Move Towards Eventual Deflation Underway - Credit Crisis Never Solved

Those of you 60 years old and older will spend the next 25 years struggling to survive one of the worst depressions in history or doing whatever you can to support your children and grandchildren.

The move toward eventual deflation is underway. It won’t happen tomorrow, but it is underway. The situation regarding the credit crisis has never been solved, unless you want to keep two sets of books in perpetuity and mark-to-model until the end of time. De-leveraging is in part still in process. The banks have a long way to go. In fact, one has made toxic garbage attractive to banks and bottom fishers. Banks and investment houses as owners and buyers will get taken off the hook by government via loans. This program is supposed to take underwater homeowners on to dry land, when in fact it’s another banking and Wall Street giveaway you will get to pay for. This will be another bailout similar to Bear Stearns that the Fed has finally admitted too. They used tens of billions of dollars to assure JPMorgan Chase would be protected as it took over Bear’s assets, including their large short silver position, which just happened to be naked. They did the same thing at AIG prior to its bailout as well. Incidentally, the taxpayer gets to pay for all this. The Fed still does what it pleases for the financial sector whether you like it or not. All the elitist cronies have to be bailed out before the world economy is taken under.

The last 9 years were losers. Trillions of dollars were forced into the economy and officially all we had to show for it was 2% growth. The price for that was an inflationary/recession/depression. In that process millions of businesses and individuals lost everything they had worked a lifetime for. Even those in the stock market and bonds lost money on a net basis. The only winners were those who sold their homes near the top of the market and those invested in gold and silver related assets.

Based on both earnings and dividends the outlook for the stock market is not very appealing at today’s levels. We are still in a credit crisis and will be for the next couple of years, but it is only a matter of time before the debt crisis begins. The Fed cannot spend its way out of this one, just as they couldn’t in the late 1930s. There is no chance the budget deficit can be brought back into balance and as a matter of fact it will worsen. We have GDP growth based on inventory growth and bogus statistics. What does Washington do after the stimulus ends this month? Inject in more like they just did with HIRE, some $17 billion or add another $500 billion, which is what the economy needs before it collapses. Then will the Fed that is withdrawing funds throw in another $500 billion? Companies are protecting themselves, their earnings and their existence. They won’t stop laying off until they believe that the depression is over. Last week’s survey showed that medium-to-small business doesn’t see any kind of revival for 14 to 18 months. They voted 92% that way.

If the Fed bought 80% of treasury and Agency paper last year will they do that again this year? Who else will buy this paper; our retirement plans? 

The probability of someone out of work finding a job is now at the lowest level since 1948. Last month half the jobs created came from bogus birth/death ratio and almost all the rest from census jobs, which will be wiped out in a few months. In reality, no real growth. Remember the easiest way to cut expenses is to lay people off and cut all those benefits. They make up 70 to 75 percent of corporate costs. When we were young we all had what was called pet peeves. Our pet peeve is writers who know the U3, 9.7% unemployment, is a scam and they still quote it and even sometimes in the same breath mention U6. Again they want to be accepted or they are under government pressure. We have never seen such lying in 50 years. These people should be ashamed of themselves. We expect it from Wall Street, banking and government, but not from journalists. Incidentally, we need 125,000 new jobs a month that under present circumstances is a joke. That is even after two stimulus programs and trillions from the Fed. Don’t you find it a little odd that after all that money and credit the economy can’t stage a real rally? Back to unemployment – we see writers who deliberately misquote the actual U6 number and make excuses that it includes part timers, as a sop to the government and to be accepted. How about the bogus birth/death ratio?

If it wasn’t bad enough that the big hitter Illuminists were getting all the bailout money now small businesses are going to get hit with big tax increases. 

Even though the Fed has been withdrawing money and credit from the system they know if they do not pour money back into the system it will not only have a double dip recession/depression, we will probably have a deflationary collapse. The big question is when will the elitists pull the plug? 

Next year we will see higher taxes and continued government increases in spending. A continued crowding out by government pushing interest rates higher. Ongoing increases in money and credit and more monetization by the Fed. That will give us higher inflation for the next 21 months. That is at least a real 14%. We will also find out whether Greece was a planned or unplanned event. Will the powers that be opt for a deflationary depression?

