"GENERAL STRIKE NOVEMBER 2nd"

I've said for a very long time (since the stolen election in 2000 at least) that something big and societally dislocating must be in store for us as none of the events that were taking place made any sense otherwise. The subornation of the integrity of the once-unquestioned Supreme Court? The hundreds of obvious questions about the planning and implementation of the Incredibly Impossible 9/11 Events? The quick march to mayhem in both Afghanistan and Iraq (based on false assumptions and obvious outright lies). The non-prosecution of any of the Wall Street Terrorists? The murder of Gaddafi (who had been reclaimed as our ally in the War on Terror a few years before)? The plans for wars on Syria and Iran developed by the same perpetrators responsible for the Iraq War Lies?

Need I go on? Karl Denninger, a well-respected financial journalist, agrees and is long past being tired of hearing any more fantasy plots from the "leaders" who are leading us irrevocably to ultimate financial destruction with their holding actions as they move their interests out of the unstable environments. (Okay, this is really wonky and quite scary enough for a Halloween essay!)

[This blog joyfully accepts any donations for its operating expenses and is hoping for an angel to descend. Calling all angels!]

Thursday, October 27, 2011

Karl Denninger, "GENERAL STRIKE NOVEMBER 2nd"

"GENERAL STRIKE NOVEMBER 2nd"
by Karl Denninger

"Now we're talking. I'm getting word (via Twitter) that the Oakland branch of "Occupy Wall Street" has finally done what I recommended as the only course of peaceful action that will matter: They have called for a GENERAL STRIKE November 2nd.

Why will a General Strike work? Simple: It attacks the government in a lawful, peaceful manner in the one way they cannot counteract: It cuts off their funding! You can't tax what doesn't happen, basically.  This is the people's way to peacefully withdraw consent to being governed.  You buy nothing, you perform no work, you do nothing that is taxable. The implicit threat is that you cut the legs out from under the government's ability to fund itself.  This is an entirely lawful action and I said in 2008 that this was the appropriate thing to be doing.

Well, here you have it.  One ex-Marine - a combat veteran - took a rubber round in the head.  He is in critical condition and may die.  That was not a mistake; that was aimed fire and an intentional assassination.  Sorry folks, that's facts - from 50' you don't "miss" and hit someone in the head with these things if you're shooting for the legs or other non-vital parts.  He was shot in the head by someone who aimed for the head.  Those projectiles are not "non-lethal" and the bomb thrown by a cop at the people trying to come to his assistance after he fell wasn't tossed accidentally either.

So here's the deal folks: Do you have a pair of clankers or are you still sporting mouse-sized nerfs?

Yeah, I know, participating in a General Strike means personal sacrifice.  Heh, that's how it is when you make choices.  There are costs.  Nothing's free, including doing nothing.  Four years of constructive consent has not brought you continued prosperity.  It has not brought the economy out of the slump and employment has not returned.  It has done nothing for you, and everything for the scammers and fraudsters on Wall Street and in DC. Four years into this and there's been no end to the fraud.  No admission of what happened and who was responsible.  No change.  No honesty.  No truth.  And no prosecutions of any materiality.  Yeah, I know, they are going after one former board member now.  That's nice.

But Obama just announced that he intends to "refinance" a bunch of home mortgages (again) and the primary beneficiary of doing so will be not you but the banks as that program includes a waiver of any fraud claims against the original mortgage so it cannot be "put back" on the originator. Yeah, the "benefits" here will be small for the banks, since the number of people who will qualify will be small and the damages on a fraudulent loan that is paying (which you must be in order to qualify) are zero.  But fraud is still a crime, and this will make ignoring the criminal side trivial as well.

I've said that it's time to choose for the four years.  Well, now you have a group that has thrown down the gauntlet for you and provided a date: November 2nd. Elephant-size or mouse-size - clankers or nerfs? That's the question, and you will answer that question on November 2nd. And incidentally, if there is no constructive response out of DC? DECLARE NOVEMBER 25th-27th AS THE NEXT ONE.  AND YEAH - I'LL DO IT.  NO SPENDING OR WORK OF ANY SORT.  NOT ONE DAMN NICKEL.”

