Greedy Capitalists Hogging Wealth Are Not Causing Income Inequality

[BridgeTroll]

Rofl... pretty much says it all...

obscure former British academic to propagate a theory

[buckethead]

Ron, I love ya. Your bookstores are among the most awesome places to go in the city.

That said, Your belief in Obama as a populist crusader is unfounded.

Rhetorically sure, but in actions Obama is just another GWB.

Shall we count the ways?

[ronchamblin]

Ron, I love ya. Your bookstores are among the most awesome places to go in the city.

That said, Your belief in Obama as a populist crusader is unfounded.

Rhetorically sure, but in actions Obama is just another GWB.

Shall we count the ways?

I see your point Bucket.  I'll admit I've been a little confused with Obama's actual behavior as compared to what one would expect given the rhetoric.  I tend to sweep things occasionally with hasty idealism; not taking time to do sufficient research.  His ties and connections are where one wouldn't expect them to be.  Yes... I'm a little confused and disappointed............ and too busy to sort it all out.         

[finehoe]

"The reason 2012 feels so empty now is that voters on both sides of the aisle are not just tired of this state of affairs, they are disgusted by it. They want a chance to choose their own leaders and they want full control over policy, not just a partial say. There are a few challenges to this state of affairs within the electoral process â€" as much as I disagree with Paul about many things, I do think his campaign is a real outlet for these complaints â€" but everyone knows that in the end, once the primaries are finished, we’re going to be left with one 1%-approved stooge taking on another.

Most likely, it’ll be Mitt Romney versus Barack Obama, meaning the voters’ choices in the midst of a massive global economic crisis brought on in large part by corruption in the financial services industry will be a private equity parasite who has been a lifelong champion of the Gordon Gekko Greed-is-Good ethos (Romney), versus a paper progressive who in 2008 took, by himself, more money from Wall Street than any two previous presidential candidates, and in the four years since has showered Wall Street with bailouts while failing to push even one successful corruption prosecution (Obama).

There are obvious, even significant differences between Obama and someone like Mitt Romney, particularly on social issues, but no matter how Obama markets himself this time around, a choice between these two will not in any way represent a choice between “change” and the status quo. This is a choice between two different versions of the status quo, and everyone knows it."

Matt Taibbi, The Meaningless Sideshow Begins (http://www.rollingstone.com/politics/blogs/taibblog/iowa-the-meaningless-sideshow-begins-20120103#ixzz1j6HCDhyv)

[buckethead]

A little commentary from a fairly bright gentleman. Not your run of the mill neocon.


http://www.youtube.com/v/8mA4HYTO790&feature=youtube_gdata_player

[ronchamblin]

Thanks Bucket.  Imagine if we did not enjoy in our presence these Chomsky type fellows who are able and willing to engage the frequently harmful trends and actions from our leaders, the result being that they expose errors in policy, and even intentional deceit.  I’ve read very little of Chomsky’s books but have read articles and quotes.  From what I’ve seen, this fellow is on the mark on many issues. 

Of course, not being a politician, Chomsky and others like him are free to ponder and seek positions closer to the truth, most always being guided by the fundamentals of an issue, whereas a politician must maneuver amongst whatever dynamics will achieve election, even if these include decisions and deceptions ultimately harmful to our nation and its people, and all too often result in benefiting only those who contribute the most money to their campaigns.

We seem to have been ensconced into a system wherein those who have attributes allowing them to be good politicians would not lower themselves to be one, and those who would lower themselves to be one, do so, even though they ultimately lack the necessary qualities. 

So……… yes, thank goodness for the Chomsky’s of the world.       

[buckethead]

Another little ditty, I thought I'd share. From a very libertarian (perhaps absolutist) source.

I am VERY suspicious about the Fed, Primary Dealers, and GSEs. (Freddie/Fannie/Minnie)

If my cynicism is unfounded, I would appreciate being talked down from the tin foil ledge.

It's scary out here.