All of the above events are negative for both stocks and bonds. As interest rates edge upward, especially on the long end, bonds will fall in value. That includes government, corporate and municipals. Stocks will fall and at least test 6,500 on the Dow. Commodities and gold and silver will continue their bull markets. Unemployment will rise and consumption as a percentage will move from 69.5% toward the long-term mean of 64.5%. Overall the outlook generally is bad, and it could be disastrous. All of you who are contemplating retirement put it off and continue to work. Whether we have inflation or deflation we will have less purchasing power. You will need your job to help support your children and grandchildren. Whatever you have in savings and investments you have to preserve and the best way to do that is with gold and silver related assets. The world economy will be in great turmoil and there is the distinct possibility of another war. If you look at history you will find each time there is severe economic or financial problems another war is arranged. The years ahead are not going to be a piece of cake.

The operative word is austerity something the IMF has specialized in for control of governments and economies. That is what we will be practiced on America. You are seeing that reflected in unemployment as business increases profits and throws away employees like used dishrags, especially the longer-term employees. We just had an unconstitutional healthcare bill rammed through Congress and now government will soon unveil its first version of guaranteed annuities, or it might also be called another tax to fund the unpayable debts of a bankrupt government. All this while banking, Wall Street and insurance prosper, as well as selective other transnational conglomerates. It is all about control and economic and financial enslavement. Banks and Wall Street will ride roughshod over America collecting more and more wealth. Fiscal responsibility is not going to be imposed on Washington, but upon the American people. How else can the system continue as it is? Someone has to pay for it and it is not going to be the rich who own your congressmen and senators. Wall Street and Madison Avenue can’t allow government to be blamed for debt; its consequences have to be laid onto consumers. It has to be understood that consumers caused all this due to their profligate spending, so it is only natural that they should be the ones to pay the debt. 

Part of this consumer payback will be the scaling back of Social Security payments and Medicare benefits. You are already seeing the loss of Medicare benefits and the higher costs being thrown upon the consumer. That includes the right to early death, so that the system doesn’t have to keep useless eaters alive. If Congress refuses to pass these austerity measures than our President will go around Congress by one means or another, or as you recently saw with health care reform he’ll simply purchase the votes with taxpayer funds. What a great system – a democratic dictatorship. Corporatist fascism at its finest.

The banks and Wall Street know the above is on the way. That is why lending to small businesses and individuals has been reduced by 20%. Many of these entities are going to fail and the lenders do not want to have to write off the bad debt. Banks, investment banks and brokerage houses are in need of more securitization of debt. That is how they make fabulous amounts of money. They simply package debt and sell it to other professionals, who supposedly know what they are doing and buying. We refer you back to CDOs, ABS and MBS, which got us into the credit crisis nightmare we are still in the midst of. Lenders are saying not us. Either we syndicate or we cut back on lending. Banks and brokerage houses still are leveraged 40 to 1 and they are still bankrupt. The BIS and the FASB, with the concurrence of government and the powers behind government, that they are to continue to be allowed to keep two sets of books and mark their balance sheets to fantasy. They value investments at whatever they wish. You cannot do that you would go to jail if you did. It is called fraud. It’s despicable, disgraceful and total moral capitulation. Overvaluation of assets as we are finding out is 50 to 97 percent of underlying assets. Look at some of the recent bank failures and what is left of there books. Overstatement of assets is going to get worse and, of course, the operators of these institutions are held civilly and criminally blameless. Can you imagine taking over a bank or brokerage house and finding that 40% or less of the assets are salvageable. This is what is going on and the public knows little about it. This is why there are loss-sharing agreements between the FDIC and those who take the sick banks over. 

The recent House hearings called The Financial Crisis Inquiry Commission were at best a travesty. The likes of Robert Rubin and Sir Alan Greenspan would have us believe that what transpired during the creation of MBS, CDOs and ABS was normal. No one ever expected the collapse in that market and the rating agencies. Yes, those agencies were to blame. It is a matter of public record the banks, investment banks and brokerage houses conspired to rate securities as AAA, which should have had a far lower rating. This was done to qualify them so that institutions could buy them and get buried in them. All the people and firms involved should have been and still should be charged with criminal fraud. Then the elitists on Wall Street never seem to get charged, nor do they go to jail. The fine is paid by shareholders and they go right back to doing what they did before. 

The Commission got nowhere in the hearings, because Wall Street, banking and insurance provide the funds for them to get reelected. They are bought and paid for. The failure of these mortgage instruments was preordained. Very simply the garbage was dumped on professional investors who believed the ratings. After it was obvious what was happening the Fed supplied endless amounts of liquidity, so central banks, particularly in Europe, could bail the buyers out. This is how the credit crisis was created and funded.

