Bob Chapman | December 13, 2008

Congressional miscreants just turned down a measly $15 billion bailout for the automakers, but apparently had no problem approving $700 billion for the big bankers, albeit that the approval required a second try. Apparently, the automakers lacked the clout to threaten martial law, did not have a Goldman Sachs stand-in like Hanky Panky, our "beloved" Treasury Secretary, to champion their cause, and could not order an orchestrated PPT takedown of the Dow by 777 points. The automakers had to come up with a plan to show that the $15 billion bailout would make their continuance as an ongoing business concern viable, while Hanky Panky was given carte blanche, no questions asked, over the first $350 billion of the TARP (Troubled Asset Relief Program, a/k/a the Paulson Ponzi Plunder Plan) money, after lying to Congress about what the funds would be used for in the first place. Apparently, the gravitational attraction of the super-massive black hole of the banking industry losses was strong enough to attract and suck in taxpayer funds, while the miniature black hole of the auto industry could not apply the necessary "sucking" power for this purpose.After all, we have to make sure that a large number of future serfs are impoverished to force them to their knees to accept the coming one-world Orwellian police state under King Obama, while the sociopaths in big banking continue to leach their salaries, bonuses, dividends, golden parachutes and banking takeover money (i.e. competition elimination) from their taxpayer victims, sucking their blood dry until they are nothing but wizened husks who have no strength left to resist the corporatist fascist order-in-the-making lead by the new would-be lords of the universe, the satanic trillionaire Puppet Masters who run our shadow government, slime-ball pond-scum like Rockefeller, Rothschild and the Black Nobility of Britain and Europe. Worse yet, after receiving the extorted Paulson Ponzi Plunder largesse based on outright lies as to its intended purpose, the banking pirates and brigands continue to horde their booty, and have exacerbated the problems of the auto industry many fold with their unwillingness to fund car loans, or any other loans for that matter, that the auto industry might need to survive.King Obama will pay the auto industry lip service and give them a token bailout, after which they will fail, probably in about six months. This will take place before the Fed attempts to re-inflate our economy as the Big Sting Two gets underway, to make sure that the auto industry is destroyed, just as Bear Stearns was assassinated before the Fed rescue plans, that could have saved it, were implemented. The elitist's will sing: "we tried, but we couldn't do it, we tried, but we couldn't do it..." This comes after GM management apologized, with crocodile tears, for its destruction of its auto business, which its executives, under orders from the Puppet Masters, intentionally and malevolently brought about to pave the way for the nationalization of our auto industry while busting our unions and shipping our good-paying jobs overseas in the process. After all, in a quasi-pseudo-capitalist nation like the US, you can only nationalize a failed business, not a successful one. Successful businesses are allowed to continue to function as an ongoing concern, at least for now, as part of the facade put on for purposes of making us continue to believe that our nation still has a "capitalist" system, when what we really now have is a corporatist, fascist police state.The banking industry will be nationalized also, but its uses and purposes have not yet been fully served, so our puppet government of marionettes, with strings leading to the Puppet Masters, continues to prop up our zombie banking industry while stuffing nuts of taxpayer largesse into their baggy little cheeks in preparation for a long, hard winter, to give the impression that they are still solvent while tens of trillions in gargantuan derivative losses continue to go unrecognized due to our so-called regulators looking the other way while bending the Sarbanes-Oxley rules to suit the purposes of their banking masters. The banking industry, including the Fed, which is destroying its balance sheet with toxic waste to keep its member banks going, will eventually be nationalized, but after it has been used to re-inflate our economy, thus causing hyper-stagflation, and ensuring the Second Great Depression in the aftermath of that hyperinflation. After all, when you are staring double digit interest rates in the face, everything locks up and you have a crack-up-boom.This re-inflation will take place in order to complete the Big Sting Two. They will run up the stock and bond markets in one final massive rally, so they can bail out of all paper assets, behind everyone else's backs, through their opaque, unregulated dark pools of liquidity like Project Turquoise and Baikal, and then plow their proceeds into precious metals, commodities, real estate, infrastructure (which infrastructure King Obama will fund upon taking office) and other real, tangible assets through the use of unregulated markets like the OTC and dark pools, again to hide what they are doing, while leaving everyone else, their sucker-dupes, holding the proverbial bag. Buy gold and silver by the horde, or get vaporized in the Big Sting Two. You either learn from 1929, or get hammered in 2009. You learn from the Big Sting One, or you get totally annihilated in the Big Sting Two. After all, as the saying goes, those who fail to learn from history are doomed to repeat it.Our problems as a nation and a world are far beyond the extremes of the 1930s. All stops have been pulled. The creation of fiat currencies and credit has gone berserk. Modern central banking is on the edge of extinction, as we’ve known it. The insiders went too far this time. The creation of structured finance, poor lending standards and derivatives