The Bernank's greatest quotes (thus far). Be afraid. Be very afraid:
(November 15, 2005) "With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly."
(July, 2005) "We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though."
(October 31, 2007) "It is not the responsibility of the Federal Reserve â€" nor would it be appropriate â€" to protect lenders and investors from the consequences of their financial decisions."
(November 21, 2002) "The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost."
"The money supply is not changing in any significant way. What we’re doing is lowering interest rates by buying Treasury securities."
"One myth that’s out there is that what we’re doing is printing money. We’re not printing money."
(When asked directly during a congressional hearing if the Federal Reserve would monetize U.S. government debt) "The Federal Reserve will not monetize the debt."


The only banks that fear deflation are those that control governments, which is the case with the relationship between almost all developed nations today and their 'central bank' masters.

The central banks can print as much fiat as they wish, to compensate for any and all "losses" that inflation theoretically could do to their holdings.

Federal Reserve Notes, aka BernankBux, are prolific and compuslive liars of the worst order, and the same can be said of all fiat worldwide now, as all of it is conjured from thin air, backed by nothing of any inherent value (just empty platitudes such as "full faith & credit" at no cost to the central merry banksters & then loaned at interest, leveraged many dozens of times over, and then either repaid with interest - or better yet - defaulted on, allowing the masters of the Merry Central Bankster Puppets to Harvest the real assets that have actual, inherent wealth, that were pledged to securitize said loans (think homes, land, factories, equipment/machinery, farms, natural resources in the case of alleged sovereign nations, etc.).

Even if a huge percentage of unsecuritized loans are defaulted upon, it's no skin of the Money Masters sacks, as the basis of the loan was conjured from thin air, with zero cost of production, and any loans that perform (even a single one) are pure gravy.

Bonds are, for the most part, securitized by fiat such as EuroWipes or BernanBux.

It's such a brilliant racket that they're running.

Banks that have to earn profits via the conventional banking model of borrowing money at a low rate from a central bank, and loaning that money out at a higher interest rate (the interest rate differential is their gross profit, essentially), have everything to fear from inflation, as it completely destroys their conventional and main method of making profits, during normal times in the economic cycle, wherein rising interest rates drown the value of their past loans extended, absent extraordinary subsidization from some external source.

Bank loans are bank 'assets,' while deposits are 'liabilities,' and all things being equal, inflation destroys any profit (and could put the bank deep in loss) that the conventional spread between money borrowed and loaned typically offers it.

So, aside from central banks, which can compensate for inflationary impact by printing more fiat, and too-big-to-fail entities, which enjoy de facto central bank status (literally; plus, look at all the revolving door nepotism as to hiring between central banks and too-big-to-fail banks) and all sorts of 'extras' in the form of guaranteed and risk free profit making avenues offered exclusively to them by central bank policies, inflation destroys lenders and rewards borrowers.

It's not deflation on home values that wipes out those banks that choose to carry (rather than sell at the time of closing) mortgage backed paper - it's the fact that the loans go bad since a greater % of the people who are indebted on the mortage quit paying on their loans.

Could the deflation lead to the non-payment? Sure. But it's far more likely that job losses and wage reductions affecting affordability of repayment will do that trick. To say that the deflation in home values will lead to job losses and wage reductions is a common misnomer, IMO, that many economists are perpetuating these days - the health of the job market governs home values; the value of homes DOES NOT GOVERN THE JOB MARKET.

Take a moment to think about the people still working, but who are underwater 20% to literally 75% on their home values, but are still making their mortgage payments because they are still working and still have that ability (although more and more who can do so are CHOOSING not to do so, but I digress).

All things being equal, deflation in general, and on home values, means that the bank is getting supercharged returns on the loan it extended to the homebuyer, assuming the loan performs and the bank receives repayment on the underlying note.

It's my humble opinion that one of Bernanke's main goals was to flood as many banks with as much excess reserves as possible, while also extending extraordinary access to the discount window (offering de facto 0% loans), in an effort to keep as many of them from crashing as possible (I think about 900 have failed since 2008), during a time in which he knew their conventional means of generating income and making profits - via loaning money at higher rates than their borrowing costs - would completely break down.

