SHOULD YOU BELIEVE WHAT THEY TELL YOU OR WHAT YOU SEE?

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Posted on 11th December 2014 by Administrator in Economy |Politics |Social Issues

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Sometimes I wish I could just passively accept what my government monarchs and their mainstream media mouthpieces feed me on a daily basis. Why do I have to question everything I’m told? Life would be much simpler and I could concentrate on more important things like the size of Kim Kardashian’s ass, why the Honey Boo Boo show was canceled, the Victoria Secret Fashion Show, whether I’ll get a better deal on Chinese slave labor produced crap on Black Thanksgiving, Black Friday, or Cyber Monday, fantasy football league standings, the latest NFL player to knockout their woman and get reinstated, Obama’s latest racial healing plan, which Clinton or Bush will be our next figurehead president, or the latest fake rape story from Rolling Stone. The willfully ignorant masses, dumbed down by government education, lured into obesity by corporate toxic packaged sludge disguised as food products, manipulated, controlled and molded by an unseen governing class of rich men, and kept docile through never ending corporate media propaganda, are nothing but pawns to the arrogant sociopathic pricks pulling the wires in this corporate fascist empire of debt.

I’m sure my blood pressure would be lower and my mood better if I just accepted everything I was told by my wise, sagacious, Ivy League educated, obscenely wealthy rulers as the unequivocal truth. Why should I doubt these noble, well intentioned, champions of the common folk? They’ve never misled us before. They would never attempt to use two highly publicized deaths as a lever to keep black people and white people fighting each other and not realizing all races are now living in a militarized police surveillance state supported by the one Party. They would never use their complete control over the financial, political, judicial, and media organisms to convince the masses that voting for one of their hand selected red or blue options will ever actually change anything. They would never engineer the overthrow of a democratically elected government, cover up the shooting down of an airliner, and attempt to blame their crimes on the leader of a nuclear power in their efforts to retain a teetering global empire. They would never overthrow or wage economic warfare on countries that don’t toe the line regarding the continued dominance of the petrodollar in global commerce.

Sadly, I’m cursed with a mind that questions everything and trusts no one in authority or associated with the status quo. It’s the reason I don’t read newspapers or watch mainstream media television entertainment propaganda, disguised as news. It’s the reason I will never vote in a national election again. The lesser of two evils is still evil. I’m skeptical of every piece of data fed to the sheep by the government apparatchiks working for the state. The faux journalists being paid millions by one of the six corporations controlling the media and dependent upon the government, Wall Street bankers, and mega-corporations for their advertising revenues regurgitate whatever they are told by those pulling the purse strings. The mainstream media are nothing but propaganda peddlers for the Deep State and truth telling is prohibited in their world of deception, debt, and denial. Their job is to sustain, enhance, and further enrich the status quo by engineering consent through what they report and what they do not report. The true ruling powers who operate in the shadows behind the scenes are men of power, wealth, status and education who truly believe they are better equipped to consciously manage and manipulate the public mind to achieve their ends. They are disciples of the Edward Bernays School of deception, manipulation and propaganda.

“If we understand the mechanism and motives of the group mind, is it not possible to control and regiment the masses according to our will without their knowing about it? The recent practice of propaganda has proved that it is possible, at least up to a certain point and within certain limits.” Edward Bernays

The Nazis were pikers compared to the technologically savvy Madison Avenue maggots and Silicon Valley snakes who mold the opinions, tastes, and beliefs of the iGadget addicted, vapid, unintelligent, unquestioning, zombie-like masses who beseech to be led, told what to do and what to believe. A vast swath of the population don’t read books or even know how to read above a grade school level. They couldn’t write a coherent paragraph if their life depended upon it. But they can twitter, text, Instagram, and facebook at the speed of light. Try walking down any street in an American city without some iGadget distracted oblivious moron bumping into you. The addicting nature of today’s technology is being used by the ruling elite to monitor, control, and make you respond the way they choose.

Facebook, corporate media organizations, quasi-government organizations, and the NSA are creating a corporate totalitarian state where the slaves willingly sacrifice their privacy, liberty and freedom for mindless entertainment and distractions. The 21st Century totalitarian state captures your political beliefs, daily activities, habits, interests, spending behaviors, organizational associations, love life, pictures, psychological makeup, and fears from your own postings on the internet. With the right algorithms they can uncannily predict how you will react to different situations and messaging. They can also uncover threats to the status quo. Under the guise of keeping you safe from terrorists they are actually ferreting out subversives and radicals who refuse to conform to their idea of a good citizen slave. We will all be subject to our own Room 101.

Dan Kaplan in his recent article about Facebook as a tool for totalitarianism lays out the extreme threat to our future:

Today’s totalitarian demands a more subtle way to influence cultural and political sentiment. But if you got your hands on an algorithmically filtered newsfeed? One that could control the stories people see every day and influence their emotions across geographic, political and economic lines? You’d be in business.

But then there was the mood-influence study that scandalized us for a couple of weeks this year. Facebook changed the tone of content showing up in people’s feeds to test the impact it could have on their moods. The results, not too surprisingly, suggested that Facebook has the power to manipulate sentiment at scale.

Given how easy it is to scare people about the scary-seeming-but-actually-low-risk Ebola, and how dumb we all get when we are afraid, it is not crazy to think that under the wrong circumstances — like one or two more mass-scale terrorist attacks on major cities — modern democracy gives way to something akin to 1984.

