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Will Hurricane Katrina's 10-year anniversary lead to honest evaluations by the politicians whose plans brought us the damaging results to the over 100,000 people who could never afford to return to their homes?
We're dreaming here as very few Republicans are able to speak about what happened under George W. Bush's presidency with any type of honesty (or apology).
Having just viewed Grover Norquist babble lies for an hour on CSPAN2 about how the U.S. needs to turn every social program over to the states in block grants, adopt Paul Ryan's disastrous budget ideas, and "end" the IRS in order to turn capital loose on us . . . right, isn't it just terrifying to find the same exact people (and those people provide the money that funds the likes of Norquist, Karl Rove, etc., and the devastation their policies wreaked upon the U.S. from 2001-2009) who brought us the thinking that caused the Iraq nightmare, the Afghanistan evisceration, the Katrina "capitalism lesson," and the hugely wrong thinking behind the deregulation of financial markets not only still spouting the mindless crap economics lessons to acquiescent acolytes (the one on TV with him was from the Heritage Foundation), but touting the Republican candidates as ones that will ensure a permanent change in the government's operations in the direction of even more inequality for the foreseeable future. (Thank whoever that Joseph Stiglitz, speaking about his book, The Great Divide: Unequal Societies and What We Can Do About Them was on CSPAN2 after Norquist to provide some intellectual heft to the viewers reactions that economists can entertain ideas that will help the middle and lower classes instead of continuing to erase them.)
Douglas Brinkley clears the intellectual brush about this nationally catastrophic time.
The Flood that Sank George W. Bush
There’s been a lot of talk lately about George W. Bush’s legacy in Iraq, and what it means for his brother Jeb’s hopes of following him to the Oval Office. But Iraq wasn’t the disaster that deep-sixed Dubya’s presidency; Katrina was. Ten years after the hurricane inundated New Orleans, the presidential historian and author of The Great Deluge tallies the cost of an administration’s incompetence._ _ _ _ _ _ _
What a weird moment in U.S. presidential history.
Hurricane Katrina, a Category 3 storm, had smashed into the Gulf South. People were drowning. And the president of the United States played guitar in San Diego, egged on by country singer Mark Wills.
Even George W. Bush’s most stalwart supporters cringed at his disconnect from reality. Bush, like Michael Jackson in his days at Neverland Ranch, was living in a bubble. By contrast, when Hurricane Betsy had struck the Louisiana coast in 1965, President Lyndon B. Johnson had immediately flown to New Orleans to see the flood zone firsthand. The difference was glaring. Bush was, quite simply — as Coast Guard first-responder Jimmy Duckworth phrased it — “out of the game.”
On the 10th anniversary of Katrina, with the advantage of hindsight, it’s clear that Bush’s lack of leadership in late summer of 2005 cost his presidency mightily. Unlike Ronald Reagan, after the Challenger explosion, or Bill Clinton, after the Oklahoma City bombing, Bush had failed to feel the profound implications of the moment as his predecessors had. He didn’t scramble into action. He didn’t touch the nation’s heartstrings by using epic oratory to inform the disaster. What we got, instead, were guitar chords and terse speeches void of human pathos. No matter how the Bush library in Dallas tries to spin Bush’s Katrina performance, we all know he deserved an F in crisis management.
. . . After the attacks on the United States on September 11, 2001, Bush was virtually unseen during the first 11 hours, making only brief statements and effectively ceding the public leadership role in the crisis to New York City mayor Rudolph Giuliani. When the president emerged, addressing the nation in a formal televised speech, it was in a role in which he was comfortable: the aggressor intent on taking revenge against al-Qaeda, against the Taliban who had harbored them, and against “the people who knocked these buildings down” (as he said, a few days after the attacks, bullhorn in hand, at Ground Zero). But soon enough, he was going after Iraq’s Saddam Hussein, whose regime had absolutely zero to do with the 9/11 attacks. Foreign policy and military strategy were not George Bush’s fortes. Within two years, he charged into the headwinds of a war that cost billions, decimated cities, claimed the lives of thousands of allied service members and hundreds of thousands of citizens and enemy combatants — the ramifications of which we are still confronting, in horrific ways, to this day.