To The Naysayers For November 2nd (And 25-27): So you have a job and thus you won't risk anything to stop spending and participate in a General Strike. Cool.  That's your choice, of course. But let me ask this: If not now, when?

See, this fraud has been going on for 30 years.  But it has picked up to a fever pitch in the last four.  FedUpUSA and Tickerforum organized marches on Wall Street and in Washington DC in 2008 after the unlawful actions related to Bear Stearns and the rest of the financial system. Pretty much nobody showed up.  Those who do deserve praise (and gratitude), but they were few in number. Now "Occupy Wall Street" (in its various incantations) has thousands in the streets in peaceful protest and has called for a General Strike; a subject I raised in 2008 as well. And again, people say "oh, no, I can't do that."

Ok. But again: If not now, when? Do you feel "better" that the DOW is up 300 points today?  You did in 2009 when Kanjorski made fraud on balance sheets a business model, right?  So let's tabulate the results of legislating fraud as a business model. Did it get you a job?  Why no, it did not. Did it make college more affordable by resolving the cost-push problem?  No, it made it worse. Did it solve the medical cost problems that bankrupt millions?  No, it made it worse. Did it solve the housing crisis?  No, it made it worse.

Ah, I get it.  It's not "bad enough" yet. Well, here's the deal folks: This is a lawful and peaceful action. Now the inconvenient question: What do you think is going to happen when, not if, the government funding model breaks down and the Federal Government is forced to curtail 60-75% of its spending overnight?  When the Social Security and Medicare stops?  When the food stamps.... stop?  When the military benefits.... stop?  Will the people's reaction to that be lawful and peaceful?

Better think that one over folks..... because virtually all of you aren't considering this at all, and those who naysay now are betting not only their future but that of their children that when it does get worse it will be "business as usual." You may be right, but that's the wager you're taking, and I don't like the odds. Before you say "oh that can't happen, especially not here" you might want to look at Greece, where it is, at Italy, where it will, and in Egypt, where it did, and everyone said it wouldn't happen in those three cases too. And that's just in the last couple of years. Something to think about."

http://market-ticker.org/

Want some Halloweeny economic news?

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Yet More Grim Inequality News from the CBO

Oct. 25, 2011

The Congressional Budget Office is out with a timely new report on income inequality, which you can find here. Nickel version: The rich are getting richer, and the rest of us are just kind of drifting along.

The main summary chart is the one on the right. Since 1979, adjusted for inflation, incomes of the broad middle class (solid blue line labeled "21st to 80th percentiles") have increased about 40 percent, which comes to a sluggish 1 percent per year. During the same period, the incomes of the richest 1 percent have increased about 280 percent, or 7 percent per year. This is a pretty familiar chart by now, but one thing to note is that the incomes of the rich are pretty volatile: They drop a lot during recessions, but they also bounce back pretty quickly and regain their high growth rates as soon as the recession is over. This chart only goes through 2007, but the same dynamic has been at work in the aftermath of the Great Recession: a steep drop followed by an equally steep recovery.

Another set of charts is below. These are a little less familiar and need a bit of explanation. They show Gini inequality coefficients for different kinds of incomes, and the more distorted the chart the higher the inequality.

The top left chart shows the inequality of labor income in 1979 (light blue) and 2007 (dark blue). As you can see, it's moderately unequal, and the level of inequality hasn't changed a lot over the years. Likewise, the bottom right chart shows the inequality of capital gains income. This is extremely unequal, but again, the level of inequality hasn't changed too much. Both the light blue and dark blue lines are pretty close to each other.