If Big Brother were to seize the reins of power, sure, he’d use the cable news the way it’s being used today. But Facebook’s data maw, targeting power and sentiment-manipulation capabilities would be far more insidious. Whether this is what we become or not comes down to the future we choose to build.

The saddest part of this episode of mass delusion, mass confusion, and mass media collusion is that even though we are moving towards Orwell’s totalitarian vision of society, thus far, technology, triviality and an unending array of distractions have lured the masses into passive preoccupation with egotistical pleasures. We’ve been persuaded to love our servitude while drowning in a sea of irrelevance, diversions, and trifles. We continue to amuse ourselves to death while forging our own chains of debt and yielding to the direction of an all-powerful welfare warfare surveillance state that promises to protect us from phantom threats while actually abolishing our rights, freedoms, and liberties. No coercion necessary. We have been trained to love our servitude.

“A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their army of managers control a population of slaves who do not have to be coerced, because they love their servitude.” Aldous Huxley – Brave New World

Arrogance, Desperation, Lies & Truth

 “Facts do not cease to exist because they are ignored.” - Aldous Huxley

The level of data massaging by the government and their co-conspirators on Wall Street and in the corporate media is a futile attempt at a happy ending that will never come to fruition. The intensity and relentlessness with which the state and its quasi-state minions attempt to paint a false picture of economic recovery is equal parts arrogance and desperation. The arrogance is a function of successfully pulling off the greatest heist in world history from 2003 through 2008 with no adverse consequences, no criminal charges, no penalties for their crimes, and more power and wealth than they had prior to 2003. The only way to stop sociopaths is to throw them in jail or kill them. In our dystopian paradise of greed, they were rewarded with trillions in rescue packages by their cohorts in crime at the Federal Reserve and in Congress. They’ve paid themselves billions in bonuses for gorging at the Federal Reserve trough of QE and ZIRP. The desperation is borne from the fact that after $7.5 trillion of debt added by the Federal government and $3.5 trillion of debt created by the Federal Reserve since 2009, the Greater Depression for average Americans deepens by the day.

The men pulling the strings behind the scenes are drunk with power and their hubris allows them to believe their own infallibility and blinds them to the dire consequences for our country when their debt Ponzi scheme fails. But, as we grow ever closer to the day of reckoning, they will use every means at their disposal to paint a positive picture, regardless of the facts and reality for the average person. The examples of twisting, distorting and outright lying about the economic reality of our times are endless. These are some of the major false storylines peddled by our benevolent corporate fascist leaders:

The BLS reported 321,000 jobs added in November and the unemployment rate at 5.8%. Jobs are plentiful, based upon these statistics.

A skeptical critical thinking individual might ask a few questions or point out a few inconvenient facts the government purveyors of propaganda might not want us to ponder:

  • The non-manipulated, non-seasonally adjusted number of jobs in November FELL by 270,000. The BLS added 600,000 jobs as an adjustment to achieve the headline grabbing result.
  • If the jobs market is so good, why is the labor participation rate at a 30 year low of 62.8%?
  • Since 2007 the number of working age Americans has risen by 17 million, while the number of employed has risen by less than 1 million, but the unemployment rate is about the same.
  • Why would almost 14 million working age Americans leave the labor force since 2007 if the economy is booming and jobs plentiful, with 1.2 million leaving in the last 12 months?
  • Why would payroll tax receipts be flat with last year if millions of new jobs have been created?
  • If the country has really added 8 million jobs since 2010, how could real median household income FALL by 2.3%?

According to the government reported figures, the economy hasn’t been this strong since 2007. GDP has supposedly grown at greater than 4% over the last two quarters.

Anyone who is sentient knows consumer spending accounts for 68% of GDP. Capital investments that lead to long term prosperity continue to decline as a percentage of GDP from 20% in 2000 to 16% today. We’ve chosen consumption and financialization over savings and investment. This fact leads to some observations:

  • If GDP has actually grown by 20% since 2008 how does this correlate with a 6.9% decline in real median household income?
  • GDP has been goosed by a $69 billion increase in government spending, with the majority going to the military industrial complex. ISIS has been a godsend for our GDP and arms dealer profits.
  • GDP was increased retroactively by $500 billion last year based on a new way the government accounts for intangibles.
  • The surge in consumer expenditures over the last two quarters has been in the purchase of services. The higher costs for Obamacare are a boon for GDP. Are they a boon for your bank account?
  • The trade deficit has fallen as exports of petroleum products have temporarily provided a boost to GDP. The collapse in oil prices will reverse that trend rapidly.

According to the quasi-governmental mouthpieces at the Conference Board, consumer confidence is near a 5 year high, reflecting what should be robust spending.