Defining a Market Bubble: 5 U.S. Stocks Worth $1.88 Trillion and One of Them Can’t Figure Out How to Make Money
By Pam Martens and Russ Martens
August 27, 2015
Capital Dynamics Founder and CEO, Tan Teng Boo
That big so-called rally at the market close yesterday was not a rally but a short squeeze.
That’s when the hedge funds that have put on short positions size up the amount of stock for sale at the close of trading and, if the amount is light, they decide to close out their short positions by buying stock to cover. On Tuesday, there was approximately $3.5 billion in orders to sell at the close, resulting in the late day selloff. Yesterday, there was only about $500 million to sell, making it risky to hold short positions, thus the short squeeze driving the Dow up 619 points at the close.
Expect to see a lot more of these spikes, up or down, in the last two hours of trading.
Assessing just how large the bubble has grown in U.S. markets as a result of the Fed’s zero-bound interest rate strategy since December 2008, Tan Teng Boo, founder and CEO of Capital Dynamics appeared on a Bloomberg Television segment this morning and summed up our new market bubble in a few words. Boo said just five U.S. stocks — Apple, Google, Microsoft, Facebook, and Amazon — are worth more than the Frankfurt, Germany stock market, which represents the fourth largest economy in the world.
We did the math after the past week’s selloff and yesterday’s big spike higher. At yesterday’s close, the market caps for the levitating five are as follows: Apple $625.532 billion; Google, $440.767 billion; Microsoft, $341.594 billion; Facebook, $245.795 billion and Amazon, $234.215 billion. The total market cap for the five — $1.889 trillion.
All five of these stocks have one thing in common: they all trade on the Nasdaq stock market. That’s the market that gave you the 2000 bust that erased $4 trillion from investors’ pockets in dot-com and tech blowups as well as the stock market that oversaw a massive price rigging cartel for more than a decade.
On July 17, 1996, the U.S. Justice Department charged most of the largest firms on Wall Street (iconic brands like Merrill Lynch, JPMorgan and predecessor firms to Citigroup) with price fixing on Nasdaq. The firms were deemed so untrustworthy going forward that as part of its settlement the Justice Department required that some Wall Street traders’ phone calls be tape recorded when making Nasdaq trades. The Justice Department also gave itself the right to randomly show up and listen in on the traders’ calls.
Today, some of the same firms that were charged with price rigging on Nasdaq have been charged with similar cartel activity in rigging the Libor interest rate benchmark and/or foreign currency trading. But that has not prevented these firms from operating their own Dark Pools, effectively unregulated stock markets, where the highfliers mentioned above are traded in darkness.
Wall Street On Parade previously conducted a study of trading in Apple stock in Dark Pools for the weeks of May 26 through June 23, 2014. (Until last year, data on Dark Pool trading had not been available to the public.) We reported as follows on that study in June of this year:
“During that period, Dark Pools traded over 103.6 million shares of Apple stock. The heaviest week was the week of June 9, 2014 when 39.9 million shares traded in dark pools. Goldman Sachs was responsible for trading 2,444,350 shares of Apple that week in its Dark Pool, Sigma-X, and has been in the top tier of dark pools trading Apple stock in all subsequent weeks of our review period. (On July 1 of last year, the self-regulator, FINRA, administered a minor wrist slap to Goldman for what was clearly very serious pricing irregularities in its dark pool.)
“Goldman Sachs has also been an enabler to Apple taking on debt to finance its stock buybacks. Goldman Sachs was the co-lead manager with Deutsche Bank in April of 2013 when Apple launched a $17 billion corporate debt offering in order to buy back its shares and increase its dividend. Apple’s $17 billion debt deal was the largest in corporate history at that point. Goldman was also Apple’s advisor in 1996 when the company was warding off bankruptcy and Goldman managed its $661 million convertible debt offering.
