Capitalism's Call to 911

The Capitalist System
Cam It Be Fixed Without Being Diagnosed?
Cam It Be Fixed Without Being Diagnosed?

A Different Look at the Dow

All the headlines will read that the Dow was down 679 points in today's trading. Those headlines will be accurate because tradition (and logic and ease of comparison factors) dictates that one measures the daily change in the Dow (and all other indexes and individual stocks and commodities) by comparing the current day's closing price to the previous day's closing price.

The Dow closed yesterday at 9258; it closed today at 8579; 9258 - 8579= (679).That represents a 7.33% loss for the day.

But the Dow trades from 9:30 AM to 4:00 PM (all times Eastern) everyday, including today. Most professional traders and virtually all financial journalists essentially disregard the numbers generated during the trading day, as mentioned above.

But let's take a peek at the numbers during the day. The pros call that action intra-day trading.

At approximately 9:45 AM, the Dow stood at 9448, the high for the day. From there it went on to close at 8579. That represents a drop of 869 points. Another way of looking at it is that, from its high for the day (9448,) the Dow lost 9.10% of its value.

Using either the traditional yardstick, which showed the Dow down 7.33%, or the non-traditional one that produces an intra-day loss of 9.10%, these are remarkable numbers that are usually associated only with very speculative, individual stocks. Stocks like those are known for their volatility, best defined as the propensity of their price to move often and widely.[Note: The Dow is down 40% from its all-time high.]

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So, what's the point?

The point, I think, is that this behavior in the market(s)--after all the efforts and trillions of public dollars expended by our and other governments--is a strong argument that nobody--nobody!--knows what the problem(s) is and, ipso facto, cannot know what the solution is.

Analogy: Obviously sick patient brought to hospital with multiple symptoms. Situation obviously serious, maybe grave. Diagnoses vary from specialist to specialist, no one diagnosis can be agreed upon.

Hospital reacts by administering huge doses of antibiotics, anti-depressants, muscle relaxants, pain killers, virtually any drug that's in the cabinet; cardiac surgeons perform triple bypass; kidney specialist hooks patient up to dialysis machine and so on. Fortunately, that's not how the medical community would react.

If the proposition that no one has accurately diagnosed the illness is true, this is not the time for more shotgun squandering of monumental sums of public funds on well-intentioned, but thus far ineffective solutions to an inscrutable problem.

Question: Which is worse, (a) no immediate new action by the US Government, (b) immediate new actions along the lines of the old ones, or (c) an attempt at "buying time?" Option (c) would be something like the declaration, in concert with other nations, of a "Bank Holiday," starting tomorrow and running through next Monday, removing the second-to-second pressures on policy-makers associated with gyrating trading markets.

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From: History.com

March 5, 1933
Roosevelt declares bank holiday

When Franklin Roosevelt started his first term in the White House in 1933, he inherited a nation in the depths of the Depression. A record 13 million Americans were unemployed and businesses were drowning in red ink. Perhaps even more pressing was the head-spinning string of bank failures which had triggered a frantic run on the nation's savings vaults. The wave of withdrawals by panic-stricken depositors further dried up banks' already-depleted supply of liquid assets and pushed the nation's banking system to the brink of disaster. On March 5--the day after being sworn into office--Roosevelt stepped into the breach and declared a "bank holiday," which, for four days forced the closure of the nation's banks and halted all financial transactions. The "holiday" not only helped stem the frantic run on banks, but gave Roosevelt time to push the Emergency Banking Act through the legislative chain. Passed by Congress on March 9, the act handed the president a far-reaching grip over bank dealings and "foreign transactions." The legislation also paved the path for solvent banks to resume business as early as March 10. Three short days later nearly

The Government of the United States of America...

.., as powerful as is it, can crumble like a stale cookie if it loses its Legitimacy in the minds of the People.

The actions of our (well-intentioned) Leaders in the face of this Economic Holocaust have thus far proven to be inadequate.

The solutions put forth by Leadership are obviously skewed to directly benefit the few, at the expense of the many.