So we are told by the representatives of corporatism that we are confident about the economy and the future. How does that measure up to the facts on the ground:

  • Black Friday weekend sales collapsed by 11% versus the previous year. As the pundits tried to blame it on on-line sales (10% of total retail sales), Cyber Monday also proved to be a dud.
  • If the average person is confident about the future and happy with their economic circumstances, why did they just vote to throw out the bums in November?
  • If consumers are confident, why have real retail sales, excluding subprime debt goosed auto sales, been flat for the last three months and up only 1% in the last year?
  • If consumers are so confident, why are credit card balances still $138 billion BELOW where they were in 2008? If all these new jobs are being created why is credit card debt lower than it was in mid-2010? Maybe consumers are so desperate they are using credit cards to pay utility and tax bills and not using them for frivolous Chinese crap at big box retailers.
  • The increased spending at grocery stores and restaurants is driven by food inflation, not foot traffic. Discretionary spending at furniture, electronics, and sporting goods stores is flat.
  • Department store sales continue to fall. Sears and JC Penney teeter on the verge of bankruptcy. Delia’s is liquidating and Radio Shack isn’t far behind. The major chains have completely stopped building new stores. The great bricks and mortar unwind relentlessly plods forward. In addition, online growth is stalling as states implement sales taxes.

According to the government, the deficit was ONLY $483 billion in 2014.

This is a real doozy. Obama has been touting how he has cut the deficit through his wise management of the budget. This is where government accounting is used by apparatchiks to mislead the public and obscure the truth. A few pertinent facts are always left out by the politicians touting deficit reduction:

  • Because of the budget impasse in 2013, the Federal government stopped updating the national debt on a daily basis, but we know from when they started counting again, the debt went up by $2.3 billion per day. Therefore, the national debt on October 1, 2013 was approximately $17.038 trillion. On October 1, 2014 the national debt was $17.875. Therefore, the national debt went up by $837 billion in 2014. Just a smidge higher than the reported deficit of $483 billion.
  • Interest is not paid on reported deficits. It’s paid on the national debt, so the massaged, manipulated and made over deficit is meaningless. The national debt was always slightly higher than reported deficits, but in the last few years the deviation has grown to a Grand Canyon size.
  • The deficit number has been artificially lowered by nothing other than accounting entry hocus pocus. The Federal Reserve increasing its balance sheet to $4 trillion out of thin air creates approximately $80 billion of phantom interest profits that are paid to the Treasury. Why don’t they increase their balance sheet to $40 trillion and eliminate deficits all together?
  • The biggest accounting scam is Fannie and Freddie. Just as the Wall Street banks have created fake profits through accounting entries regarding future losses, Fannie and Freddie have gone the extra mile in helping fake deficit reduction. These bloated insolvent government run pigs required a $187 billion taxpayer bailout in 2009. Amazingly, when you allow criminals to value their assets at whatever they choose, phantom profits flow like honey.
  • These two horribly run institutions of fraud “generated profits” of $129 billion in 2014 which were “paid back” to the Treasury. That is four times more than Apple or Exxon’s profits during a non-existent housing recovery. Why are their stocks trading at just over $2 per share if they are generating vastly more profits than they were in 2007 when their stocks were north of $70 per share? It’s because the profits are fake. Everyone knows it, but the Federal Deficit is reported $129 billion lower because these insolvent entities pretended to pay the taxpayer back. Accounting entries do not reduce deficits. Spending less than you generate in revenues reduces deficits.

According to the government, we’ve experienced a strong housing recovery since 2010.

The supposed housing recovery storyline continues to be beaten like a dead horse by the Wall Street media (CNBC) and the shills at the NAR. Anyone with a functioning brain (eliminates CNBC bimbos, hacks, and Ivy League economists) can see there has been no real housing recovery:

  • The 24% rise in home prices (Case Shiller Index) since the 2012 low has been nothing more than a Wall Street hedge fund/Federal Reserve scheme to elevate prices and make Wall Street bank balance sheets less insolvent. Wall Street banks withholding foreclosures from the market while Wall Street hedge funds (Blackstone) use free money from the Fed to buy up housing and rent it out to former homeowners has enriched the .1% while destroying the dream of home ownership for millions.
  • The percent of first time home buyers remains near record lows, while speculators, flippers, hedge fund managers, and rich Chinese businessmen make up a record number of purchasers. The fact this is a fake housing recovery is proven by mortgage applications to purchase a home sitting at 1995 levels and 30% below 2009 recession lows. Maybe the fact real median household income is also at 1995 levels, real wages keep declining, and labor force participation is at 1978 levels has something to do with real people not being able to purchase a home.

  • Even with the artificial hedge fund demand, existing home sales are lower than 2013 and languishing at 1999 levels. They are still 25% below 2005 levels, despite the lowest mortgage rates in history. New home sales are a disaster, with no appreciable increase in two years. Apartment construction has far outpaced single family housing construction. After a five year housing recovery, new home sales languish at levels seen at the bottom of our last six recessions. New home sales are 65% below the 2005 peak and at levels seen in the early 1960’s when there were 130 million less people living in the country.

According to the corporate media, the auto market is hitting on all cylinders with annual sales of 16.4 million, the highest since 2006.

Pretending to sell automobiles to people without the means to pay you for the automobile is always a good business idea. Of course, when you have Ally Financial and the rest of the Wall Street banking cabal doling out 7 year 0% loans and subprime auto loans like candy, it’s easy to move inventory. The temporary boost to GDP by issuing more bad debt always works out in the long run. Right?