“Could taking on debt and buying back shares become an addiction? One year after the April 2013 $17 billion debt deal by Apple, Goldman Sachs and Deutsche Bank co-led another $12 billion debt offering for Apple in April of 2014. So far this year, Apple has issued $6.5 billion in debt in February and another $8 billion on May 6. Goldman Sachs & Co., Bank of America Merrill Lynch and J.P. Morgan were involved in Apple’s May offering, which was specifically earmarked for share buybacks and dividends.”
Another of the highfliers, Amazon, whose market cap is larger than AT&T, is still trying to figure out how to generate profits. Here’s a few headlines describing its struggles:
December 18, 2013: International Business Times: “Amazon: Nearly 20 Years In Business And It Still Doesn’t Make Money, But Investors Don’t Seem To Care”;October 23, 2014: New York Times: “Amazon’s Investments Are Piling Up, as Big Losses”;October 24, 2014: Bloomberg Business: “…the company yesterday posted its biggest quarterly net loss since at least 2003…”
As for Facebook, all you need to know is that its Price-to-Earnings Ratio (PE Ratio) is an astronomical 88.97 at yesterday’s close.
One of the Bloomberg Television anchors who was interviewing Tan Teng Boo, Angie Lau, noted that those five stocks had led the big rally yesterday and said “those still seem like safe haven plays.”
Calling Apple and Amazon and Facebook “safe haven plays” is like comparing Donald Trump to the Dalai Lama. Let’s hope American investors are smarter today than they were going into the dot.com bust in 2000 and the 2008 crash.
Professor Paul Craig Roberts has mountains of personal research and insights to share with us on what's going down.
And up.
Central Banks Have Become A Corrupting Force
August 23, 2015
Paul Craig Roberts and Dave Kranzler
Are we witnessing the corruption of central banks? Are we observing the money-creating powers of central banks being used to drive up prices in the stock market for the benefit of the mega-rich?
These questions came to mind when we learned that the central bank of Switzerland, the Swiss National Bank, purchased 3,300,000 shares of Apple stock in the first quarter of this year, adding 500,000 shares in the second quarter. Smart money would have been selling, not buying.
It turns out that the Swiss central bank, in addition to its Apple stock, holds very large equity positions, ranging from $250,000,000 to $637,000,000, in numerous US corporations — Exxon Mobil, Microsoft, Google, Johnson & Johnson, General Electric, Procter & Gamble, Verizon, AT&T, Pfizer, Chevron, Merck, Facebook, Pepsico, Coca Cola, Disney, Valeant, IBM, Gilead, Amazon.
Among this list of the Swiss central bank’s holdings are stocks which are responsible for more than 100% of the year-to-date rise in the S&P 500 prior to the latest sell-off.
What is going on here?
The purpose of central banks was to serve as a “lender of last resort” to commercial banks faced with a run on the bank by depositors demanding cash withdrawals of their deposits.
Banks would call in loans in an effort to raise cash to pay off depositors. Businesses would fail, and the banks would fail from their inability to pay depositors their money on demand.
As time passed, this rationale for a central bank was made redundant by government deposit insurance for bank depositors, and central banks found additional functions for their existence. The Federal Reserve, for example, under the Humphrey-Hawkins Act, is responsible for maintaining full employment and low inflation. By the time this legislation was passed, the worsening “Phillips Curve tradeoffs” between inflation and employment had made the goals inconsistent. The result was the introduction by the Reagan administration of the supply-side economic policy that cured the simultaneously rising inflation and unemployment.
Neither the Federal Reserve’s charter nor the Humphrey-Hawkins Act says that the Federal Reserve is supposed to stabilize the stock market by purchasing stocks. The Federal Reserve is supposed to buy and sell bonds in open market operations in order to encourage employment with lower interest rates or to restrict inflation with higher interest rates.