As the crisis grows, so too does the threat to the Nation, the greatest threat to its survival since the Civil War.

We have witnessed some of our unelected, appointed leaders taking unilateral actions involving the expenditure or commitment of 100s of billions of taxpayers funds that have already been proven to be ineffectual.

We have endured our elected leaders passing legislation blatantly in opposition to the will of the People, legislation that benefits a select few at the expense of the many, and whose efficacy is dubious.

We watch in helpless awe as the leadership squanders their legitimacy as they display their subservience to special interests, at the expense of the People.

Below are some words of the Civil War President, from his Gettysburg Address:

" Four score and seven years ago our fathers brought forth on this continent, a
new nation, conceived in Liberty, and dedicated to the proposition that all men
are created equal.

"It is ... for us to be here dedicated to the great task remaining before us...--- that this nation, under God, shall
have a new birth of freedom -- and that government of the people, by the people,
for the people, shall not perish from the earth."

Is our government a government "of the people, bythe people, for the people" any longer? Or is it now a government of, by and for Goldman Sachs?

The events of the days ahead will answer that question.

All I can say is that it is now a question.

From My ObamaWebsite Blog: Bailout Greatest Threat to USA Since Civil War

The Bailout: Greatest Threat to the Nation Since the Civil War



1. I have published 119 posts on this blog, none of which has ever been deleted or censored by the Obama campaign, despite the fact that I have been "reported" to the authorities numerous times. One of those blogs was a Thank You to this site, which is still in effect.

2. Since there is a written, dated record extant of my opinions, both here and on my own personal blog, statements made in the following post regarding past comments of mine are verifiable.

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Since at least March of this year, I have equated and compared the on-going financial crisis we are experiencing to the Great Depression of the 1930s, using such terms as "The Postmodern Great Depression" and "Capitalism Gets Re-Capitalized," among others.

The focus of my comments has been economic.

A couple of days ago, a friend with whom I had not spoken with for awhile asked me, during a telephone conversation, my opinion on the Bailout and the general politico-economic events appurtenant to it.

I found myself responding thus: "This is the most serious threat to the United States of America since the Civil War." Not only had I never said that before, I had never thought that before.

My usually composed and well spoken friend responded, "Holy shit!"

And when I myself realized what I had said, my internal response was the same.

"We've transcended the threat of a mere Depression," I said, "and moved into that rarefied realm where we must be concerned with the very existence of the Nation as we've known it since the Founding."

He was silent.

Thinking aloud, I blurted out, "We are witnessing the destruction of representative democracy, a bloodless coup, the only opposition to which is coming from the 'lunatic fringe,' on both poles of the political spectrum, a coalition of the absurd and the powerless."

We chatted for a brief time, agreed that we were both astonished that Hedge Fund Managers could exert more influence on our elected representatives--and do so with such blatancy, such arrogance--than the outcry of perhaps 80% of the citizens of the Nation who opposed the Bailout, even in the face of the relentless and thoroughly ramified propaganda campaign mustered by the Elites, endorsed by the mainstream of both parties, and propagated by the most "noble" of media outlets.

But the fact is the Hedge Fund Managers triumphed. And they know it. And when they win, they don't pick up their winnings and move along---they Double Down.

The country's Changed over the last two weeks; there can be no argument with that proposition.

Obama ran/runs on Change.

And he's going to be the next President of the United States:

The first President of the United States of a New America, for better or worse.

Good Luck, sir.

Paulson & Congress: He Made Them an Offer They Couldn't Refuse

EXTORTION

Main Entry: ex·tort

: to obtain (as money) from a person by force, intimidation, or undue or unlawful use of authority or power

Merriam-Webster's Dictionary of Law, © 1996 Merriam-Webster, Inc.


Extort

1. To wrest from an unwilling person by physical force, menace, duress, torture, or any undue or illegal exercise of power or ingenuity; to wrench away (from); to tear away; to wring (from); to exact; as, to extort contributions from the vanquished; to extort confessions of guilt; to extort a promise; to extort payment of a debt.

Webster's Revised Unabridged Dictionary, © 1996, 1998 MICRA, Inc.

