David Rosenberg – The Burning Platform

NO ONE GETS OUT OF HERE ALIVE (PART TWO)

In Part One of this article I exposed the numerous false narratives being peddled to the masses, as this Fourth Turning is entering the intense phase headed towards an unknown climax.

I’ve been expecting the next shoe to fall in this Fourth Turning for years, but the financial elite have pulled the debt levers to keep the Ponzi scheme alive far longer than a reasonable person would expect. We are only six weeks into 2020 and it seems like a year’s worth of major events have already occurred. The year started with the assassination of Qasem Soleimani in Iraq.

For the next week the world was awash in rhetoric about World War III and possible revolution in Iran. Accusations of Trump using the Wag the Dog method to deflect the negative press from the impeachment hearings were rampant among the half of the country that despises Trump. Soleimani was lauded as a hero by the left and a terrorist by the right. Now, the entire episode seems like ancient history, as more interesting squirrels have arisen for the propaganda media to chase.

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The entire month of January was occupied by the ongoing coup/impeachment against Donald Trump. Schiff, Nadler and Pelosi doing their best impression of the three stooges, conducted a laughable prosecution in the House, revealing this was nothing more than a desperate attempt to avoid losing to Trump in a November landslide. The predictable trial in the Senate resulted in an acquittal and Trump’s popularity soaring to all-time highs, as independents realized the Democrats misused the power of impeachment for purely political purposes. Trump’s SOTU address infuriated Pelosi to such an extent it provoked her into acting like a petulant child, tearing up the speech. Future campaign ads wrote themselves.

Continue reading “NO ONE GETS OUT OF HERE ALIVE (PART TWO)”

10 YEARS LATER – NO LESSONS LEARNED

“A variety of investors provided capital to financial companies, with which they made irresponsible loans and took excessive risks. These activities resulted in real losses, which have largely wiped out the shareholder equity of the companies. But behind that shareholder equity is bondholder money, and so much of it that neither depositors of the institution nor the public ever need to take a penny of losses. Citigroup, for example, has $2 trillion in assets, but also has $600 billion owed to its own bondholders. From an ethical perspective, the lenders who took the risk to finance the activities of these companies are the ones that should directly bear the cost of the losses.” – John Hussman – May 2009

This month marks the 10^th anniversary of the Wall Street/Fed/Treasury created financial disaster of 2008/2009. What should have happened was an orderly liquidation of the criminal Wall Street banks who committed the greatest control fraud in world history and the disposition of their good assets to non-criminal banks who did not recklessly leverage their assets by 30 to 1, while fraudulently issuing worthless loans to deadbeats and criminals. But we know that did not happen.

You, the taxpayer, bailed the criminal bankers out and have been screwed for the last decade with negative real interest rates and stagnant real wages, while the Wall Street scum have raked in risk free billions in profits provided by their captured puppets at the Federal Reserve. The criminal CEOs and their executive teams of henchmen have rewarded themselves with billions in bonuses while risk averse grandmas “earn” .10% on their money market accounts while acquiring a taste for Fancy Feast savory salmon cat food.

Continue reading “10 YEARS LATER – NO LESSONS LEARNED”

A NATION BUILT ON LIES

“The greatest want of the world is the want of men — men who will not be bought or sold; men who in their inmost souls are true and honest; men who do not fear to call sin by its right name; men whose conscience is as true to duty as the needle to the pole; men who will stand for the right though the heavens fall.” – Ellen G. White

The world becomes more chaotic by the day. Good luck finding a politician, business icon, or religious leader who is not bought and sold by corporate or special interests. Finding truth telling honest leaders in today’s world is virtually impossible. Charles Foster Kane, a quasi-biographical portrayal of William Randolph Hearst, is a fine representation of the billionaire clique that pull the strings in our warped, deceitful, greed driven, materialistic world.

Citizen Kane’s thematic portrayal of the American Dream is far more germane to our society today than it was when made in 1941. Financial affluence, material luxury, wielding power over others, and controlling the opinions of the masses through propaganda media, did not guarantee happiness or fulfillment for Kane or todays oligarchs. Kane was happiest as a poor child, living with his parents, playing in the snow on his sled – Rosebud.