If central banks purchase stocks in order to support equity prices, what is the point of having a stock market? The central bank’s ability to create money to support stock prices negates the price discovery function of the stock market.
The problem with central banks is that humans are fallible, including the chairman of the Federal Reserve Board and all the board members and staff. Nobel prize-winner Milton Friedman and Anna Schwartz established that the Great Depression was the consequence of the failure of the Federal Reserve to expand monetary policy sufficiently to offset the restriction of the money supply due to bank failure. When a bank failed in the pre-deposit insurance era, the money supply would shrink by the amount of the bank’s deposits. During the Great Depression, thousands of banks failed, wiping out the purchasing power of millions of Americans and the credit creating power of thousands of banks.
The Fed is prohibited from buying equities by the Federal Reserve Act. But an amendment in 2010 – Section 13(3) – was enacted to permit the Fed to buy AIG’s insolvent Maiden Lane assets. This amendment also created a loophole which enables the Fed to lend money to entities that can use the funds to buy stocks. Thus, the Swiss central bank could be operating as an agent of the Federal Reserve.
If central banks cannot properly conduct monetary policy, how can they conduct an equity policy? Some astute observers believe that the Swiss National Bank is acting as an agent for the Federal Reserve and purchases large blocs of US equities at critical times to arrest stock market declines that would puncture the propagandized belief that all is fine here in the US economy.
We know that the US government has a “plunge protection team” consisting of the US Treasury and Federal Reserve. The purpose of this team is to prevent unwanted stock market crashes.
Is the stock market decline of August 20-21 welcome or unwelcome?
At this point we do not know. In order to keep the dollar up, the basis of US power, the Federal Reserve has promised to raise interest rates, but always in the future. The latest future is next month. The belief that a hike in interest rates is in the cards keeps the US dollar from losing exchange value in relation to other currencies, thus preventing a flight from the dollar that would reduce the Uni-power to Third World status.
The Federal Reserve can say that the stock market decline indicates that the recovery is in doubt and requires more stimulus. The prospect of more liquidity could drive the stock market back up. As asset bubbles are in the way of the Fed’s policy, a decline in stock prices removes the equity market bubble and enables the Fed to print more money and start the process up again.
On the other hand, the stock market decline last Thursday and Friday could indicate that the players in the market have comprehended that the stock market is an artificially inflated bubble that has no real basis. Once the psychology is destroyed, flight sets in.
If flight turns out to be the case, it will be interesting to see if central bank liquidity and purchases of stocks can stop the rout.
Western Democracy Is An Endangered Species On Its Way To Extinction
August 25, 2015
Paul Craig Roberts
The British Labour Party no longer represents the working class. Under UK prime minister Tony Blair, the Labour Party became a vassal of the One Percent. The result has been a rebellion in the ranks and the rise of Jeremy Corbyn, a principled Labourite intent on representing the people, a no-no in Western “democracies.”
Corbyn is too real for the Labour Party Blairites, who hope to be rewarded with similar nest eggs as Blair for representing the capitalist One Percent. So what is the corrupted Labour Party doing to prevent Corbyn’s election?
The answer is that it is denying the vote to Corbyn supporters. You can read the story here:
The illegal Egyptian military dictatorship that overthrew on Washington’s orders the first democratically elected government in Egyptian history has issued an edict prohibiting journalists from contradicting the military dictatorship. In brief, the dictatorship installed by Washington has outlawed facts.
Washington rejected the government that the Egyptian people elected, because it appeared that the democratically elected government would have a foreign policy that was at least partially independent of Washington’s. Remember, according to the neocons who, together with Israel, control US foreign policy, countries with independent foreign policies, such as Iran, Russia, and China, are America’s “greatest threats.”
