Its interesting how the media will focus on the most trivial matters, such as a politician’s personal problems, or spin about how the economic improvement is “just around the corner.” In this situation, a couple of guys get caught smuggling $134.5 worth of bonds and you hear little to nothing in the press.

Most of you reading this have, at least a suspicion that something smells rotten in Denmark, when it comes to the integrity of the press during this day and age. Stories like this are confirmation of any suspicions you may have. This is a historic event, which we need to get to the bottom of and understand; because there is probably something important here that we need to know about.

Since the media is sweeping it under the rug, I suspect that the perpetrators may have been acting on the behalf of well connected individuals. Perhaps the media refuses to report real news altogether; opting instead to create a fantasy world, which acts as a sort of red herring. This keeps people from getting in the way of powerful individuals; since they wish to conduct their business undisturbed.

Personally, I think there is a little news that leaks in there, from time to time; but, for the most part, the world portrayed on television is a fantasy one used to control the behavior of those who watch. Accuracy and professionalism don’t really factor into the equation much anymore.

US government securities seized from Japanese nationals, not clear whether real or fake

Bonds worth US$ 134.5 billion are seized. This is the largest financial smuggling case in history. But are they real? Concern over ‘funny money’ or counterfeit securities is spreading in Asia. The international press is silent.

Milan (AsiaNews) – Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each.
Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter would be even more mind-boggling because the quality of the counterfeit work is such that the fake bonds are undistinguishable from the real ones.

What caught the policemen’s attention were the billion dollar securities. Such a large denomination is not available in regular financial and banking markets. Only states handle such amounts of money.

The question now is who could or would counterfeit or smuggle these non-negotiable bonds.

In order to stop money laundering Italian law sets a ceiling of 10,000 euros per person for importing or exporting money without declaring it. The penalty for violating the law is 40 per cent of the money seized.

If the certificates were real, for Italy it would be like hitting the jackpot. The fine alone would amount to US$ 38 billion, five times the estimated cost of rebuilding quake-devastated Abruzzi region. It would help Italy’s eliminate its public deficit.

If the certificates are fakes the two Japanese nationals could get a very lengthy jail sentence for fraud.

As soon as the seizure was made the US Embassy in Rome was informed. Italian and US secret services were called in to assist the Italian financial police.

Some important international financial newspapers had already reported on the existence of ‘funny money’ circulating on parallel, i.e. unofficial, financial markets.

For AsiaNews a few points need considering:

1. When it comes to Italy the world press has tended to focus on Italian Prime Minister Berlusconi’s personal problems rather than on stories like the bonds smuggling affair which has been front page on Italian newspapers.

2. The fear of counterfeit bonds and securities has spread across Asia with the result that real securities are also considered with suspicion.

3. During the Second World War several countries at war printed and put in circulation perfectly counterfeit enemy money. It is also historically established that some central banks, like the Bank of Italy 65 years ago, issued the same securities twice (identical registered number and code). This way they could print more money with legal tender than they officially declared. The main difference though is that 65 years ago the world was involved in a bloody war, which is not the case today.

source: UPI.com

WASHINGTON, May 30 (UPI) — Federal debt last year amounted to a record $545,668 per U.S. household
— a 12-percent spike in just one year, government sources said.

The increase burdens each household with an additional $55,000 in national debt for just 2008, USA Today reported Saturday.

The increase can be pinned on the explosion of federal borrowing during the recession and an aging population that is driving up the costs of Medicare and Social Security.

“We have a huge implicit mortgage on every household in America — except, unlike a real mortgage, it’s not backed up by a house,” said David Walker, former U.S. comptroller general, the government’s chief auditor.

The federal government assumed $6.8 trillion in new debt last year, pushing its total debt to a record $63.8 trillion, USA Today reported.

The enormous burden has increased awareness of the government’s financial challenges, U.S. Rep. Jim Cooper, D-Tenn., said.

“More and more, people are worried about our fiscal future,” Cooper said.

