Looking back at 2008 there were some notable decisions being made for our betterment in Australia.  Hopefully 2009 will see less focus on our welfare.  Consider the following:

Alcopop tax.    In their wisdom to curb binge drinking by young people in Australia the Government slapped significant taxes on alcopops (ie, pre-mixed alcohol drinks).  A successful strategy if it were not for those Google-savvy Gen-Y genuises that managed to crack the constituent components of bourbon and Coke and realise that they are both readily available separately.

Luxury car tax.  The Robin Hood of tax strategies.  Not so great however, when the definition of a luxury car is A$57k (ie, US$40k) which pretty much captures most working class vehicles with the minimal uptake of options, like say airbags.  Then imagine the timing when it was introduced just before the biggest economic slowdown in our lifetime when the car industry is on its knees clinging on to life by the grace of bailouts.

Ban on short sales.  What do you do when the equity market is falling?  Legislate against short selling.  If it weren’t for the fact the ASX200 fell a further 36% post the introduction of the rules, some people could have really been led to believe that the current correction was caused by hedge funds short selling.  Say nothing of the credit crisis let alone the badly managed corporate balance sheets it revealed.

Famous last words from the Reserve Bank of Australia.

‘This credit crisis is just a storm in a tea cup’

‘We don’t feel bad for those in Western suburbs that have gotten in over their heads and can no longer afford their mortgages.  We didn’t force them into that predicament’….only months later was the Government handing out $10bn to these people in the hope that they will reignite the economy

‘We will not get overly aggessive on rate cuts.  It’s easy to cut rates but harder to raise them’…a week later the RBA cut by a surprise 100bps.

Michael Ocrant is another journalist who had been very suspicious of Madoff as early as the late 90s. Here he recounts the story in the Times - his article was published in MAR Hedge, a now defunct publication.

The key point that was raised by anyone with a modicum of sense was that (already at the time), the volume of option trading needed to execute Madoff’s purported strategy exceeded the total volume traded. For a detailed analysis of this, see here (Red flags 4 and 6) As Madoff got given more and more money (Funds under Management in Optimal Strategic US tripled over the last few years), this got ever more obviously absurd - and still no alarm bells rang since the money was rolling in for them!

“Audio Panton, Cogito Singularis, Listen to everything, think for yourself.”

Dandelion Salad

The collective consciousness of the U.S. working class is on the brink of a profound transformation. We grew up being told that capitalism was the best of all possible systems, with apparent confirmation being supplied by the fall of the Soviet Union. But we are now entering a new reality that has the potential to overturn all the old, established assumptions perhaps, in the final analysis, even to overturn capitalism itself.

The U.S. government, which has been lecturing other countries for decades about the virtues of privatizing state-owned enterprises, has recently embarked on a campaign of reversing its own dictates by partially nationalizing many of the financial institutions that were teetering on the brink of disaster. In other words, the U.S. government became a stockholder in these companies, thereby ironically taking a step in the direction of socialism socializing their losses, that is, not their profits. Meanwhile, for decades, the U.S. working class has watched helplessly as public education has been defunded, the environment has been progressively destroyed, and social services in general have shriveled, all supposedly because no money was available to launch a rescue operation. Yet the breathtaking speed with which the government threw a staggering trillion-dollar bailout to the financial institutions with no strings attached has not been lost on the working class. And more is on the way: the government has thus far pledged a total of $8.5 billion to help rescue the financial institutions. Workers, too, through their unions, are now demanding bailouts.

Policies that only yesterday appeared as irrevocable as acts of nature suddenly appear as they truly are: political decisions made by the federal government where Democrats and Republicans are united in their commitment to rescue their friends - the rich.

And fuel has been thrown on the fire. Recently, when asked for an account of how they spent the bailout funds, the financial institutions refused to oblige. After all, they calculated, why should they start becoming accountable to the U.S. public after all these centuries? This, too, has not been lost on the working class.

The working class also took notice of the modest but resounding victory scored by the United Electrical workers at the small windows and doors factory in Chicago. These workers did not have the advantage of working in a key industry so that if it were shut down, the reverberations would echo far and wide, thereby providing them with bargaining leverage. But they were emboldened by the outpouring of public support from across the country, and Bank of America, one of the most powerful banks in the world, backed down.

Finally, the working class was assured that the Great Depression would never see a second coming. Lessons had been learned and mechanisms were inserted to guarantee everlasting stability, we were told. All these assurances now look like more toxic assets, and working people will begin to draw the obvious conclusion: not only are recessions endemic to capitalism, but depressions are as well. And this realization will inevitably provoke questions about the desirability of capitalism itself.

The Defense

Harboring a rather grim view of human nature, capitalism’s apologists have argued for centuries that we are incorrigibly greedy to the core, meaning that we focus exclusively on our individual self-interest, not the interests of our neighbors or the community at-large or those who are most needy, and we define our well-being principally in terms of the accumulation of material wealth. Accordingly, Milton Friedman, leading member of the notorious Chicago School of Economics, reasoned: “The problem of social organization is how to set up an arrangement under which greed will do the least harm; capitalism is that system.”

Hence, capitalism is a system that embraces greed; its defenders insist that to do otherwise would be hopelessly naive and utopian. But, they continue, by placing certain restrictions on greed, such as rules of ownership and regulations governing production, distribution and exchange of property, capitalism succeeds in harnessing greed in order to maximize its effectiveness. In other words, greed is the fuel that energizes the system. Ayn Rand, the most virulent defender of capitalism, simply put it this way: greed is good.

Adam Smith, one of capitalism’s earliest and most eloquent defenders, argued that when individuals are allowed to compete against one another and pursue their private self-interest, everyone’s interests are advanced by means of an “invisible hand.” For example, if two businesses are in competition, then the business that manufactures the best product for the lowest price will prevail. In this way, everyone is motivated to excel, and progress in the production of wealth seems almost guaranteed.

The Veil Slips

But with economic turmoil engulfing the world where millions of people are being thrown out of work through no wrongdoing on their own part and where homelessness and hunger are on the rise, the arguments in support of capitalism begin to lose their compelling force. As the crisis deepens, faith in capitalism will be dragged down faster than the value of a worker’s 401k. And what was considered virtuous in the past will become the vice of the future.