Continue reading “A NATION BUILT ON LIES”

GOLDILOCKS IS DEAD

“Once you strip out the effects of the debt binge, the artificial stimulus via currency depreciation, and the fabled ‘wealth effect’ from the equity market runup, real GDP growth stripped-down to its core was the grand total of 0.7% last year. Potemkin would be proud.” – David Rosenberg

It appears every president finds the religion of false economic narrative once they ascend to power. Trump never stops babbling and tweeting about the fantastic economy and raging jobs market since his election. He has embraced the stock market bubble as proof of his brilliant leadership, rather than the tens of trillions in debt propping up the most overvalued market in world history. Every president takes credit for any good news, spins bad news as good news, or blames the previous president for bad news that can’t be denied. The president has absolutely zero impact on the economy or stock market over the short term. It’s like taking credit for the sun rising in the east each morning.

The Big Lie method works wonders when you have a willfully ignorant, mathematically challenged, easily manipulated populace. I spent the entire Obama presidency obliterating the fake economic data perpetuated by his BLS, BEA and every other government agency trying to paint a rosy economic picture. I voted for Trump because the thought of Crooked Hillary as the president made me ill. Despite disagreeing with many of his economic, budgetary, and military policies during his first year in office, I’d vote for him again over Hillary in an instant. The thought of having that evil shrew running the country gives me chills.

Continue reading “GOLDILOCKS IS DEAD”

Outside the Box: Breakfast with Dave

By John Mauldin

David Rosenberg and I have been friends and colleagues for years, but he never ceases to amaze me. I mean, a 10- to 15-page letter covering every significant development in global markets, delivered to clients’ mailboxes every single morning of the work week?! Breakfast with Dave is legendary in our business.

Rosie’s presentation at our just-concluded Strategic Investment Conference was his usual rapid-fire tour de force, but to truly appreciate the volcanic force that is Mr. Rosenberg, you had to be up in my suite at the conference, where every night we hashed over the day’s developments and Rosie often dominated the conversation due to his remarkable ability to recall facts, figures, obscure economic quotes, and data points going back decades.

So for today’s Outside the Box I have a special treat for you: this morning’s Breakfast with Dave. And Rosie has agreed to provide my readers with a one-week complimentary subscription to his daily letter, beginning June 9 and ending June 13. We’ll send his letter to you each morning as a PDF. Breakfast with Dave normally sells for $1,000 per year. Click here to receive an entire week free of charge beginning June 9, compliments of Mauldin Economics and Dave’s firm, Gluskin Sheff.

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Outside the Box[email protected]

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Breakfast with Dave

June 3, 2014

IN THIS ISSUE

While you were sleeping
Where Americans are shopping (and where they are not)
Update on the Commitment of Traders report
Third time’s the charm for the May ISM
Construction spending solid to start Q2
Bank lending gaining more momentum

WHILE YOU WERE SLEEPING

In stark contrast to yesterday at this time, global equities are under some selling pressure. Most of Europe is down anywhere from 0.2% to 0.4% (a whole lot of ECB easing ostensibly was priced in with the 2% jump in May), though Asia was more mixed to positive — the Japanese Nikkei index was up again (+98 points or 0.7% to 15,034), the Hang Seng rallied 0.9%, the Korean Kospi index rose 0.3% to a five-month high, and the Indian Sensex index firmed 0.7% to a new record high (the central bank cut the liquidity ratio for banks today), but China was flat (though the H-shares spiked 1.2%) and Australia and Singapore were in the red column. Overall, the Asia-Pac region closed higher to its best level in seven months today, with eight of 10 industry groupings in the green column.

There is some relief stemming from the latest data-flow out of China showing the slowdown turning to growth stability — the non- manufacturing PMI rose to 55.5 in May from 54.8 in April, as an example (and follows the news that the official manufacturing PMI edged up to a five-month high of 50.8 in May). As such, the hedge funds are now reportedly closing their short bets on Emerging Market equities (as per Bears Pull Out of Emerging Markets Amid Four-Month Gain in today’s Bloomberg News).

Core sovereign bond markets are stable — not benefitting from the slippage in euro area equities — even though we got news that inflation in the Eurozone slipped last month to a five-year low of +0.5% from +0.7% in April (consensus was +0.6%). The core rate plunged from +0.9% to a shockingly low +0.6% rate.