For the last several decades, our civilization has steadily approached the point of no return.  This is the point which, when passed, we can no-longer salvage our lifestyle as we know it.  This means that we cannot simply steer ourselves out, as a society; but we must first endure a painful collapse in which millions will be ruined financially and lose everything they have.  Indeed many people will be absolutely shocked and dumbfounded when the very fabric of the society they are completely reliant on, comes apart suddenly, in a devastating wave of hyper-inflation.

There is no doubt in my mind that hyper-inflation is headed our way very soon.  The unprecedented level of money creation will not be wiped by deflation.  In point of fact, the circumstances we are now in are virtually identical to other situations throughout history, which have all resulted in hyper-inflation.

Basically the economy is in a deep slump, while governments are rapidly increasing the money supply with Quantitative Easing (a fancy academic term for creation of large amounts of money).  This formula has a long history of causing currency failure.

Indeed, the system has been abused to such an extent that they have little choice at this point; the only way to wipe out the massive public and private debt obligations is to shrink the size of the debt by debasing the currency.

In the process of dropping the value of the dollar, they are also wiping out the savings of many people and governments around the world.  Indeed most of the dollars in circulation are actually held overseas.  So this debasement of the currency is going to rob the savings of a great many people who trusted in the integrity of the US government.  I doubt this mistake will be made again; at least for a few generations.

This is precisely why the wealthiest and most successful families in the history of our civilization, will only hold their money in hard assets or quality companies which produce hard assets.  They learned through experience, that hard assets are the only way to preserve their family’s wealth, generation after generation, in situations where the currency has no convertability.

I find it truly interesting to observe the behavior of different types of people, as we head into this period in our history:

• There is a significant segment of our population that doesn’t want to know anything; they prefer to think that their lifestyle is untouchable.  They have everything they own in some mutual funds or money markets in their 401(k) or IRA.  Anything in regards to money is “better left to the professionals” despite the fact that these “professionals” are the ones who created the terminal situation which has robbed so many people of their life’s savings.
• Another portion of our population wishes to be blindly optimistic.  They celebrate the fact that the new President is an well-spoken intellectual who says and does much of what they always wanted their leader to say and do.  There seems to be little to no concern, amongst these pseudo-intellectuals, that nothing is being done to address the fundamental problems which plague our society.  Instead new bandages are being applied to mask the problems and “keep up appearances.”
• Finally, there is another portion of the population who have become thoroughly disgusted with the dis-ingenuous left-right paradigm.  They realize that both political parties are leading us down the primrose path, not into the land of milk and honey; but into the desert to die.  It is this segment of the population, which has chosen to rely on their own abilities; to adapt in whatever ways they are able.  To this group of individuals, the solutions to our problems are not top-down, as we are accustomed to; instead the solutions are implemented by each of us in our own lives.  The basic idea is to reduce and eliminate the dependency on this failed society; instead relying on their selves and the local community.  They don’t wish to wait and hope for someone or something outside of themselves to produce “change ™”; instead they fundamentally change the way they live their lives.

I prefer to identify with the third group, because I feel strongly that the first two groups are simply accomplishing nothing of substance. I believe in our power as individuals to produce what we need to live on this planet. Its not like we’re having to live on Mars or something inhospitable like that. This is a very fertile planet which is positively bursting with life and genetic diversity.

I often hear naysayers say that you must have 40 acres and significant financial resources to change your lifestyle; but I have seen examples of urban homesteaders who have been able to produce the majority of their food on small lots (less than 1/4 acre). Sure, they aren’t totally “off the grid” but producing one’s own food is a significant step in cutting costs and achieving sustainability.

We may as well start where we are at. If we are going to strive for something, we must strive for goals that we know we can achieve in a reasonable amount of time. If a significant segment of our population learned to decrease their dependency on this failed system, the benefits would be innumerable.