have doomed the financial system. Banks did not believe they were at risk selling this toxic waste to others, but as it turns out they were. They securitized debt and colluded in bogus ratings in mortgages via CDOs, MBSs and SIVs and ABS as well (asset-backed securities.) As it turns out all of these bonds consisting of real debt and derivatives were another big banking and Wall Street lie. The result is that it is impossible for any kind of bottom to be found in debt for a minimum of two years and probably in three to four years. What sticks out like a sore thumb is the concentration of the issuance of debt by five legacy, money center banks that control 70% of lending. These are the bankrupts that the American taxpayer is being forced to keep from going bankrupt by pouring trillions of dollars into their balance sheets. This is not a solution. It is throwing good money after bad. The solution is the 5,000 plus regional banks that are solvent. They should be assisted in taking on part of the load and that these five big banks should be partly dismantled. The big five Illuminist banks won’t lend and are cutting credit lines, which is exacerbating the situation and running the economy into the ground. The economy needs liquidity not austerity. All the taxpayer liquidity created has gone on the balance sheets of these banks. All the Treasury and the Fed has done is rescue these banks and has allowed the economy to deteriorate.Home prices will fall another 20% as a result of overbuilding and a lack of any lending standards. That will encompass the next few years. If private credit is not extended to business, industry and to consumers the economy will contract that much faster. Saving the big banks serves no useful purpose if we go into depression. All the Illuminists care about is preserving their power and influence. They have theirs and could care less about the American people. This has to stop, but it won’t until the system collapses.We are seeing the result of crass greed. These so-called investment vehicles were not created to provide true value to the buyer, but to maximize profits by the lender via leverage. It was all a giant scam. No one calls it that, but that is exactly what it was.When we said Fannie Mae and Freddie Mac were leveraged 100 to 1, 4-1/2 years ago, we set a short at $69.00 a share. We knew what they were doing would end in disaster, and it did. We covered the short at $0.80. The big five legacy banks were leveraged at 20 to 30 to one and eventually that caught up with them thanks to CIBC, Oppenheimer’s top equity analyst Meredith Whitney, who changed the course of history by stating the simple truth. The game of structured finance reversed and de-leveraging began not only for these big five banks, but for hedge funds and the entire world economy. We are now 18 months into the credit crisis and there is no solution in sight. Congress continues to give taxpayer funds for bailouts of the gangster-banksters who made millions and billions creating this mess. These funds are directed to all the elitists who created or benefited from the criminal activity. A good part of investment banking is no longer a viable business model and that is a positive development.Fraud is everywhere. At Wachovia, Bear Stearns, Lehman, Fannie Mae, Freddie Mac, Indy Bank and Washington Mutual, yet the SEC sees nothing. No civil and no criminal charges. Over and over we have pointed out there is two scales of justice: One for the rich, connected elitists and the other for us. It is no wonder Dick Cheney has $85 million invested in a prison company for the poor. The rich are too big to go to jail and their banks, brokerage and insurance companies are too big to fail. That may be the ultimate scam. Securities fraud is now only found at small and mid-sized brokerage firms and with small brokers and with an occasional newsletter writer. Our government is a disgrace.The financial system is a great dark hole. It has already collapsed. The elitists are trying to hold it together with bailing wire and chewing gum, called money and credit and loans. It won’t work. The system is so seized up that lenders can no longer flog credit-card debt. The well has run dry. It is inflate or die.Our problems as a nation and a world are far beyond the extremes of the 1930s. All stops have been pulled. The creation of fiat currencies and credit has gone berserk. Modern central banking is on the edge of extinction, as we’ve known it. The insiders went too far this time. The creation of structured finance, poor lending standards and derivatives have doomed the financial system. Banks did not believe they were at risk selling this toxic waste to others, but as it turns out they were. They securitized debt and colluded in bogus ratings in mortgages via CDOs, MBSs and SIVs and ABS as well (asset-backed securities.) As it turns out all of these bonds consisting of real debt and derivatives were another big banking and Wall Street lie. The result is that it is impossible for any kind of bottom to be found in debt for a minimum of two years and probably in three to four years. What sticks out like a sore thumb is the concentration of the issuance of debt by five legacy, money center banks that control 70% of lending. These are the bankrupts that the American taxpayer is being forced to keep from going bankrupt by pouring trillions of dollars into their balance sheets. This is not a solution. It is throwing good money after bad. The solution is the 5,000 plus regional banks that are solvent. They should be assisted in taking on part of the load and that these five big banks should be partly dismantled. The big five Illuminist banks won’t lend and are cutting credit lines, which is exacerbating the situation and running the economy into the ground. The economy needs liquidity not austerity. All the taxpayer liquidity created has gone on the balance sheets of these banks. All the Treasury and the Fed has done is rescue these