U.K. gilt yields have actually jumped four basis points to 2.65% — and now trade about a full 10 basis points above comparable U.S. Treasuries — on reports that U.K. home prices are spiraling upwards as per the just-released Nationwide data for May: +0.7% MoM and +11.2% on a YoY basis to record-high levels (not even the U.S. is close to that just yet) in what is the hottest real estate market since the bubble peak of June 2007 (Mark Carney left one housing bubble in Canada to help create another one in Britain). Sterling is rallying on this news — can a 0.5% policy rate really be sustained in this asset inflation backdrop?

The challenge for the ECB is how to take the edge off a still-overvalued euro — it is already down about four full figures on the ‘talk’, but at 1.36 versus the U.S. dollar it still has at least 15 figures to go the downside just to hit its fair-value line (this will need a Draghi ‘walk’ which would finally quash the deflation pressure … this worked in Japan and Canada, as an aside). The fact that the euro has just broken below its 200-day moving average for the first time in ten months — now at a three-month low against the greenback — is a step in the right direction and the fact that the 50-day moving average is rolling over provides added technical confirmation that the euro is on the down-escalator for some time to come.

Not all is lost, however, as German new car registrations were just released and showed a decent +5.2% YoY growth rate; and the euro area jobless rate fell to 11.7% on April from 11.8% and 12% a year ago, which may be painfully slow progress but at the same time at the lowest level since November 2012 (5.2% in Germany but 10.4% in France, 12.6% in Italy and 25.2% in Spain so the divergences are super-wide).

The Reserve Bank of Australia was among the first of several central banks to hold a policy meeting today, leaving rates on hold and signaling a completely neutral stance going forward. The Bank of Canada meets tomorrow and likely to do much the same.

Yesterday’s ISM manufacturing index finally came in at a respectable 55.4 reading — the high-water mark for the year and the fourth straight increase. In the past, this level was consistent with 4% annualized real GDP growth, a rate that Q2 seems on track to meet (the Markit estimate was sitting even prettier at 56.4, a three-month high). Of the 18 industries responding, 17 reported expanding factory activity and just one said conditions were flat — so it’s not just the depth but the breadth of the report that was impressive.

The ISM prices-paid index moved further out of disinflation terrain, rising to a three-month high of 60 in May from 56.5 in April. For every company seeing declines in input costs, three are seeing increases. That is either a margin squeeze, a source of cost-push inflation, or both. The “nominal” ISM that takes into account both volumes and pricing, hit its best level in four years last month. Something for the growth bears and bond bulls to possibly consider.

Bonds have benefitted of late from massive short covering, portfolio rebalancing after last year’s huge S&P 500-Treasury relative return gap, the nouveau talk of a lower post-crisis “terminal” Fed funds rate and huge institutional investor appetite for duration for pure liability matching purposes — powerful fund flow sources of strength for the bond market. But I simply cannot see the economic case for an ongoing rally in U.S. Treasuries from here.

The first quarter GDP setback was clearly the outlier, influenced by one- off effects from the severe weather, an auto inventory unwind, the end to emergency jobless benefits and the new mortgage qualification rules. These shocks, in terms of influencing incremental growth rates, are over. Few pundits mention that total labor input, measured by aggregate hours worked, rose at a 2% annual rate in Q1. Dow Transports meanwhile, have made gains in seven of the past eight sessions, are at a record high and up 30% from year-ago levels, and are signaling better economic times ahead. The recent decline in mortgage rates is a much- welcome source of relief for the homebuilders.

Don’t see wage inflation? Well, we shall see whether Seattle turns to be a leading indicator because the city council there just unanimously voted in a $15 per hour minimum wage. That is a 60% hike. It will be interesting to see if the price of that Big Mac and grande latte stay where they are (if you’re a Fed dove, not to worry, these don’t affect the ‘core’) — have a look at Seattle Approves $15 Minimum Wage, Setting a New Standard for Big Cities on page A15 of today’s NYT. U.S. consumer spending power is coming back too — Gallup’s survey for May showed that shoppers’ average daily spending jumped $10 to $98 — the highest this has been in six years.