For example, let us consider the role of individual self-interest and greed in the current crisis. The subprime loan debacle offers an instructive example. Financial institutions engaged in a frenzied flurry of brokering loans to people who wanted to buy a house but had bad or no credit. The loans were manipulated to entice the unsuspecting house buyer by originally pegging interest rates low, but, disguised by the fine print, jumping to much higher rates a few years later. Many homebuyers were consequently duped after all, we are not taught how to buy a house in school and put down their money only to discover not long afterwards that they could not afford the payments.

One might assume it was not in the financial institutions’ interests to negotiate loans that would certainly fail, but the opposite was in fact the case. Lenders were often rewarded with handsome bonuses in relation to the quantity of loans they brokered, not their quality. Moreover, these loans were routinely bundled together and sold to unsuspecting investors who had no idea what they were buying. The original lenders scored a quick profit and left the investors holding toxic bundles. It was all about greed and self-interest.

But the pursuit of naked self-interest, regardless of the misery inflicted on others in the process, surely does not represent an anomaly in capitalist society. Capitalist enterprises that are connected with fossil fuels are choosing to destroy the planet rather than curb their pollution. Clean operations cost money, and these companies would rather protect their profit margins than protect the environment. Automobile industries have vigorously lobbied against higher fuel standards, coal companies have invested millions in advertising in an attempt to convince the U.S. public to believe in the fantasy of “clean coal,” and oil companies, in a similar campaign, have tried to convince us that they are on the cutting edge of clean energy, while all of them are accelerating the destruction of the planet through the intensification of global warming. They have all carefully crafted policies in the self-interest of their particular company, and they have been willing to sacrifice everyone else’s interests in the process. This is business as usual for capitalism.

In a recent New York Times op-ed article (December 16, 2008), Thomas Friedman, in a fit of exasperation, vilified the toxic lenders, and concluded:

The Madoff affair is the cherry on top of a national breakdown in financial propriety, regulations and common sense. Which is why we don’t just need a financial bailout; we need an ethical bailout. We need to re-establish the core balance between our markets, ethics and regulations. I don’t want to kill the animal spirits that necessarily drive capitalism - but I don’t want to be eaten by them either.

But isn’t this rather like asking wolves to become sheep? Capitalism is driven by a basic set of rules, and if you do not adopt the rules, you do not survive. Accordingly, ruthless competition in the business world is a virtue. Selling products to people without warning them of their potential flaws, even fatal flaws, is simply good business sense. On the other hand, hiring people who are nice and desperately in need of work, regardless of their abilities, is a vice because, if such policies become the norm, the company will collapse under the weight of incompetence.

Morality isn’t something that is suspended in midair — always waiting for us if we tire of acting selfishly. Morality is nurtured by, and is inseparable from, the social structures we operate in, as Philip Zimbardo’s famous Stanford prison experiment illustrated. It showed that when people are placed in relations of vastly unequal power - some were assigned the role of prison guards while others the role of prisoners - individuals who are otherwise good, decent people will turn sadistic. Our morality is molded by the structures that surround us, and today these structures are defined overwhelming by market relations with their own agenda: profits are the highest good.

These market relations are not just a side-show in our society; they radiate from the economy and penetrate almost every sphere, particularly the political. Corporate America routinely gives huge sums of money to politicians. Does anyone really believe corporations would engage in this practice if they did not get a return on their investment? That is why, when Friedman states, “We need to re-establish the core balance between our markets, ethics and regulations,” one can only wonder, whom is he addressing? If he is directing this plea to the working class, we should point out that our concerns have never constituted a political priority. If he is addressing corporate America, Friedman should be informed they do not care about ethics except in rare cases when ethics and profits coincide. And if he has the politicians in mind, then the question should be redirected back to the corporations, their handlers.

Ben Stein, economic writer for The New York Times, paused after losing considerable wealth in the current economic meltdown and offered these musings in his December 28, 2008 column: “We are more than our investments… We are what we do for charity. We are how we treat our family and friends. We are how we treat our dogs and cats. We are what we do for our community and nation. If you had $100 million or $100,000 a year ago and now you have a lot less, you are still the same person.” In other words, he rightly concluded that family and community have real value, as opposed to the acquisition of meaningless things. Unfortunately, this insight only rises to consciousness when capitalism breaks down, and a lull interrupts the frenetic race for profits. As soon as capitalism revs up again, this insight is submerged and we are back to the routine of equating morality with money, offering our greatest respect to those with the greatest wealth and the most expensive cars.

The Problem

People are a social species. We need each other, not only to satisfy our basic physical needs, but also to satisfy our deep-seated psychological needs. We need to be appreciated, loved, and enjoy the pleasures of friendship. Capitalism, however, directs people to look to the accumulation of wealth as the highest good so that each of us competes against the others for “success.”

While some material wealth is obviously necessary for survival and for a comfortable life, when wealth is promoted to the supreme good — when people are valued on the basis of their income and not on the content of their character - then human needs become subordinated to the accumulation of material things. Genuine needs are forsaken for artificial substitutes. Once people accept this premise, then they embark on a lonely, futile road. When the accumulation of wealth proves unfulfilling, then these unwitting victims pursue even more wealth, but fulfillment and satisfaction always seem to recede to a more distant horizon. In short, they become more like drug addicts, always identifying happiness with a bigger fix, but becoming progressively more miserable in the process.

Capitalism has placed us at a crossroads in history. Our planet can no longer sustain the hyper consumption that this economic system encourages. 70 percent of the U.S. economy has been dependent on consumption; without it, we slip into a recession. When there is a national disaster, we are encouraged to go shopping. Meanwhile, the environment is breaking down. If these tendencies are not checked, it will suffer irreversible damage.