The other two charts show business income and capital income, and they're quite different. Both show a fairly heavy amount of inequality, and, more interestingly, they show that the level of inequality has widened dramatically over the past three decades. Business income, which means income going to owners of private businesses, has grown much more concentrated, probably due to the growth of high incomes among privately owned professional firms (law, medicine, and finance). And capital income, which is largely dividends and rental income, has become far more concentrated as well. I'm not quite sure what story this tells, but one thing it tells us for sure is that most of the growth in income since 1979 has been in nonlabor income. Which is to say, not the kind of income that people like you and I get much of.

Click on the title for the rest of that essay.

Police confront occupations in NYC, San Diego, Nashville, Raleigh
 
And speaking of that type of income (or lack of it), we get the latest update on the bank shenanigans and some insight from the OWS Versus Tea Party perspective:

In recent years banks have become so powerful they apparently don’t even feel the need to feign deference to federal regulators. After providing hundreds of billions in public bailouts to their colleagues at Bear Stearns and other reckless speculators, the Fed rejected a 2009 request from the U.S. Treasury for a review of the central bank’s governance and structure. One candid trader stunned a BBC on-air panel last month by flatly stating, “governments don’t rule the world, Goldman Sachs rules the world."

Given the power struggle between the U.S. government and powerful banking interests dating back to the days of the American Revolution, it is strange that Tea Party leaders such as Rick Perry now dismiss the Occupy Wall Street movement as “class warfare.” Rather than join the battle against the banks stretching back to the days of Benjamin Franklin, the patriots of the Tea Party have unwittingly become a zombie army of the same corporate interests seeking to destroy the very institutions the Founding Fathers fought so hard for.

The widespread revolt against the excesses of wealthy financiers spreading across North America would be very familiar to the Founding Fathers. Iconic Americans from Thomas Jefferson to Teddy Roosevelt battled valiantly to protect the fragile notion of liberty against repeated and coordinated attacks from a corrupt and self-serving banking sector. In contrast, the milquetoast response by President Obama to the recent crimes of corporate America indicate just how enfeebled the U.S. government has become.

But hope springs eternal. More than two centuries on, the true spirit of the American Revolution is finding new life on the streets below financial towers across the continent. While the foe is formidable, these battles have been waged — and won — many times before.

On my way out of the New York preview screening of “In Time,” I overheard another moviegoer cheerfully describing what he had just seen as a “Marxist propaganda film.” So it wasn’t just me. But it says something about our times, I guess, that the phrase would even come up in reference to a motion picture that could just as well be called grade-B dystopian sci-fi, or an attempt to position Justin Timberlake as an action star. New Zealand-born writer-director Andrew Niccol, he of “Gattaca” and “S1m0ne,” has been making chilly, satirical, almost-excellent science-fiction movies and thrillers for years; he cannot possibly have known that this particular one — which advocates nothing short of full-on class warfare — would land right on top of the Occupy Wall Street moment. I mean, could he?

. . . the guy gets props for being weirdly and accidentally on time with “In Time,” and also for the best-ever high-concept premise that allows him to cast only beautiful young actors. See, in the downscale urban future (which strongly resembles the downscale urban past, circa 1978), everyone is genetically engineered to stop aging at 25 — and to die at 26. On your 25th birthday, a phosphorescent digital clock in your arm starts counting down that last year, and that time is literally money, the society’s only currency. If you can accumulate more of it, through work or crime or gambling or the good fortune of birth, you can live on indefinitely — albeit in constant fear of dying through violence or by accident. But the poor, in the downtrodden “time zone” where Timberlake’s character, Will Salas, grew up, must literally live day to day, borrowing or stealing or working double shifts to keep themselves from “timing out.” (There are several background details that made me crack up, like a painted advertisement for the “99-second store.”)

So my anonymous friend in the theater was absolutely right, since it was Karl Marx who observed that the worker’s only capital in the modern economy is his labor power, or vital force, and the capitalist seeks to drain it out of him, day by day, at the cheapest possible rate, allowing the worker the sustenance to continue but little more.

Under late capitalism, i.e., large-scale consumer capitalism, to be sure, that equation was altered significantly, at least in the developed world. The question we now face is whether that system is collapsing. “In Time,” one could say, forecasts a world in which it has done so — a world in which a tiny minority have found immortality but lost their souls, while the mass of working people has been reduced once again to an economic subjugation that is based on a supposedly free and fair exchange of labor for capital but is every bit as thorough as slavery or feudalism.