Back to bonds for a second. Interestingly, Larry Kudlow pens a column on page A13 of the Investor’s Business Daily titled Bernanke’s Bullish Bravado and concludes that “we’re looking at 1950s-style interest rates and we may be looking at this for a long time”. Indeed, what is not commonly known about the 1950s was that the fed funds rate was as low as 0.25% and as high as 3.0%, and that the range on the 10-year T- note yield was 2.3% to 4.0% … low indeed, but interest rates were hardly unchanged over the decade.

And remember when we got the stronger-than-expected payroll data a month ago for May — the headline up 288k with sizeable upward revisions? That day, the U.S. Treasury market rallied — the 10-year yield closed down three basis points to 2.6%. That was a sign that all the good news on the data was priced in and then some. We saw the reverse take place yesterday because the 10-year failed to rally on the initial (and faulty) ISM manufacturing report showing a poor 53.2 result … in a sign that all the ‘bad’ news on the macro front may already be priced into the yield.

WHERE AMERICANS ARE SHOPPING (AND WHERE THEY ARE NOT)

We went through the April consumer spending report with a fine tooth comb to see, over the past year, what the relative growth rates were. And in contrast to all the talk of luxury versus necessities and “haves” versus “have nots”, the reality is that American consumers took the liberty over the past twelve months to treat themselves to the goods and services that they sacrificed in the Great Recession and through much of this tentative recovery. The numbers speak for themselves — out of the cyclicals, only restaurants and casinos have been soft. While housing has been weak, households have found the room in their budgets to buy furniture, appliances and video equipment to spruce up their existing units. Transportation — both autos, motorbikes and transport services — have rung up impressive growth rates. The travel bug is back too even if gambling is not. Buying toys and going to the movies have staged a visible comeback.

UPDATE ON THE COMMITMENT OF TRADERS REPORT

The copper price has been rallying in part because of a massive short squeeze — the net speculative short position on the COMEX has plunged 90% in barely more than two months to 4,152 contracts — the lowest since late January.

Gold has been suffering from the massive net longs getting increasingly impatient — the 92,710 net speculative longs are half the nearby peak and the lowest they have been since late January.

The net speculative long position on WTI crude oil on the NYMEX continues to grind ever higher — now bordering at a record 444,048 contracts. Meanwhile, and perhaps this is a great contrary signal, but the NYMEX shows a net noncommercial short on natural gas that has risen to levels not seen since the turn of the year and has doubled since the end of February (3,259 contracts).

The Fed has created a bull market all right — a bull market in complacency. The net speculative VIX position on the CBOE has more than doubled since mid-April to 81,779 contracts.

The Canadian dollar is enjoying a short covering rally of its own, as the net speculative short position has been closed to just 20,965 contracts, the lowest since November 19th and down a whopping 65% from the recent peaks of maximum bearishness.

The stock market is quietly making new highs by the day but the speculators have been net short the S&P 500 now for two weeks in a row (4,169 contracts as of May 27th — the hedge fund proxy was net long to the tune of 10,086 contracts back in early April).

The hedgies love the bond market all of a sudden — talk about a contrary peak (in price). The net speculative long position on the CBOT as of May 27th was 22,876 contacts — this is a huge swing (in the opposite direction to that seen for stock market) from the net 103,518 shorts back in early April (that was the capitulation buying opportunity).

THIRD TIME’S THE CHARM FOR THE MAY ISM

The Institute for Supply Management’s (ISM) manufacturing index, released at its customary time of 10 a.m. EDT on the first business day of the month, disappointed market expectations for an improvement to 55.5 by showing a monthly decline from 54.9 to 53.2 in May on broad- based decreases among its component sub-indices. Markets reacted poorly to this indication that the U.S. economy was losing momentum through the second quarter, with the S&P 500 falling by as much as 0.4% in the minutes after the report’s release.

Shortly thereafter, however, the ISM issued a correction, stating that an improper seasonal factor was applied in calculating the May index values — the level of the manufacturing index was now 56.0 in May, up from April and a five-month high. One final correction was issued to show the actual value of the ISM manufacturing index was 55.4 in May (still up from April and a five-month high, but now in line with original market expectations) — by this time equity markets had recouped their losses while bond yields also notably reversed course.