The Egyptian military thugs, following Washington’s orders, have more or less eliminated all of the leadership of the political party that was democratically elected. The party was called the Muslim Brotherhood. In the presstitute Western media, the political party was described more or less as al Qaeda, and how are the ignorant, brainwashed, and propagandized Americans to know any difference? Certainly neither “their” government nor the presstitute media will ever tell them.
With the military dictatorship’s edict, independent news reporting no longer exists in Egypt. Washington is pleased and rewards the dictatorship with bags full of money paid by the hapless and helpless American taxpayers.
Americans should keep in mind that most of the dollars that they pay in income tax are spent either spying upon themselves and the world or killing people in many countries. Without resources taken from American taxpayers millions of women, children, and village elders would still be alive in Afghanistan, Iraq, Libya, Syria, Somalia, Yemen, Pakistan, Ukraine, South Ossetia, and other countries. America is the greatest exporter of violence the world has ever known. So wear your patriotism on your sleeve and be proud. You are a depraved citizen of the world’s worst killer nation. Compared to the USA, Rome was a piker.
France herself seems to be collapsing as a democracy and no longer respects her own laws. According to this report from Kumaran Ira on World Socialist Website.
“In the name of the “war on terror,” the French state is dramatically accelerating its use of clandestine operations to extra-judicially murder targeted individuals. French President François Hollande reportedly possesses a “kill list” of potential targets and constantly reviews the assassination program with high-ranking military and intelligence officers.“This program of state murder, violating basic constitutional rights in a country where the death penalty is illegal, underscores the profound decay of French bourgeois democracy. Amid escalating imperialist wars in France’s former colonial empire and deepening political crisis at home, the state is moving towards levels of criminality associated with the war against Algerian independence and the Vichy regime of Occupied France.”
Where do you suppose the socialist president of France got his idea of an illegal and unconstitutional “kill list”? If you answer from “America’s First Black President,” you are correct.
The French people should be outraged that “their” president is nothing more than a murderer and an agent of Washington. But they aren’t. False flag operations have made them fearful. The French like other Western peoples, have ceased to think.
Every western democracy is gone with the wind. Washed up, Finished. Every value that defined Western civilization and made it great has been flushed by power and greed and arrogance.
Proconsuls have replaced democracy.
I certainly do not believe that Western civilization was ever pure as snow and devoid of sins and crimes against humanity. But it is a fact that in Western civilization, despite the numerous injustices, reforms were possible that improved life for the lower classes. Reforms were possible that restricted the rapaciousness of the rich and powerful. In the US reforms made the impossible come true: ladders of upward mobility made it possible for members of the lowest economic class to become multimillionaires. And this actually happened.
The governments in Washington committed many crimes, but on occasion Washington prevented crimes. Remember President Eisenhower’s ultimatum to Washington’s British, French, and Israeli allies to remove themselves from the Suez Canal in Egypt or else.
Today Washington pushes its allies to commit crimes against humanity. That is what NATO and the National Endowment for Democracy are for.
In my lifetime Americans have always had a good opinion of themselves. But in the 21st century this good opinion has hyper-jumped into hubris and arrogance. If you haven’t been around very long in terms of a human life, you don’t see this. But older people do.
Just as the Roman Empire ended in the destruction of the Roman people, the American Empire will end in the destruction of the American people. Judging from histories, Roman citizens were superior to American citizens; yet, Rome failed.
Americans shouldn’t expect any other outcome. The price to be paid for insouciance, self-satisfaction, and complicity is high.
Where is Neo When We Need Him
Paul Craig Roberts
August 26, 2015
In "The Matrix" in which Americans live, nothing is ever their fault. For example, the current decline in the US stock market is not because years of excessive liquidity supplied by the Federal Reserve have created a bubble so overblown that a mere six stocks, some of which have no earnings commiserate with their price, accounted for more than all of the gain in market capitalization in the S&P 500 prior to the current disruption.
