Tuesday, December 30, 2008

• Israel, Hamas, Lebanon – Here We Go Again. And Again.

Israel’s systematic and carefully targeted attack on Hamas militants has invited the usual response from the Arab world, and from Muslims generally. The following words from Iran’s Supreme Leader Ayatollah Khamenei, released through Iran’s news agency, embodies the essentials of a very old refrain.

"All true believers in the world of Islam and Palestinian fighters are duty-bound to defend the defenseless women and children in Gaza Strip and those giving their lives in carrying out such a divine duty are 'martyrs.' "

This official statement is burdened with detrimental intent from the Iranian leadership enthusiastically promoting discord in the Arab world. It sadly reflects a generally felt and ancient sentiment. This cynical stance accentuates the dearth of reprimand emanating from Arab leadership toward a callous treatment of its own, by its own.

Using the well-tried and successful Hezbollah strategy for waging war, Hamas inserts itself into communities populated with children, women and men. It then launches missiles into Israel, knowing that its launch sites will be easily detected by Israel’s technology. Hamas also knows that the deeper it has insinuated itself into Arab family communities, the higher the odds of civilian casualties during a retaliation. The higher the casualties, the higher the sympathy quotient for militant Islam, and unfortunately, the higher the support for Islamic radicalism.

On the Israeli side of the wall, leaders cannot retain power unless they are seen to decisively defend their people. The international PR machinery emanating out of this crisis, however, including expressions of disgust from the UN, will continue to work against Israel. U.N. Secretary-General Ban Ki-moon, “condemned the excessive use of force.” The current air assault from Israel tactical forces inevitably killed civilians. Even missiles with an accuracy of three meters to target, will unavoidably deliver death to bystanders and innocents when the intended targets are hiding in apartment buildings, mosques or schools. The media then becomes very preoccupied with reporting of rallies orchestrated around the world demonstrating opposition to the Israeli offensive.

This has been a sustained and caustic dance of death long contaminating the Middle East. Much of the world observes, but does not understand. It can’t. How can it make sense of a conflict that plays and replays, generation after generation, with the same players, same faces, different weapons? How can the world make sense of self-hating organizations being allowed to “lead” a society? Did anyone really expect that withdrawing thousands of Israeli settlers from Gaza would silence the rockets screaming into Israel?

From Denmark to Venezuela, the sanctimonious debate as to which side holds greater responsibility for the current cycle of death avoids the well-entrenched commitment in radical Islam to exterminate the state of Israel. The few Muslim voices declaring disapproval with Hamas’ ongoing break of the ceasefire accord find little harmony in the Islamic Arab community. Whether Israel is doing enough to allow Gaza’s economy to flourish, or whether it is shipping enough goods into the territory, giving Hamas justification for sporadic but endless rocket launches are simply minor subsets of the larger problem.

Most critical to any long term silencing of the rockets, would be reading and hearing loud pronouncements from the long silent voices of the vast majority of Arabs and their leaders. Their chorus should emphatically vocalize support for the existence of Israel. With such pressure on the extremists, the rest of the world would take the possibility of a Middle East peace seriously, and economic development would be on the horizon for Gaza and the Palestinians. Arabs in Gaza deserve some peace, and so do the people of Israel.

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Wednesday, December 24, 2008


Best wishes for feelings of Joy and Gratitude to all readers from around the world who have joined me here this past year, and to billions more who haven’t yet. I have enjoyed the exploration and the education in this journey. And no matter what time of year, internally or externally, a smile is always infectious. … ☺

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Tuesday, December 23, 2008

• A New And Different Shattering Of Assumptions

You have done your share. You work exhausting hours, sometimes at two jobs, and you have succeeded by any definition in fashioning a good life for yourself and your family. You accepted that while you were taking care of your part, others, some perhaps with more knowledge, power, influence and wealth, were taking care of theirs. Good for you, and well, … not so much.

Assumptions are a foundation of society’s functioning processes. As you travel at 55 miles an hour down a busy highway, you assume. You assume your automobile’s wheels will not suddenly part ways and decide to retire in a roadside ditch. You assume others driving in the opposite direction will continue enjoyment of life long enough to pass by your left window at a relative 110 miles an hour, with no sudden change of heart that might cause your abrupt transition into a hood ornament.