May 03, 2009 | SeekingAlpha.com

Since the economy began sliding downhill in late 2007, mainstream economic and market experts have consistently erred on the sunny side.

As late as June 2008, mainstream consensus held that the U.S. was heading for a “soft landing” and would avoid recession. Several months later, the slump was acknowledged to have started in January 2008, but we were supposed to see renewed growth by mid-2009, with unemployment peaking in the eight-to-nine percent range. A quick “shovel-ready” stimulus bag was supposed to set us back on the road to prosperity.

In January, recovery projections were pushed forward to late 2009. Today, the consensus is for a mid-2010 recovery, with unemployment peaking at just over 10 percent. Clearly, the mainstream has struggled to catch up to reality for well over one year. What are the chances that they finally have it right this time?

Moreover, the mainstream continues to see what is going on as a plain-vanilla recession that will be quelled with some on-the-fly monetary and fiscal tinkering. Washington, we are told, will pull us out of this slump—as soon as the masses can be enticed back to the shopping malls. Then things will return to how they were before. But what if the experts and politicians are wrong not only on their ever-changing recovery timeline, but also on the nature—nay, the very existence—of a recovery?

America’s reigning political-economic ideology has demonstrably failed. Given that its government is obviously fumbling along without a clue, its foreign and domestic credit is tapped out, and its 300 million people are discovering that their hopes for continuous material improvement will never be met, could the U.S. be headed the way of the USSR?

Instead of a recovery as the mainstream envisions it, what if America permanently bankrupts, impoverishes, and marginalizes itself? What if its cherished institutions fail across the board? For example, what happens when the police realize that their under-funded pension plans cannot support a decent retirement? Will they stay honest, or will they opt to survive by any means necessary? These are questions that the mainstream does not even begin to contemplate. Read the rest of this entry »

Mike Whitney | Counterpunch

This time the banks are zeroing in on Geithner’s cash giveaway bonanza, the “Public Private Investment Partnership” (PPIP). As expected, Bank of America and Citigroup have angled their way to the front of the herd, thrusting their snouts into the public trough and extracting whatever morsels they can find amid a din of gurgling and sucking sounds. Here’s the story from the New York Post:

“As Treasury Secretary Tim Geithner orchestrated a plan to help the nation’s largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market, sources told The Post…

But the banks’ purchase of so-called AAA-rated mortgage-backed securities, including some that use alt-A and option ARM as collateral, is raising eyebrows among even the most seasoned traders. Alt-A and option ARM loans have widely been seen as the next mortgage type to see increases in defaults.

One Wall Street trader told The Post that what’s been most puzzling about the purchases is how aggressive both banks have been in their buying, sometimes paying higher prices than competing bidders are willing to pay.

Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids.”(“Double Dippers; Citi and B of A buy laundered loans at lower rates”, Mark DeCambre, New York Post)

Thus begins the next taxpayer-subsidized feeding frenzy, featuring all the usual suspects. The race is on to vacuum up as much toxic mortgage paper as possible so it can be dumped on Uncle Sam at a hefty profit. These are the same miscreants the Obama administration is so dead-set on rescuing. Better to let them sink from their own bad bets.

How is it that industry rep Geithner couldn’t see that his latest round of corporate welfare would create incentives for the bank scoundrels to game the system again? Naturally, if the government goes into the business of buying crap-loans from teetering financial institutions, the speculators and snake oil salesmen will follow. And so they have. Citi and B of A are just the first to respond to Geithner’s pigwhistle. Next will be the hedgies and the Private Equity porkers, all nuzzling up to the Treasury’s feedbin.