The Keynesian model and inflation was expected to wash away these criminal excuses. Well, it didn’t, and quite frankly banking and Wall Street could care less. At the time this fiasco broke 2-1/2 years ago real inflation was 4-5/8% and official inflation was 5-1/2%. In this case inflation was the problem and as always the Fed, which was created to enrich Wall Street and banking. Inflation is what creates bubbles and busts deliberately covering up the tactics of the elitists.

The hearings will solve little, because the real problems won’t be addressed, that is criminal behavior. This is a war that began 2-1/2 to 3 years ago, and Congress is just getting around to hearings. That alone speaks volumes regarding Congressional intent. The war began years ago and the credit crisis is still with us. Financial companies are still working two sets of books and still marking to model. The outrageous compensation hasn’t ended and the abuses and distortions haven’t changed hardly at all. Too big to fail have grown from financial companies to encompass the entire system. The mantra now is the entire system is too big to fail – everyone has to be bailed out. There is also the matter of who gets bailed out. Illuminists get bailed out; others are allowed to fail. Massive stimulus is still believed to be the way toward success and the method of saving the world system. These masters of the universe obviously do not read history or they believe this time will be different. Where have we heard that before? All speculators are back at it again because the Bernanke put is going to save them. They will be monetized into happiness while the un-anointed, we the public, live in poverty. This is what the French Revolution was all about. 22-1/8% unemployment is waking up the public in spite of endless unemployment benefits. Wages are falling, not rising. Inflation is rising. The Fed has been playing with fire for the past seven years and one of these days their game will breakout into an inflationary conflagration. Once that occurs and it will occur, control will be lost and deflation will take over. We are within two years of that becoming reality.Here are some interesting dates: 

April 19, 1775 Patriot’s Day, Concord, Massachusetts, the “shot heard ’round the world” 

April 20, 1889 Hitler’s birthday

April 19, 1933 FDR removes US from gold standard
April 19, 1943 Attack on the Warsaw Ghetto by Hitler begins, Jews successfully resist for a while

April 19, 1961 Bay of Pigs Invasion – freedom fighters betrayed, Marxist Castro stays in power

April 19, 1992  First attempted raid on the Weaver Family – Ruby Ridge, Idaho
April 19, 1993  Waco Raid

April 19, 1994 “[The New World Order] cannot happen without U.S. participation, as we are the most significant single component. Yes, there will be a New World Order, and it will force the United States to change it’s perceptions.”– Henry Kissinger, World Affairs Council Press Conference, Regent Beverly Wilshire Hotel 

April 19, 1995 Oklahoma City Bombing

April 10, 2010 Polish Government wiped out in plane crash.  April is a popular month for NWO events, and the crash is an 9 (an occult number) days before April 19. Wonder what might happen on April 19?

Looks like the NWO likes to celebrate on the eve of Hitler’s birthday by a special act of destruction and  especially when it is accompanied by large loss of life as a human sacrifice to their sponsoring gods, namely, Satan-Osiris-Isis-Horus-Apollo-Nimrod-Molech-Baal-Lilith-Metatron, etc.

Also, they like to dishonor the memory of Patriot’s Day, which was the start of America’s break from England and the British Mercantilist (i.e. Illuminist) System and its fractional reserve European style banking which was used to destroy and then subjugate other nations (as well as the British colonies in America) to create the British Empire.  So they use Patriot’s Day as a day to implement major Illuminist machinations-events intended to take America back into the NWO British Merchantilist System so the Queen Mum, head of the NWO, can once again rule over the “Colonies.”  They like to attack liberty on Patriot’s day.  This is totally in your face stuff!!!
Please note the following:  Poland was among the chief opponents of the old USSR in their bid to break free from the Iron Curtain.  Poland had agreed to sponsor some of the Bush Administrations missile/anti-missile installations for its proposed Eastern Europe missile defense system, which Marxist Obama (“The Joker”) abandoned as fellow Marxist Putin of Russia assisted his masters in the NWO in taking out Poland’s leadership.  Poland was the second last country to sign on to the euro and to join the European Union.  Poland opposed the swine flu vaccines.  Poland was the only country in the EU to have an economy with positive growth.  Poland had one of the few major economies and banking systems that steered clear of the Illuminist banking fraud derivative orgy and even had the audacity to offer the IMF a loan when the IMF was gunning for more victims to enslave, with Poland conspicuously missing from the IMF’s victim list.