You assume that those you have elected to office will ardently carry their impassioned campaign trail promises to Washington or The White House. You assume that all knowing sages who have been given the keys to the National Safe will be diligent in the management of its contents. You assume that the Harvard educated captains of industry will manage the corporate world in testament to their prodigious capacities. You assume that others must have special insights far exceeding your own on the big picture.

We all assume. We have to. The faculties of human endeavor expect it. Without assumptions, the evolving ritual dances of the social, political and other conventions would disjunct into paralysis. Our behavior holds certain expectations of its ambience. In the event that those expectations are violated, we have enacted laws that will impose a collective retribution.

Current economic, political, corporate and social events are shattering our assumptions with impudent and invasive intrusion into the core of our lives. Our centers of gravity are undergoing some dislocation somewhat similar to that experienced three generations back during the Great Depression. The global interconnection and interdependence allows for a more pervasive impact on the earth’s population by the current version of high anxiety.

Do you remember the day when that parent you thought archaic told you, “Things are rarely as they seem?” This assertion pertained to perceptions. You were convinced that government bailouts were foreign concepts too far down the politically impossible spectrum to warrant serious thought. Now you listen to unwavering shouts from experts telling you that bailing out banks and financial institutions is not only good for you, it is mandatory for your future well-being and peace of mind.

Will the best-connected voices, the CEOs cap-in-hand, be the most rewarded in the bailout line-up? The taxpayer will continue to borrow trillions of dollars to enable these bailouts of Wall Street, and it will be left to our children and grandchildren to figure out how these debts will be repaid. Can’t we just assume that they will? That would be easier. The dogmatic nudging of our perceptions is disquieting. We are perhaps observing, and financing, the dawning of a new capitalistic system and a metamorphosis of the corporate entity.

Surely somebody knows what he or she is doing. The assumptions return. This new Obama administration with its dozens of experts must know something we don’t. It will make things better with a stimulus package on top of the bailout packages. This stimulus package will be the biggest in history, setting new incomprehensible levels of national debt. Shall we assume once again that for that singular reason, this package will work?

The cycles of our presence on this Earth are not all within our control, and these times are an experience along our journey for which our spirits will draw a learning. New assumptions will advance on our percepts, reframing our outlooks and expectations, and your parent was right, things will rarely ever be quite as they seem.

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Saturday, December 20, 2008

• Bernanke And The Perpetuating Credit Card Swindle

Banks, and whomever else we blissfully accepted a credit card from, have been charging us, all of us, grossly usurious fees. Even those diligent observers faithfully sending off payments before they were due, have long been abused by capricious credit card issuers.

When the Head of The Fed, Ben Bernanke, gets involved because Congress has been asleep, you know the pressure of discontent from tens of millions of Americans is building beyond a sustainable level of annoyance. Ben Bernanke's comment that the rules, “will establish a new baseline for fairness,” is so fraught with meaning one doesn’t know where to begin its appreciation, … well almost.

This is what he might be saying, “We have been exhorting so much out of your pockets for so long through slight of hand, guilt, ... no, make that fear, that we are led to enact a few rules that will do nothing for you. If we present these new rules with enough jaw-dropping appearance of boldness and empathy for your well-being, you will remain oblivious to the vulgarity with which you have been and will continue to be fouled.

“Don’t get yourselves in a knot over this one-half-of-one-percent-rate thing on the sub-slime, I mean sub-prime interest rate the Fed charges its friends, and quit wondering why you can’t get in on that good stuff. It doesn’t concern you, and has nothing to do with you. Never has, never will. That rate has no correlation to the 14% to 36% interest you pay on your credit cards. Such rates are because you are all really terrible at keeping your books in order, and making all your debt payments on time. If you knew what you were doing, you’d never agree to pay such insane rates. You are so oblivious, you could be getting better rates on your street corner. Idiots. Oh, sorry. I didn’t mean that, although, why are there almost three quarters of a trillion credits cards holding a trillion dollars in debt when there are only 300 million men, women and children in this wonderful country of ours? And, NO, I will not go into an explanation of why our friends, the banks, get almost no interest charged on money we lend them, while their credit stinks, and you have to bail them out. It is much too Byzantine a system to be explained. Even my bosses have no clue.

“Ladies and gentlemen the rules regulating credit are complex, though a little feudal. You’ve understood all along that we, umm, I mean the banks and credit card issuers, could set interest rates and fees at whatever levels they wished. Why so much surprise? We are nevertheless pleased to announce that we will reduce re-pricing, a little, well, we won’t reduce it but we want you to be notified when it will happen. Will we check if lenders tell you ahead of time? No. Will you? Not much, no. We are absolutely certain most of you never pay attention to notices or fine print. How many of you can tell me, right now, how much interest you pay on those ubiquitous and so colorful pieces of plastic? … Clueless.