More Halloween spookiness?

From our really frightening finance ghoul, John Mauldin's Out of the Box:

Right now, the team comprising the ECB, EU and the various parliaments that make up that fractured and faltering alliance are sending pitcher after pitcher to the mound (sometimes in groups of two or three) trying to combine for the perfect game that they NEED in order to escape the debt trap they have backed themselves into.

Being in a situation where you lose unless you can pull something off against odds of multiple-thousands to one and pitch a 'perfect game' is a ridiculous spot in which to find yourself, but as this month has rolled by, it has become ever-more apparent that that is precisely where the Brussels Eurocrats now find themselves. It appears as though, as the pressure has ratcheted up this week, we are now in the ninth inning.

Personally, my own belief (as regular readers are by now well aware) is that the very best the Eurocrats can hope for is to extend the game by an inning or two, but their arms are tired, their bullpen is empty and, at some point, we are going to see an absolute avalanche of runs scored against them as the whole thing finally topples under its own weight. 

This past week has been nothing short of farcical as the tension has built towards a crescendo that seemed at first to be willfully engendered in order to generate just enough sense of impending crisis to enable a resolution to be forced through in a similar fashion to that which preceded Henry Paulson and Ben Bernanke's now-infamous closed-doors fright-fest (hyphenation alert!) that led to the passing of the TARP in late 2008.

Obviously any and all capitulation towards outright bailouts (or 'QEU') must at least be seen to be against the will of the Germans and that proviso goes a long way towards explaining the raft of headlines that have flooded the Reuters and Bloomberg screens of investors all around the world this week. We have seen misdirection, scaremongering, u-turns and abject incompetence as well as the kinds of 'leaks' that are, frankly, laughable - the prime example being the 'leaked' draft copy of the Euro Summit statement which was printed, in its entirety, in the Daily Telegraph on Thursday - coincidentally at the precise moment when things were starting to come unglued as it became clear that this Sunday's Summit would NOT produce the magic bullet required.

The statement itself is priceless. It begins with a bit of back-slapping for the passing of the EFSF (after no less than six months of wrangling and an eleventh-hour drama in Slovakia):

The strategy we have put into place encompasses determined efforts to ensure fiscal consolidation as well as growth, support to countries in difficulty, and a strengthening of euro area governance. At our 21 July meeting we took a set of major decisions. The ratification by all 17 Member States of the euro area of the measures related to the EFSF significantly strengthen our capacity to react to the crisis.

The agreement on a strong legislative package within the EU structures on better economic governance represents another major achievement. The euro continues to rest on solid fundamentals. . .

It then moves on to more familiar ground; an agreement to display their strong determination to fix things. Nothing concrete, of course, but they sure as hell are determined:

The crisis is, however, far from over, as shown by the volatility of sovereign and corporate debt markets. Further action is needed to restore confidence. That is why today we agree on additional measures reflecting our strong determination to do whatever is required to overcome the present difficulties.

The rest of the text, should you want to read it, is here, but allow me to summarise it through a few select phrases that will save you the trouble of doing so:

“blah, blah, blah… All Member States are determined, blah, blah, blah… We want to reiterate our determination, blah, blah, blah… We reaffirm clearly our unequivocal commitment that, blah, blah, blah… All other euro area Member States solemnly reaffirm their inflexible determination, blah, blah, blah… The euro area Heads of State or Government fully support this determination, blah, blah, blah… All tools available will be used in an effective way to ensure financial stability in the euro area, blah, blah, blah… We fully support the ECB, blah, blah, blah… “

See. I told you they were determined.
But, buried deep in the draft are (amazingly enough) some specific measures that will surely help solve the crisis:

• There will be regular Euro Summit meetings bringing together the Heads of State or govern­ment (HoSG) of the euro area and the President of the Commission. These meetings will take place at least twice a year
• The President of the Euro Summit will be designated by the HoSG of the euro area at the same time the European Council elects its President
• The President of the Euro summit will keep the non euro area Member States closely informed of the preparation and outcome of the Summits
• As is presently the case, the Eurogroup will ensure ever closer coordination of the economic policies and promoting financial stability.
• The President of the Euro Summit will be consulted on the Eurogroup work plan and may invite the President of the Eurogroup to convene a meeting of the Eurogroup, notably to prepare Euro Summits or to follow up on its orientations
• Work at the preparatory level will continue to be carried out by the Eurogroup Working Group(EWG)
• The EWG will be chaired by a full-time Brussels-based President. He/she should preferably also chair the Economic and Financial Committee
…and my personal favourite:
• Clear rules and mechanisms will be set up to improve communication and ensure more con­sistent messages.

It’s at this point that the non-Europeans amongst you are possibly finally beginning to get the joke that anybody caught in the tractor beam of ineptitude that is ‘Europe’ (and by ‘Europe’ I mean the bureaucratic construct rather than the land mass) has understood for years.

THIS IS HOW EUROPEAN BUREAUCRACY WORKS, PEOPLE!!!!

Millions of Euros spent on days of ‘talks’ to come up with solutions that fail to address any REAL problems.

Don’t believe me?

Please read on for the really bad news.

Amidst this barrage of headlines, Nicolas Sarkozy was quoted in two articles which outlined his own fears for Europe: 

“Allowing the destruction of the euro is to take the risk of the destruction of Europe. Those who destroy Europe and the euro will bear responsibility for resurgence of conflict and division on our continent.”

And...“If there isn’t a solution by Sunday, everything is going to collapse”

There’s something eerily familiar about that last sentence. Let’s see what Google Translate makes of the original French version, shall we?:

“If money isn’t loosened up, this sucker could go down”

Those words were uttered by another President on September 26, 2008 - a few days before TARP was passed into law.

No matter how long this charade continues, it seems impossible to see how it doesn’t end in a EuroTARP. The ECB have a brand new, never-been-used printing press just sitting there in a locked room waiting to be called into action. The only problem is; the Germans have the key to the door. How long they continue to try to do the ‘right’ thing before capitulating is pretty much the only unknown quantity right now

Having backed themselves into a hopeless corner early last week with promises of a ‘solution’ come the end of this weekend’s summit, the Eurocrats have now postponed the decision until next Wednesday. On hearing this, the markets were eerily calm, as the UK Guardian noted:

(UK Guardian): Investors’ thinking seems to be that the adoption of a new deadline - “Wednesday, at the latest,” according to last night’s communiqué - could be construed as good news, or at least neutral from the point of view of share prices and bond prices. This theory says that more time to reach agreement makes a watertight plan more likely to happen.

Really? The notion sounds like a triumph of hope over experience. Okay, last night’s statement still promised “a global, ambitious response to the crisis currently facing the Eurozone” but it seems just as likely that more time will simply entrench disagreements between Germany and France. As the clock ticks, the definition of “ambitious” could simply be watered down..

But is this sense of calm justified? Well, in a word, no.

Overnight, the latest leaks out of the ongoing Crisis Summit paint an ugly picture about what happens next and, if the leaks are anything to go by, we are in for anything BUT a period of calm:

(UK Daily Telegraph): Europe’s leaders are threatening to trigger a formal default on Greek debt and risk a “credit event” if banks refuse to accept losses of up to €140bn (£120bn) on their hold­ings.

Hardline eurozone members, backed by the International Monetary Fund (IMF), delivered the ulti­matum this weekend after an official report found that in a worst-case scenario Greece could need a second bail-out of€450bn – twice the current package and more than the entire €440bn in the eurozone’s rescue fund.

Vittorio Grilli, a senior EU official, travelled to Rome yesterday to present the “take it or leave it” deal to the Institute of International Finance, which is leading the negotiations for the banks. “The only voluntary element for the banks now is to take a 50pc haircut or face a credit event, a default,” said an EU diplomat.