And here we are, with banks that allegedly survived (so far), stuck with toxic balance sheets, full of shitty ass loans secured by eroding value assets, depending more and more on their excess reserve income and massive amounts of new fees (adding significant revenue to their top line) they are imposing on their customers, praying and hoping that here never comes the day that reverse repo operations really do take place, as that would mean a death sentence for another estimated 2500 banks (maybe more).

Anyone who tells me that banks are in anything other than extend and pretend mode, made possible by incredible intervention and excess reserves compliments of Bernanke & Geithner, along with incredibly lax regulation and fantasy-land valuation of assets (thanks to Congress), is really knee or thigh high in the Kool-Aid.

Similarly, given the unsettling trends of high inflation (real numbers), pathetic job growth (with the risk of actually printing negative numbers soon again - even by official and highly massaged measurements via the BLS), incredibly weak demand for loans and incredibly weak willingness/ability to make loans (unless its guaranteed/backstopped by the Fed or Treasury or subagencies of government), anemic retail and manufacturing data, etc., anyone who thinks Bernanke and our own beloved government haven't merely kicked the can at the expense of taxpayers and the organic economy and organic growth, for two long years, to the tune of at least 5 trillion in direct and incredibly inefficient spending (Stimulus, TARP, TALF, QE1 and QE2, etc.), and as much as 12 trillion considering what's yet to be paid back or what the government is still on the hook for in terms of guarantees on loans and toxic asset portfolios it contractually made, only complicating his dilemna and the nation's dilemna, should seriously reassess their level of intelligence or sources of information gathering.

The more that The Bernank pushes on a string (QE, ZIRP4EVER), the more people white knuckle their fiat. Oh, the irony.

It's all the snake eating its own tail.

The Bernank is DESTROYING the desire to consume, as he's freaking the world of savers and the presently liquid out with his absolute abomination of policies, while the non-savers and the majority who have difficulty getting credit have difficulty spending, also (given the banking sectors precarious-dead state of health).

Here is but one of many examples I can cite:  Mr. Smith, who is 78 years old, worked hard his whole life and retired with enough savings that would have, in an ordinary interest rate environment, have produced an income stream from interest on his savings, that would have prompted him to spend far more freely (he may even have already have replaced his 2001 Mercury Grand Marquis by now if not for the fact he is anxious due to his meager/non-existent interest ZIRP income).

So, Mr. Smith buys no new car, hires no one to put a sunroom on his (now radically depreciated home), and gets all of his grandchildren a lump of coal for Christmas this year.

All thanks to The Bernank.

And the cherry on top is The Bernank is thinking of going all in, doubling down on his failures in the U.S., with a sure fire IMF (i.e. U.S.) and credit swap line liquidity tsunami of USD into the EuroZone Debt Black Hole, which sucks in all capital, never to be seen again.

The alleged great academician, expert on The Great Depression, wizard of monetary policy, etc. etc., who is The Bernank, is a total and complete failure IF the goal of his actions was to help the broadest swath of people.

If his goal was to debase their purchasing power, concentrate more and more wealth in the hands of fewer and fewer Crony Capitalists (the opposite of true capitalists) who know all the right players in what is unquestionably now our Kleptocracy, he's succeeding magnificently.

No one really knows whether deflation or inflation takes firm grasp of the global economy, as things will spiral out of control, inevitably, and social and political unrest will foment great changes that can't be predicted or controlled by even the Money Masters, and no one knows how the current system will implode or what will take its place (it will implode without question, however).

And to be honest, it doesn't really matter whether a deflationary death spiral or inflationary destruction of consumption does the economy in - the end result, the destruction of the global economy as we know it, will come about.

Some sane theses have been put forth that we'll have a deflationary collapse first, followed by hyperinflation. While that certainly sounds as likely as anything, no one knows, because people like The Bernank and those he runs errands for won't be calling the shots after things break down.

http://www.zerohedge.com/news/chart-proves-feds-policies-have-been-failure

[buckethead]

Nobody wants to help me emerge from this (very restricting) tin foil sarcophagus ?