Two definitions of the word "extort."

The Shrinking of America

Are words even necessary anymore?

Lacking anything substantive to do or say and seeing his poll numbers plummet, one of the major party candidates decides the best tactic for his campaign is saying that he's no longer campaigning, a demonstrable lie.

He adds that he's got more important things to do than debate his opponent, so he calls for a postponement of the debate scheduled for tonight. In less than 48 hours, he changes his mind and says the debate will go on as scheduled.

He calls for a bipartisan meeting at the White House to hammer-together a solution to the Financial Crisis, implying that he's the guy--the only guy--that can do it. The meeting takes place, and the savior essentially sits mute throughout it.

On the Bailout Plan itself: It's designed and will be executed by someone, Secretary of the Treasury, Henry Paulson, whose conflict of interest is so obvious and so appalling (former CEO of Goldman Sachs) that if he were acting as a Municipal Court Judge presiding over a traffic ticket case, he would be asked to recuse himself. But, hey, it's a crisis.

This is not meant as a partisan attack on McCain. Frankly, his erratic behavior transcends political issues and makes one focus on his personal suitabilty to hold the office of president.

Obama, though behaving in a calmer, more presidential manner, is not immune from criticism either. He essentially has bought into the Paulson Plan with a few trivial, piddling addendums added to it. Obama's top financial adviser is Robert Rubin. Rubin is currently employed by Citigroup and, just like Paulson, is a former CEO of Goldman Sachs.

Did the Founders envision a country with a two-party system where both parties find it necessary to be advised on financial matters by what is essentially one person? They may have separate social security numbers, but for all intents and purposes, Rubin=Paulson. Why should anyone expect the Democrats to come up with some proposal of their own that would be fundamentally different from Paulson's?

And, finally, the dearth of specific information being offered to the Public regarding the cause(s) of the crisis, the reason(s) that the Paulson Plan is the best plan, and who exactly will be the primary direct beneficiaries of the plan is another astounding example of the contempt for the Public that its rulers have.

Maybe we should ask Putin or Palin to come up with some alternative plans to Paulson's---at least they wouldn't bring the conflict of interest baggage to the table.

Footnote: Washington Mutual was seized by the FDIC last night, the largest bank failure in US history, but nowadays barely front page news.

An Editors' Selection from The NY Times! My Life's Complete

EDITORS' SELECTIONS (what's this?)
September 23, 2008 2:08 pm

Link
That fellow at the Fed, with whom I share a rare last name, seems to have been given the role of sidekick, a sort of Lindsey Graham to Henry Paulson's John McCain. For that reason, and the fact that Bernanke's roots are in the academic world, I'll restrict my comment to Paulson.

If this matter was being adjudicated in a court of law, would Henry Paulson be permitted to preside as the judge? Or would he be compelled to recuse himself?

As a judge, he would be asked to rule on a proposal whose SOLE DIRECT BENEFICIARIES are financial institutions (in the broadest sense of the term,) including the firm of which he was the CEO prior to assuming his judgeship.

He actual role in this matter far out-reaches the role of a judge. He essentially has become judge, jury, prosecutor and defense counsel all wrapped into a tidy ex-Goldman Sachs package. Perhaps the next shoe to drop will be an announcement that Paulson has chosen John Fuld, the CEO of the former Lehman Brothers, as the Bailout Czar-designate to administer the program.

Obviously, Paulson is very bright and is not a crook. But all of the top guys on Wall Street, mega-banks, large insurance and mortgage companies are also very bright, and the outright crooks among them are few and far between.

The fact is, however, that these are the very people who were flying the plane when it crashed!

I'm rambling, sorry.

One final comment, please: So far, there are three public officials who have uttered some sense in this matter: Sens. Bernie Sanders, Richard Shelby and Jim Bunning. How's that for an odd threesome?

— FredrickBernanke, San Diego

Birth of an American Fuhrer: The Paulson Bailout Act

Absolute Power....

The following is the text of the proposed legislation which I refer to as the Paulson Bailout Act.