With the dust settled and the finalized numbers in place, the overall ISM report was fairly solid with the components break down as follows: improvements in new orders (+1.8 points to a five-month high of 56.9) and production (+5.3 to 61.0, also a five-month high) more than offset declines in supplier deliveries (-2.7 to 53.2, indicating that delivery times were less slow than the previous month) and employment (-1.9 to 52.8, retracing half of the previous month’s jump). Inventories held steady at 53.0. Encouragingly, the orders-to-inventories differential improved to a four-month high of 3.9, pointing to further improvements in production in the coming months.

The customer inventory index jumped to a three-month high of 46.5, though this is still indicative of customers’ inventories being considered too low and points to increased near-term production as firms get their inventories to levels they deem more appropriate — that said, the share of respondents saying that customer inventories were “too low” slipped to 18% from 21% in April and 24% in March, while those saying stockpiles were “too high” rose to 11% from a four-year low of 5% in the previous month.

With respect to inflationary pressures, the prices paid index rose to a three-month high of 60.0 following two consecutive monthly moderations as 31% of survey respondents said their costs were rising — the largest share since February 2013 — just 11% said prices paid were declining and the balance noted no changes. The report noted 23 commodities were up in price versus only four that were down while four commodities were noted as being in short supply.

While the overall indices were fairly solid, perhaps the best indication of the momentum in the industry through Q2 is the breadth of improvement: for the second straight month, 17 of 18 manufacturing subsectors reported a growth while in contrast to April, no industry reported a contraction. Moreover, the comments from respondents were generally upbeat, with any concerns more tied to supply-side issues than any problems with demand:

What respondents are saying

Increasing demand for product is creating supply and sourcing challenges. (Food, Beverage & Tobacco Products)

Steel bars required for automotive applications are in high demand. Supply is very tight and prices are increasing. (Fabricated Metal Products)

Aviation is recovering and outlook is optimistic. (Transportation Equipment)

The improving gas prices are positively impacting our short term drilling plans. (Petroleum & Coal Products)

Political issues in Russia are not yet impacting our supply of raw materials from Russian suppliers. (Computer & Electronic Products)

Volumes picking up in some sectors, but profitability still elusive. Suppliers indicate similar difficulties in getting price increases. (Chemical Products)

Business has remained steady. However, this month has a more subdued disposition by comparison. Price escalation has leveled off with even a few decreases on selected items. (Wood Products)

Semiconductor, oil & gas are very busy. (Electrical Equipment, Appliances & Components)

Business slightly up as anticipated; holding. (Machinery)

Defense industry contracts are shrinking, customer is exercising minimum options, or less than minimum. (Miscellaneous Manufacturing)

CONSTRUCTION SPENDING SOLID TO START Q2

Construction spending in the U.S. rose by 0.2% MoM in April, missing market expectations for a 0.6% gain in the month, however, any disappointment was erased as the initially reported 0.2% increase in March was revised up to +0.6% while February’s previously reported 0.2% decline now stands as at +0.4%. The net result of the monthly increase combined with the upward revisions to the previous two months was for the level of construction spending in April to actually be 0.6% higher than expected by the markets going into today’s release — providing a decent start to activity in Q2 with the April level an annualized 2.9% above Q2.

In terms of the details of the report, the modest overall increase construction spending in April was entirely concentrated in the public sector (+0.8% MoM) while private sector spending was flat (0.1% gain in residential construction spending was offset by a 0.1% decline in non- residential spending as declines in communication, power and manufacturing more than offset increase in the other sectors led by office, commercial and health care).

BANK LENDING GAINING MORE MOMENTUM

U.S. banks may say in the Senior Loan Officer Survey that they remain tight in their credit scoring, but they are still managing to find borrowers to whom to extend loanable funds. Commercial bank lending, on net, rose $26.7 billion in the May 21st week and have expanded now in 12 of the past 13 weeks. We have not seen back-to-back increases of this magnitude (was $18.7 billion in May 14th) since the beginning of January last year. On a 13-week rate of change basis, total loans and leases have accelerated at a 9% annual rate, and the gains have been broad-based: commercial & industrial loans up at a 12.7% annualized rate, commercial real estate up 7.3%, housing loans swinging to a positive-2.9% rate, and consumer credit up to a 8.1% annual rate. Tough to square these data points with a moribund economic backdrop.

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Important Disclosures

The article Outside the Box: Breakfast with Dave was originally published at mauldineconomics.com.