"Let me make something perfectly clear. We do not owe you debt. Debt is not your right. It is a privilege. You should be grateful we even allow you to borrow from us to lever your lavish lifestyles against your future incomes. Right now we’re not so comfortable with your prospects for continuing those incomes, so we are simply making some adjustments. Tweaking the system a little. We also don’t need to see any demonstration parades coming down Avenue of The Americas whining about how you’re hard-done-by, or chanting ‘ban the fed’ or shaking signs with ‘help we’re broke.’

"We are gleefully aware of your lack of familiarity with the term, Saving. It is a term in the English language that refers to economizing or conserving money for the future. Who do you think keeps count? I do. Why? Because tracking details of your habits with microscopic attention enables us to accurately time adjustments in the system. I don’t mean adjustment in prime rates, I mean the establishment of regulations that will instill in your minds an impression of our all-knowing prescriptions for everything financial that ails you.

"This is why we will allow companies to raise interest rates only on new cards and purchases, not on existing balances. I know that you think the interest on the old stuff’s already been jacked through the roof, so what difference can this possibly make? True, but when you add to this the restriction on allocation of payments to account balances with lower interest rates, and reducing cross-card-credit-contamination, now we’re talking vast implications on the credit system. Huge. This is big for you guys. Really. Well, maybe. Hey, we’re doing the best we can here at the Fed, and things are tough everywhere. No one wants to give an inch. That is why we won’t be putting caps on interest rate levels charged by card issuers. Sorry. Oh, and by the way, because we just cannot upset our friends, these new rules will not go into effect for at least a year and half. You know how things are. Congress is so laborious. Each one of those crapulous crackpots wants a piece of the pie before agreeing to anything. They think pork-barreling is their right, … things like that.

“In conclusion, I know deep down in my heart that all of you feel a very strong and emotional commitment to repaying your obligations. We are thrilled to know that you will be making your payments on time and that you will atone for your sins, … umm, that you will extinguish your debt, the principal and the interest. Every penny. Particularly the interest. Yes, make sure you repay the interest. Perhaps I shouldn’t harp on the principal so much.

“We will lend you more as you need it, and the presses, the paper, the ink are churning 24/7 to keep up. Now I must go have lunch with your new leader and explain what I’m doing, again. I wish these guys would just leave me alone, their eyes just glaze over when I talk to them. Merry Christmas, and happy spending. It’s good for the economy.”

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Tuesday, December 16, 2008

• Is Madoff Really A Wall Street Anomaly?

As if the negative news of the past month was not enough to rattle the constitutions of the hardiest bank accounts, a new face has appeared to erase Paulson’s from principal and front-page news coverage. The new face of Wall Street’s meltdown is Bernard Madoff, a well-respected, elusive, disarming, egocentric, and now arrested, financial service executive. Is he really such an anomaly?

Individuals, banks and fund managers of brokerage, hedge, trust, private, non-profit or other capital pools, who made sumptuous donations to Madoff’s coffers are making the headlines for having invested in the genius of 1% to 1.5% monthly returns. Over the coming days and months names will continue to emerge, and so will the dearth of ethics. It is inevitable that some of the nastiness permeating the penumbral netherworlds of investment banking will force the hands of authorities that have ignored many of the egregious abuses of fiduciary responsibilities entrusted in positions of influence and power over money. Wealth destruction of such magnitude required servility and assent from a synchronous multitude.

In the Madoff fiasco, the range of investors already finding light of day includes for example Banco Santander based in Spain with a reported $3.1 billion exposure, and Britain’s Man Group with only $360 million in potential losses. Individual fund managers and financial advisors to the wealthy will also be exposed. For some individuals the nature of the exposure may be more than simply having lost staggering amounts due to their inappropriate allocation of capital to an alleged ponzi scheme.

We may be bestowed the first significant opening to a flood of exposure into the imposture and pilferage that has been too pervasive in the investment and banking industries for a century. It is an industry that has been protected with almost ecumenical solemnity by regulatory agencies and media. Regulators might not be up for it and MSM may be too distant from privacies of collusion. Nevertheless, the doors of the cloisters shrouding indefensible vulnerabilities may open a crack. Perhaps we will be granted insight to a whole range of shamelessly aberrant possibilities that the financial world and its regulators would rather leave undisturbed like a stagnant toxic reservoir.