  • If the auto business is booming why have GM profits fallen from $9.2 billion in 2011 to $5.4 billion in 2013, and on course to fall to $4 billion in 2014? Record levels of channel stuffing produces sales gains, but no profits. Why is their stock 25% below its 52 week high and lower than it was in 2010 when it was IPO’d after being rescued by Obama?
  • If the auto business is booming why are Ford’s profits falling by 35% versus last year and lower than they were in 2010? Why is their stock price 16% below its 52 week high and still 20% below its 2010 price?
  • Auto loan debt is at an all-time high of $950 billion, up 33% since 2010 when the Fed, Wall Street, and the political class in the fetid D.C. swamp decided they needed new debt bubbles in auto loans and student loans to jump start our moribund economy.
  • There are 65 million auto loans outstanding, and the average debt now stands at $17,352. Over 30% of auto “sales” are actually leases. The rest are financed over an average of 65 months. Virtually all new car sales are nothing more than 3 to 7 year rentals. It’s amazing what easy money from the Fed can produce.
  • Over 31% of all new auto loans this year were to subprime borrowers. They now account for 36.5% of all outstanding auto loans. You become a subprime borrower by defaulting on previous debt obligations. In a shocking development, auto loan delinquencies surged by 13% in the last quarter, with subprime loan delinquencies skyrocketing by 18%. When has issuing billions of debt to subprime borrowers ever caused problems before?
  • Only a University of Phoenix African Studies major is more of a subprime risk than the millions of ecstatic Escalade drivers cruising around our urban ghetto paradises. The average student loan debt is now $33,000. Until the Obama administration went Keynesian, student loan debt was primarily in the private sector. When Obama entered the White House total student loan debt was $620 billion and delinquencies totaled $50 billion. There are now $1.3 trillion of student loans outstanding, with the Federal government accounting for $830 billion and guaranteeing a large portion of the rest. Delinquencies have skyrocketed to $125 billion, as another taxpayer bailout beckons.

According to the corporate mainstream media pundits, the plunge in oil prices from $100 per barrel to $61 per barrel is unequivocally good for the economy. The shale oil boom has worked its magic and happy times are here again.

Sometimes you have to wonder whether the highly educated spokesmodels on the corporate mainstream media are really as vacuous and clueless as they appear or whether they are just paid to look pretty and mouth the corporate line. They seem incapable of comprehending the unintended consequences of various events. The collapse in oil prices is one of those events.

  • There is no doubt that lower oil prices will lower the price of gas for the average American. Estimates say they will save $368 per year, which can be spent elsewhere. The highly paid shill economists who declare this will boost spending seem to be math challenged. Retail sales figures include gas stations. What isn’t spent there will be spent in another category, most likely healthcare or groceries as prices in both areas continue to escalate. It’s a zero sum game. No new spending will occur.
  • The worldwide supply of oil has only increased marginally over the last few years. The U.S. shale boom has been offset by declines elsewhere (Libya, Iran, Mexico). The reason for the collapse is the same reason for the 2009 collapse – worldwide demand is contracting. Europe is in a depression. Japan is in a depression. Russia’s economy is contracting. China is decelerating rapidly. The U.S. demand is flat. The implications of another global recession after five years of central banks printing trillions of fiat currency are alarming to say the least.
  • The cost to extract shale oil and transport it to a refinery capable of processing it is high. Honest analysts will tell you that a price of $70 to $80 is required to breakeven. Most companies don’t build breakeven into their plans. Bakken shale oil sells at a discount of about $14 per barrel due to the difficulty of extraction, transport, and processing. It is now selling for $47 per barrel. The number of permits for new rigs fell by 40% in November when oil was still selling for $75 per barrel. Do you think permits for new wells will fall at a price of $61 per barrel? Capital spending by the energy industry accounted for 33% of all capital spending in the last few years. I’m sure some other industry will pick up the slack. Right?
  • It seems the shale oil boom has resulted in a few jobs being created since the 2010 recession trough. In fact the states where fracking is prevalent have accounted for all the job growth in the nation. I wonder if a shale oil bust will have any employment implications. There are 9.3 million jobs related to the energy industry across the country. The plunge in oil prices created by Saudi Arabia in the 1980s created a depression in Texas which contributed to the S&L crisis. This plunge will reveal who has been swimming naked in the high yield bond market and derivatives market.

These are just a few examples among a multitude of lies. Others include: stocks aren’t overvalued, gold isn’t money, inflation is good for you, and ISIS terrorists are an imminent threat to your way of life. Every feel good story fed to the masses by the oligarchs running this shitshow we call America is no different than the propaganda doled out by other infamous totalitarian regimes throughout history. We believe things because we’ve been conditioned to believe them. The crony capitalist oligarchs are intelligent enough to invent theories to explain how the world should work, but not intelligent enough to interpret their models correctly. When they act on their theories (Keynesianism), their actions appear to be those of a lunatic. Despite all evidence refuting their theories, their arrogance and hubris lead them to destruction. The collective insanity of this world is almost too much for a rational thinking person to grasp. The extremely wealthy men operating in the shadows will use every means at their disposal to retain power, enhance their wealth, and crush dissent.

“Being a card carrying member of the privileged class means never having to say I’m sorry, much less ‘not guilty.’  Power is doing what you want when you want, and consequences are for everyone else. Or perhaps these titans of modern industry and the halls of power are at heart just good natured bumblers, who in a genuine belief destroy lives and crash economies, while pursuing insane ideological assumption put forward by vested interests, all the while stuffing their pockets, and crushing all dissent with the political skills of a Machiavelli and the ruthlessness of Al Capone.” – Jesse

The two party system is nothing but a ruse designed to keep the people believing they have a say in how things are run in this country. Both parties support the military industrial complex. Both parties support the militarization of police forces around the country. Both parties support the mass surveillance of its citizens. Both parties do the bidding of their rich corporate and special interest benefactors. Both parties favor deficit spending for eternity. Both parties believe the government should expand its role in our everyday lives. Both parties do the bidding for and protect the Wall Street interests who really run this country. No more proof is needed than what has occurred over the last five years, as criminal Wall Street bankers were rewarded for their malfeasance with trillions of dollars from taxpayers and their puppets at the Federal Reserve. While we were allowing ourselves to be distracted, amused, entertained, and indebted, the oligarchs were busy conducting a silent coup.

