BRAKING THE BANKS

8 AUG 2007


BRAKING THE BANKS


As the Gods on Mount Olympus looked down upon the mere mortals and took care of their own brood, the national bankers of the various industrialized nations are throwing dollars in the market to save their kin from the financial Armageddon. It has only delayed the day of reckoning. (This para added on the 13th of August 2007)

SHOULD THE FED BE TRIED FOR TREASON, FOR UN AMERICAN PRACTICES, FOR SELLING OUT THE NATION, FOR LEAVING AMERICA BROKE??? FOR DESTROYING THE ECONOMY AND THE FUTURE OF OUR NATION, AND CAUSING THE PEOPLE OF THE WORLD TO BE ENSLAVED!!

It was over eighteen months ago when I asked Senator Shelby as to when the federal government spends the borrowed money (budget deficits), where does all that money end up at? Well there are many ways you can word this question, many ways to define the deficits, and there are many stories the government tells us about the deficit spending, but the end results are always the same and it seems that the money also ends up in the same pockets, sooner or later.

Our government is more broke than any other government on the face of the earth, in as much as the number of dollars owed and promised to be paid back at some time in the future. There is no money in the social security fund to pay back the working poor and persons from so called lower middle class, who slaved for years for meager wages for a promise that they will be taken care of in their old age. That money has already been spent many times over, our federal government is on the hook for the under funded retirement funds, the FHA loans, the VA loans, the Medicare and the monies owed to the foreign governments and the banks, for the merchandise bought and sold in retail stores, what we call the trade deficit or current accounts deficit.

As our MBA president brags about our booming economy, if he were to be honest he would be crying real tears for how broke we are, and that the house of cards that the Republicans (with help of sell out Democrats) have built could come down any time at the whim of a foreign or domestic banker or currency trader or the Chinese or Japanese Government.

Since Mr. Senile, the President Reagan, declared that the deficits do not matter, that the tax cuts increase the government income, that the global economy is good for every body, that the workers are fools to ask for a decent living wage ( bust the unions) and can be replaced by slaves in other countries, we have been on a non-stop down hill slide, and like the children of the story of the Pied Piper, we have been a nation glee fully running along to our own national demise.

Our leaders are not giants nor geniuses, they are not gods nor angels, and as such Reagan was an old man, albeit with a sense of humor (to make up for his total lack of real knowledge), till he passed into the onset of Alzheimer’s while still in office. If we were to admit the truth ( if could have even understood) that he was not an economic genius who parroted what he was told to believe with a smile on his face. If you believe that cutting taxes actually increases the revenue to the governments coffers then to you Saudi Arabia is nothing but a thousand mile wide beach. What we forget is that under Reagan the government accumulated a trillion dollar deficit. That under Reagan the bank reserve requirements were trimmed, that under Reagan we started to “borrow” money from the social security deposits, without telling the public that it was also a part of deficit spending, that the new banking regulations under Reagan allowed banks to create money on demand, and as such money existed if you wanted it, no need for anyone to save any longer. That under Reagan the stock market truly became a gambling joint, where average person was to put away his life‘s saving.

SO WHO SHOULD PAY FOR THE SUB STANDARD MORTGAGE LOAN LOSSES? There have already been calls for the federal governments to step in bail out the mortgage and banking industry. Does anyone remember we have been here before? Does any one remember the Silverado Savings and Neal Bush, or John McCain and the Keating Five? Michael Milkin anyone? Didn’t the federal government just bail out the fools already? And who gets stuck with the bill? Not the rich mind you because they can not pay taxes, they need tax cuts right? As I explained back in 2002, the rich were given a tax cut to make up for the Fed lowering the interest rates.