Geithner’s plan is a disaster from the get-go. It jacks up the price of garbage assets, rewards the misallocation of capital, invites rampant fraud, and prolongs the recession. Worst of all, it transforms the FDIC into a hedge fund putting individual bank deposits at greater risk. Economist Jeffrey Sachs sums up Geithner’s “public-private” boondoggle in his article “Will Geithner and Summers suceed in raiding the FDIC and Fed?”:

“Geithner and Summers have now announced their plan to raid the Federal Deposit Insurance Corporation (FDIC) and Federal Reserve to subsidize investors to buy toxic assets from the banks at inflated prices. If carried out, the result will be a massive transfer of wealth — of perhaps hundreds of billions of dollars — to bank shareholders from the taxpayers (who will absorb losses at the FDIC and Fed)…

The FDIC is lending money at a low interest rate and on a non-recourse basis even though the FDIC is likely to experience a massive default on its loans to the investment funds….In essence, the FDIC is transferring hundreds of billions of dollars of taxpayer wealth to the banks…The public will not accept overpaying for the toxic assets at taxpayers’ expense. Thus, it is very likely that the Administration will attempt to avoid Congressional oversight of the plan, and to count on confusion and the evident “good news” of soaring stock market prices to justify their actions. ….

Other parts of the plan support subsidized loans from the Treasury and, even more, from the Fed. The Fed is already buying up hundreds of billions of dollars of toxic assets with little if any oversight or offsetting appropriations. Since the Federal Reserve profits and losses eventually show up on the budget, the Fed’s purchases of toxic assets also should fall under the Federal Credit Reform Act and should be explicitly budgeted. (“Will Geithner and Summers suceed in raiding the FDIC and Fed?”, Jeffrey Sachs, Huffington Post)

As Sachs points out, the Fed’s liabilities will eventually be shifted onto the taxpayer. But that hasn’t stopped Bernanke from writing checks on an account that is overdrawn by $11 trillion. Nor has it compelled Geithner to seek congressional authorization before he leverages the FDIC up to its eyeballs. These decisions are all being made by a small coterie of bank loyalists who operate independent of any oversight or government supervision. They do what’s best for their constituents and let the chips fall where they may.

Earlier this week, Geithner asked Congress for additional powers to take over insolvent non-bank financial institutions. The Washington Post:

“The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.”

Geithner must think he’s a shoe-in for the new “systemic regulator” post because of the exemplary way he handled the AIG bonus scandal.

Of course, in the bizarro world of Washington–where failure typically catapults one to higher office–it’s only logical that Geithner would be elevated to Uber-Regulator, not only controlling the public purse, but using his own peerless grasp of the marketplace to decide which institutions pose a systemic risk and need to be sidelined, and which need stepped-up government support via limitless capital injections.

Prediction: If Geithner is granted these special powers by the braindead Congress, the country will undergo the greatest period of bank consolidation in its 230 year history. This is a blatant power grab by a shifty character who has risen to his present pay-grade by nosing his way up the political stepladder. Congress had better get its act together and put an end to this nonsense or the nation will continue its fast-paced metamorphosis into a feudal oligarchy run by the Bank Mafia and Wall Street racketeers. The first step, is to give Geithner, Summers and any other of the Rubin-clones a full-body bacon-rub followed by a few brisk dunks in the shark tank. Then, hose down Treasury and bring in a whole new team.

Nobel Prize winning economist Joseph Stiglitz summed up Geithner’s “public-private” fiasco like this:

“Quite frankly, this amounts to robbery of the American people. I don’t think it’s going to work because I think there’ll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer.”

Here is an interesting discussion between Congressman Ron Paul and Paul Volcker in which Dr. Paul starts by describing the blow-up of the global fiat credit bubble; he later inquires to former Federal Reserve Chairman Paul Volcker’s ideas on the reform of the international monetary system.

Among his concerns were:

• the creation of supra-national powers for international financial institutions
• moving away from the free market
• international negotiations for the replacement of the dollar system

It is interesting, that during this discussion the idea of the IMF having an increased role in the world economy was brushed off; while in recent days there is new talk of the world returning to a new standard of IMF-issued SDR’s.

Eric deCarbonnel | MarketSkeptics.com

The fed is planning moves that would more than double its balance-sheet assets by September to $4.5 trillion from $1.9 trillion. Whether expressing approval or concern over the fed’s intentions, most commentators fail to understand the real magnitude of the projected expansion of the US monetary base because they don’t take into account the amount of dollars circulating abroad.

