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[Leslie <cayadopi AT yahoo.com>]

I'm still working thru the rest of the radio show, but some of the terms 
they're using, I haven't heard before.... so have to look some stuff up.
 
Oh and first, I want to thank you for one of your posts yesterday, a concept 
you posted... has helped me very much understand something I was struggling 
to understand, which leads into the below.
 
Yesterday, basically you posted along the lines that if the Fed prints the 
same amount of money as asset destruction, there is no inflation, no 
deflation.  At least that was my simplified interpretation, so correct me if 
I got that wrong.  It was something I was wondering about a few months back.
 
Oh, and I should point out that these people were stating we were in a 
recession publicly a year ago, and the gov't just now is just admitting to 
it.  (They were using alternative metrics to come up with that conclusion, 
not the standard 2 qtrs of negative GDP measurement.)
 
Clearly they think we are in a depression now, because of the extraordinary 
tactics Bernanke & Gangsters are using.  
 
Asset deflation (with the exception of Treasuries), is of course key also.  
 
There's no arguing we've had asset deflation, and there is more to come.  For 
example, statistically under cyclically theory etc. after a decent bounce up 
in the stock market, we should see another 45% down in that class of asset.  
Which would be quite similar to the 1929-1932 drop of some 90%.
 
In the 30s, real estate dropped some 90% in Chicago (according to my deceased 
grandfather).
 
Gold & other commodities, also dropped significantly (I loaned my book out, 
so I can't get the stats right this sec...but signficant.)
 
Today, stock market down 45%, real estate down 10-40% depending on local 
area.  Oil down some 70%,,, and probably similar with other commodities. 
 
Gold priced in USDollars is down only about 30%... in other currencies it is 
down only fractionally or is actually higher than when gold was $1k.
 
So we have some parallels that would suggest that we are about 1/2 down the 
slip and slide... if history repeats.
 
Again, back to Bernanke.... his claim to fame is his work on the Great 
Depression and his "no depression on my watch" moto....  you have to chuckle 
at the irony of the below data....
 
Last year, I think in August (possibly October) Cramer did an incredible rant 
and rave on CNBC claiming the Fed had no idea what they were doing... if you 
missed it:  http://www.youtube.com/watch?v=cYPtCmdFCrc
 
That very weekend the Fed met with Wall Street, who promptly told him that 
Wall Street was about to go into a meltdown, and wallah,,,, Bernanke pulls 
out his let's-prevent-a-depression game book.
 
So far that includes the $8.5 Trillion and rising higher B-52 bomber plan,,, 
 
So far, there is the appearance that he is not printing enough money fast 
enough because asset prices are falling and falling fast.  
 
$85. Trillion is a lot of zeros and still isn't enough to stop asset prices 
from falling??? !!!
 
First - That simply spells a whole lot of more money printing. 
 
What I haven't finished up is the reviewing and making notes on the rest of 
this program... but there is a section that talks about the how the Fed has 
been injection all this money into the banks to repair their balance sheets 
so the banks will start lending again - so the economy can get a foothold 
again.  It isn't working because the banks are hoarding that cash.... Which 
begs the question of how much worse the banks balance sheets really are.... 
or if they are just hoarding and convincing the Fed to issue more free money 
and waiting for the right time to deploy....
 
Anyway, it seems since the bankers won't play in the sandbox the Fed way, the 
Fed is going to by-pass the banks, and start monetizing the debt directly, 
which is the part I need to re-listen to and look up some phrases I haven't 
heard before.
 
One way or another the Fed is going to get all this money into the system, no 
doubt about it, they are going to do it by force thru monetization.    If 
they guessed wrong about the banks' playing ball with them.... how can we be 
sure they will not overestimate the number of monetized debt dollars to 
inject without triggering a hyper-inflation?
 
No matter what though, ALL the dollars they are creating will be getting into 
our economy and causing inflation at some point.  
 
Bernanke has a reputation to keep,,, no depression on his watch.   It took 
them a year to admit we've been in a recession.  Will they ever admit to a 
depression?  
 
Bernake in a speech he gave on Milton Friedman's 90th birthday pointed out 
that the reason the Great Depression lastest so long in the US compared to 
other countries is that we stayed on a gold standard and did not flood the 
market with liquidity.  His reponse, flooding the market with liquidity, has 
always been a given..... He's either going to get it right (no inflation), or 
get it wrong --- inflation, maybe hyperinflation.
 
