Friday, July 23, 2010

Presenting THE WAR OF THE WORLDS on the Mercury Radio Theater a division of News Corp

“Ladies and gentlemen, I have just been handed a message that came in from Grovers Mill by telephone. Just a moment. At least forty people, including six state troopers lie dead in a field east of the village of Grovers Mill, their bodies burned and distorted beyond all possible recognition. The next voice you hear will be that of Brigadier General Montgomery Smith, commander of the state militia at Trenton, New Jersey.”

This was the 8:00 PM “news” on October 30, 1938 as broadcast by CBS radio, of course it wasn’t news and nobody who listened to the radio play thought that it was. This didn’t stop William Randolph Hearst who was the Rupert Murdock of his day from plastering headlines on his newspapers about the panic that never happened. Researchers have never been able to find a single reference on the police blotters to any of the horrifying events spawned by the panic that Hearst reported as irrefutable fact.

Today we have elements of media that again operate the same way Hearst did in 1938. Hearst had large chain of newspapers that specialized in sensational stories (often simply made up) that were not intended to inform but to mold his followers to his political advantage. Everything from the Spanish American War to Reefer Madness was created by the yellow journalism of Hearst and other newspapers would repeat his “news” without question if it sounded good. It has even become “history” that is rarely questioned because it sounds good.

The accusations of reverse racism by FOX News against Shirley Sherrod were treated as fact in much the same way. They had the tape after all, just as Hearst had the “proof” on Orson Welles by his own broadcast. He had the pictures of the USS Maine sunk in Havana harbor (the result of the negligent storage of gunpowder in the heat, not sabotage and the Navy knew this) and everybody came to know what reefer madness would do to black men thanks to the “science” provided by Hearst. No matter that it was all lies designed to further Hearst’s ambitions.

So we have come full circle. The media is again in the hands of billionaires who have caused another Great Depression and they don’t want anything done about it. Hearst had seized the opportunity to de-legitimize the new medium of radio that FDR was using effectively to put forward the New Deal. FDR wasn’t shy about calling out the “economic royalists” like Hearst while the newspapers called FDR a communist and worse for helping the common man.

For all the lasting damage that Hearst did, in the end Orson Welles got the last laugh on Hearst with the movie Citizen Kane and FDR gave us fifty years of prosperity. But the lessons learned have worked well for Rupert Murdock who really does use his radio players to create the “news”. “We take you now to Grovers Mill, New Jersey and our correspondent Glenn Beck….”

Thursday, July 22, 2010

99'ers are the only growth area

Weekly unemployment claims were up sharply but that has more to do with the previous week's Monday holiday driving its number down than from any noticeable change in the labor picture. The Senate managed to squeeze out funding for extended benefits but has no intention of doing anything for the 99'ers who don't get benefits anymore or the one third of the unemployed who never got any coverage. This is by far the worst it has been since the last Republican Depression and getting worse. If words don't get through to your conservative friends make them look at this chart.

Wednesday, July 21, 2010

A sure fire system if you're the house

Federal Reserve Chairman Ben Bernanke ran into the Capitol building with his hair on fire, screaming that all is lost and then disappeared into the dark and stormy night. Okay, that’s the translated into English version, what he actually said to the Senate Banking Committee was “… the outlook for the economy remains ‘unusually uncertain.’ “  That’s about as close to screaming hysteria as a Fed Chairman gets.

Bernanke went on to assure the Senators “…we remain prepared (the Fed) to take further policy actions as needed to foster a return to full utilization of our nation's productive potential in a context of price stability.”

Translated the scene went like this [He then sobbed, “there’s nothing we can do, save yourselves”] You see there isn’t much the Fed can do, they’ve long ago pegged the interest rate at zero and the stock market bubble that created is becoming unstable. Even Goldman Sachs hardly showed a profit last quarter.

When Bernanke mentioned “… in a context of price stability” he’s talking about runaway deflation and that’s an economy killer. Wholesale prices are already starting to slip and the slope is very slippery. Nervous retailers are starting to undercut one another hoping to be the one left standing. The really big corporations on the hand are wallowing in cash, primary because they pay no taxes and are so powerful that they can extract money out of the peasants at will.

The DOW lost its early gains and finished down a hundred points after the speech and the dollar fell sharply against all major currencies. The futures market has started betting that the Fed will keep interest rates near zero until the end of next year. That means a couple more trillion of derivatives will be generated as the quadrillion dollar casino rolls along. The suckers are still coming and the mob bosses of Wall Street continue to skim their billions off the take. Don’t worry though, I’m sure Glenn Beck has a no lose betting system to sell us. Just bet your gold coins on Red to win in the fall. How could you lose the farm an that?