I have highlighted some passages.The Act speaks to the powers granted to the Secretary of the Treasury. But it is best understood as granting these powers to the President of the United States, as the Secretary is appointed by and serves at the pleasure of the President.

The Founders would shit in their pants if they ever saw something like this. It is nothing less than handing dictatorial, new powers to the Executive Branch without regard to the "checks and balances" written into the Constitution.

If this has already been published here, sorry for the duplication.

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LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY

TO PURCHASE MORTGAGE-RELATED ASSETS

Section 1. Short Title.

This Act may be cited as __________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;

(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;

(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;

(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and

(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.

(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.

(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

Sec. 7. Funding.

For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Sec. 9. Termination of Authority.

The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.

Sec. 10. Increase in Statutory Limit on the Public Debt.

Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.

Sec. 11. Credit Reform.

The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.

Sec. 12. Definitions.

For purposes of this section, the following definitions shall apply:

(1) Mortgage-Related Assets.--The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.

(2) Secretary.--The term “Secretary” means the Secretary of the Treasury.

(3) United States.--The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.

Bailing -Out Billionaires?

The NYTimes is reporting that a new far-reaching and financially stupendous rescue plan is being advanced by King Henry at the Treasury and Chairman Bernanke at the Fed--two unelected, appointed officials--to address the systemic exposed by the collapse of Capitalism being played out on Wall Street.

The Dynamic Duo, who hitherto had preferred the quite and isolation of boardrooms to hatch their thievery, have deigned to brief members of the Legislative Branch on their scheme, the details of which have not been announced to the public, and might not have been briefed to the legislators either.

The Times reports that the plan centers around the Treasury, the Federal Government purchasing from private organizations securities that are essentially worthless, and doing this with countless hundreds of billions of taxpayer dollars.

No details have been reported regarding any financial sacrifices these bailed-out private entities will be compelled to endure. But it is clear the taxpaying public will, once again, be compelled to foot the bill for the gross miscalculations of individuals whose annual earnings, perhaps whose monthly earnings, surpass the lifetime earnings of the vast majority of United States citizens.

They ask a question in courtrooms: cui bono? Translated: who benefits?

We are going to be deluged with the usual platitudes: "All of society benefits." "We are saving the system." "Every citizen will be better off by what we propose to do."

That should not be enough this time around.

How much is Bill Gross, who runs the Pacific Investment Management Company (Pimco) going to make off this public handout? His firm manages approximately $162 Billion of credit securities (bonds.) Pimco reportedly saw their net asset value increase by almost 2% immediately following the announcement of the Fannie and Freddie bailouts. Two percent of $162 Billion equals $3,240,000,000. Not a bad day's work, huh? [Please do not misinterpret this as an attack upon Mr. Gross; he's one helluva bond guy who enjoys a stellar reputation as a straight-shooter. I do not know him personally, but have followed his commentaries for years, and have no reason to disagree with the straight-shooter rep he has earned.]

But how many Wall Street and hedge fund already-multimillionaires are going to find their pockets swollen by the Paulson-Bernanke Plan?

AT ALL COSTS, THAT CANNOT BE ALLOWED TO HAPPEN.

The Postmodern Great Depression, Act II

Russia, two days ago, closed their stock market in the face of a two-day decline of of approximately 27%. That market has not yet re-opened for trading.

What can be expected next in the United States?

Today's trading on the New York Stock Exchange saw the Dow Jones Index lose 450 points.

Shares of the venerable and sole-surviving independent investment banks, Morgan Stanley and Goldman Sachs fell as much as 44%(!!!) and 27%, respectively. Morgan is doomed for sure, Goldman, most likely too.

As the logo's in the post below this one indicate, these two firms have plenty of company.

Does the USG dare halt trading? Do they dare call a "bank holiday," as was done during the other Great Depression in the 1930s? Will such actions only exacerbate the problems?

As of now, there has been no indication of a 1930s-style run on the banks taking place. The public, either because of ignorance or blind faith, has yet to line up at their local bank branch and demand their money. Right now, the first priority of the USG is to prevent such a scenario from developing.