We are not greedy to the core; greed is not the origin of capitalism but to a large part its effect. People are placed in structures in which greed and selfishness are rewarded. Hedge fund operators have walked away with tens of millions, sometimes hundreds of millions of dollars, and then successfully used their wealth to lobby Washington for low taxes. Meanwhile, teachers who are dedicated to helping everyone achieve their full potential must struggle to get by. Artists who want to make our world more beautiful, and us happier in the process, must struggle to get by. Hard-working maids and janitors must struggle to get by. People who do not like to compete but just want to do a good job must struggle to get by. But those who are only dedicated to money and themselves can indulge in every imaginable luxury.

If the environment were healthy and the rest of us had plenty, who would care? These money-obsessed fanatics could be dismissed as immature, self-absorbed and self-indulgent degenerates. But the irrationality and injustice becomes intolerable when this rapacious greed implies that millions of others will not have their basic needs met and the environment will be destroyed.

The Solution

Socialism is predicated on the premise that in order for society to operate in the interests of the majority, everyone must have both a voice and vote in democratically determining its direction. Instead of the economy being owned by a wealthy elite who run it entirely in their own interests while impoverishing billions of people around the world and destroying the environment, it would be placed in public hands. And its basic operating framework would then be determined by a public discussion, with all the relevant information available, followed by a debate and vote. In this way, the economy could be steered onto an entirely rational foundation so that its ability to serve the interests of ALL members of society would be maximized coupled with the recognition that our collective interests can only be served when the environment, which nurtures and sustains us, is healthy and vibrant.

Such a revolutionary transformation would represent a tremendous moral advance for humanity: the impulses of individual self-interest and greed would be replaced by a conscious commitment to defend the interests of everyone. Instead of the weak and frail being cast by the wayside to fend for themselves, society would redouble its efforts to ensure that their needs, too, were properly addressed. Instead of living by the uninspiring dictum, “Everyone for him or herself,” we would embrace the principle, “An injury to one is an injury to all” because, in the final analysis, the well-being of each individual is bound by millions of invisible threads to the well-being of all others.

Conclusion

The stakes are high. The U.S. working class will be reevaluating everything in these next years, and in particular the nature of the capitalist economy which runs most efficiently when wages and benefits are at rock bottom, or when workers can be replaced by machines and when unemployment is high. Although workers might not succeed in overthrowing capitalism during this profound economic crisis, their consciousness will emerge transformed. Capitalism will never again enjoy their unquestioning loyalty. If this crisis does not prove to be the end of capitalism, it will be the beginning of the end.

Ann Robertson is a writer for Workers Action (www.workerscompass.org), and can be reached at aroberts45@aol.com

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The Economy Sucks and or Collapse 2

Capitalism on Dandelion Salad

Socialism on Dandelion Salad

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Gas is being shut off.  Russia caused world energy prices to collapse during the 1990’s.  As Russian energy flooded world markets, the situation in Saudi Arabia also deteriorated.  The kingdom, run by US-sponsored despots of the worst kind, nearly went bankrupt.  Agitation in the ‘Arab street’ rose to a fever pitch.  Terrorism sprang up and the Throne of Saud was nearly overthrown.  When Putin came in and began to put Russian energy under nationalist controls again, the price of oil began to climb in the late 1990’s.

As per usual, the US economy immediately began to fall into a recession and the stock market crashed.  Inflation began to rise since the US always, always, always prints more money to buy energy from overseas.  Imports from China were allowed to flood into the country to disguise obvious inflation.  Everything came to a head on 9/11 and what Israel and the neo cons in the Bush administration and in the Democratic Party had their lovely excuse to kill millions of pesky Muslims across the entire planet.  This planetary population control mechanism doesn’t work since Muslim women still insist, unlike the European and Japanese women, to have babies no matter how cruel things are.   So the population controls are flailing.

Europe and the US depend on cheap oil to survive.  We are accustomed to living like kings.  Not like Gaza residents, just for one huge example.  The Afghanis live with very little fossil fuels.  Most of China, the same way.  But we love our climate controlled houses, our luxuries, our ability to move swiftly about in private chariots drawn by the equivalent of 140 horses.  When Russia floundered due to the collapse of the speculator bubble last summer, European and American pundits danced on Russia’s grave.  Immediately, they launched the usual right wing sneak attacks on Russian troops in Ossetia.  Then crowed as Russia’s stocks fell, etc.

Nine countries in and around Europe have now reported problems with their gas supply as a result of Russia’s dispute with the Ukraine, after Slovakia, Greece and Croatia today disclosed they were experiencing drops in gas pressure. The development comes as an emergency mission from the European Commission in Brussels and the Czech Presidency of the EU left this morning, bound for Kiev for talks with the Ukrainian authorities as the international crisis deepened.

Russia’s stock market fell because the oil price bubble popped, not because we ‘won’ something in that Georgian sneak attack.  Instead, we alerted Russia to our nasty intentions which is to destroy Russia utterly as a ‘nation’ and replace it with a series of hate-filled ethnic/religious enclaves like Israeli Jews are foisting on the Middle East.

Economics, military matters and philosophical beliefs are all part of one big matrix which I call ‘reality’.  People can’t pick and choose what is causing what.  We have to look at everything at once.  The failure to do this dooms most analysis to failure.  One blind spot and poof!  The analysis is wrong.  In the ‘West’, the majority of mainstream analysts are of the Jewish ethnic group.  Collectively, they have decided to endorse national socialist ethnic values.  This is a tool for them and for non-Jewish ruling elites [who outnumber the Jews, for the most part] because it allows European powers of the older sort to continue colonial domination of distant lands.

This is why the EU grows and grows while the EU, through NATO, encourages the shrinking of all other power centers.  One power center they are desperate to shrink is Russia.  Europe is plunging into a massive recession due to several stupid things they did: 

For the last 600 years, Europe has always sought to dismember and weaken the Ottoman Empire.  When it looked like Russia would suck down the entire empire, England and France opposed Russia.  When Germany and Austria began to suck down huge parts of the Ottoman Empire, England and France decided to confront Germany and Austria and we got WWI.

It is very easy to fall off of historic cliffs and that was one big cliff.  We are on the verge of another big cliff caused by the exact same historical forces.  Russia will win the latest round of tit for tat with Europe because Europe is weaker than Russia since Europe depends on the US for its economic AND military power.  And the US is going off the cliff first, not last. 