At the less pernicious end of the seductive a cappella temptations of ripened greed are those who suspected that Madoff was doing something off the main line to deliver such absurdly consistent returns. As is often the case on schemes too good to be true, these investors didn’t really want to know. They invested anyway. Smaller fish begged Madoff to accept their capital for investment, but many were likely directed there by their own financial consultants who received some form of compensation from the virulent fund. This is not to suggest that the whole system is corrupt, however, a considerable portion in the financial consulting and capital management business, have forever acceded to beguilement and dipped their buckets into both sides of an investment transaction.

Nearer the apex of the pecking order are market savvy managers of large capital pools who accost both sides of financial transactions in monastic secrecy and with ascetic prudence. The nature of their game can get complex, and presents a kaleidoscope of diversity. While overseeing funds or pools owned by others worth tens, even hundreds of billions, they manage their own private smaller but nevertheless sizable funds. One can scale down numbers applied to the graft, however the same ceremonial congruity applies. Regardless what long, short or other more eclectic bet is made from the large fund under management, the smaller private fund can be insinuated into the safe side of the transaction between the bid and ask, for example. The smaller private million-dollar insertion will be guaranteed warmth by the bigger trades on behalf of the larger managed funds. Execution can avert prying eyes with or without broker or market maker accommodation, utilizing Byzantine devices such as well nested off shore accounts, although many operate subtly but in full view.

The investment game is prodigally encumbered with inducement for manipulation or corruption, imploring those weak of fortitude, morals and principals to abide to discrepant customs. When managing “someone else’s money” it is too easy to take a piece over and above the agreed-to fees. Rationalizations abound sanitizing the egos of corrupt investment bankers convinced they are the requisite Eustachian tubes of the investment world. Attempt to calculate odds of graft in this industry would accelerate the most complex algorithms into catharsis. We are treated to many great lies, such as “the market never lies,” or “insider trading is illegal,” meant to administer salve to the flock, or anaesthetize the unsuspecting.

What self-respecting investor, broker, market maker, fund manager or general purveyor of financial clout would make an investment without “inside” information? Martha Stewart was jailed for a minor incarnation of that infraction. Occasional immolations are inevitably imposed for the industry’s aesthetics to maintain consecration. Madoff is no recent proselyte to the game, having founded his firm in 1960 and having served as Chairman of NASDAQ, his breadth of experience should deliver unusual enlightenment into the darker corners of his industry during these times of bailouts and deficits. It will then be up to Congress to act on reducing the odds of seduction.

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Thursday, December 11, 2008

• Cerberus Leveraging Billion Dollar Connections In Congress

It is agonizing to watch Congress publicly stumbling through its analysis and qualification of the auto industry, providing appearance that it is doing its homework on a bailout. Over 40% of Congress is made up of lawyers, with little grasp of finance, economics or business. Congress should not be negotiating the bailout.

Chrysler and Cerberus Capital Management are seeking an unholy bailout and Congress understandably struggles when Cerberus owned Chrysler CEO, Bob Nardelli, cannot explain why his bosses will not put up cash to bailout one of its many subsidiaries. Cerberus does not work that way, and it does not have to. Its political clout will do the heavy lifting on salvaging a failing investment.

Taxpayers won’t know any better since neither the current nor the incoming administrations will take oversight seriously and neither seems to understand Deal Structure. Unfortunately, neither will Congress which is simply lacking understanding of some critical components of business, wealth creation and negotiations. Certainly its actions suggest absence of such comprehension. American taxpayers have a particular interest in the outcome, and should be paying particular attention to the bailout, and to the Chrysler deal in particular.

In the shadows of enormous private equity investment firms lurk shareholders who remain anonymous, and who hire directors, senior staff and advisors who have political connections deep inside the private rooms of Washington decision makers (Congress & Administration), enriching the deals and enhancing ultimate financial returns. John Snow, the current Chairman of Cerberus and Bush’s former Secretary of the Treasury before Paulson, has apparently been earning his employer’s favor by lobbying directly, and through influential lobbyists at Treasury and elsewhere, for a Chrysler bailout.