At least 70 percent of all US currency is held outside the country, and this means the US monetary base is considerably smaller than the fed’s overall balance sheet. Take, for example, the true US domestic money supply at the beginning of September 2008, before the fed started its quantitative easing. From the Federal Reserve’s website, we know that currency in circulation was 833 Billion. This translates as 583 Billion dollars circulating abroad (70 percent), and 250 Billion dollars circulating domestically (30 percent). Since the bank reserve balances held with Federal Reserve Banks were 12 billion, that gives us a 262 Billion domestic monetary base as of September 2008. Now compare that to the projected US domestic monetary base for September 2009 which is 3,818 billion (4,500 billion – 583 billion (dollars circulating abroad) – 99 billion (other fed liabilities not part of the money supply)). The fed’s planned balance sheet expansion results in a 15-fold increase in the base money supply.

262 Billion = US monetary base as of September 2008 (minus dollars held abroad)
3,818 Billion = projected US monetary base in September 2009 (minus dollars held abroad)

3,818 Billion / 262 Billion = 15-Fold Increase in US monetary base
Read the rest of this entry »

Two of the most corrupt professions on the planet are at work here: banking and accounting. Its funny that they should even call it “accounting” anymore; as it is meant to provide for “accountability” and the “rule of law.” Instead we are stuck with “deceivability” and the “rule of men.”

As you will soon learn, if you haven’t already; there is no reason whatsoever to hold the securities of most of the corporations today. They simply don’t have to account for the value of their assets anymore. If there is no real accountability, then there will be no confidence. If there is no confidence, then there will be no speedy recovery.

This depression will languish for years. People are getting FED-UP with these kinds of cheap, inbred bankster shenanigans; they are starting to buy real hard assets to squirrel away what they are able, to whether the coming storm.

What? You thought the recovery is around the corner. Do you honestly believe what these people who have been repeatedly wrong are telling you once again, like a broken record? The recovery, as you may picture it, is not going to happen.

People are going to have to change their habits to adapt to the new paradigm. They are going to have to cut out the waste, become more sufficient unto themselves, manage their own money with sound economic principles. They must be guided by a understanding of just how perverted the whole economic system has become, over the past couple of decades.

Accounting Brothel Opens Doors for Banker Fiesta

Jonathan Weil | Bloomberg News

March 19 (Bloomberg) — The banks demanded that the accountants give them leeway in how they report losses to investors. The accountants responded by giving away their souls.

This week, the Financial Accounting Standards Board unveiled what may be the dumbest, most bankrupt proposal in its 36-year history. If it stands, the FASB ought to change its name to the Fraudulent Accounting Standards Board. It’s that bad.

Here’s what the board is floating. Starting this quarter, U.S. companies would be allowed to report net-income figures that ignore severe, long-term price declines in securities they own. Not just debt securities, mind you, but even common stocks and other equities, too.

All a company would need to do is say it doesn’t intend to sell them and that it probably won’t have to. In most cases, it wouldn’t matter how much the value was down, or for how long. In effect, a company would have to admit being on its deathbed before the rules would force it to take hits to earnings.

So, if these rules had been in place last year, a company that still owned shares of American International Group Inc. or Fannie Mae, for instance, could exclude those stocks’ price declines from net income entirely. It would make no difference that the companies were seized by the government last year, or that both are penny stocks. The loss would get buried away from the income statement, in a balance-sheet line called “accumulated other comprehensive income.” Read the rest of this entry »

There is this popular idea, that earmark spending results in increased Federal Government spending; so it is thought that the government should be given the money to spend on whatever they please. As with most popular ideas, this one is wrong; it is likely propaganda from those who would be receiving the pork without accountability.