WHO DESTROYED THE MIDDLE CLASS – PART 2

In Part 1 of this three part series I addressed where and how the net worth of the middle class was stolen. In Part 2, I will tackle who stole your net worth and in Part 3, why they stole your net worth. Now let’s zero in on the culprits of this crime.

Dude, Who Stole My Net Worth?

“Thus far, both political parties have been remarkably clever and effective in concealing this new reality. In fact, the two parties have formed an innovative kind of cartel—an arrangement I have termed America’s political duopoly. Both parties lie about the fact that they have each sold out to the financial sector and the wealthy. So far both have largely gotten away with the lie, helped in part by the enormous amount of money now spent on deceptive, manipulative political advertising.” – Charles Ferguson – Predator Nation

When you dig into the charts and data supplied by the Federal Reserve generated report, the data which goes back to 2001 tells a story not addressed by the deceptive, manipulative, political propaganda that passes for investigative reporting by the captured mainstream media. The chart below compares the median versus mean income growth from the last three Fed consumer surveys. Overall, it reveals a lost decade of negative income growth for the average middle class family. In the early part of the decade the average middle class family made some progress as jobs were relatively plentiful and the internet crash mostly impacted the rich, who own most of the stocks in the country. This is why the median income rose while the average income fell. The wealthy have a large impact on the average because they own the vast majority of assets in this country. The stock market debacle was unacceptable to the oligarchs and their money printing puppet Greenspan.

Both the liberal and conservative wings of the ruling oligarchy were in complete agreement. A new bubble needed to be blown in order to refill the coffers of the ruling class. Paul Krugman spoke for the liberal wing:

“To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

Greenspan and his handpicked successor Bernanke represented the conservative wing by reducing interest rates to ridiculously low levels, failing to carry out their regulatory obligations, encouraging recklessness, and purposefully failing to acknowledge and deflate the greatest housing bubble in world history:

“American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.” – Alan Greenspan – February 2004

“House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.” – Ben Bernanke – October 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.” – Ben Bernanke – November 2005

The master plan worked like a charm from 2004 through 2007 as you can see by the tremendous surge in average income. The stock market rocketed by 75% between 2003 and 2007 and national home prices shot up by 50%. Wall Street creatively invented no doc, negative amortization, interest only, subprime mortgages and generated a frenzy of demand from anyone that could scratch an X on a loan document, just as Greenspan had demanded. Being “sophisticated” financial institutions, they were able to assemble thousands of shit loans that were certain to default into one big derivative package of shit and their captured lackeys at the “sophisticated” rating agencies stamped a AAA rating on the smelly pile of feces. Always looking out for the best interests of their clients (aka muppets), the upstanding Wall Street firms sold the derivative piles of shit to them as can’t miss investments. Wall Street profits went off the charts. Billions in bonuses flowed to the rich and powerful Wall Street titans. Mega-corporations generated record profits as consumers utilized the Fed induced tsunami of easy debt to buy BMWs, 72 inch HDTVs, home theaters, stainless steel appliances, granite counter-tops, Caribbean cruises, Jimmy Choo shoes, and Rolex watches in a mad frenzy of consumer delusion.

What you might also notice in the chart above is that median household income somehow declined during this decadent orgy of corporate fascist pleasure. How could this be? Table 2 from the Fed report makes it clear. The vast majority of households in this country generate 75% to 81% of their income from wages. Virtually none of the income generated in 85 million households (the bottom 75%) comes from interest, dividends or capital gains. You need money to make money. The top 10% only generated 46% of their income from wages. The report does not provide details on the top 1%, but wages most certainly account for less than 20% of their income. Interest, dividends and capital gains represented 22.2% of the income for the top 10%, while it represented less than 1% of income for the bottom 75%. This data is the smoking gun that proves that Federal Reserve policy and control fraud on a grand scale by the titans of Wall Street was designed and executed to benefit only the wealthy elite billionaire class and their co-conspirators. All the income gains during this time accrued to the psychopathic amoral financial oligarchy. The average family saw their real wages decline and anyone lured into the housing market during this time frame by the “sophisticated” financial experts at Citicorp, Bank of America, Wells Fargo, Merrill Lynch, Countrywide, Washington Mutual, Wachovia, Bear Stearns, Goldman Sachs, Lehman Brothers, and the other members of the Too Big To Fail criminal syndicate was set up for epic loses.