NRDC: Press Release - Robert Redford, Members of Congress, and Broad Coalition Call on Administration to Halt Midnight Land Sale in Utah

“You can’t put a price on silence or solitude,” said Robert Redford, actor, director and NRDC trustee. “Future generations deserve to experience the wildness and beauty of these lands, and to leave them as a legacy to generations that follow.”

The US, frantic to suck down all the energy resources we have left, is doing one stupid thing after another.  The entire point of ‘renewable energy’ is that it won’t suck down all the world’s resources, totally.  We do have to go into space to use resources from the moon and asteroids and the nation that figures out how to do this first will rule the earth.  I am betting, it will be China in an alliance with Russia.  

We can utterly trash our own nation if we are dumb and we are pretty dumb.  We want to suck down every drop of oil here in order to zoom around in big machines, live in big houses that are totally climate-controlled and feast our way through the world, zooming about the skies to distant lands where we can run riot.  This is all a lot of fun!  And doomed.  Once this party is over, we sink back into a sub-Victorian lifestyle. 

Alas, trying to conserve things is a lost cause!  This is because it is more fun to eat, drink and be merry and grasshoppers outnumber ants.  The ants will wail for more caution, winter is coming but the grasshoppers laugh and act even more irresponsibly.  If we visit  www.tennessean.com | Nashville Tennessee Green   we can see many photos and maps showing the devastation caused by the dam breaking.  This has utterly polluted the water table, streams and rivers.  This residue from coal burning power plants has now destroyed the landscape FOR THE NEXT TEN MILLION YEARS.  Only if we have many violent volcanic eruptions coupled with global dust storms like in the last Ice Ages, can we clean up this mess and it still won’t be clean.

Destroying everything in sight is a stupid thing when the goal was to run millions and millions of homes as climate-controlled pleasure palaces.  In my youth, virtually no one in the South had much air conditioning. Movie theaters advertised air conditioning as a lure to movie goers in the fifties.  In the 1940’s, there was virtually no air conditioning in any theaters and we used fans to cool ourselves.  Now, almost all buildings in the south are climate controlled.  

I remember in 1970 when people in NYC got air conditioners.  I didn’t have one but many did.  And during the summer, we had ‘brown outs’ and even outright black outs due to the increasing numbers of air conditioners sucking down energy.  To run these stupid things, Con Edison increased air pollution in the city.  So people with open windows choked on the foul air.  While the climate control people lived high off the hog.

Iranian commander says to cut oil sales to Israel’s backers | Reuters

The Arab despots we support with our military won’t do this.  They want to keep their own people under lock and key.  But the Iranian challenge is ringing in the streets…very quietly.  Like all revolutionary forces, this will take everyone by surprise.  If the price of energy continues downwards, the revolution will be swift.  If it rises, it will be delayed.  But only if there is no inflation.

Of course, there is no escape for the US or Europe or even the Israeli Jewish population, all of whom want to live in climate controlled palaces that didn’t exist a mere 50 years ago.  Even the royals of Europe didn’t live in climate controlled palaces.  They lived in drafty, cold or very hot in summer residences.  Ditto, the kings in the Middle East.  Now, everyone is consuming vast amounts of precious energy that will run out.  In the Saudi lands, they even run ski slopes in the desert.  This is something that won’t exist in 30 years.

King Faisal Stood Firm on Oil Embargo’

The US wanted to do what England and France tried to do several years earlier: take over Egypt, Saudi Arabia and all of the Middle East via our military.  We already took over Iran at that point.  We were already importing oil and Europe needed the oil badly, this was before the North Sea oil technology was perfected.  Finally, the pesky king was disposed of and we got a pro-pump oil like crazy king on the throne.

King Faisal of Saudi Arabia has died after a gun attack in Riyadh despite the efforts of doctors to save him.

And finally, I am utterly aghast at the wild talk from Obama and the Democrats on massive tax cuts and massive, massive overspending across the board at every possible level.  So we continue to roam the planet, seeking funds.  Everyone knows, this is debt we are collecting and all our rivals who wish to dominate us happily give loans.  But not at ZIRP levels.  And this is increasingly a problem.

The Gulf currency alliance still hasn’t been finalized but the fact that they are even seriously discussing this is one of many signs that the US dollar will cease soon to be the world’s fiat currency for trade and for oil purchases.  Already, Iran has signaled an end to this.  Note the amount of money given to Saudis on welfare.  This population is forbidden any birth controls and it is rising rapidly.  They are the ‘Arab Street’ and will overthrow their government if things get too nasty.  And things are getting much nastier.

Your Industry News - China Aims to Add 60-GW of Nuclear Generating Capacity by 2020

The NDRC said in November that China would begin construction of a series of large energy projects by the end of this year in order to boost domestic demand to hedge the impact of the current financial crisis.

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Gas is being shut off.  Russia caused world energy prices to collapse during the 1990’s.  As Russian energy flooded world markets, the situation in Saudi Arabia also deteriorated.  The kingdom, run by US-sponsored despots of the worst kind, nearly went bankrupt.  Agitation in the ‘Arab street’ rose to a fever pitch.  Terrorism sprang up and the Throne of Saud was nearly overthrown.  When Putin came in and began to put Russian energy under nationalist controls again, the price of oil began to climb in the late 1990’s.

As per usual, the US economy immediately began to fall into a recession and the stock market crashed.  Inflation began to rise since the US always, always, always prints more money to buy energy from overseas.  Imports from China were allowed to flood into the country to disguise obvious inflation.  Everything came to a head on 9/11 and what Israel and the neo cons in the Bush administration and in the Democratic Party had their lovely excuse to kill millions of pesky Muslims across the entire planet.  This planetary population control mechanism doesn’t work since Muslim women still insist, unlike the European and Japanese women, to have babies no matter how cruel things are.   So the population controls are flailing.