For those who don’t remember this, here is a reminder: “The drive of the Rockefellers and their allies is to create a one-world government combining super-capitalism and Communism under the same tent, all under their control…. Do I mean conspiracy? Yes I do. I am convinced there is such a plot, international in scope, generations old in planning, and incredibly evil in intent.” Congressman Larry P. McDonald, 1976, killed in the Korean Airlines 747 that was shot down by the Soviets. The Russians like to execute people on behalf of the NWO.  Sure is funny how history rhymes.  This also shows you that the ouster of the NWO Russian oligarchs was all show biz, and that Putin is just another NWO goon.  His best buddies are fellow Marxists Obama and Queen Hillary.  We can’t have that nasty missile defense system now can we?  We Marxists have to stick together after all.

To give you a flavor for what has just happened to the Polish government, here is an excerpt from a Polish citizen from Alex Jones’ Infowars site:

“As I’m writing this from the country overwhelmed with grief after the greatest of its tragedies since some September of 1939, I guess there are few details which western MSM won’t probably touch and which I find more than important.
First one is just a clarify-I found few sources claiming that Lech Kaczynski is the first ruler of Poland in the XXth century who died during his term in the time of peace. Not really: wiki Gabriel_NarutowiczI really don’t appreciate lack of knowledge of people calling themselves professional journalists.

“Top Polish leaders opposing euro and swine flu vaccines wiped out in plane crash”

“President and two presidential candidates killed, reports WSJ.”
“Polish central bank faces questions after governor killed in plane crash”
Imagine the situation:

Your country three days ago had four candidates for presidential elections set for the early fall, with three of them having real chances for win. Two of them dies at the same time and the third one, wiki Komorowski accidentally being a Marshal of the Sejm (Lower house of polish parliament), due to the constitution accedes official duties of the President, which include deciding when the accelerated elections are going to be set-being the most probable winner at the same time.

Your country’s ALL top military commanders, including chief of general staff, chief of land forces, chief of navy, chief of the air forces and chief of the special forces are dead. Who is the leader of polish army due to the constitution?
Komorowski. Your country’s chef (sic) of National Bank and Federal Reserve is dead.
Who decides of whom shall come after him? Komorowski.

Since this Saturday, for the first time from mid thirties and Pilsudzki (the only guy that even Hitler was afraid of wiki Pilsudski , one of the biggest countries in Europe is being formally ruled by one man-at least until elections. And now comes the best. Komorowski is a close associate, friend and a political student of mr wiki Andrzej Olechowski whose name can be easily found on the list of Bilderberg meetings…oh, and a member of Trilateral Commission as well. Poland has become a NWO state in every meaning of this word-get a pun?

If your coffee hasn’t sunk in yet, consider something like ‘oppose the flu shot’ and then ‘flew’ into the ground. Flu/flew – the PTB has a way with words and deeds, do they not? The “official story” may be true, but circumstantially, things don’t seem entirely as they are made out to be.”

So basically the opponents of Marxism and fascism have been conveniently wiped out, and an NWO stooge, who conveniently survived the crash, is now running the country.  Putin has deniable plausibility with the fog and will now whitewash the investigation.  It’s just another version of the 911 snuff job/cover-up.  Ladies and Gentlemen, welcome to Hell.

A group of 18 banks—which includes Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co., Bank of America Corp. and Citigroup Inc.—understated the debt levels used to fund securities trades by lowering them an average of 42% at the end of each of the past five quarterly periods, the data show. The banks, which publicly release debt data each quarter, then boosted the debt levels in the middle of successive quarters.

     That practice, while legal, can give investors a skewed impression of the level of risk that financial firms are taking the vast majority of the time… 

     According to the data, the banks’ outstanding net repo borrowings at the end of each of the past five quarters were on average 42% below their peak in net borrowings in the same quarters. Though the repo market represents just a slice of banks’ overall activities, it provides a window into the risks that financial institutions take to trade.

Why didn’t Street bank analysts report this chicanery?  How can anyone know how to value large banks? 

Former Federal Reserve Bank of St. Louis President William Poole said the central bank played favorites when providing aid as part of efforts to stem the financial crisis.  

        “The Fed did not provide assistance to all on an equal basis but tilted the playing field,” Poole said in remarks prepared for a lecture at the University of Delaware, where he is a scholar in residence. “Why should the Fed have had a program to buy commercial paper from large corporations and no program to help small businesses starved for funds?”  

          The Fed’s program to purchase $1.25 trillion in mortgage- backed securities issued by government- sponsored enterprises probably contributed to the demise of the market for non- government mortgage- backed securities and will “complicate monetary policy in the years ahead,” Poole said.  