Tuesday, July 20, 2010

You knew Glenn Beck was a snake oil salesman, right? or 1932 is an excellent vintage for Spam

A favorite of the far right government haters, fear mongers like Glenn Beck and others like him at FOX News, Goldline is under investigation by the Los Angeles DA for its practice of bilking customers with over priced gold coins. The scam is based on the fiction that the government is poised to seize your gold at anytime and only collectible coins issued before 1933 are exempt. FDR did exempt very rare coins when he called in gold at that time but this is not the law as signed by Gerald Ford. That law allows the President to seize gold only in time of war and without any exemption for rare coins.

They claim the coins they sell are "collectible" because FDR melted down all the gold and only a few coins survived overseas.  In fact the government did not melt any usable coins but held them to satisfy redemption of USD by foreigners over the next forty years. Since most of these coins are still in circulation they are by no means rare or collectible. This makes any of the coins they offer worth no more than the daily posted price for bullion and in fact less as they are not pure gold.

Allegations that have been made to prosecutors are that the coins are worth barely half of what the company Beck endorses is selling them for. Their spokesman’s response is that they sell bullion too and the buyer can have what he wants. Well, that’s just caveat emptor sucker. If over priced gold coins fit into your crazy right-wing world view (that we helped create) we’re just providing a legitimate public service by taking your money. What do you think you’re doing by going to the local coin shop and trying to sell them? Don’t you remember that Mike Huckabee (another paid FOX spokesman) told you the world was ending? You’re supposed to hang onto the gold until then.

As far as the FEDs getting involved with your gold, this will only happen if you exceed the IRS daily cash transaction reporting limits by paying your gold broker with green cash exceeding $10,000 or with multiple money orders exceeding $10,000. (if pay by personal check or a single cashiers check it's not subject to reporting) Your bank does keep track of Cashier's Checks and might report you anyway regardless of the amount unless you have an agreement with the bank to launder your drug money.

Of course your personal bank records are always subject to snooping by the IRS and any of the several thousand agencies and contractors established since 9-11 and you won't be told by the bank if they do. Selling large amounts of foreign bullion over a certain amount are reportable by the dealer but US minted gold bullion coins are completely exempt. PS if you're NOT a tax cheat or drug dealer then being reported to the IRS will do nothing worse than trigger an audit. If you are a terrorist or trans-national corporation (I repeat myself), then nobody is watching you anyway.

If you buy more than $10,000 worth of canned goods with cash at the grocery store in a single day they are required to report the transaction to the IRS. I don't recommend buying pre-depression era canned goods to try to avoid this requirement.

Sunday, July 18, 2010

Returning assets to their rightful owners
I wonder if you could do a piece on the balancing act regarding
the Teeter/Totter of massive gov't borrowing (causing inflation), versus
high unemployment and low wages (causing deflation).

Is the government doing this as a purposeful balancing act ?

Regards, Randall B.

Hi Randall, there is no teeter/totter in that sense.  Inflation doesn't describe prices or wages but rather how much money is in circulation but of course inflation can drive prices up and if labor can unionize you can get higher wages too but primarily it creates asset bubbles and it will drive mergers and acquisitions if these are legal (and they‘re not but nobody has enforced the law since Carter).

Government borrowing takes money out of the system, that in theory would cool inflation. The Federal Reserve (a private bank) creates its version of money by creating debt which can be inflationary but doesn’t need to be. It has to do with what you allow the debt to be used for. Right now they are driving the all the markets worldwide by printing money for the big Wall Street banks.

You are starting to see food commodity inflation again being driven by this “inflationary” money.

Deflation is a different sort of monster that comes from an economy that is heavily indebted becoming unable to maintain the debt and the money supply collapses as people with assets begin panic selling. It makes no difference what you use for money, its entirely the result of allowing banks to become more than a utility.

They've had this problem since stone age times. That’s why all religions have prohibitions against usury (chase them from the temple). The founders of the United States warned against the bankers and their cycles of inflation and deflation. This has been the practice of bankers since there have been bankers, inflation requires borrowing. Deflation causes defaults and before the New Deal, bankers could call in loans at will (even if you were current).

Even if not everybody could pay and remember Mortgage means "death pledge" so people did pay or it was off to debtor’s prison. After deflation bankers could buy everything for pennies on the dollar and start the cycle over again since everybody needed loans to start over (after ten years or so of starvation). Nothing that is going on now is "natural" or an "accident". Thirty years ago you were a big wheel if you had a 100 million in assets, now they take that in salaries.

Listen to the words of Andrew Mellon, giant of both the financial and industrial sectors, and Secretary of the United States Treasury under the infamous presidents Harding, Coolidge, and Hoover: "During a depression, assets return to their rightful owners"  This guy had a fortune that in today's dollars would make Bill Gates money look like a skimpy tip. FDR put him on trial for causing the Depression (technically for tax evasion and not putting his assets in blind trust while at Treasury) but he did a Ken Lay (they said it was old age) before he could be convicted.

There is a provision in the Financial Reform Act to take these banks and companies apart if (x out “if“) WHEN there is another crisis. It’s a question of the people running the government having the will to do it. Elections do matter. Even at best it will be a rough ride. Otherwise all the assets will return to those very few at the top who think of themselves as the entitled class.