Europe and the US depend on cheap oil to survive.  We are accustomed to living like kings.  Not like Gaza residents, just for one huge example.  The Afghanis live with very little fossil fuels.  Most of China, the same way.  But we love our climate controlled houses, our luxuries, our ability to move swiftly about in private chariots drawn by the equivalent of 140 horses.  When Russia floundered due to the collapse of the speculator bubble last summer, European and American pundits danced on Russia’s grave.  Immediately, they launched the usual right wing sneak attacks on Russian troops in Ossetia.  Then crowed as Russia’s stocks fell, etc.

Nine countries in and around Europe have now reported problems with their gas supply as a result of Russia’s dispute with the Ukraine, after Slovakia, Greece and Croatia today disclosed they were experiencing drops in gas pressure. The development comes as an emergency mission from the European Commission in Brussels and the Czech Presidency of the EU left this morning, bound for Kiev for talks with the Ukrainian authorities as the international crisis deepened.

Russia’s stock market fell because the oil price bubble popped, not because we ‘won’ something in that Georgian sneak attack.  Instead, we alerted Russia to our nasty intentions which is to destroy Russia utterly as a ‘nation’ and replace it with a series of hate-filled ethnic/religious enclaves like Israeli Jews are foisting on the Middle East.

Economics, military matters and philosophical beliefs are all part of one big matrix which I call ‘reality’.  People can’t pick and choose what is causing what.  We have to look at everything at once.  The failure to do this dooms most analysis to failure.  One blind spot and poof!  The analysis is wrong.  In the ‘West’, the majority of mainstream analysts are of the Jewish ethnic group.  Collectively, they have decided to endorse national socialist ethnic values.  This is a tool for them and for non-Jewish ruling elites [who outnumber the Jews, for the most part] because it allows European powers of the older sort to continue colonial domination of distant lands.

This is why the EU grows and grows while the EU, through NATO, encourages the shrinking of all other power centers.  One power center they are desperate to shrink is Russia.  Europe is plunging into a massive recession due to several stupid things they did: 

For the last 600 years, Europe has always sought to dismember and weaken the Ottoman Empire.  When it looked like Russia would suck down the entire empire, England and France opposed Russia.  When Germany and Austria began to suck down huge parts of the Ottoman Empire, England and France decided to confront Germany and Austria and we got WWI.

It is very easy to fall off of historic cliffs and that was one big cliff.  We are on the verge of another big cliff caused by the exact same historical forces.  Russia will win the latest round of tit for tat with Europe because Europe is weaker than Russia since Europe depends on the US for its economic AND military power.  And the US is going off the cliff first, not last. 

NRDC: Press Release - Robert Redford, Members of Congress, and Broad Coalition Call on Administration to Halt Midnight Land Sale in Utah

“You can’t put a price on silence or solitude,” said Robert Redford, actor, director and NRDC trustee. “Future generations deserve to experience the wildness and beauty of these lands, and to leave them as a legacy to generations that follow.”

The US, frantic to suck down all the energy resources we have left, is doing one stupid thing after another.  The entire point of ‘renewable energy’ is that it won’t suck down all the world’s resources, totally.  We do have to go into space to use resources from the moon and asteroids and the nation that figures out how to do this first will rule the earth.  I am betting, it will be China in an alliance with Russia.  

We can utterly trash our own nation if we are dumb and we are pretty dumb.  We want to suck down every drop of oil here in order to zoom around in big machines, live in big houses that are totally climate-controlled and feast our way through the world, zooming about the skies to distant lands where we can run riot.  This is all a lot of fun!  And doomed.  Once this party is over, we sink back into a sub-Victorian lifestyle. 

Alas, trying to conserve things is a lost cause!  This is because it is more fun to eat, drink and be merry and grasshoppers outnumber ants.  The ants will wail for more caution, winter is coming but the grasshoppers laugh and act even more irresponsibly.  If we visit  www.tennessean.com | Nashville Tennessee Green   we can see many photos and maps showing the devastation caused by the dam breaking.  This has utterly polluted the water table, streams and rivers.  This residue from coal burning power plants has now destroyed the landscape FOR THE NEXT TEN MILLION YEARS.  Only if we have many violent volcanic eruptions coupled with global dust storms like in the last Ice Ages, can we clean up this mess and it still won’t be clean.

Destroying everything in sight is a stupid thing when the goal was to run millions and millions of homes as climate-controlled pleasure palaces.  In my youth, virtually no one in the South had much air conditioning. Movie theaters advertised air conditioning as a lure to movie goers in the fifties.  In the 1940’s, there was virtually no air conditioning in any theaters and we used fans to cool ourselves.  Now, almost all buildings in the south are climate controlled.  

I remember in 1970 when people in NYC got air conditioners.  I didn’t have one but many did.  And during the summer, we had ‘brown outs’ and even outright black outs due to the increasing numbers of air conditioners sucking down energy.  To run these stupid things, Con Edison increased air pollution in the city.  So people with open windows choked on the foul air.  While the climate control people lived high off the hog.

Iranian commander says to cut oil sales to Israel’s backers | Reuters

The Arab despots we support with our military won’t do this.  They want to keep their own people under lock and key.  But the Iranian challenge is ringing in the streets…very quietly.  Like all revolutionary forces, this will take everyone by surprise.  If the price of energy continues downwards, the revolution will be swift.  If it rises, it will be delayed.  But only if there is no inflation.

Of course, there is no escape for the US or Europe or even the Israeli Jewish population, all of whom want to live in climate controlled palaces that didn’t exist a mere 50 years ago.  Even the royals of Europe didn’t live in climate controlled palaces.  They lived in drafty, cold or very hot in summer residences.  Ditto, the kings in the Middle East.  Now, everyone is consuming vast amounts of precious energy that will run out.  In the Saudi lands, they even run ski slopes in the desert.  This is something that won’t exist in 30 years.

King Faisal Stood Firm on Oil Embargo’

The US wanted to do what England and France tried to do several years earlier: take over Egypt, Saudi Arabia and all of the Middle East via our military.  We already took over Iran at that point.  We were already importing oil and Europe needed the oil badly, this was before the North Sea oil technology was perfected.  Finally, the pesky king was disposed of and we got a pro-pump oil like crazy king on the throne.

King Faisal of Saudi Arabia has died after a gun attack in Riyadh despite the efforts of doctors to save him.