Again, that gold backwardation in the futures market tells a big story about 
people who are smarter than I am for sure.  Technically, gold is not and has 
not yet been in a bubble.  Price would have to rise some 1800% - 2400% before 
it gets to a potential bubble stratosphere. (It's a historical - statistical 
thing on bubbles...)  The problem is that, we don't really know where we 
should start that climb from, because of 35 years of gold manipulation by 
central bankers around the world (GATA work).
 
I would guess that they will try to avoid admitting anything about a 
depression publicly, and err towards inflation........... and it looks like 
it is really going to be a doozey....
 
It takes time for monetary inflation to work its way thru the system.... 
apparently it is too much time for the Fed, since they are going to by-pass 
the banks since the banks are hoarding...
 
I'm thinking it is likely we will either have a short-lived depression, 
(admitted to or not), and then the inflation game starts.  Cyclically, gold 
is still on schedule to rise next year.  How far depends on that M1 Bernanke 
is showering down on us.
 
 
 
 


--- On Sun, 12/7/08, bob ford <bobford79 AT yahoo.com> wrote:

From: bob ford <bobford79 AT yahoo.com>
Subject: Re: [Homestead] Depression first?
To: cayadopi AT yahoo.com, homestead AT lists.ibiblio.org
Date: Sunday, December 7, 2008, 6:54 PM

Leslie, post 'your' commentary on what all of that means, 'your'
conclusion, if you please.....................

------------------------------------------------------------------


--- On Sun, 12/7/08, Leslie <cayadopi AT yahoo.com> wrote:

> From: Leslie <cayadopi AT yahoo.com>
> Subject: [Homestead] Depression first?
> To: homestead AT lists.ibiblio.org
> Date: Sunday, December 7, 2008, 4:51 PM
> Whoa nellie........... and here I thought it would be
> hyper-inflation first...
>  
> The below are excerpts from the first 1/3 of the 3rd hour
> radio show dated 
> 12/6/2008 at financialsense.com 
>   
> Puplava/Loeffler discuss:  Big differences between
> recession & depression. 
>   
>   
> NORMAL RECESSION CYCLE 
> ·         Recession is a contraction in GDP, 
> ·         Recession – the contraction in GDP is
> brought about due to raising interest rates and a slowdown
> in the economy, then the Fed comes in a cuts interest, it
> reduces debt burdons, re-fi becomes easier, and as credit
> becomes more available, the economy is stimulated, and
> stimulates buying. 
> ·         This buying brings the recession to a
> halt and the economy bounces up again 
>   
> DEPRESSION 
> ·         Key point to understand is that a
> depression is all about excess debt and a de-leveraging
> process that results.  (How many times have we heard
> “deleveraging in the past year?  This is exactly what is
> going on.) 
> ·         As people de-leverage, they sell assets
> that were purchased with debt.  As they sell those assets,
> the asset values decline. 
> ·         The more asset values decline – credit
> become tighter. 
> ·         As credit becomes tighter, you get an
> economic contraction. 
> ·         However, in a depression the traditional
> monetary responses used in a recession cease to work and
> more and more asset comes in to play, more de-leveraging,
> more margins calls and it becomes a self feeding cycle.  
>   
>   
> The current events of the past year are more reminiscent of
> a depression than a recession because the typical remedies
> that have been used by central bankers over the past 50-60
> years clearly are not working. 
>   
> Recession v Depression isn’t just about the level of
> economic growth, but a shift in the actual environment where
> the rules are all changing. 
>   
>   
> LOOKING AT A DEPRESSION 
> 
> It is a de-leveraging process 
> Wealth destruction
> Economy declines
> All prices falling together
> Assets fall and debt becomes worth more (a greater % of
> asset). Servicing debt becomes more expensive, and
> stimulates more selling.
> 
>  
>   
> The first part to get hit was the financial sector, Feb
> 2007, then again Aug 2007. 
>   
> 3 parts to the economy: 
>   
> Manufacturing 
> Service 
> Financial 
>   
> Up until recently, approx this summer, most of the
> contraction was hitting the financial section:  real
> estate, mortgage, banking system, Wall Street, insurance
> companies. 
>   
> Underlying difference between recession and depression is
> debt levels and the magnitude of de-leveraging. 
>   
>   
>   
> Typical response to recession stops working. 
>   
> We’ve had a series of unconventional moves that shows
> that the Fed’s traditional methods of combating a
> recession have failed, and that they have move to depression
> battle mode: 
>   
> 
> Term Auction Facility
> Asset Swaps
> Loans to Securities Dealers
> Shotgun mergers of brokerage firms
> Swap lines to European Banks
> Fed back-stop commercial paper market
> Fed back-stop money market funds
> Fed nationalization of FNM and FRE
> Projected to see the Fed nationalize part of the banking
> system, similar to Swedish model.
>   
>   
> Now all kinds of consumers and companies lining up for a
> hand-out also. 
> 
> Hints of the Fed buying up consumer debt
> Auto makers lining up
> etc
>   
> This is giant amounts of money .  Where is all this money
> going to come from? 
> Out of thin air.  
>   
> How much money?  So far? 
>   
> Rescue Fnds:  8.5 Trillion committed so far, they’ve
> actually issued and spent 3.2 Trillion so far. 
>   
> The size and magnitude of this monetization is illustrated
> here, which will eventually show up as inflation (a day of
> reckoning).  Article on Friday that thoughts of deflation
> might be coming to an end given the size and magnitude of
> monetization going on. 
>   
> This is what the Fed has committed (the taxpayers) to as of
> 11/30/08: 
>   
> 
>  1.8 Trillion - Commercial Paper 
> 900 Billion - Term Auction Facility
> 606 Billion – Other Assets
> 600 Billion - Finance Company Debt Purchases
> 540 Billion - Money Market Facilities
> 291 Billion - Citigroup Bailout
> 250 Billion - Term Security Lending
> 200 Billion - Term Asset Backed Loan Facilities.
> 123 Billion - Loans to AIG
>   92 Billion - Discount Window Borrowings
>  62 Billion - Commercial Program #2
>  50 Billion - Discount Window Program #2
>  29 Billion - Bear Stearns Bailout
>  10 Billion -Overnight Loans
> 118 Billion -Secondary Credit 
>   
> Total so far 5.5 Trillion so far of which 2.1 Trillion has
> been used. 
>   
> 
> 1.4 Trillion - FDIC commitment / loan guarantees
> 139 Billion - Guarantees on GE Capital
>  10 Billion – another infusion to Citigroup
> 700 Billion - TARP  - Troubled Asset Relief Program
> 168 Billion - Stimulus Package earlier this year
>  50 Billion - Exchange Stabilization Fund
>  29 Billion - Tax Breaks for Banks
> 300 Billion - Hope for Homeowners July 08
>   
> 8.5 Trillion…. And this doesn’t include next year’s
> stimulus program…. 500-700 Billion. 
>   
>   
> Citizens are getting more and more torqued about Wall
> Street getting a free ride. 
>   
> Congress now talking about buying down mortgages. 
> Driving down interest rates for home purchases down to
> 4.5%. 
>   
> These things were all predicted, “When Money Dies”. 
>   
> The size and scope of the programs tell you this is NOT an
> ordinary recession.  It is more like a depression. 
>   
> ’29 Depression versus now. 
>   
> Then the government tried to get the depression to end via
> intervention. 
> 
> FDR came in, declared a bank holiday, came back with the
> FDIC.
> FDR severed the dollar from gold, which allowed step 3
> FDR started the monetization process
>   
> Today, we have similar events that further hint that we are
> in a depression: 
> 
> The Fed came in and raised the FDIC limits from 100K to
> 250K insurance.
> The Fed is artificially suppressing the price of gold.
> The Fed is printing money like crazy and down the road…
> “The Nuclear Option” coming at some point, will be
> devaluation of the dollar.
> 
> 
>       
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Subject: [Homestead] "Tax The Rich"
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An interesting commentary from today.  I know I should comment, but I don't 
really know what to think about this..................


------------------------------------------------------------------------- 

 December 7, 2008    Stop Paying Credit Card Debt ...    
  
 
 Tax the Rich! State Budget Crisis Deepens: Humanitarian Crisis Emerges 


by Shamus Cooke
 
 
Global Research, December 6, 2008 
 

Social catastrophes are poorly expressed by statistics. A recent study by The 
Center on Budget and Policy Priorities revealed that 41 states are facing 
severe budget shortfalls for 2009. Some states are worse off than others, 
with California ($31.7 billion) and Florida ($5.1 billion) leading the 
deficit pack.

 In all, the 41 states are currently facing a $71.9 billion budget shortfall. 
The key word here is “currently,� since a similar study was conducted by 
the same group only three months earlier, at which time “only� 29 states 
were predicted to face shortfalls of a “mere� $48 billion. As the 
recession deepens, so will the state’s budget problems, turning this 
“budget crisis� into a humanitarian disaster. Projections have already 
been made for a $200 billion shortfall by 2010.