The Cerberus investment of $7.4 billion in Chrysler is underwater. Their elimination of 30,000 jobs has not helped them or their former employees, so now Nardelli uses fear to energize congress into action. Most firms like Cerberus don’t acquire control of companies to turn them around, rebuild them and create wealth. They either acquire for position in an industry, then apply and leverage influence for strong ROI, or they pluck low lying fruit in the hope that political polishing and some finely tuned connections will enable a flip of the asset for a significant profit. Cerberus has for years had a nasty reputation on Wall Street as a fierce player and hard nosed negotiator, which is its right. Everything Congress is not. In this game of risk, connections and being ruthless make all the difference. In the Chrysler deal, these warm associations and substantial sphere of influence will bring access to taxpayer funds. Snow called his friend Paulson for the cash.

There may be media clamoring for transparency on the wealthy and secretive Cerberus, yet I feel this is an unwarranted forensic hunt for indeterminate ghosts. If Congress structured the deal properly, Cerberus and who owns it, how much it has, what companies it controls, all become irrelevant. Implementing a bailout program as delineated in this recent article on this post, would remove any Congressional concerns of the Cerberus share position, which would be drastically diluted to a minority in the event of any bailout cash injection. Unfettered, Cerberus could then slide back into the shadows, to await some future Congressional discomfort with its unnatural influence.

Should Chrysler take any money from the taxpayers, as it now appears it will, structure can be simple and effective as noted in the above referred-to article and “…take preferred share positions at the current market value for funds provided as and when the investments are made.” This, and other suggestions therein, such as clearing all Directors for the Boards, renders Cerberus shares inconsequential and provides taxpayer complete control over a company they will have funded, until all funds are repaid.

Congress, please pay attention. American taxpayers don’t need another blunder committed on their behalf.

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Wednesday, December 10, 2008

• Obama - The Second Tell

As follow-up to a November 21, ’08 article on this post regarding signs that may reveal the direction that an Obama Presidency might take, the following presents another “tell.” This one is less innocuous, but may prove to be more expensive to America.

Perceptions inside the current White House, when Bush and Cheney took office, were that incurring debt was its right and was its political capital to spend with Cheney supposedly claiming “deficits don’t matter.” Hindsight was temporarily kind to them with support from William Niskanen, a member of Reagan’s Council of Economic Advisors also claiming, “The lesson we should have learned is that deficits have little or no short-term economic impacts.”

Through the early years of this decade, everyone accepted the premise that debt was a normal, perhaps integral conveyance of a modern society, possibly even an applauded one. From economists to taxpayers on assembly lines, everyone dwelled in the comfort that deficits and borrowing could bring unfathomable respect from acquisition of material possessions. Second mortgages were objects of desire and their procurements were cause for boasting. And didn’t second cars and gigantic cinema sized TV screens provide jobs for people in foreign lands anyway? Who could possibly argue with success?

Debt administered through spinal shunts delivered energy into the U.S. economy. The amphetamine rush sent economic experts into undiluted delusions of grandeur, and the exploiters into creative overdrive on derivative concoctions too complex for their corruption and decomposition to be diagnosed. Somewhere along the delivery track, the drug magically transformed into analgesic and the rest of society, including government, slid into either acceptance or compliance. Some sectors of government abdicated responsibility, when their persuasion to appear oblivious was finessed with financial seduction.

Debt is seductive. Its power is evidently overpowering. America is anxious to move on beyond the current administration and is anticipating a new President with promises of change. We listen for signs of that impending change, and so here is the Second Tell. During this past weekend President Elect Obama, while making promises of unprecedented public works projects, stated, “We've got to provide a blood infusion. And that means we can't worry short-term about the deficit." At least Obama’s delivery of attitude toward economic probity was less arrogant than Bush and Cheney’s, but identical in its bearing. He seems more genuine, even if misguided. The legal debt ceiling has already been increased to $11.3 trillion and more increases will be requested.

Evidently not so much has changed or will change, and deficits be damned, full steam ahead with borrowing and government intervention. An additionally disconcerting sense is felt when accepting the reality of the notion that even bigger government may not be just an enigmatic abstraction over the coming four years.

A preceding article on this post discussed the need of the 44th President to urgently obtain an intensive and thorough education on inflation. With the coming boom in currency creation, not doing so would be tantamount to an abdication of responsibility.