banks and has allowed the economy to deteriorate.Home prices will fall another 20% as a result of overbuilding and a lack of any lending standards. That will encompass the next few years. If private credit is not extended to business, industry and to consumers the economy will contract that much faster. Saving the big banks serves no useful purpose if we go into depression. All the Illuminists care about is preserving their power and influence. They have theirs and could care less about the American people. This has to stop, but it won’t until the system collapses.We are seeing the result of crass greed. These so-called investment vehicles were not created to provide true value to the buyer, but to maximize profits by the lender via leverage. It was all a giant scam. No one calls it that, but that is exactly what it was.When we said Fannie Mae and Freddie Mac were leveraged 100 to 1, 4-1/2 years ago, we set a short at $69.00 a share. We knew what they were doing would end in disaster, and it did. We covered the short at $0.80. The big five legacy banks were leveraged at 20 to 30 to one and eventually that caught up with them thanks to CIBC, Oppenheimer’s top equity analyst Meredith Whitney, who changed the course of history by stating the simple truth. The game of structured finance reversed and de-leveraging began not only for these big five banks, but for hedge funds and the entire world economy. We are now 18 months into the credit crisis and there is no solution in sight. Congress continues to give taxpayer funds for bailouts of the gangster-banksters who made millions and billions creating this mess. These funds are directed to all the elitists who created or benefited from the criminal activity. A good part of investment banking is no longer a viable business model and that is a positive development.Fraud is everywhere. At Wachovia, Bear Stearns, Lehman, Fannie Mae, Freddie Mac, Indy Bank and Washington Mutual, yet the SEC sees nothing. No civil and no criminal charges. Over and over we have pointed out there is two scales of justice: One for the rich, connected elitists and the other for us. It is no wonder Dick Cheney has $85 million invested in a prison company for the poor. The rich are too big to go to jail and their banks, brokerage and insurance companies are too big to fail. That may be the ultimate scam. Securities fraud is now only found at small and mid-sized brokerage firms and with small brokers and with an occasional newsletter writer. Our government is a disgrace.The financial system is a great dark hole. It has already collapsed. The elitists are trying to hold it together with bailing wire and chewing gum, called money and credit and loans. It won’t work. The system is so seized up that lenders can no longer flog credit-card debt. The well has run dry. It is inflate or die.We keep hearing of a bubble in US Treasuries. What happens to the funds received by those who sold out? The only real option is gold and silver related assets and Swiss franc Treasuries.RBC Cash Consumer Attitudes plunged to an all-time low – as bleak economic news appears daily. Their Consumer and Spending by Household Index was 15.3 for December, 19.4 points below November’s 34.7 level and almost at the all-time low of 14.6 reached in July 2008.There are 12 states on the brink of insolvency and 20 states are right behind them. The states have to raise taxes and cut spending just to pay unemployment benefits.You are about to see the value of the Swiss franc versus other currencies, especially the US dollar. Now that 84.80 has been broken, the dollar is free fall to 71.16. That means the government can no longer effectively support the stock market. The first alternative, of course, is gold and silver as hyperinflation and stagflation raise their ugly heads. In the dollar and the Dow the technicals have collapsed. On the other hand they are strengthening for gold, silver and the franc. This opens up the next very dangerous chapter in this depression. The Treasury has been borrowing short and lending long and will have a tough time selling 10-year notes, and 7-year and 30-year bonds. This is a sure recipe for bankruptcy. As paper gets harder to sell, tax revenue is drying up. Eventually next year interest rates will finally rise.This is when the solvency of the US and the Treasury comes into play. When that happens there will be a currency panic and devaluation. If the US still has gold the value will be set at $2,000 or higher to back the dollar. If there is no gold then anything goes.The strongest underlying reason the Fed wants to issue bonds is so that it can bypass congressional approval on the debt level. This is a method of undermining all constitutional checks and balances. This makes us believe the US has no gold left.A New York Times/Bloomberg poll has found 55% of Americans say they do not believe the government should be responsible for funding a bailout plan; 57% want the government to do something about the problem by intervening to stabilize the economy.Citigroup Inc. and UBS AG yesterday agreed to buy back a total of nearly $30 billion in risky auction-rate securities regulators said the banks marketed to customers as safe.The Securities and Exchange Commission formally approved the accords with the two banking giants following preliminary deals reached in August. Securities regulators in Texas and New York also disclosed details of final agreements with the banks.Tens of thousands of the banks' customers bought the securities before the $330 billion market for them froze in mid-February, the SEC said in revealing the final accords.The new settlements were the largest return of customer money in the agency's history and all the investors will be made whole, SEC chairman Christopher Cox said in a statement.Citigroup and Switzerland's UBS neither admitted nor denied wrongdoing under the settlements. New York-based Citigroup agreed to buy back about $7 billion in the securities