One can surmise that the USG in concert with the Federal reserve System has realized that they cannot be the "lender of last resort" to EVERYONE.

The question now is: Who shall be allowed to fail and how can the consequences of these failures be mitigated, if at all?

The Garbage Disposal?

Can they digest Countrywide and Merrill Lynch?

If not, who's gonna pay for BOA's insatiable appetite?

King Henry (Paulson) To The Rescue With "Other People's Money"

Just being announced (unofficially)is another taxpayer bailout: This time giant insurance company AIG.

The report in the NYTimes says the Treasury Department is going to lend AIG--a private company with private investor ownership--$85 billion of taxpayer funds. AIG, in turn, will pledge all of its assets as collateral for this loan. Shareholders will see some dilution, but will not be wiped out.

Once again, this is Government-by-Fiat. All done behind closed doors by men "obligato" to the very industries that created this fiasco. Apparently, Henry Paulson, current SecTreasury and ex-CEO Goldman Sachs, is endowed with powers that allow him to supersede Congress when it comes to allocating taxpayer money.

Yes, it's an emergency; yes, it's a crisis. But do we want to abdicate any semblance of democracy and permit one or two men to distribute public funds as they--and only they!--see fit?

How much money is being made by hedge funds that bought AIG securities betting that Goldman Sachs' King Henry would, once again, come to the rescue with boat-loads of "other people's money?"

And who are the "other people?" They are us!

Is the Solution an Extra-Democratically Imposed Socialism?

I won't belabor a point I have been making since at least March on this blog and elsewhere. I'll just repeat it.

We are witnessing the greatest socialization of the American economy since The Great Depression take place, and it is being conducted by the hitherto laissez faire Administration of Republican George W. Bush.

It's also being done hastily, with no public debate, and its front men [Paulson, particularly] are representatives of the very institutions--banks, Wall St. speculation-houses--responsible for the crisis.

This entire dynamic is the greatest transfer of wealth from the many (US taxpayers) to the few (holders of debt instruments) in the history not only of the United States, but of the World.

Liberal Democrats and Libertarian Republicans should be united in their opposition to this theft. But thus far, except for the lunatic fringe (this site included), there are very few questions being raised by mainstream politicians of either party, let alone the mainstream media.

Kapital Kollapse

Alan Greenspan calls the current financial crises a "once in a century" event.

Lehman Brothers, a 158-year-old Wall Street investment bank that cannot be sold without the USG supplying the money, will declare bankruptcy tonight (Sunday.) And, by the way, the Lehman CEO was paid a $22 million performance bonus in March 2008, just as Bear Stearns was being bailed out with US taxpayer funds.

To avert another collapse, Bank of America is about to announce that it will buy Merrill Lynch, presumably without USG-supplied funds.

This transpires with narry a peek from either of the presidential candidates, with zero public input, with no Congressional hearings---nothing except the ex-CEO of Goldman Sachs (Treasury Sec. Paulson) and my namesake at the Fed allocating $100's of Billions of public funds to private pockets.

The Trap of Buying Into the Prevailing Conventional Wisdom

Barack Obama has gotten where he is by taking positions contrary to those of the Bush (McCain) Administration. Many of those positions--particularly the Iraq Invasion--were the conventional wisdom when they first were proposed, meaning those positions had bipartisan support; think Hillary and Biden on Iraq, circa 2003. Obama was not then part of the conventional wisdom crowd.

Lately, however, Barack seems to be succumbing to the pressures of joining the prevailing bipartisan conventional wisdom on several issues where robust debate, if not opposition, might be a better course of action. Here are three of those issues:

1. The "surge" was a success, and was the primary cause for the diminution of the violence level in the Iraq Theater;

2. As US troop levels decrease in Iraq, US troop levels should increase in Afghanistan, perhaps on a one-for-one basis; and,

3. The US taxpayer bailout, as structured by the Bush Administration, Morgan Stanley and Goldman Sachs, of Fannie Mae and Freddie Mac was the best and only action that could have been taken to avert more damage to the housing market and the overall economy.