Who’s money is it that the Fed is using to bail out the hedge funds and the bankers, who’ money is it that they are talking about using to keep the homeowners from bankruptcy? - Hey Mr. President, where are those seventy percent of the Americans that own their own homes.- Does the Fed grow money? Do the American people have money saved so that it can be loaned? The Fed, and the Federal bankers of the industrialized nations, as usual, can snatch money out of the thin air. (not in the third world countries though, where it is considered inflationary)

As I have discussed before, all money today is imaginary, and yet the major business of the people in business and banking is how to steal the most of it through financial gimmicks, and ripping off of the workers, (who are, by the way stupid enough, to let it happen). In a “free” economy people are free to chose what they want to pay for a product. We have an economy already based on that rule, “ to buy things that we do not need, with the money that we do not have, loaned to us by the people who are hoping we will not pay them back”, because when you do not pay back your loan you are nothing, because you are no longer going to work to make money for THEM.

When we talk about the monetary policy today, we are not talking about the real world, we are talking about consumption, consumption and consumption, which when extended to the real world only means that a percentage of the people, will be allowed to corner the resources and let the rest suffer. People who become a part of the machine called the corporation. We are no longer living in a free world, or a free society, we are consumers who work to earn so we can spend all we make, and more, selling our children into slavery, or worse, setting up the world for a decimation of population groups.

I am not a conspiracy theorist, I state the facts about what I see, so I am not saying that there IS a conspiracy per se, what I AM saying is if the things don’t change, and if we don’t change the way we are doing certain things, this is what the consequences will be.

So here is how the scam is working. But first let me tell you that the consumption causes pollution, it is destroying the environment and depleting the natural resources, it hurts a lot of people for the benefit of a few. The cost of one single apartment in a luxury condominium can provide clean and safe drinking water for thousands in India, or Bangladesh or in some African village.

We live in a world where the average American high school kid can not make change for a dollar, or balance a check book then how is he supposed to know who the global economy is working.

Let me give you an example, the Fed discount rate cut may have helped the banks and hedge funds and other “lending institutions” but how is it going to effect your personal life, right? This is actually what is happening, when the interest rates are kept low by federal reserve no one can (or is willing to) save any money. How is that? you say. See the first thing is that the government is telling us lies about inflation, since Mr. Reagan had the inflation rate calculations changed. Even though the cost of housing, transportation (price of a car or truck and gasoline, oil, tires etc) medical care and college education have been going up by seven to twelve percent a year for the last twenty years, the government keeps stating an inflation rate of two to three percent. Now it used to be that if you put money in the bank the bank paid you four to six percent interest on your money. Then the bank would lend that money to a home buyer, a car buyer or a business man for their needs, and make one or two percent on that money you had in your account.

With the real inflation going up and the interest rate being paid by the bank being so low (because the Fed keeps creating cheap( I.e. free money), how would one save money for a down payment on a car or a house? Well now you need not save any money because they gave us zero down home and zero down car loans, ( another advantage for the bank is that you are borrowing more money and will pay more interest) why not borrow money from the fed at two percent and charge you eleven percent for your car and pocket he difference , and in the mean time you the stupid idiot (the “consumer”) are working for the bank now.

An idiot(“consumer”) you are when you go and buy things on a credit card, since most people do not pay off the balance at the end of the month, and carry a balance for years on their cards, they end up paying three or four times the cost of the item, be it a three dollar T-shirt or a three thousand dollar plasma TV.

And how does it benefit the nation of ours when the manufacturing is being off shored, and the major industries left in this country are Wal-marts and Burger Kings. The answer Senator Shelby to my question“ when the government spends borrowed money, where does that money end up?” is , it ends up in the hands of the Chinese, it ends up in the hands of the bankers.

Similarly, when the federal reserve steps in to bail out the mortgage companies and the hedge funds, it causes inflation in the housing sector. In a country where the median income is about forty five thousand, and the median house price is about one hundred forty thousand, we could all use a lower house price.