And finally, I am utterly aghast at the wild talk from Obama and the Democrats on massive tax cuts and massive, massive overspending across the board at every possible level.  So we continue to roam the planet, seeking funds.  Everyone knows, this is debt we are collecting and all our rivals who wish to dominate us happily give loans.  But not at ZIRP levels.  And this is increasingly a problem.

The Gulf currency alliance still hasn’t been finalized but the fact that they are even seriously discussing this is one of many signs that the US dollar will cease soon to be the world’s fiat currency for trade and for oil purchases.  Already, Iran has signaled an end to this.  Note the amount of money given to Saudis on welfare.  This population is forbidden any birth controls and it is rising rapidly.  They are the ‘Arab Street’ and will overthrow their government if things get too nasty.  And things are getting much nastier.

Your Industry News - China Aims to Add 60-GW of Nuclear Generating Capacity by 2020

The NDRC said in November that China would begin construction of a series of large energy projects by the end of this year in order to boost domestic demand to hedge the impact of the current financial crisis.

* FEEL FREE TO EMAIL ME AT emeinel@fairpoint.net

Greetings Investors,  Happy New Year! It’s time to catch up on the serious developments in  the financial markets.  I have been running a private investment advisory newsletter in which I pick a “Top Ten” Portfolio for four years now. In 2008, I did not issue a “Top Ten” portfolio based on the fact  that I thought it would be a very difficult year to invest. As we  now know, that may have been the understatement of the century.

Twelve months later, as we start 2009, the investment landscape has  changed dramatically. The investment banking industry has been  obliterated. Fannie Mae, the largest mortgage buyer on the planet,  has been taken over by the U.S. government. The federal government  has expanded its balance sheet to over $1 Trillion (the truth is,  nobody knows by exactly how much) and is taking large stakes in  private businesses. We’re becoming “Francified” as the country moves  toward large-scale socialization of industry.

Where does it all lead? Unfortunately, Americans aren’t very good at  making baguettes, so the “Francification” isn’t a good look for us.  As the government takes on more and more liabilities of the private  enterprise, prints up money, and seeks to bail out the economy by  the creation of new public debt, this could lead to the largest  inflationary bubble of our lifetime.

Nearly all asset classes were destroyed in 2008: Equities, corporate  bonds, municipal bonds, real estate, oil, industrial commodities.  Almost everything was down 40-60%. I guess we can take solace in the  fact that we weren’t Iceland, where the stock market declined 95%!  There were really only two places to hide: 1) Gold, of which I have  been a big fan (and still am), which ended the year up 5% 2)  Treasury bonds, which mounted their largest rally in history. 2009 will certainly throw a few curveballs.

I believe we will see a  “divergence in asset classes.” As the government prints more money,  expands its balance sheet, and becomes the public dumpster of all  toxic assets that caused the collapse in the market, savvy investors  are likely to run for the cover of assets that would hold their  value in an inflationary environment as global governments begin a  mad race to “print the most money.”

I believe  the “stuff” trade will be back on, as people protect themselves  against the coming inflation.  As Jim Rogers, the commodities  investor and founder of the Quantum fund has pointed out,  commodities do not have “impaired” fundamentals. That is, the  fundamentals for many commodities, especially agricultural  commodities, remain incredibly strong (for example, wheat stocks are  at their lowest point in history while global demand for food hits  new highs).

To sum up the problem: In 2009, you might not be able  to buy a new Escalade on bank credit, but you will need to eat and  buy food. Financial assets, including government balance sheets, are, in fact,  impaired. Nobody knows where the federal government balance sheet  will end up after this process, nor what it will be valued at.

Some  corporate earnings numbers are also big question mark, especially in  the retail sector. To invest in treasury bonds at this point for a  measly a 2% yield looks like one of the worst risk/reward trades in  history. In fact, I advocate:

* Shorting Treasury bonds and believe it  may be one of the best trading opportunities in a long time.

* Precious metals and agricultural commodities are likely to  outperform. 

* Energy will return, but likely later in the year, after  the precious metals and grains. It is interesting that major  diversified oil companies such as Chevron (CVX) has stabilized ahead  of crude oil, and we think that is a favorable sign for energy  stocks.

* The stock market could see a benefit from  the return to liquidity, and for that reason it would not surprise  me to see the market rally for the next 2-3 months. It is a good time to test the equity waters with some high- quality  dividend-producing stocks, if only because they are a decent hedge  against inflation and the dividend “pays you to wait.” But take it slow and easy! Dollar-cost averaging rules, and have a long time horizon.

* High-quality  corporate bonds are also interesting. Individual corporate bonds  take a lot of work to understand and I am no expert, therefore I am  going to stick with some reputable funds, including the BlackRock  Income Opportunity Trust. However, any stock market rally should be  seen skeptically and sold accordingly. I doubt that a new bull  market can emerge in 2009 because of issues with corporate profits. 

It’s unlikely that corporate profits will return to the giddy growth  of the 2003-2006 period because of under-investment and a consumer  that is returning to saving. Our stock picks are weighted to things  that might be impervious toward a prolonged recession, including  healthcare and biotech. In general, I am expecting that the stock  market will be a trader’s market in 2009, with violent chops up and  down.

This year, our first portfolio “goes to 11” because we like to add  another unit of diversification to our approach.  Without further ado, here is my “Top Ten Portfolio” for 2008.

Top Ten Portfolio 2009 – The “Macro Portfolio”

1) Gold – Either  iShares Gold (GLD) or gold futures (I prefer to play futures and physical)

11) Corn & Wheat futures (those of you who can’t buy  futures can substitute DBA)

Paolo Pellegrini, the former Paulson & Co. hedge-fund manager who helped make more than $3 billion with bets on a U.S. housing crash, said his new fund will avoid equity markets after last year’s rout.

Pellegrini, 52, a manager of Paulson’s credit-opportunities funds, left on Dec. 31 in an “amicable” separation to start a new fund called PSQR LLC. The New York-based fund will use a strategy known as fundamental macro investing, which trades everything from commodities to currencies and seeks to profit from changes in the global economy.