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Friday, December 5, 2008

• Revising Government Relationship To Money

In the search for solutions to the global economic turmoil, there is a disconnect between the objective of bankers and financial institutions, and the objective of government (read: people). The global crisis presents an evolving pathology beyond the reach of Paulson, Bernanke or any other imposition. That is the great mystery and abstruse nature of money.

If current examples of frenetic activity on the levers of the financial system are any indication, no one really understands money. The actions have been more akin to transgressions against taxpayers, although where would any forensic audits hope to begin on a course to discover root causes for the overwhelming market, currency or resource price gyrations. Some well enough appreciate how to use or manipulate money, but who really understands its complexities and flux? We all make some use of it, need it, work for it, fight for it, even beg for it, but understanding it is an altogether different exercise. We leave that to the wisdom of economists and Wall Street addressed expertise.

In the past year, banks all over the world have lost billions, and many have slid into bankruptcy. Paulson’s decision to hand billions to bankers, in the hope they would loosen their grip was just that, hope. J.P. Morgan for example acquired depressed financial entities for pennies on the dollar, expanding its presence and reach over the economy. But lend? Not so much. Why should it take risks, when it is still standing after having been more diligent, or gifted with higher levels of awareness than others?

Banks will not lend in this climate of uncertainty when the term rescue has morphed from verb, or name, into an adjective of economy. Paulson did not structure his deals with effective strings attached to ensure the function of providing liquidity to businesses. If the Secretary of the Treasury’s purpose was to stimulate the wheels of commerce on behalf of taxpayers, he is failing. Europe has also taken the bank bailout route in earnest, with each country dispersing enormous percentages of its GDP hoping to diffuse uncertainty and minimize the collapse of banks.

Did anyone listening to the concept of the government acquiring toxic assets from banks not have an intuitive flutter? And with all the talk of mortgages, are we forgetting the careless lending practices that were also applied to car loans and credit cards? Without disputing the overall concept, who could possibly be chosen as the arbiter of moral behavior on such elemental questions as the application of “valuation” on these noxious and nebulous inhabitants at the far reaches of the derivative universe? Walking on water would prove a more plausible expectation. This is not a smear on Paulson. He is human. He will no doubt do what he believes to be right. Paulson’s view is that of a banker. We will not change human nature, nor eliminate greed through regulation. Although perspective can be limiting, and in the existing financial situation may act to further exacerbate the damage, perspective can be modified. This can in turn alter behavior. The banking system may be in crisis, but much of the rest of the economy is not. At least not yet. Is a very different approach worth consideration?

There are endless suggestions floating through the political maelstrom girding an out of control financial implosion that will not be corralled. We are now heading to the $2 Trillion dollar bailout mark with no end in sight, and little substantive ignition of financing activity. On the personal front, taxpayers and workers are on average currently paying interest of 6.95% on car loans, 11.43% on credit cards, with $2.6 Trillion of consumer credit outstanding.

Taking counsel from Abraham Lincoln and Theodore Roosevelt, in the hope that we might prevent reprimand from Thomas Jefferson, may we be so bold as to proffer on the Secretary a few additional suggestions on dealing with the vicious cycle of credit contraction?

Mr. Paulson,

- Send out the whole army of economists and accountants at your disposal, add more as needed, to meet with the critical cogs in the economy, businesses, not the banks.
- Disperse these troops across the country, adding administrative support from state level when needed or appropriate, to meet with companies large and small.
- Don’t ask what they need, that would be insulting since you already know, just ask, “How much and for how long.”
- Assess the reasonableness of the demands based on current audited financial statements of each corporate entity and make a decision on the urgency of the need.
- Cut the check within two weeks, and here’s the key, No Interest. None. Why should banks be the only ones with access to borderline negative interest rates?
- Prorate repayment schedules over a five year window, preferably, but remain flexible and susceptible to the capacity to repay.
- The taxpayers (read: government) aren’t in need of interest on their money. Whether entrepreneurs or employees, they require an economy that continues to thrive, provides them jobs, a roof over their heads and nourishment for their kids. They’ve already been slapped into awareness on the traps of endless credit, they will be more astute from now on. Furthermore, the national currency is not backed by anything other that the strength of the economy, ergo, until there is a change to something like gold, silver or microchips backing the currency, the economy is it. It needs bolstering and we will trust that its resurgence will provide enough gain for us to deal with the cost of escalating debt.
- Take care to ensure that proper documents are signed with equitable collateral.
- Establish very tough regulations and repercussions in order to limit abuse, kick-backs or graft.
- Nationalize the Federal Reserve if you have time, before deploying the distributors. The Fed will be less cantankerous in good time, but you must give it the good news. It will be really good news, since there will be no leveraging with 30+ multipliers on capital to asset ratios, as we have seen over the past two decades in the financial derivative escalations.
- Government will actually have accurate measurements on the money supply, and there will be no concern for where the interest owed will come from, since none will be required. 
In other words, no one needs to fry at the bottom of the financial pyramid. This will also reduce the need to infinitely create new debt.