In our Matrix existence, the stock market decline is not due to corporations using their profits, and even taking out loans, to repurchase their shares, thus creating an artificial demand for their equity shares.
The decline is not due to the latest monthly reporting of durable goods orders falling on a year-to-year basis for the sixth consecutive month.
The stock market decline is not due to a week economy in which after a decade of alleged economy recovery, new and existing home sales are still down by 63% and 23% from the peak in July 2005.
The stock market decline is not due to the collapse in real median family income and, thereby, consumer demand, resulting from two decades of offshoring middle class jobs and partially replacing them with minimum wage part-time Walmart jobs without benefits that do not provide sufficient income to form a household.
No, none of these facts can be blamed. The decline in the US stock market is the fault of China.
What did China do? China is accused of devaluing by a small amount its currency.
Why would a slight adjustment in the yuan’s exchange value to the dollar cause the US and European stock markets to decline?
It wouldn’t. But facts don’t matter to the presstitute media. They lie for a living.
Moreover, it was not a devaluation.
When China began the transition from communism to capitalism, China pegged its currency to the US dollar in order to demonstrate that its currency was as good as the world’s reserve currency. Over time China has allowed its currency to appreciate relative to the dollar. For example, in 2006 one US dollar was worth 8.1 Chinese yuan. Recently, prior to the alleged “devaluation” one US dollar was worth 6.1 or 6.2 yuan. After China’s adjustment to its floating peg, one US dollar is worth 6.4 yuan. Clearly, a change in the value of the yuan from 6.1 or 6.2 to the dollar to 6.4 to the dollar did not collapse the US and European stock markets.
Furthermore, the change in the range of the floating peg to the US dollar did not devalue China’s currency with regard to its non-US trading partners. What had happened, and what China corrected, is that as a result of the QE money printing policies currently underway by the Japanese and European central banks, the dollar appreciated against other currencies. As China’s yuan is pegged to the dollar, China’s currency appreciated with regard to its Asian and European trading partners. The appreciation of China’s currency (due to its peg to the US dollar) is not a good thing for Chinese exports during a time of struggling economies. China merely altered its peg to the dollar in order to eliminate the appreciation of its currency against its other trading partners.
Why did not the financial press tell us this? Is the Western financial press so incompetent that they do not know this? Yes.
Or is it simply that America itself cannot possibly be responsible for anything that goes wrong. That’s it.
Who, us?! We are innocent! It was those damn Chinese!
Look, for example, at the hordes of refugees from America’s invasions and bombings of seven countries who are currently overrunning Europe. The huge inflows of peoples from America’s massive slaughter of populations in seven countries, enabled by the Europeans themselves, is causing political consternation in Europe and the revival of far-right political parties. Today, for example, neo-nazis shouted down German Chancellor Merkel, who tried to make a speech asking for compassion for refugees.
But, of course, Merkel herself is responsible for the refugee problem that is destabilizing Europe. Without Germany as Washington’s two-bit punk puppet state, a non-entity devoid of sovereignty, a non-country, a mere vassal, an outpost of the Empire, ruled from Washington, America could not be conducting the illegal wars that are producing the hordes of refugees that are over-taxing Europe’s ability to accept refugees and encouraging neo-nazi parties.
The corrupt European and American press present the refugee problem as if it has nothing whatsoever to do with America’s war crimes against seven countries. I mean, really, why should peoples flee countries when America is bringing them “freedom and democracy?”
Nowhere in the Western media other than a few alternative media websites is there an ounce of integrity. The Western media is a Ministry of Truth that operates full-time in support of the artificial existence that Westerners live inside "The Matrix" where Westerners exist without thought. Considering their inaptitude and inaction, Western peoples might as well not exist.
More is going to collapse on the brainwashed Western fools than mere stock values.
(Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the "Wall Street Journal." He was columnist for "Business Week," Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts' latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West and How America Was Lost.)
Need rehab from the market madness?
Or is it back to black?
No, not really.
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