in a heartbeat. People are locked into mortgages, still paying high rents from the inflated real estate boom, carrying huge amounts of debt on their credit cards. Most are just a paycheck or two from being broke. Finding a new job will be extremely difficult in this climate. So as housing values continue to decline, equity continues to evaporate, 401ks shrink month by month, the recovery is yet a long way off in this writer's opinion. This wealth deflation, and all those lost jobs, will prevent any rebound in consumer spending, and there goes 70% of the economy.

Now consider that massive $13.8 trillion dollar bailout funneled to the firms that created the collapse, the big banks and investment houses. Blogger Matt Tabbi had this scathing remark about it in his article for Rolling Stone. Speaking of Goldman Sachs, he wrote:

"The bank’s unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere – high gas prices, rising consumer-credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you’re losing, it’s going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it’s going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth – pure profit for rich individuals."

I suppose the old saying that the rich just keep getting richer while the poor stay poor is so very true. There are now thousands more people, former middle class citizens, becoming the "Nouveaux Poor" in this country. Say buddy, can you spare a dime?