These deficits have already transcended the computer screen of the 
statistician into real suffering of the most vulnerable sections of society. 
In dozens of states across the country, vital services are being cut to the 
elderly, disabled, the poor, and recently unemployed. Teachers are being cut 
from schools and tuitions are rising. Workers from state construction sites 
are being laid off, while social service employees suffer a similar fate. Non 
profits are closing their doors.

Most likely, these pains only mark the beginning. Many states have a “rainy 
day fund� of some kind that they use to plan for such crises. These funds 
are already depleted, or certain to dry up quickly, with “hard decisions� 
now having to be made. This is especially troubling when one considers that, 
in many cases, state cutbacks made from the 2001 recession remained in place. 
Not to mention that successive presidents have successfully plundered federal 
social programs.

 The new, extraordinary state budgets that are being drawn up to address the 
current deficit crisis will essentially destroy the social safety net for 
millions of people, including access to daycare, food stamps, welfare, and 
basic medical services.  The fact that the federal budget is in even worse 
shape, and will likely choose to follow a similar route of massive cuts, 
makes future predictions of social calamity all but certain. 

The options available to states to respond to budget crises are limited since 
states are not allowed to run deficits; they must solve their budget problems 
immediately. Nearly every state government is reacting to the crisis in 
essentially the same way: by cutting essential services and raising 
“secondary� taxes (alcohol, cigarettes, gas, etc). In reality, after 
spending their reserve funds, states have only two viable options: cutting 
spending and raising taxes.

Raising taxes is counterproductive for two reasons: it can cause social 
unrest and it takes money out of people’s pockets who would otherwise be 
“aiding� the economy by purchasing things.

However, there is a class of people whom this does not apply to: the very 
wealthy. By taxing them instead, money will not be taken out of the economy 
since it lays idle in banks (especially since they’ve temporarily stopped 
gambling in the stock market). Also, there can be no fear of social unrest 
when this group is taxed, since they constitute a very, very small section of 
society.

Rather than opting for this common sense solution, states are instead raising 
taxes on gas, alcohol, cigarettes, sales taxes, among other things that 
affect working and poor people disproportionately more than the rich, at a 
time when the working class is already financially desperate.

And yet another grim way that states are responding to the crisis is building 
prisons and focusing on “law and order.� The money spent on building 
these prisons will likely house many people who have recently had their 
social services terminated. 

Perhaps most disturbing about this crisis is that it could not have been 
planned for. In a market economy, a state’s budget depends on income 
generated by “market forces�, determining the ability of corporations to 
sell their products and employ workers. When there is a crisis in the 
markets—  as when more goods are produced than can be bought— society as 
a whole is dragged down; a“glut� in the labor market emerges, followed by 
mass layoffs.

 The states cannot plan their budget, including how many services they need 
to provide, nor how many roads they can build, because the market is 
completely unpredictable. Every projection the states made about the future 
was completely off: instead of building towards a better future they are 
destroying what had already existed. 

The first step in addressing the current crisis is to confront those who 
benefit most from the current social arrangement. It is not by accident that 
most corporations pay far less taxes than the average worker, while the rich 
continue to have their taxes lowered.

 In fact, according to a recent study, two-thirds of all corporations did not 
pay any taxes during the past year. These same interests sparked the current 
crisis by not only driving down the wages of workers to the point they were 
unable to purchase goods, but by creating and profiting from the pyramid 
scheme that created the housing crisis. 

The vast profits made by the rich and corporations in the previous boom must 
be funneled back to the states and local governments to pay for the current 
crisis. Because this solution is a threat to the corporate elite who control 
government, it will not happen merely by request. 

To accomplish this, a broad-based coalition is needed of working and poor 
people affected by the current crisis, led by the organized labor of the 
teachers, health care workers, and public employees, united around the 
demands of ending corporate bailout and for a progressive tax policy— one 
aimed at taxing the rich, not working people.

  Such a coalition, because of the vast numbers of people it represented, 
would have the potential to unite all workers, both in the public and private 
sectors.  It would therefore have the strength to transform this "request" 
into a demand:  TAX THE RICH!

Shamus Cooke is a social service worker, trade unionist, and writer for 
Workers Action (www.workerscompass.org).  He can be reached at 
shamuscook AT yahoo.com 

 

Shamus Cooke is a frequent contributor to Global Research.  Global Research 
Articles by Shamus Cooke