This post is not the venue to analyze the three prevailing wisdoms above. The article I posted just below this one addresses point 3. At least one previous blog of mine on this site addresses point 2.

Shrill criticism is not being advocated by me.

But there is no reason Obama could not be saying something like: "The new administration will be examining these, and all, policies and positions of the Bush Administration in detail. Those examinations will determine whether or not changes in course are necessary. Everything will be on the table,..." including those three pieces of conventional wisdom listed above.

-This originally appeared on my Blog on www.barackobama.com

Bush Socializes the Mortgage Industry...Oh, the Freakin' Irony

The federal government--translation: you and me--steps into the breach and seizes the private mortgage corporations Fannie Mae and Freddie Mac from the precipice of bankruptcy. Cost to taxpayers? Unknown and unknowable.

Thus the Republican Bush-McCain team adds to its legacy the single largest government encroachment into the Private Sector since the Great Depression years of the 1930s. It's done as stealthily as something of this magnitude can be done, beginning on Friday evening, all over by Sunday.

The action is justified as necessary to halt and prevent the continued unraveling of the financial-housing-mortgage-banking system; that is, the 20% of that system that has not already unraveled.

Who benefits? Holders of Fannie and Freddie debt securities, primarily. The Bank of China, for example, holds $360 billion of those puppies, which have been steadily declining in relative terms, to US Treasury debt securities.

War in Iraq, 21st Century Economics...Unpleasant Thoughts

I try to follow the coverage the media, both "mainstream" and "acceptable-alternative," gives various news stories.

Without question the Democrat Primary campaign gets the most ink day after day. And the coverage, as John Edwards' wife so ably pointed out in her NYTimes Op-Ed piece, almost solely concentrates on various tactics, gossip and the candidates' personalities.

So be it.

But here at this modest Blog, the temptation to do otherwise notwithstanding, I am resolved to write about important matters.

The two most important issues facing the United States (and by extension, the democratic, industrialized democracies) are the War in Iraq and the Economics of the 21st Century, particularly the unprecedented transfer of wealth from the aforementioned nations to the nations that produce exportable oil.

These are both complex issues not easily captured in sound bites or snapshots. To report on them, let alone analyze and comment (synthesize) on them, requires deep, sometimes long, thinking. That's not what media is all about. Mass media is about quick and easy; here today, gone tomorrow kind of stuff.

I'm not a media-guy, but neither am I an academic. I use my brain for sure; but I'm not afraid to use my human intuition either. I'm not an "expert" in/on anything. My only credential is the writing I produce.

As I indicated in a recent earlier blog, I am working on the general subject of the inexplicable spike in commodity prices, including without limitation such commodities as oil, corn, wheat, rice, and soybeans.

Concomitant with that work, I am thinking about the insidious transfer of wealth currently taking place, whereby nations such as the USA and Japan, for example, are having their wealth stolen by countries such as Saudi Arabia, Iran and Russia, for example. I have reached one conclusion thus-far:

THIS PHENOMENON IS THE GREATEST NATIONAL SECURITY THREAT CURRENTLY FACING THE INDUSTRIALIZED DEMOCRACIES; AND THE ELECTED LEADERSHIPS OF THESE DEMOCRACIES ARE SITTING WITH THEIR FINGERS UP THEIR COLLECTIVE ASSES WHILE THIS IS HAPPENING.

The War in (not with) Iraq is the other subject I am expending thought upon. The fabulousness of the USG miscalculations is unprecedented in our nation's history. And the relative acquiescence of the American public to this patent and self-destructing fiasco is nothing if not mysterious.

As part of this study, the grotesque suffering of the Iraqi people themselves due to our government's preposterous assumptions that under-girded our invasion is at the forefront of my thinking. For example, Iraq's population is approximately 8.3 per cent of that of the United States (25 million vs. 300 million;) therefore, to adjust Iraq casualty numbers to make them proportional to what those numbers would be in our country if the "war" were being fought on United States home-turf, one must multiply the Iraq citizen casualty numbers by a factor of 12! That means when 60 Iraqis die in a suicide bombing , it would be the equivalent of 720 Americans dying in a suicide bombing on United States soil.