“Let’s be clear about this, the oligarchs are flush with victory, and feel that they are firmly in control, able to subvert and direct any popular movement to the support of their own fascist ends and unslakable will to power.

This is the contempt in which they hold the majority of American people and the political process: the common people are easily led fools, and everyone else who is smart enough to know better has their price. And they would beggar every middle class voter in the US before they will voluntarily give up one dime of their ill-gotten gains.

But my model says that the oligarchs will continue to press their advantages, being flushed with victory, until they provoke a strong reaction that frightens everyone, like a wake-up call, and the tide then turns to genuine reform.” – Simon Johnson

The oligarchs have had a good run. The system cannot be reformed from within. The corruption runs too deep. The system is broken and can’t be fixed. There is no doubt in my mind that a collapse approaches which will make 2008/2009 look like a walk in the park. The anger, blame and retribution will sweep away the existing social order and replace it with something new. It will be up to the people to decide what happens next. We were warned two centuries ago by a wise man. Hopefully, we’ll get a 2nd chance.

“However political parties may now and then answer popular ends, they are likely in the course of time and things, to become potent engines, by which cunning, ambitious, and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government, destroying afterwards the very engines which have lifted them to unjust dominion.” George Washington

 

Rigging Justice: More Tales of the New Oligarchy and the Supreme Court

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Posted on 10th December 2014 by Administrator in Economy |Politics |Social Issues

Guest Post by Jesse

“The sad truth is that most evil is done by people who never make up their minds to be good or evil.”

Hannah Arendt

“Those who have crossed
With direct eyes, to death’s other Kingdom
Remember us – if at all – not as lost
Violent souls, but only
As the hollow men
The stuffed men.”

T. S. Eliot

The power of Big Money is often ostentatious, heavy with sanctimonious ceremony and media envy, but sometimes it is even more powerfully subtle.

The Supreme Court has a limited docket, and apparently a penchant for choosing certain lawyers of repute to bring cases before them.

So Big Money hires those lawyers.

The people tend to vote for the less repugnant of the choices that the two political parties in their elections.

So Big Money gets ahead of the curve and pre-selects the candidates from the two major parties.

How can you fail to win the debate when you frame the questions, pick the debaters, and control how it is reported and scored?

Where are the great minds, the outstanding leaders, the moral beacons? Has greed overwhelmed all virtue, leaving only shallow passions and self-deceptions? Have we become an audience of cynical voyeurs in a digital Colosseum?

We are becoming a nation of waiters, bankers, and corporate-sponsored intellectual bordellos. We can commit despicable, even heinous acts, and think we can rationalize and lie our way out of almost anything. Winning!

Death by cynicism and expediency in the latter days of Empire.

And justice, for some.

“The Reuters examination of the Supreme Court’s docket, the most comprehensive ever, suggests that the justices essentially have added a new criterion to whether the court takes an appeal – one that goes beyond the merits of a case and extends to the merits of the lawyer who is bringing it. The results: a decided advantage for corporate America, and a growing insularity at the court.

Some legal experts contend that the reliance on a small cluster of specialists, most working on behalf of businesses, has turned the Supreme Court into an echo chamber – a place where an elite group of jurists embraces an elite group of lawyers who reinforce narrow views of how the law should be construed…

The court generally has a conservative, pro-business majority, but even one of its most liberal justices, Ruth Bader Ginsburg, accepts the corporate tilt of the specialist bar that dominates the docket.”Business can pay for the best counsel money can buy. The average citizen cannot,” Ginsburg said. “That’s just a reality.”

Read the entire story at Esquire here.

Stock Valuations Outrunning Profits Growth – And the Band Played On

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Posted on 18th November 2014 by Administrator in Economy |Politics |Social Issues

Guest Post by Jesse

“We are still amazed by the chart [below], but it summarises the problem for those seeking to short stocks with fundamental weaknesses. In the last three years, the MSCI World Index has risen by 38% (11% per annum) whilst reported profits have risen by just 3% (that’s just 1% per annum!). As the events of last month attest, central bank actions–not profits–are driving equities forward.”

Andrew Lapthorne, Societe General

This quote is in reference to the first chart below that shows stock prices are outrunning profit growth. The second chart is the Shiller PE 10 Ratio for US stocks.

Beside the corrupting influence of Big Money on politics and academics, the other pervasive problem in our society is really quite banal, that is, mindlessly managing to the numbers.

Although incentives have always been an issue, in the last thirty years it has become quite fashionable in modern management theory to set a few relatively narrow metrics and judge the performance and rewards of a manager by them and them alone.

While this is not wrong in and of it self, such a philosophy provides a source of great mischief if the metrics are excessively narrow, and therefore obscure the bigger picture and the health of an organization, a company, or even a nation.