Whatever it is called, the unrestricted increase in money supply has had some strange and unintended consequences. First and foremost has been the myth propagated by our leaders, that the tax cuts increase the tax revenues. As the government spends more and more money outside the legal budget passed by the congress, this money is not included in the deficit, but it is taxed at certain levels and therefore there is a corresponding increase in the tax income. Secondly as the amount of money in circulation is increased every year there is more money to be taxed meaning that more taxes are colleted, all of this has nothing at all to do with the benefit of a tax cut, if the taxes are cut while the money in circulation is kept constant, the taxes revenues will decrease. But the lie and the lying continues.

When there is “free money” available just for the asking, the people with access to this money bid up prices for things, want to build a billion dollar high rise, no problem, and who will pay for it, someone else with a similar “access to capital will be willing to pay whatever rent you want, cost of building material and of land and labor subsequently goes up, so if you are in the market to build or buy a two thousand square foot house, you will be paying a lot more for it now. In other words, if you are poor or just working class you are screwed.


What are we getting for all this cheap money, granted we have CNAs
and McDonalds hamburger flippers now carrying gold Master Card (no kidding), and I am not being an elitist mind you, while we are buying our gasoline and hamburger meals at McDonalds with that gold card, the people in “private equity funds” and the “hedge funds” are buying up whole companies, laying off workers and moving operations overseas. What a bargain.

So who should be blamed for the real estate mess, and who should pay for it? We had a real estate bust under Mr. Reagan, so no one can say it could not be foreseen. This bubble started during the dot com boom, when people were making untold millions just for offering dog food for sale on line, and we know what happened with that boom also. But some people did make a lot of money, a lot of people did ( while many more lost their bottom lines). To these people the price was no object, it was free money, it was easy money, and they could bid up the price of anything they wanted to have, a two bedroom fixer upper in the silicon valley could fetch a million or more, so many idiots jumped in the market, along with their bankers and the brokers. No down payment, no income, no equity, better yet go into a house and draw against the speculated increase in price and live high on the hog with your line of credit. Are you looking to me for the sympathy?

Why is not Mr. Bush bragging about the seventy percent of the Americans who own their own homes now? Because the truth was and still is that a vast majority of the Americans are up to their necks in debt, and have been living beyond their means. If the Fed throws more money into this mess, or lowers the interest rates, it only delays the day of reckoning and it only makes the end worse that it would be today.

A word for Mr. Berneke, hey professor, do not be stupid again. As I have said before, “ life is a game of connect the dots, if you do not connect them all, you fail to see the whole picture. So here is that picture. When the US government borrows money ( deficit spending), or the federal reserve bank prints more money or lowers the interest rate, people have more money in their pockets. When people have more money in their pockets they spend that money, when the spend that money and buy goods, and most goods are made over seas it increases the trade deficit, when the trade deficit increases ( we don’t have anything to sell them cause we don’t make anything anymore that they want to buy) we have to pay the foreigners in American dollars, with these dollars the foreigners buy US government securities, which means that the US government is now in debt to that foreign nation (China, Japan, and the Arab oil states are examples). So Mr. Berneke and Senator Shelby, when the US government spends money in deficit, that money ends up in China, or Japan, or in the hands of the people that support terrorism.


How do we say then that the deficits do not matter? Look at the value of the dollar, or the lack there of. Only an idiot will believe that the economy is doing good because the stock market is up. Compared to the value of the dollar, the Euro, the gold, the value of stocks has fallen drastically. As the real estate has gone up ( as well as the health care costs, the cost of college education, transportation etc.) Gold is now costing three times as much as it did when Mr. Bush came in the office, the dollar is down against all the major currencies, While the Dow thirty have barely made a gain, (actually we are almost back to where we were before 9-11 in the Dow). Compared to the gold, the foreign currencies or even the over priced real estate, Dow has lost his behind.