Welp... just watch this.

Lengthy, but watchable:
http://www.youtube.com/watch?v=T7mw1qHgTy4&feature=player_embedded#!

[buckethead]

Money from Nothing: A Primer On Fake Wealth Creation And Its Implications (Part 1)

"Only God can create… value out of nothing"â€"Justice Martin V. Mahoney in First National Bank of Montgomery vs. Jerome Daly.
"(I’m) doing God’s work." â€" Goldman Sachs CEO, Lloyd Blankfein
Introduction:

What is fraud except creating “value” from nothing and passing it off as something?

Frauds interlink and grow upon each other. Our debt-based money system serves as the fraud foundation. In our debt-based money system, debt must grow in order to create money. Therefore, there is no way to pay off aggregate debt with available money. More money must be lent into the system to make the payments for old debts. This causes overall debt to expand as new money for actual people (vs. banks) always arrives at interest and compounds exponentially. This process is called financialization.

Financialization: The process of making money from nothing in which debt (i.e. poverty, lack) is paradoxically considered an asset (i.e. wealth, gain). In current financialized economies “wealth expansion” comes from the parasitic taxation of productivity in the form of interest on fiat lending. This interest over time consumes a greater and greater share of resources, assets, labor, and livelihood until nothing is left.

Only in a debt-based money system could debt be curiously cast as an asset. We’ve made “extend and pretend” a quaint phrase for a burgeoning market for financial lying and profiteering aimed toward preventing the collapse of a debt- (or lack-) based system that was already doomed by its initial design to collapse. This primer will detail the major components and basic evolution of fake wealth creation, accelerating debt expansion, hollowing out of the economy, and inevitable financial implosion.

Stage oneâ€"Fiat money origination, multiplication, and distribution

The U.S. Federal Reserve System (“The Fed”): A private, non-transparent entity, formed in 1913, representing and serving private, profit-driven banks that creates money from nothing (fiat) and to which the U.S. government has delegated and effectively ceded its constitutional power to coin money.

The Fed essentially lends our “sovereign” public money to us at interest, paying for things like government debt with more debt, thus expanding debt. By contrast, the Fed currently gives away money to its constituent private banks at zero percent interest, allowing those banks to buy U.S. Treasury bonds, which yield a 2-3 percent interest mark-up to be paid by taxpayers, adding to citizen debt.

Fractional reserve: Private fiat fabrication of exchangeable public “money” as a bookkeeping entry through “multiplication” of public fiat held in private bank reserves. Holding 100,000 dollars of depositors’ money may allow me, as a bank, to lend out 1,000,000 dollars. By what authority? None, really, just my say-so and my action.

In the court case referenced in the heading quote, Justice Mahoney ruled against a bank acting in conjunction with the Federal Reserve Bank of Minneapolis in its efforts to foreclose upon and “buy” a U.S. citizen’s house by simply creating “the entire $14,000.00 foreclosure purchase in money or credit upon its own books by bookkeeping entry.” Further, “Mr. Morgan (the plaintiff/bank representative) admitted that no United States Law or Statute existed which gave him the right to do this.” (First National Bank of Montgomery vs. Jerome Daly)

Stage twoâ€"Delusional, unregulated value assignment, manipulation, and expansion

After money is created out of thin air, other market mechanisms have been propagated to magnify, funnel, and package value-from-nothing further still, creating financial vehicles that add more numbers without adding more value.

Leverage: The practice of arbitrarily multiplying one’s alleged value in order to acquire controlling interest in another property. This mechanism is a favorite of now-discredited corporate raiders and leveraged buy-out firms that currently go under the euphemism “private equity firms”. This claimed private equity can be a fictitious multiplication of self-assessed asset value used to buy a controlling interest in a productive company.

Typically the acquired company is put into debt, its real assets hollowed out and harvested, and then the acquired company is allowed to go bankrupt thus making a killing for the raiders while destroying the ability of displaced workers to make a living. (Unhinged: When Concrete Reality No Longer Matters to the Market (and What to Do About It)).