I think we are all familiar with how incentives badly designed can drive counter-productive, short term behavior that can actually be destructive of the values of an organization. I cannot think of a better recent example, other than the widespread fraud and corruption on Wall Street, than the manner in which the Central Banks and their governments are managing The Recovery™.

If employment is a metric, let us foster an economy in which a large number of jobs are created, that are low paying and part time. This addresses the metric of unemployment, while ignoring the real reason for it, ie, the availability of jobs at living wages which will spur aggregate demand.

If inflation is a metric, let us follow policies of money printing and distribution in order to raise the prices of goods, ahead of the ability of the broad public to pay for them through wage and income growth.

See, there is no deflation. It doesn’t matter to the model that the growth in prices is not only artificial, but is in fact increasing the misery of the people by diluting their already reduced incomes with which to purchase necessities.

Now, this would seem to make common sense. But in fact if you are a bureaucrat under pressure to please a powerful constituency, and are driven to pursue policies that really do not make sense by any reasonable estimation of ‘the public good,’ it is tempting to stand fast on your models, and insist that one cannot prove that you are not doing a good job of it. And it is all so easy to claim ignorance, or a lack of relevancy to your purview.

And you use discredited theories and perception management to quell those who are calling out the contrariness, at times to the point of madness, of your policy actions. Prove to me it is a bubble! Prove to me that people are not just lazy, or incapable of doing useful work!

But the bosses are happy, and your perks and prestige, and all important access to the halls of power, are ensured. At times your conscience is troubled by the thought that in some of your actions you may have gone too far, and committed acts that could be considered outside of the law, but you have done it for the good of the system, after all.

And in that you are above the law, a law maker, not a follower. But a bonus or promotion, or some visible reward quiets your conscience and concerns. You are only doing what must be done, as demanded by those who deserve to be followed and obeyed. You see the excesses, by the really bad ones, but you are not like them. Some day when you have the power you will set things right, but you must stay within the system to obtain that power. So you must steel yourself, and be practical, and do what must be done.

And that is easier to do, when there is no metric for human misery and suffering.

You work hard, and are only human after all. And for this you are a very important person, well regarded in the Capitol. You are making money for yourself and your friends, the people who really count. You are a success! And all is right with your world.

“When virtue is lost, benevolence appears, when benevolence is lost right conduct appears, when right conduct is lost, expediency appears. Expediency is the mere shadow of right and truth; it is the beginning of disorder.”

Lao Tzu

No one sits down one day and decides, ‘I shall become a monster, and do monstrous things.’

And the band played on.

h/t Zerohedge

 

Shiller PE Ratio

Will the Fed Ever Learn?

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Posted on 3rd November 2014 by Administrator in Economy |Politics |Social Issues

,

Guest Post by Jesse

 

“They will act in accord with the proverbs, ‘that a dog will return to his own vomit again; and the sow that was washed goes back to wallowing in the mud.'”

2 Peter 2:21-22

No. The Fed will not learn.

The Fed will keep repeating their policy errors because they are well paid not to learn. And the economic bobble heads will keep agreeing with them and rationalizing their failures because that is the judicious thing to do if you wish to succeed in a disgraced profession that traffics in expedient fantasies as long as everyone that matters agrees with them.

The Fed wishes for the ECB and the other central banks to do dumb things like they and some of their friends are doing so that they all do the same dumb things together. There is safety in numbers apparently. Hey, we all did dumb things out of good intentions. Who could have known? No one saw the bubble coming. No one could have known that what we were doing was making things worse.

It worked for Greenspan. And its working for the Banks.

The Fed is a creature of the Banks. Its members are all members of the same ‘Club,’ the financial demimonde, and their livelihoods and privileges are supplied by the financial-political complex.

Insiders never speak ill of insiders. And whistleblowers and reformers are left at the curb.

As a regulator the Fed is one of the worst possible choices, just a quarter step removed from pure ‘self-regulation’ by the Banks. The Fed are their proxies and manservants. The recent tapes of Fed meetings with Goldman are no surprise except to those who live in fantasies with their models and jargon.

I’m sorry, but that is just how things are in the real world. The US and UK are caught in an awful credibility trap, and are destined to suffer stagnation and growing inequality until reform comes. And as we see in the case of Japan, that can be a very long time.

Speaking of things that make you go what the heck?, on CNBC this morning the assertion was that ‘the gold market is not driven by supply and demand. It only responds to fear and greed.’ That is, it’s only fundamental basis is emotion.

And you know what? In the West, in London and New York, that’s true.

The gold and silver markets have all the depth and substance of a game of Liar’s poker. They are rigged like most of the other markets with global consequences have been. This one hasn’t been cleaned up yet because the pinheads who are running the scam have no real track record or experience in trading physical commodity markets, and think they can keep leasing out what isn’t theirs and leveraging up ad infinitum, without ever incurring any real world consequences. And the Banks are perfectly willing to take their cuts because they are covered with plausible deniability, just following orders.

But this divergence from reality is not the case everywhere. Certainly not in the Asian and Mideastern markets where some accountability still exists, and delivery tends to imply taking possession.

And in that convergence of these two markets, the physical and the paper, there is both risk and opportunity. When the reckoning comes it is likely to be quite impressive.

There will be a Non-Farm Payrolls report on Friday.