As expected, the psychopathic banker class could not be satisfied with the results of their looting. Their gluttonous voracious greed culminated in a historic collapse of the worldwide financial system resulting in a housing implosion, stock market crash and 8 million middle class Americans losing their jobs. The Fed report does show that average household income declined more than median household income after this historic financial oligarchy created collapse. One look at Table 6 from the Fed report will explain why. Only 15% of families own stocks and only 50% have retirement accounts. Approximately 50 million households in the country have virtually no stocks and less than 30% have retirement accounts. The top 10% wealthiest households, with a median household net worth of $1.2 million, proportionately own 3 times as much stock as the average family and 90% have retirement accounts. Therefore, the 57% crash in stocks impacted the top 10% to a greater extent, while the average family was most impacted by the 28% drop in home prices.

Despite the fact that the median net worth of the top 10% actual rose from $1.17 million in 2007 to $1.19 million in 2010 (while the bottom 80% saw their net worth decline by 36%) the losses in the stock market were intolerable to the banker predators and their captured government parasite politicians. All the “solutions” to the Wall Street induced financial debacle have been designed to benefit those who committed the crime and should have done the time. The singular design of those pulling the strings was to replenish the treasure chests on Wall Street, engineer a stock market rally to pump up the net worth and capital gain income for the 1%, and protect the vested interests of the financial elite. All the obscene criminally generated profits created during the boom were privatized into the grubby hands of the financial predators, while the subsequent gargantuan losses were socialized onto the backs of the American middle class taxpayers and future unborn generations.

TARP was rammed through the captured Congress by the oligarchs despite a 300 to 1 opposition from the public in order to protect obscenely wealthy bankers, stockholders and bondholders. The $800 billion of debt financed political pork, disguised as stimulus, was doled out to corporate contributors, union thugs, and a myriad of other special interests. Zero interest rates are specifically geared to generate billions of risk free profits for Wall Street and to force retirees to gamble their dwindling retirement funds in the rigged stock market. Bernanke and Paulson threatened the limp wristed pocket protector CPAs at the FASB into allowing Wall Street banks to make up the value of their loan portfolios in order to mislead the public regarding their insolvency. The tripling of the Federal Reserve balance sheet from $950 billion in September 2008 to $2.9 trillion today was done to remove the toxic assets from the balance sheets of the Too Big To Fail Wall Street cabal at 100 cents on the dollar. QE1, QE2, and Operation Twist have had the sole purpose of providing the “sophisticated” financial elite with the funds to pump into the stock market using their high frequency trading super computers.

The subsequent Federal Reserve contrived 100% increase in the S&P 500 has repaired the damaged balance sheets of the moneyed interests, while the average middle class family has sunk further into debt and despair. The powerful entrenched sociopathic marauder class cares not for the average middle class American. They can barely conceal their contempt and disgust for the masses as they blatantly flaunt their hegemony and supremacy over our decrepit decaying corrupted economic system. M. Ramsey King described the disgusting display last week:

“Jamie Dimon’s appearance before the Senate Banking Committee was a sickening display that clearly demonstrated that Congress has been thoroughly corrupted by Wall Street. Instead of grilling Dimon, Senators acted like overly affectionate puppies fighting each other for an opening to smooch their master.”

The destruction of the middle class has been methodical and systematic. The top 10% of earners had a median net worth of $1.19 million, or 192 times as much as the median wealth of $6,200 of those in the bottom 20% in 2010. In 2007, the top 10% had 138 times as much wealth as the bottom 20%. In 2001, it was 106 times as much. With the continued rise in the stock market, declining real wages for the middle class, and further home price declines, the gap between the top 10% and the bottom 20% has continued to widen. The level of pain being experienced by the middle class has reached an unprecedented extreme. A few data points from David Rosenberg make that clear:

Forty-six million Americans (one in seven) are on food stamps.
One in seven is unemployed or underemployed.
The percentage of those out of work defined as long-term unemployed is the highest (42%) since the Great Depression.
54% of college graduates younger than 25 are unemployed or underemployed.
47% of Americans receive some form of government assistance.
Employment-to-population ratio for 25- to 54-year-olds is now 75.7%, lower than when the recession “ended” in June 2009.
There are 7.7 million fewer full-time workers now than before the recession, and 3.3 million more part-time workers.
Eight million people have left the labor force since the recession “ended” — adding those back in would put the unemployment rate at 12% instead of 8.2%.
The number of unemployed looking for work for at least 27 weeks jumped 310,000 in May, the sharpest increase in a year.