As Congressman Ron Paul describes, the amount of a particular budget is decided before any earmarks are put into place; so a particular earmark does not alter the amount of the overall budget. To remove earmarks would remove accountability and give them even more money in their slush funds; to do with as they please.

Earmarks Don’t Add Up

by Ron Paul | RonPaul.com

Earmarks seem to be the hot topic this week, and as a fiscal conservative I am dismayed so many people deliberately distort the earmarking process and grandstand to make political points. It is an easy thing to do with earmarks. It takes a little more time and patience to grasp the reality of what earmarks really are.

To be sure, if earmarks were the driving force behind explosive government spending as some have been led to believe, that would be a good reason for all the fuss. The misconception seems to be that members of Congress put together a bunch of requests for project funding, add them all together and come up with a budget. The truth is, it is not done that way. The total level of spending is determined by the Congressional leadership and the appropriators before any Member has a chance to offer any amendments. Members’ requests are simply recommendations to allocate parts of that spending for certain items in that members’ district or state. If funds are not designated, they revert to non-designated spending controlled by bureaucrats in the executive branch. In other words, when a designation request makes it into the budget, it subtracts funds out of what is available to the executive branch and bureaucrats in various departments, and targets it for projects that the people and their representatives request in their districts. If a congressman does not submit funding requests for his district the money is simply spent elsewhere. To eliminate all earmarks would be to further consolidate power in the already dominant executive branch and not save a penny.

Furthermore, designating how money is spent provides a level of transparency and accountability over taxpayer dollars that we don’t have with general funds. I argue that all spending should be decided by Congress so that we at least know where the money goes. This has been a major problem with TARP funding. The public and Congress are now trying to find out where all that money went.

The real issue is that the overall budget is too big, by far, which is why I always vote against it. But attacking the 1% that was earmarked solves nothing. The whole issue is a distraction from the real problems we face, which are that the Federal Government will absorb over 1/3 of our country’s GDP this year and taxpayers are forced to fork over more than half their income to fund government at all levels. On top of that, the national debt is $11 trillion, which is $36,000 per citizen. The recent increases in bailouts, government spending and money creation is going to hobble our economy for decades. We must curb the government’s appetite severely if this country is ever to thrive again. The noise over “earmarks” is a red herring and a distraction from the real issue of uncommitted spending.

It is time to attack the entirety of government spending. We especially need a full account of the activities of the Federal Reserve that spends and creates trillions of dollars with no meaningful oversight. This is a huge problem that needs immediate attention.

source: LaRouche Political Action Committee

December 9, 2008 (LPAC)–“It’s all gone ‘poof’,” one Goldman Sachs banker told today’s Wall Street Journal. Bankers who once wrecked companies and looted pension funds are now finding themselves reduced to irrelevance. Once Masters of the Universe, they are now lucky to have a job. “Investment banking has become a phantom realm,” the Wall Street Urinal said “where everyone is busy but no one is doing anything,” where “status is conferred by a quality meeting, not a completed transaction.” The “basic reality” of their profession, the paper said, is an “excess of bankers.” If you feel tears swelling in your eyes at the plight of these poor souls, who are now faced with selling their yachts and their country homes, and cutting back in other ways, perhaps the knowledge that Wall Street played a major role in destroying the productive power of the U.S. economy, laying waste to countless American businesses and families, will help. This is a classic case of “they did it to themselves.” And, of course, to the rest of us.

Then there’s the spectacle of hyena versus hyena, which we see breaking out as the members of the pack turn on each other in self-preservation. Take the case of Carl Icahn, the notorious corporate raider, and Leon Black, head of private equity giant Apollo Management. Former allies (both got rich from the Drexel Burnham Lambert junk-bond machine, Black as a Drexel banker and Icahn as his client), they are now fighting over money. Apollo needs to reduce its debt by getting its holders to cash it in at as little as 36-cents on the dollar, while Icahn, who owns a bunch of it, calls that fraud and has filed suit.

Hyena versus hyena. Maybe they should have a quality meeting.