The Comex Delivery Report for Friday is late, as if it is about anything that is actually delivered anywhere but on paper. There was the usual moving around the plate in the silver bullion warehouses. Gold was a snoratorium.

There is speculation now by the economists about when wage inflation will return. They are looking at 2015 for it.

I would point to the Japanese experience of 3.6% unemployment, at least on paper, and a massive underemployment running about 40%, with general wage stagnation and a large portion of the population struggling along on near subsistence wages.

Tell me again what is going to change to allow Labour to demand higher wages from a system totally dominated by two political parties both paid to represent the moneyed interests?

Change will come, but not from within. Something will have to happen to bring people back to their senses. What that will be I do not know.

For Whom Are the Japanese Leaders Kuroda and Abe Making Their Monetary and Fiscal Policy?

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Posted on 2nd November 2014 by Administrator in Economy |Politics |Social Issues

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Guest Post by Jesse

 

The expansion of the BOJ asset purchase program was timed to start with the end of the Fed’s asset purchase program. I mean, come on. Could it have been any more obvious?

There is no big question that the Bank of Japan has been acting in concert with the Fed for the better part of this century at least. And politically, Japan is a client state of the US.

And readers know that I have a long standing observation that one of the great difficulties in recovering from the long period of Japanese economic stagnation since the collapse of their great real estate and stock market bubble has been the inability to clean up their interlocking financial system dominated by industrial combines called keiretsus and a closely associated political system run by a surprisingly well connected minority of insiders.

Beyond that I wondered why was Japan pursuing the purchase not only of domestic equities and non-sovereign paper, but foreign equities as well with their very large pension fund? Are these intended as ‘investments?’ Or are they a form of cross subsidies in support of a more global agenda?

It makes me wonder if the policy being pursued by the BOJ is not designed to help the people of Japan now, so much as to support the requests of the international banking concerns, more specifically the US Federal Reserve.

This made me wonder if Kuroda is pursuing the same type of trickle down stimulus in buying large amounts of financial paper by printing money, rather than engaging in policy actions to stimulate aggregate demand.

And there is that nasty consumption tax hike in April which tends to have a regressive effect on lower income households. A weak yen is good for the exporters and multinationals, but is hard on small businesses and consumers.

Although the Japanese GINI coefficient for economic equality is lower than that of the US, in terms of power Japan is a very top heavy, insider dominated society. Their incorporation of University pedigrees into the success ladder would make the Ivy League envious.

Here is a thoughtful discussion of Japanese quantitative easing from just a few weeks ago from Sober Look. As you can see, the consensus was running heavily against an expansion, making the surprise from BOJ the day after the Fed taper even more of a surprise.

“With wage growth remaining sluggish (particularly for non-union workers), rising import costs could undermine consumer demand – particularly in the face of higher consumption taxes. Given these headwinds, there may be sufficient political pressure to put the BoJ into a holding pattern.”

I am not sure of all the specifics of what is happening in Japan, but I am becoming increasingly persuaded that the Anglo-American financial cartel and some of its client states are engaging in an intensifying currency war with regard to the international dominance of the dollar.

This extends not only to the dollar as the primary benchmark for international valuations, but also to the more compelling power that such an instrument, in the hands of a single governmentally affiliated entity, provides to those who wield it to set international and domestic policies that go far beyond mere terms of trade.

So I think it is fair to ask for whom the Bank of Japan and their political leadership are making some of their policy decisions. And further, it is incredibly naïve not to ask the same questions about the Federal Reserve and the political leadership of the US.

Money power is political power, in every sense of the word.

Employment In Japan

It has been quite some time since I have been doing business in Japan, and I was curious to know if the culture of the ‘salary man’ had changed. What is the employment picture in Japan really like for the average person? What are things like behind the statistics put forward in the international press?

While unemployment in Japan is very low at 3.6% or so and the Labor Participation Rate is still fairly high, it looks like ‘underemployment’ might be something worth looking at given the slack in wage growth. Certainly Japan is experiencing deflation, but is that a ’cause’ or an effect as part of some other economic feedback loop?

What happened to the NAIRU non-accelerating inflation rate of unemployment theory? It is the theory put forward by Friedman and the monetarists that refers to a level of unemployment below which inflation must rise due to wage pressures. Personally I think the growth of monopolies, the globalization of markets, and the relative political weakness of labor has knocked another dodgy economic theory into a cocked hat.

Places like the old South might have had nearly full employment, but I don’t think slavery was adding seriously to wage pressures. Maybe not wages, but on the costs of transport, whips and chains. But this is just my opinion and I could be wrong.

Sometimes it is not always easy to find things because people tend to be very positive about their country, especially when speaking with others. And I dislike looking at OECD statistics and other compendiums because they tend to lose quite a bit with time lag and a lack of insight past government statistics which, and I know this is hard to believe, tend to paint a pretty picture.

But I did get this in from a long time friend in Japan.

“It is difficult for many young people who are part-time or temporary, particularly the men. It is hard for them to “attract” a mate. Many couples are both employed but when they have children there is pressure to find a nursery and often times the wife cannot return to her former job. This obviously complicates the demographic conundrum. Although I do not have figures, this sort of conversation comes up even on the TV.

This is from JIJI dot com. Sorry but Japanese.

The chart shows average monthly salary after subtracting inflation for 2013 having dropped 0.5%.

According to the latest government statistics there are 33.1 million “full time employed” (seiki shain) and 20.4 million “part-time” (hi-seiki shain).