from affected customers, while UBS's repurchase totaled $22.7 billion. Again none of the connected go to jail.Eight current and former Fidelity Investments employees will pay more than $1 million to settle federal charges they improperly received gifts from brokers seeking the Boston mutual fund company's vast trading business, the Securities and Exchange Commission said yesterday.They are among a group of 13 current and former employees charged with wrongdoing by the agency earlier this year for accepting $1.6 million worth of gifts and entertainment - free plane rides, golf outings, concert tickets - in violation of federal rules limiting such gifts. All but two of the 13 have now settled.Fidelity itself agreed in March to an $8 million settlement with regulators. The family-controlled firm did not admit or deny wrongdoing. Again none of the connected go to jail.A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts. Talk about suicidal.However, it was expected that GOP senators would prevent an automaker bailout. Perhaps the bursting of a flimsy hope is enough to wreck fragile markets. We think that the markets fear that the US Senate reluctance to bailout US automakers indicates that the massive US bailout movement is ending.GM and Chrysler will probably declare bankruptcy. This will force the UAW to renegotiate its contract. Then the US Senate is likely to fund the rejuvenation of US automakers.We keep hearing of a bubble in US Treasuries. What happens to the funds received by those who sold out? The only real option is gold and silver related assets and Swiss franc Treasuries.RBC Cash Consumer Attitudes plunged to an all-time low – as bleak economic news appears daily. Their Consumer and Spending by Household Index was 15.3 for December, 19.4 points below November’s 34.7 level and almost at the all-time low of 14.6 reached in July 2008.There are 12 states on the brink of insolvency and 20 states are right behind them. The states have to raise taxes and cut spending just to pay unemployment benefits.You are about to see the value of the Swiss franc versus other currencies, especially the US dollar. Now that 84.80 has been broken, the dollar is free fall to 71.16. That means the government can no longer effectively support the stock market. The first alternative, of course, is gold and silver as hyperinflation and stagflation raise their ugly heads. In the dollar and the Dow the technicals have collapsed. On the other hand they are strengthening for gold, silver and the franc. This opens up the next very dangerous chapter in this depression. The Treasury has been borrowing short and lending long and will have a tough time selling 10-year notes, and 7-year and 30-year bonds. This is a sure recipe for bankruptcy. As paper gets harder to sell, tax revenue is drying up. Eventually next year interest rates will finally rise.This is when the solvency of the US and the Treasury comes into play. When that happens there will be a currency panic and devaluation. If the US still has gold the value will be set at $2,000 or higher to back the dollar. If there is no gold then anything goes.The strongest underlying reason the Fed wants to issue bonds is so that it can bypass congressional approval on the debt level. This is a method of undermining all constitutional checks and balances. This makes us believe the US has no gold left.A New York Times/Bloomberg poll has found 55% of Americans say they do not believe the government should be responsible for funding a bailout plan; 57% want the government to do something about the problem by intervening to stabilize the economy.Citigroup Inc. and UBS AG yesterday agreed to buy back a total of nearly $30 billion in risky auction-rate securities regulators said the banks marketed to customers as safe.The Securities and Exchange Commission formally approved the accords with the two banking giants following preliminary deals reached in August. Securities regulators in Texas and New York also disclosed details of final agreements with the banks.Tens of thousands of the banks' customers bought the securities before the $330 billion market for them froze in mid-February, the SEC said in revealing the final accords.The new settlements were the largest return of customer money in the agency's history and all the investors will be made whole, SEC chairman Christopher Cox said in a statement.Citigroup and Switzerland's UBS neither admitted nor denied wrongdoing under the settlements. New York-based Citigroup agreed to buy back about $7 billion in the securities from affected customers, while UBS's repurchase totaled $22.7 billion. Again none of the connected go to jail.Eight current and former Fidelity Investments employees will pay more than $1 million to settle federal charges they improperly received gifts from brokers seeking the Boston mutual fund company's vast trading business, the Securities and Exchange Commission said yesterday.They are among a group of 13 current and former employees charged with wrongdoing by the agency earlier this year for accepting $1.6 million worth of gifts and entertainment - free plane rides, golf outings, concert tickets - in violation of federal rules limiting such gifts. All but two of the 13 have now settled.Fidelity itself agreed in March to an $8 million settlement with regulators. The family-controlled firm did not admit or deny wrongdoing. Again none of the connected go to jail.A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts. Talk about suicidal.However, it was expected that GOP senators would prevent an automaker bailout. Perhaps the bursting of a flimsy hope is enough to wreck fragile markets. We think that the markets fear that the US Senate reluctance to bailout US automakers indicates that the massive US bailout movement is ending.GM and Chrysler will probably declare bankruptcy. This will force the UAW to renegotiate its contract. Then the US Senate is likely to fund the rejuvenation of US automakers.