Apparently, even a once-taboo idea of a centralized Treasury is also now on the table:

(UK Daily Telegraph): European Union chiefs are drawing up plans for a single “Treasury” to over­see tax and spending across the 17 eurozone nations.

The proposal, put forward by Herman Van Rompuy, the European Council president, would be the clearest sign yet of a new “United States of Europe” — with Britain left on the sidelines.

The plan comes as European governments desperately trying to save the euro from collapse last night faced a new bombshell, with sources at the International Monetary Fund saying it would not pay for a second Greek bail-out..

Or how about an EFSF SPV that will attract money from our old friends the Sovereign Wealth Funds (surely, by now, even THEY are starting to understand the folly of investing in these things?):

(UK Guardian): Finance ministers from the 17 eurozone countries are discussing the option of creating a “special purpose vehicle” for the European Financial Stability Facility (EFSF) in order to boost its current€440bn (£383bn) lending capacity.

The idea, according to sources, would be to attract further money from official and private inves­tors, with the sovereign wealth funds of countries such as China, Singapore or Qatar a prime target. Some of these already invest in European banks such as Barclays and UBS.

So here we are.

It’s Sunday morning in Asia as I finish writing this week’s missive and the messages coming out of Europe are as mixed as ever, despite the clear need for a ‘solution’ (which has been perhaps the only consistent communique for about two years now). Sadly for the Eurocrats, the time when they have to stop telling us how important a ‘solution’ IS and actually devise one that WORKS is now at hand.

Any more prevaricating and the markets will give them their solution whether they like it or not.

The chances are that we will see another photo-op featuring the region’s finance ministers this week as they unveil their latest ‘plan’ that will fix everything. There will be a communique issued which lays out exactly how determined they are to solve everything and quantifies all the important steps they have so far taken as well as the improvements they are seeing in the finances of the PIIGS.

There may be some criticism of the banks for forcing them to this point, and there will most likely be certain promises made about how they aim to extract retribution for their forced largesse, but they will take one more swing at a solution - one that stops short of the massive steps they need to take to shore things up once and for all.

Then the markets will have their say

Ultimately, the only realistic way to fix Europe’s problems is to shovel money into the gaping hole that is the region’s finances. Which means that the REAL question that has to be answered is fairly simple:

Where is that money going to come from?

Growth? Nope.

Inflation? Not quickly enough.

Forgiveness or default? Not if you don’t want M. Sarkozy’s prediction coming true.

The ECB’s printing press? Only if you can change German minds.
Until German minds are harder to change than the immutable laws of mathematics, I suspect we have our answer.

Only one Perfect Game has been thrown in a World Series game - when it REALLY counted. The year was 1956, the pitcher that day was Don Larsen and, as the 27th opposing batter was finally struck out, Larsen leapt into the arms of a man whose words of wisdom have graced the cover of Things That Make You Go Hmmm..... on several occasions: Yogi Berra.

The latest European Crisis Summit? Well, as Yogi would probably have said, it’s déja-vu all over again.

∞∞∞∞∞∞∞
So what do we have for you this week? Well, naturally, there’s a whole lotta Europe including warnings of a French downgrade from top economists, warnings of a ‘downgrade blitz’ across the EMU from S&P and a warning for Mario Draghi as he prepares to take the crown from Jean-Claude Trichet’s greying head in a little over a week.

Morgan Stanley explain Europe’s‘Triangle of Terror’, we hear how the EU is mulling over a $1.3 trillion fund and little Belarus is doing its bit to show that austerity is the way forward by heading to eBay.

Amidst Boston’s own ‘Occupation’ we find some of the most delicious irony of the year, the next wave of mortgage-backed lawsuits is set to traumatize Wall Street yet again, Peter Tchir imagines the EFSF as a hedge fund and we investigate the mysterious China International Fund and its activities in Africa.

That’s all for me for another week.

Play Ball!

As if anyone really wants to see the endgame.