This means that the hi-seiki 非正規 or part-time/temporary account for 38% of the work force.

You can see the numbers I quote “3311” and “2042” in the second line of the page linked below.

Japanese Internal Affairs and Communication Ministry

Note: Hi-seiki refers to any type of employment other than full-benefit employee of a company. I have also seen figures that suggest 40% of those employed earn an average of less than 3 million yen (about $26,710 per year at current exchange rates).

Jesse’s Note:

There is an English tab on the site, but unfortunately the tab goes to a different site and does not ‘match up’ with the Japanese page.

Here is a google translation of the relevant line on the page.

Heisei “regular staff and employees” of the October time year 24 33,110,000 people, “non-regular staff and employees” is 20,420,007 thousand (Excel: 2985KB)

Nomi Prins: Why the Financial and Political Systems Failed

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Posted on 28th October 2014 by Administrator in Economy |Politics |Social Issues

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Guest Post by Jesse
Nomi Prins calls out the policy error deluxe that has been the topic of so much commentary at Le Café over the past few years.
What is perhaps most striking is that this failure is so bipartisan in a time of contentiousness.   It crosses not only parties but professions, from academics to politicians.
As you know I have featured several articles and videos of hers as she introduces her latest book, All the President’s Bankers which is insightful, well-founded and researched, and essential to any understand of what is happening today.
As you know I have ascribed this to the credibility trap.   Insiders never speak ill of insiders, if they which to remain a part of the power elite. This is reinforced in the Ivy League and the halls of power.   And so leaders and potential leaders are hopelessly compromised and entangled in a self-serving system of abuse of power and corruption.
It is part of a general failure of moral conscience and leadership in the country.   It has been or is being repeated in England and other countries in Europe.  It is the reason for the long stagnation of the Japanese economy.
This is a very brief excerpt.  You may read this insightful commentary in its entirety here.
“The recent spike in global political-financial volatility that was temporarily soothed by ECB covered bond buying reveals another crack in the six-year-old throw-money-at-the-banks strategies of politicians and central bankers.
The premise of using banks as credit portals to transport public funds from the government to citizens is as inefficient as it is not happening. The power elite may exude belabored moans about slow growth and rising inequality in speeches and press releases, but they continue to find ways to provide liquidity, sustenance and comfort to financial institutions, not to populations.
The very fact – that without excessive artificial stimulation or the promise of it – more hell breaks loose – is one that government heads neither admit, nor appear to discuss. But the truth is that the global financial system has already failed. Big banks have been propped up, and their capital bases rejuvenated, by various means of external intervention, not their own business models…”

Chris Hedges: The Myth of a Free Press

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Posted on 27th October 2014 by Administrator in Economy |Politics |Social Issues

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Guest Post by Jesse

The bias in the US media towards corporate and special interests is apparent in some sources more easily and readily than in others, especially if one has access and bothers to look at a broad base of international news sources.The great change was institutionalized with the overturn of the Fairness Doctrine under Reagan in 1985 and the revoking of media ownership restrictions from 1934 and 1975 under the Clinton administration’s Telecommunications Act of 1996.

What has changed perhaps is the extreme marginalization of independent sources.  For the most part media outlets declare themselves for one group or another.  The bias of the financial media in policy issues has become so obvious and servile to its corporate interests that it is almost embarrassing.  What is even more surprising is the reach of this sort of continuous advocacy journalism into ‘mainstream’ channels such as Fox and MSNBC that actively re-interpret reality to suit a class of viewers.

This balkanization of the issues attracts large classes of listeners into group think, and precludes any meaningful debate of the issues, even to the very framing of the questions and the issues, and ultimately their very perception of reality.

This is a brief excerpt.   Read the entire article for free here.

“The mass media blindly support the ideology of corporate capitalism. They laud and promote the myth of American democracy—even as we are stripped of civil liberties and money replaces the vote. They pay deference to the leaders on Wall Street and in Washington, no matter how perfidious their crimes. They slavishly venerate the military and law enforcement in the name of patriotism.

They select the specialists and experts, almost always drawn from the centers of power, to interpret reality and explain policy. They usually rely on press releases, written by corporations, for their news. And they fill most of their news holes with celebrity gossip, lifestyle stories, sports and trivia. The role of the mass media is to entertain or to parrot official propaganda to the masses.

The corporations, which own the press, hire journalists willing to be courtiers to the elites, and they promote them as celebrities. These journalistic courtiers, who can earn millions of dollars, are invited into the inner circles of power. They are, as John Ralston Saul writes, hedonists of power…

The mass media are plagued by the same mediocrity, corporatism and careerism as the academy, labor unions, the arts, the Democratic Party and religious institutions. They cling to the self-serving mantra of impartiality and objectivity to justify their subservience to power.

The press writes and speaks—unlike academics that chatter among themselves in arcane jargon like medieval theologians—to be heard and understood by the public. And for this reason the press is more powerful and more closely controlled by the state.

It plays an essential role in the dissemination of official propaganda. But to effectively disseminate state propaganda the press must maintain the fiction of independence and integrity. It must hide its true intentions.”

Chris Hedges, The Myth of a Free Press

U.S. MIDDLE CLASS: THE REAL WALKING DEAD

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Posted on 25th October 2014 by Administrator in Economy |Politics |Social Issues

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Via Jesse