         “Much more research is necessary to determine whether the Fed made the right choices; clearly, I have my doubts,” said Poole, 72. He was president of the St. Louis Fed from 1998 until retiring from the post in March 2008, the month that Bear Stearns collapsed.  

          Poole expressed concern about “an appalling lack of economic literacy in Congress” and said that neither the House nor Senate versions of legislation to overhaul financial regulation address the most important shortcomings. Banks should be required to hold more long-term bonds, and tax deductions for interest should be eliminated, he said.  

The debt crisis that has taken root in Greece, sparking an investor panic and talk of a national default in the heart of Europe, is at the leading edge of a problem expected to roll through the economically developed world as government borrowing rises into uncharted territory. 

www.washingtonpost.com/wpdyn/content/article/2010/04/08/AR2010040801759.html?wpisrc=nl_headline

The Transactional Records Access Clearinghouse <trac.syr.edu/>  at Syracuse University today released a report,  Despite Rising Deficits, IRS Audits of the Largest and Richest Corporations Decline trac.syr.edu/tracirs/newfindings/v15/
Despite a growing federal deficit, IRS audit efforts aimed at the nation’s largest corporations have precipitously declined in the last few years and now are at an all time low…

Among corporations reporting assets of $250 million or more, the IRS since FY 2005 has cut back by a third (33%) the hours it spends examining their books. IRS has also sharply reduced the number of large corporate returns it examines — these audits have fallen by 22% since 2005.

Well, Obananomics is very similar to Rubinomics, which was the centuries-old scheme of hiking taxes, giving trade concessions to the aristocracy and using funny money to paper over debt. 

Yes, the economy has improved.  But it has improved because of record government and Fed intervention.  Income remains stagnant even though transfer payments and food stamps usage soar. 

  The US is having another unwarranted party on credit and funny money.  But this time the party is on the US’s credit card and the Fed balance sheet. 

But the big difference now is that consumers are tapped out.  Instead of using their homes as an ATM to support unwarranted consumption, consumers now employ strategic mortgage defaults so they can continue to consume above their means.  This and abundant tax rebates & refunds produced a good bounce in retail sales. 

But let’s not forget that the past quarter is the easiest comparison since the thirties because Q1 2009 was the nadir of the crisis.  And Q1 2010 to Q2 2010 is forecast to be the peak of economic activity this year. 

State sales taxes remain soft even though retail sales look jiggy.  Economists try to ignore this and the weakness in withheld income taxes. 

March withheld income taxes jumped about $8.5B y/y, probably on Wall Street bonuses.  This is Obamanomics at work.  There is even more concentration of wealth than what occurred during the Great Stock Bubble of 1999 and commodity and real estate mania of several years ago. 

Harvard Business Review says US CEOs now make 300 times an average employee.  In 1978 it was 35:1. 

We’ve highlighted the absurd accounting for the BLS’s Household Survey job growth by noting that virtually all of the gain in January came from women and the past two months’ gains all came from men while women lost jobs.  This is Madoff-like bookkeeping. 

A month ago, Chairman of the House Oversight Committee, Edolphus Towns sent a rather angry letter demanding an explanation from Ben Bernanke why he had allowed this blatant case of semi-insider trading to occur at the highest echelons of shadow government. Today, we find out that Towns is unhappy with the production provided by the Fed, and concludes “that senior officials had misgivings about granting the waiver but were ultimately overruled” and that “we believe a closer examination of this issue is necessary, especially when Congress is considering increasing the Fed’s powers.  In the coming weeks, we will continue our investigation of this matter and will schedule a hearing to learn more from Mr. Friedman and senior Fed officials about how he was permitted to make windfall profits by trading stock in a company he had a role in regulating.” We are not so sure there is any room for confusion – after Goldman told its pseudo employees at the Fed to bail it out at the cost of tens of billions in taxpayer money, why is it in any way surprising that those same FRBNY Goldmanites will not be allowed to profit from Goldman’s bailout as well? The is nothing than a clear cut case of power and political capture at the very highest level of the country, by the two most collusive entities, whose sole purpose is the confiscation of middle-class wealth, or whatever is left of it, before the administration decides to hike middle-class taxes to a Socialist country appropriate 99%.    www.zerohedge.com/

  Wonder why CNBC isn’t all over this story?  BN: Berkshire Hathaway Inc. was sued by an ex-manager of its recreational-vehicle business who said he was fired after bringing allegations of “millions of dollars” of fraud to executives including Chairman Warren Buffett.