I would add a few more data points to David’s list of woe:

Over 7.5 million homes have been foreclosed upon by the Wall Street bankers since 2008.
The National Debt has increased by $5.7 trillion (57% increase) since September 2008, while real GDP has risen by $305 billion (2.3% increase) since the 3^rd quarter of 2008.
Interest income paid to senior citizens and savers has declined by $400 billion (29% decline) since September of 2008 due to Ben Bernanke’s ZIRP.
Government transfer payments have risen by $500 billion (32% increase) since September 2008, while private industry wages have risen by $200 billion (4.7% increase).
The price of a gallon of gas has risen from $1.70 in December 2008 to $3.53 today.
Food prices have risen by 7% to 10% since late 2008, even using the falsified BLS data. A true assessment by anyone who actually goes to a grocery store (not Bernanke – his maid does the shopping) would be a 10% to 20% increase.

The middle class has a gut feeling they are being screwed by somebody, they just can’t figure out who to blame. The ultra-wealthy elite keep up an endless cacophony of propaganda and misinformation designed to confuse an increasingly uneducated and willfully ignorant public while blurring the facts for those educated few capable of understanding the truth. They have been able to keep the masses dumbed down through government run education; distracted by sports, reality TV, Facebook, internet porn, and igadgets; lured by mass media messages of materialism; and shackled with the chains of debt used to acquire the goods sold by mega-corporations. We’ve become a society oppressed by a small faction of ultra-wealthy masters served by millions of impoverished, uneducated, sedated slaves. But the slaves are getting restless and angry. The illegally generated wealth disparity chasm is growing so large that even the ideologue talking head representatives of the elite are having difficulty spinning it. Even uneducated rubes understand when they are getting pissed on.

“Senator, don’t piss down my back and tell me it’s raining” – Fletcher – Outlaw Josey Wales

The situation is growing increasingly unstable and has left the country susceptible to an extreme outcome when this teetering tower of debt topples.

The moneyed interests have brilliantly pitted the middle class against the lower classes through their control of the media, academia, and the political system. They have cleverly blamed the victims for their own plight. They have convinced the general public that millions have lost their homes to foreclosure because they were careless, greedy and stupid. They blame the Community Reinvestment Act. They blame others for taking on too much debt when they were the issuers of the debt. The Wall Street moneyed interests created the fraud inducing mortgage products, employed the thousands of sleazy mortgage brokers, bullied appraisers into fraudulent appraisals, paid off rating agencies, bribed the regulators, bet against the derivatives they had sold to their clients, threatened to burn down the financial system unless Congress handed them $700 billion, and paid themselves billions in bonuses for a job well done. But, according to these greedy immoral bastards, the real problem in this country is the lazy good for nothing parasites on food stamps and collecting unemployment, who need to stop complaining and pick themselves up by their bootstraps and get a damn job. It’s a storyline used against Occupy Wall Street and anyone who questions their right to plunder what is left on the carcass of America. The vilest fraud in the history of man was perpetrated by these evil men and not one executive of these firms has been prosecuted. Obama, the champion of the little people, has proven to be nothing but a figurehead for the powers that be. Proof that the Wall Street syndicate is winning the war couldn’t be any clearer than the fact that the top six criminal banks now have 40% more of the nation’s assets in their vaults than they did before they burned down the economy.

The demonization of the victims continues, while the perpetrators prosper. The sociopaths appear to be winning; just as they seemed to be winning in the later stages of the Roman Empire.

“And we often fall into this bias on the prompting of con men and sociopaths of the predator class who use it to justify their own criminal actions and personal injustice. They are not burdened with empathy for their victims, and even delight in their misfortune. But they must find ways to make their actions more acceptable to society as a whole that normally does have such concerns for equity and justice.” – Jesse

“Are we like late Rome, infatuated with past glories, ruled by a complacent, greedy elite, and hopelessly powerless to respond to changing conditions?” – Camille Paglia

I think you know the answer to this question.

If you missed the first part of this series, CLICK HERE to read it.