That’s it, Mr. Paulson. Good luck.
Your Taxpayers.

While issuing legal tender is in the government’s purview, it does so through creation of bank debt. Banks distribute currency as they see fit. Even The Fed operates under the aegis of the government though it operates privately. Increasing the efficiency of the money creation system, allowing capital to flow and infusing it directly where it will most straightforwardly impact the nation’s engines will ignite recovery. Efficiency is not the primary objective, though under current circumstances, it would appear a necessary one in the mix of considerations. The current monetary and banking infrastructures claim efficiency, while the outcome is evidence otherwise.

The American economy rests on the back of the American worker and consumer. Taxpayers own the government and currency is only a tool enabling commerce. Get it working for you, not against you. With the computing power available and the internet’s ubiquity, the possibilities to become creative on the currency front within economic, political, or other boundaries are endless even to include a large role for banks.

The government just wants its tax. On the next trillion dollars, don’t waste it on the black hole of bad debt. Get this economy thriving again and get it paying its taxes. There will then be hope on the horizon that the principal on trillions of dollars of debt will gradually get paid down.

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Tuesday, December 2, 2008

• Recession? Depression? Deflation? Inflation?

The world of internet search has become a reasonable gauge of a population’s concerns. Obama has almost disappeared from the top of the list and has been replaced by the economy. The shift suggests more than an elemental change in unfolding interests. The first has been a result of serious preoccupation with the new face of America as he becomes the 44th President, the latter and current driver of search engines, is a deepening concern for personal economic well being.

Our stress propels the investigation. We are anxious. The uncertainty of tomorrow, clouds our present. Until we find answers that might lead to a plan, the apprehension will persist. On our individual paths, along the trail of our human endeavors, we encounter various challenges to our physical, intellectual, emotional, or spiritual vitalities. Relief usually arrives in the form of clarity and a plan. Knowing what we are going to do provides a relief valve for the anxiety, even before we step into action mode. Our disposition improves and we then walk with purpose.

This week brought news that the U.S. has been in a recession since December 2007. That is what economists have decreed, after thorough analysis of past economic activity across numerous indicators, including incomes, production and employment. That is not helpful to our cause. The ability to look backwards is great, but what will tomorrow bring, and how do we deal with it? Expertise tells us that we are in a deflationary period. No one is raising the likelihood that inflation may be around the corner as the printing presses accelerate to satisfy the currency demands of the national debt and payments on maturing obligations. (more on this in future articles)

Our media is particularly adept at elevating confusion and adding drama to the unraveling economic events whirling conscious thought into a frenzy. This also is not helpful. One pundit provides an explanation and prognostication that appears valid, only to be immediately followed by another expert with a completely different and opposite view, which also seems valid, and based on its delivery, appears even more so. And both read the same tea leaves.

No matter what comes tomorrow, or next year, whether recession, depression, deflation, or inflation, you will get through it because what matters is not so much what might be, but what is. Your common sense will guide your steps as it did yesterday. You already know that it is time to do all that is in your power to get rid of your personal debts starting with your credit cards. You already know that it means making extra payments, however small, until debts have all disappeared. You also already know that it means doing without a long distance holiday, or taking the time to look for discounts on daily purchases. Your natural spending to meet your needs will over time sustain the economy. Discount any implorations from certain leaders who would want you to return to profligate spending.

This economy will lead us to become more reliant on communal groups, including family, where support and encouragement is available, and where shared perceptions can yield gratitude for the smallest gifts of life. Attitude can lighten the path and crystallize solutions, easing anxiety. We will all become just a little more productive in small ways that impact the whole.

Perhaps the internet will soon gauge that the level of voices clamoring to be heard by their elected officials represents a majority of traffic until common sense is evidenced in Congress, reversing the abusive past indiscretions and their listening skills have been sharpened. Then we can expect some abatement in national anxiety levels and the next July 4th celebration will be an observance of national renewal.

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