Over the counter (OTC) derivatives: Purely unregulated, non-transparent, and malignant uncollateralized bets and hedges on market movements requiring no assets or stake in assets. Of the over 700 trillion dollars of “notional value” in disclosed OTC derivatives by International Bank of Settlements for 2011, the majority were supposedly “benign” interest rate and currency swaps, not the more toxic credit default swaps. However, it was a Goldman Sachs currency swap with “a fictitious exchange rate” that sunk Greece, nearly doubling its liability on just one deal from about 2.8 billion euros to over 5 billion euros. (How Goldman Sachs Helped Corrupt Politicians to Screw the Greek People) Also remember the undisclosed OTC derivatives market may easily be bigger than the disclosed market.

Rehypothecation: The process of recycling or using the same collateral with multiple deals and entities. Apparently England has no legal limit on how many times collateral can by rehypothecated (Shadow Rehypothecation, Infinite Leverage, And Why Breaking The Tyranny Of Ignorance Is The Only Solution):

Simply said: when one truly digs in, MF Global exposes the 2011 equivalent of the 2008 AIG: virtually unlimited leverage via the shadow banking system, in which there are practically no hard assets backing the infinite layers of debt created above, and which when finally unwound, will create a cataclysmic collapse of all financial institutions, where every bank is daisy-chained to each other courtesy of multiple layers of "hypothecation, and re-hypothecation." (Why The UK Trail Of The MF Global Collapse May Have "Apocalyptic" Consequences For The Eurozone, Canadian Banks, Jefferies And Everyone Else)

Note: For a concise explanation of the related mechanisms of collateralized debt obligations (CDO’s), synthetic CDO’s, credit default swaps (CDS’s), naked short selling, and high frequency trading (HFT), see When The Market Has Cancer.

Stage threeâ€"Usurping democracies and cannibalizing functioning capitalism

A cartel of international wealth counterfeiters have boldly made claims on Greece’s national wealth through super-national entities like the European Central Bank. These claims are not backed by clear legal authority or logic, but they are being enforced anyway, administered by unelected technocrats and “agreed to” by complicit politicians acting against the interests of actual citizens.

Greece (with more countries to come) is being treated like a company town where “costs” (i.e. social services) are to be cut, productivity milked through greater taxation, and debt servitude reinforced. Corrupted capitalism continues thus to metastasize. Now that phantom paper profits are collapsing for the counterfeiters, real assets must be taken over to fill in the gaps.

Greece’s national assets have been put up for sale endangering its national sovereignty and right to control its own property. Greek well-being is being diminished through austerity programs. This has only caused the economy to contract at an accelerating rate. Seizing control of productive assets, and cannibalizing real wealth to feed counterfeit demands seem to be the primary unstated goals of these strategies because the empirical results of these strategies clearly run counter to stated objectives.

Disaster capitalism: (The Shock Doctrine) The intentional infliction of insecurity, suffering, and scarcity on a population to cause panic, compliance, and amenability to exploitation and extraction of wealth. It is a thoroughly vicious business model that operates in plain sight. When abuse no longer has to be organized and covered by conspiracy, one can confirm that capitalism’s illness is in advanced stages. It is amazing how easily assets can be acquired and individual rights denied (as with fraudclosure) when people are overwhelmed by corruption on all sides.

Stage fourâ€"Implosion of the body politic or necessary transformation and redirection?

This stage has yet to be fully entered, but the fraying of Greece’s current social and political order sends a strong signal for the future of the wider world: Passivity equates with more abuse and exploitation, more austerity, and greater hijacking of national and personal assets. Active, civil resistance is necessary to stop the loss of public sovereignty to private interests. Creative, viable alternatives to the currently corrupt and fraud-ridden global economic system are vital. These alternatives and the implications of our current counterfeit wealth trajectory will be explored tomorrow in Part 2 of this article.

http://www.zerohedge.com/news/guest-post-money-nothin-primer-fake-wealth-creation-and-its-implications-part-1#comment-2247206