So every time you read about X-number of Iraqis dying, multiply that number by 12 to appreciate the impact that those many deaths would have on us.

More and more to come on these, and other topics.

Capitalism Gets Its Biggest Overhaul Since The Great Depression, And Republicans Are Going To Do It

An article in the (London) Telegraph by its financial editor indicated that the Bush Administration, led by Treasury Secretary Paulson, and the Federal Reserve Bank, led by Chairman Bernanke may soon propose the nationalization of the United States banking system.

Huh? Yep, those free market in the pinstripe suits and power ties are certainly thinking the unthinkable, and very well may act on their thoughts.

THAT'S HOW SERIOUS THE CURRENT FINANCIAL CRISIS IS!

Talk is that the model being considered for emulation is Norway's, when that and other Scandinavian countries found themselves in a financial quagmire produced by private enterprise in the early 1990's. Reportedly, the actions then taken proved efficacious, in contrast to the drip-by-drip approach taken by the Japanese in the 1990's when their economy imploded. That approach still has not brought Japan back to where it was economically before the implosion.

Already here in the US, the Fed has opened its borrowing window to Wall St. "Investment Banking" firms for the first time since the Great Depression, at least; and, perhaps, for the first time ever. The Wall St. firms have not hesitated to that counter and borrow.

The Administration has released initial drafts of new regulatory powers that they propose the Federal Reserve System be given regarding Wall St. This would have been unimaginable even 3 months ago.

In short, while the mass media covers every detail of Hillary's ensemble of the day and Barack's reason for leaving "Barry" in the dust and McCain's confusion regarding four-letter words beginning with an "I" and others starting with the letter "S," the entire centerpiece of our capitalist economic system is about to undergo its most significant--and traumatic--overhaul in 80 years, all with less media coverage than Britney gets if she puts on or takes off a pair of dirty panties.

Finally, the Norway model mentioned earlier ensured that shareholders of the nationalized organizations came away with nothing, zilch, zero, unlike the Bear Stearns bailout,where those responsible still walked off with their pockets bulging, thought the bulge was much smaller than they expected.

Bear, Stearns and Future Ticking Timebombs

One of Wall Street's most aggressive--and admired--firms got their booties saved today by actions taken by the Federal Reserve System acting in conjunction with JP Morgan Chase Bank.

On the Street, once the other firms lose confidence in a firm's ability to perform on its trading commitments, most of which are made by two people from two firms talking on the telephone--no written contracts--the suspect firm is doomed. Who's going to make deals with a firm they may be out of business before the trade even "settles?" Nobody.

The Street lost confidence in Bear, Stearns (BS) and other firms would no longer trade with them.

BS is BIGTIME, the second largest player in mortgage-backed securities, next to Lehman Brothers. BS could not be allowed to wither up and die, not without a fight.

So the Fed used its most powerful and rarely employed tool--which I won't describe in detail here--to give the boys over at Bear at least a 28-day extension of their existence.

Of course, the poor slob who is about to have his house taken away by foreclosure gets no such individual attention. He either pays-up or gets the boot. He can fail; Bear, Stearns can't.

Yes, the scenario reeks of unfairness. Yet it is justifiable in a macro-economic sense.

The real problems are that the BS-bailout is unlikely to save the firm from extinction, merely to delay it; and that the Fed has found itself in a position of having insufficient data to accurately anticipate what is yet to come from the Depression in the Housing Market.

This Depression has been apparent to those in the real estate biz for quite some time. Yet the Fed could not seem to even see, yet alone connect, the dots that inter-relate the housing market and the explosion in shaky mortgage-backed securities to the rest of the economy.

The Fed believed to problems could be "contained" within the housing market itself, much like Saddam's ambitions to rule the entire Middle East could. The Fed was wrong. The Fed slept as the housing market collapse extended its tentacles to other sectors of the economy.

Now we have Time bombs waiting to explode all over the economy, particularly in the Banking/Finance sector. BS is small change compared to what lies ahead.