“I’ll be investing in commodities and interest rates, taking advantage of the imbalances between different countries,” Pellegrini said in an interview with Bloomberg television today.

There will be few opportunities in equity markets in 2009 after the Standard & Poor’s 500 Index dropped 38 percent in 2008 and the MSCI World Index fell 42 percent, Pellegrini said. One of his investment themes will be the changing dynamics between the U.S. and China, he said. The U.S. consumer, whose purchases fueled economic growth for years, can no longer afford to buy at the same pace from Chinese manufacturers, Pellegrini said.

“Right now there’s a regime shift in that the U.S. has been the borrower for many years and China has been the saver,” he said. “The U.S. cannot continue to borrow and increase its debt at a higher rate without increasing its output. It’s not sustainable, at some point the U.S. has to come back to some level of balance.”

Overvalued Mortgages

In 2006, Pellegrini and John Paulson, founder of the New York-based hedge-fund firm with $36 billion is assets, became convinced that investors were overvaluing mortgage-backed securities after misjudging their loss risk, according to client letters obtained by Bloomberg News. The firm’s credit- opportunities funds soared about sixfold in 2007 as mortgage defaults rose and the value of the securities declined.

“There had been a very unusual pricing development in the housing market,” said Pellegrini, who estimated at the time that U.S. housing prices were 30 percent above where history suggested they should have been.

Pellegrini said his new venture, which will be financed with his own capital, won’t have the infrastructure to invest in mortgages. Still, he said shorting, or betting on a decline, in mortgage-backed securities had become too expensive, and some now offered opportunities to buy. “Mortgages are attractive right now based on current prices,” Pellegrini said.

Funds Gain

Paulson Credit Opportunities and Credit Opportunities II funds gained about 15 percent last year through the middle of December, according to a person familiar with the returns. Hedge funds in 2008 suffered their worst year in two decades, with the HFRX Global Hedge Fund Index falling 23 percent.

Pellegrini, born in Milan, worked for investment bank Lazard Ltd. from 1986 to 1995, according to Paulson & Co. marketing materials. Like Paulson, he has a master’s degree in business administration from Harvard University.

“I want to be the pilot of my own boat,” Pellegrini said when asked why he left Paulson & Co. “John Paulson is a very good friend. He doesn’t need any suggestions on how to run money. He knows how to do it.”

New York University obtained a court order extending a ban on J. Ezra Merkin transferring millions of dollars of the university’s funds related to investments with Bernard Madoff.

The university asked New York State Supreme Court Justice Richard Lowe in Manhattan today to restrain Merkin, along with his Gabriel Capital LP fund and Ariel Fund Ltd., from withdrawing, liquidating or dissolving assets. Lowe agreed and said he will order a preliminary injunction hearing on the ban.

NYU, the largest private university in the U.S. by enrollment, said in a complaint filed Dec. 23 that it had at least $24 million in losses after Merkin and his funds invested its money with Bernard L. Madoff Investment Securities LLC without informing the university. Merkin, who has denied wrongdoing, may be deposed in the case, Lowe ordered.

“On Dec. 12, 2008, the university received a letter from Mr. Merkin announcing for the first time that Gabriel had invested a portion of the university’s funds with Madoff and that those funds had been lost,” Maurice Maertens, NYU’s chief investment officer, said in court papers. “Until Dec. 12, 2008, we had no knowledge that NYU’s funds were instead being managed by Bernard Madoff.”

Justice Herman Cahn issued a temporary order Dec. 24 barring Merkin “from taking any action to liquidate Ariel” prior to a hearing before Lowe. Cahn also prohibited Merkin from taking any action to move assets of Ariel or Gabriel or to destroy any Madoff-related documents.

$50 Billion

Madoff, 70, was charged last month with allegedly directing a $50 billion Ponzi scheme out of his New York-based investment firm. He remains free on $10 million bail while under house arrest and electronic surveillance. He was charged with one count of securities fraud and faces as long as 20 years in prison if convicted.

Gabriel Capital, a $1.5 billion hedge fund, plans to liquidate after incurring losses on investments with Madoff, Merkin said in a Dec. 18 letter to investors including NYU. The fund lost 39 percent of its value this year through Nov. 30, he said. NYU had about $94 million invested in Ariel, which operated as a limited partnership with Merkin and Fortis Bank, according to the lawsuit filed in state court in Manhattan. Ariel and Fortis are also named as defendants.

“Without making disclosures in the quarterly reports to investors, and in the face of an extraordinary number of ‘red flags,’ Merkin, for years, simply turned over a substantial portion of Ariel’s funds to Madoff for management,” NYU said in its complaint.

Court Papers

Maertens said in court papers that NYU first invested with Ariel in December 1993, with a $20 million investment of endowment funds. It invested $10 million more in 1997. He said Merkin met with university officials in October and suggested NYU invest with Madoff. Maertens said the university refused to authorize such an investment.

“It is shocking in retrospect that Merkin concealed at that moment he had already invested NYU’s money with Madoff,” Maertens said.

The university also objects to Merkin’s claim that he would continue to seek payment for “expenses” related to managing the fund.

“It would be outrageous for him to take any further monies from the fund,” Maertens said in an affidavit filed with the court.

Merkin’s lawyer, Andrew Levander, didn’t immediately return a call seeking comment about the hearing. He has previously denied any wrongdoing on the part of his client.

$36 Billion

Madoff’s clients had invested about $36 billion with his firm, according to a Bloomberg tally that may include some double counting. Before his arrest on Dec. 11, Madoff confessed to employees that his “giant Ponzi scheme” may have cost as much as $50 billion, according to an FBI complaint.

Merkin is chairman of GMAC LLC, the finance arm of General Motors Corp. that is 51 percent owned by Cerberus Capital Management LLC.

The case is New York University v. Ariel Fund Ltd., 603803/2008, New York State Supreme Court (Manhattan).

The first part of executing your idea is figuring out your market.  What people, anywhere and any kind, need my product or service?  Who exactly is your market?  And more importantly, why do they need this?