May be that what this country really needs is a recession, may be even a depression so we can come back to the ground, and come to our senses. That we need to save some money for bad times, we need to be frugal, our daughters don’t become six hundred million dollar Paris Hiltons, no matter how many boy friends they have, and they don’t become Brittany Spears no matter how many guys they show their private parts to. That spending money is not all it is about, and that keeping up with the Joneses is not a family value we need.

So you say how do/ dare I accuse the FED ( Federal Reserve Bank) of treason and selling the United States into slavery. Once again let me refer you to the e-mail, and the question I posed to the senator Shelby, “what happens to the money that the federal government spends in deficit. First thing we need to look at the trade deficits. For the past twenty or more years we have a run an ever growing trade deficit with China and Japan and the Arabs. As the federal government keeps borrowing money (instead of collecting taxes from the people) for current expenses, that money is spent in the economy. As more and more goods are imported (since we have off shored our manufacturing) this money ends up in the coffers of the foreign governments and foreign industrialists,(the rich folks), more money the government spends the more money goes over seas. Is it not stupid then for the government to be reducing taxes and not reducing the spending , knowing that we are enriching the enemy.

By the same token when the FED keeps pumping money in to the economy, to keep the economy afloat, that money also goes to the rich and to the foreign entities, be it the communist or the terrorist. Is it too hard then to understand that the FED activity has actually hurt the United States in the worst possible ways.

If the Fed was working in favor of the United States and its people, the interest rates would be allowed to rise. So the people will save money and get something in return, people will be able to save money for their children’s education and their retirement, and for down payment on a house. People will be able to put money in a bank where it will be safe and guaranteed to supplement their retirement, not gambling with it in stocks, where the markets have lost time and again. Higher interest rate will take the speculation out of housing market, increase the value of dollar so the imports will stay cheap relatively and will reward savings not consumption. But that will favor the United States not the internationalists.

While our manufacturing is being off shored, we do have new jobs being created, in what we call a “service economy”. Mind you a service economy is a euphemism for slavery which I had defined previously as thus.

SLAVERY 9-14-2004

It is a basic economic fact that in a market where labor is plentiful, the wages will drop. So it follows that when we live in a global market and this market has a glut of workers, pretend as we may, the wages and thus the standard of living of the working class must fall. And what is service economy anyway. Service by definition does not produce anything and does not add value to anything, be it making of a burger or advice from a banker. You could always make a burger your self , go to a fast food restaurant and pay three dollars or go to a fancy bistro and pay eight dollars, it is still a burger, and the same advice you get from a banker could be gleaned from a magazine or researched on the net. As we are finding out that the certain office duties or banking functions can be performed anywhere in the world, thus no chance for one to improve their lot in life by extra hard work or education. As we watch, we are being sold into slavery without being aware of it , YET.

(M.N.R.)

Basically the new jobs being created have been in the fast food (hamburger engineering? Pizza decorating?), in car cleaning (now being called detailing), yard mowing (now called lawn maintenance), house cleaning and janitorial services ( now so lovingly referred to as facilities management), baby sitting, real estate sales, in coffee mixing ( baristas) and of course in retail and how can I forget in toe nail clipping, etc, other wise nothing that adds value to anything. So what is next profession choice for the Americans, behind cleaners?
Are these not the jobs that slaves would be doing at some time in the history?

What have we lost for what we have gained, first we have lost our morals, as money has become more and more important in our lives, we are willing to do just about anything for just a little more of it, we have become greedy. A morally bankrupt people, living in a fiscally bankrupt country. Get a clue, we are not free.

The gap between the poor and the rich keeps increasing, but that s not all, we have lost our sense of security, if you think that someone making eighty thousand a year is rich, then ask some one with the net worth of a million if he can now retire comfortably. In many places a million won’t even buy you a house in a decent neighborhood, and forget about being able to pay for your children’s college.

P.S. we could still talk about this cheap money and how it is effecting the morals of our country and destroying the society, I hope it is still a wake up call to all those who still love the United States of America, and think of it as, and want it to be a free country.