Free kibbles

FASCISM:

How Goldman Sachs and government officials who used to work at Goldman helped create the AIG credit default swap monster, bring AIG down and profit from the taxpayer money used to bail AIG out.

"The important thing to remember about all of this is that just because Goldman was buying “insurance” from Cassano, that doesn’t mean they were being responsible. On the contrary: Goldman was creating well over ten billion dollars worth of exposure to a guy that they must have known was an absolute idiot. Now, in a world where actual capitalism existed, Goldman should then have been highly invested in making sure that AIG did not go under. A dead and bankrupt AIG should not have been good news to a company like Goldman Sachs, which had billions of dollars riding on AIG’s financial health.

But if anything Goldman behaved throughout the runup to AIG’s collapse like it couldn’t care less if the company died. In fact Goldman accelerated AIG’s demise by making margin calls against AIG, for both the CDS deals and for deals it had done with Win Neuger, who was running AIG’s securities lending business. What really sank AIG was the fact that the downgrade of its credit rating permitted companies like Goldman to demand large sums of money from AIG in the form of these margin calls, and AIG could not get its hands on enough cash to meet its demands, resulting in the death spiral situation we all witnessed last September. Of all the firms making such demands against AIG, Goldman was the most aggressive (I have more on this coming out in a forthcoming book) and my sources who were involved in the AIG bailout bunker scene of a year ago almost to a man report that Goldman and its chief Lloyd Blankfein took an extremely hard line with AIG.

Why would it act like that? Well, in a normal capitalistic situation, it wouldn’t. But Goldman, it turned out, had an ace in the hole. It seems that when the state stepped in and decided to bail AIG out, its former director, Stephen Friedman, was among those making the decision that AIG’s counterparties should be paid 100 cents on the dollar for its CDS debts. It never made sense that AIG/AIGFP would decide on its own to pay its creditors 100 cents on the dollar for its debts, but now we know, thanks to reporting from Bloomberg, that it wasn’t AIGFP and its CFO Elias Habayeb who was making that decision.

It was, instead, a group of people from the New York Fed who gave that order, a group that included Tim Geithner and Friedman. Goldman ended up getting almost $14 billion from AIG after the bailout. And Friedman, we later found out, bought 50,000 shares of Goldman stock after this deal was struck. He resigned in May from the Fed, a few days after the Wall Street Journal broke the story about Friedman’s stock purchases."

And the corruption keeps on rolling.

ECONOMY:

Ron Paul says government has created an new bubble that is destined to burst worse than the last one.

As bad as the economy and debt problems are in the US, they're way worse in Japan. Let's hope that when Japan implodes, Americans will wake up and reverse course toward freedom.

TAX AND SPEND:

Governments will default on their debt.

"Politicians lie. Voters believe. This is the great symbiotic relationship of democratic politics."

You have appreciate any essay that puts it that succinctly.

"For older Americans, a single mental image above all others illustrates this perpetual relationship. It is their memory of the annual Sunday cartoon in the cartoon strip, "Peanuts," which was the most widely read cartoon strip – and therefore the most widely read anything – in the United States for at least three decades. The annual cartoon featured two children: the ever-mendacious Lucy, whose hand supported an upright football on the ground, who encouraged the ever-trusting Charlie Brown to run at the ball and kick it. He always believed her. At the last moment, she would pull the ball away, and Charlie would fly into the air, then land on his back. What changed each year was her argument on why she would not pull the ball away, and her final remark to Charlie, as he lay flat on his back. She thought he was stupidly naïve. He was. She always took advantage of him. Her philosophy was clear: "Never give a sucker an even break.""

I wonder if that's what Schulz had in mind.

"The great advantage of political promises is that the politicians who make them will not be in office when the bills come due. The benefits are immediate: votes. The costs are deferred. The supply of promises increases.
...
The advent of the day of reckoning is easy to describe: (1) the upward move of Treasury interest rates, or (2) the upward move of prices in response to the Federal Reserve System's expansion of its balance sheet – monetary base – to hold down rates."

It's funny, because I see prices changing wildly. At some places, $5 has been painted over with $6. But pizza prices are crashing. Inflation is hitting some places and deflation others. Soon prices will be inflating everywhere. Just like I wrote a couple of years ago:

"He says that the welfare state is going to die, all over the world. I think he is correct."

The question is do we end the welfare state intelligently, or do we allow it to crash all around the world and leave people starving in the streets. I see no evidence to make me think we'll do the smart thing. This guy agrees with my contention that we're going to need more farms and farmers.

"The ways around this are limited to investing in real goods: commodities, small farms, used goods stores, small-town real estate. Not many people will see this in time. Of those who do, few will take action. These escape hatches are for people who are hedging against default. The average voter has no financial reserves. Of the 20% who do have reserves, 80% will be stuck in conventional investments. They will believe the Establishment's Keynesian line. "The government can fix it if you just hang on.""

I wonder if there are any small farms available for purchase out of foreclosure.

Taxpayers payed $24,000 for each of those clunkers.

FEDERAL RESERVE:

Congress gut's Ron Paul's bill to audit the Fed.

GLOBAL WARMING:

Another person thinks the Copenhagen climate change agreement would establish the framework for an unelected, one-world communist-type government.

"My research of the Climate Change document that Monckton references found the following: it is a 181-page working document that does not mention the words "ballot," "elected official," or "vote" anywhere in it. In my opinion, Lord Monckton did not exaggerate; if anything, he may have understated the situation. The document does indeed appear to be the institutional framework for an unelected supreme communist-style world government."

This is why the Marxists hijacked the environmental movement. With Obama in office, they're so close to achieving their dream they can taste it. With quotes from the treaty.

FREE SPEECH:

Obama signs UN draft resolution assigning free speech as a privilege granted by government instead of a right.

MISC:

Will the economic collapse of the US lead to the US government and others killing their citizens like the communists? Good bet. That's the consequence of our continued evolution into a Soviet-like state.

The reason our power grid is so vulnerable to hackers is it's controlled by government.

Only 11 percent of people polled by BBC say free markets are working well. The rest want regulation of the free markets. What free markets? Show me a free market. The biggest and most destructive lie of the last 100 years might be that we have free markets.