When I pitched Howard Lindzon my Gen Y mutual fund idea a few months ago that I was working on with Ross, his application provided some quality pointers on market validity:

The Y Fund’s target market are college-educated, middle to upper-class consumers born between 1980 through 1990.  The complete Generation Y demographic, at 78 million individuals strong, earns an annual income of approximately $211 billion per year, with disposable income levels close to $172 billion per year.

The Bureau of Labor Statistics recently published that total college-level job openings between 1998 and 2008 will nearly equal the number of college-educated entrants to the labor force.  Recent data shows that the number of bachelor’s degrees conferred between 1998 and 2008 is expected to grow from 1.16 million to 1.24 million, an increase of 7%.

The target customers of the Y Fund are not necessarily your typical people checking their portfolios monthly or calling their investment adviser once a quarter; instead, our fund and respective community is aimed at the specific group of young, internet driven and community prone individuals who plan to have daily interaction with their investments and other investors.

The Y Fund will differentiate itself by not being labeled as a financial institution, but instead will serve as an engaging, user driven financial community that provides a transparent investment product.

Albert Einstein once said that the hardest thing in the world to understand is income tax. This genius, who cracked the most difficult problems in physics, believed that filing tax is a philosopher’s job.

Agreed, filing tax does looks baffling. But complexities diminish when you get to know a few basic rules.

The first step is to know whether you are an ‘assessee’, or a taxpayer in simple words. By definition, an assessee is someone who is liable to pay tax to the government.

These slabs are decided in the Union Budget. At present, there is no income tax for people earning less than Rs 1.5 lakh as annual income.

Above this, the government charges income tax in various slabs depending upon the total money a person earns each year. These slabs range from 10 per cent to 30 per cent of the income, after several deductions.

For starters, you need to have a Permanent Account Number (PAN).

Bob Retired Early Because He Channeled Stocks!

One of my favorite “snake oil salesmen” advertisements on television is Channeling Stocks. A really dippy looking guy in a drab office who appears to be no older than sixteen tells somebody behind the camera that he is retiring because he made a fortune “channeling stocks.” He proceeds to scribble a diagram of a line oscillating with peaks and valleys between two borders to describe how he finds a stock that goes up and down in regular patterns, and buys it low and sells it high, over and over.

The most ubiquitous adage of investing is to “buy low and sell high.” Channeling Stocks offers a service where, through intensive research, they uncover, every week, stocks that trade in the same up and down patterns. I looked at their site where they offer dozens of examples of really colorful stock charts that you imagine should be accompanied with the sounds of bells and whistles. The extreme “chartist” philosophy behind this sort of trading is that you do not need to research the company, examine the fundamentals, conduct valuations, read the current news, etc. You just need to look at chart patterns, buy the stock when it reaches low and amazing colors, and sell when it reaches high and alarming colors. And after you have done this in your free time at work, you would probably lose enough money that you would have to take on a second job. The name of the service, “channeling,” should alert you that it has as much credibility as people who claim they can “channel” the spirits of the dead.

Internet Stock Market Vultures

The internet has made it possible for anyone anywhere to trade stocks. There once was a time not long ago when you had to pick up the phone and call a broker to buy or sell stock. Now, anyone who has a little disposable cash can register at a trading site and buy or sell a stock in a matter of minutes. This instant and diffuse access to the market

makes you vulnerable to impulse and falling victim to every make-it-rich-quick scheme under the sun. And with the stock market as volatile and, well, just damn awful as it is now, there are a lot of desperate people out there looking for quick financial salvation getting hurt everyday.

The Internet can Give You Control Over Your Investments If You are Careful and Wise

At the same time, the access and independence that the Internet has offered investing and trading to anyone is empowering. It allows you to take control of your savings and investments. A couple years ago, I looked into what my investment adviser at my bank does to earn his 1.5% of my returns every year, and realized that I could do what he was doing, and more. So I opened up an account with T.D. Ameritrade, moved and reallocated my investments into my own account. Unfortunately, this was the summer of 2007, so I essentially rolled my investments over and off a cliff. (If you do not know what I mean here, check out a chart of the Dow Jones for the past five years.) Of course, everyone else’s investments–except for Bernie Madoff, who made off with everyone else’s money–rolled off a cliff, too. But at the end of last year, I did some calculations, and discovered that I came out of 2008 roughly 7% better than if I had left my investments in the hands of the investment counselor.

All of You Teachers and Professors: Stop Being Passive With Your Investments!

As I have said in another post, I am unusual in my professorial, liberal arts occupation in that I believe in and celebrate capitalism. I think that the academic world, where pay is low and debt is high, is filled with people far too passive about their money and their savings. If a graduate student or a professor spent even just an hour a week using the same brainpower he or she uses to write a dissertation, he or she could financially succeed better than the academician who thinks the world of investing is anathema. At the same time, even a brainy humanities PhD can fall victim to the quick, cut-corners, might-as-well-use-the-money-as-toilet-paper styles of investing.

There are no sure-fire ways to make money in the market, but there are plenty of almost sure-fire ways to lose money.

I started independently taking control of my investments in the worst two years in the stock market since it bottomed out in 1932. But I came out 7% higher than the 2008 loss in the S&P 500. More importantly, I learned a lot of helpful lessons for a novice who wants to start investing in this horrendous market. I think I could help a lot of other academic people (or anyone else) for whom trading and investing is an utterly foreign activity.

The First Batch of Lessons I Have Learned About Investing.

Once every week or so, I will incrementally post some of the lessons I have learned so far as an artsy-fartsy liberal arts guy trying to have some economic control over my life. Most of the lessons are in the form of prohibitions, things to avoid because they almost always lose you money. So, here are the first several.

In another post in a few days, I will break down the above into more specific lessons I have learned. For now, this post is twice the size of what I normally do.

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In normalcy, we are children at one stage or another before adulthood. Then, some of us decide to stay children – actually toddlers, forever. The latter is not today’s subject, we mean real children – arguably below 16 years.

It is no desire to check again but the last time such was done; mankind was running extinct, not with such recent run on inhuman events. And then look at what yours truly has in mind! That was the beast in me, do not let him awake.