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Thursday, June 30, 2011

The Truth why the market is going up

Everything about the stock market is rigged.  It is smoke and mirrors.  High frequency trading and computer algorithmns. It is a con; an insider's game, and you the everyday person is not meant to benefit from it.

Did you know: 90% of all the stocks are owned by 10% of the population?

So the market's been rising.  The carnival barkers on the financial networks pick rationales out of the thin air (or another area more posterior) and tell you to Buy! Buy!  Invest! Invest!   And Mom & Pop investors and the Jim Cramer dirtball wannabes stay glued to their sets, hoping to learn how to make money.

So.. What made the market rise in the first quarter of 2011 and continue to rise, beside all the Fed stimulus which everyone will have to one day repay in tax increases and social program cuts?

From MarketWatch:

"A new report from TrimTabs, the investment analysts, has blown the whistle on what really went on behind the stock-market "boom" we saw in the first quarter, when the S&P 500 Index rose more than 5%...  So who was driving up the market? What was creating this boom?

Turns out it was the companies themselves. TrimTabs says companies spent a thumping $124 billion in the first three months of the year trying to boost their share prices by buying up stock.  That works out at about $2 billion for every day the market opened."

~ In other words, companies took some of their collective $2 Trillion in cash reserves which they did not wish to use on job creation, and put into their own companies to give the appearance they were stronger than they appeared and to entice Mr & Ms Sucker to invest with them.

* "This stock is jumpin' I tell ya'  Juuuuummpin~"

Let's continue...

"Meanwhile, according to Trim Tabs, guess who avoided buying stock during the first quarter? Company executives. The "insiders."  These are the guys whose stock purchases tend to strongly signal bull markets and genuine booms. They were spending investors' money buying their stock, but weren't spending their own... "We've never seen such a sharp contrast between what insiders are doing with their own money and what they're doing with the money of the companies they manage," TrimTabs Chief Executive Charles Biderman wrote in a note..."

~  Interesting- the CEOs did not wish to risk their own money on their own companies.  They understood the rise in the market was complete bullshit. They better than anyone else, understood their balance sheets and profitability was nowhere near as strong as the public perception they were selling.

How is this not different than say, cooking a meal for others which you're afraid to eat or buying a car for another which you're nervous to be a passenger in?

Now part 3- the money source.

"Where did the companies find the money to buy back their stock? In some cases the money came from profits (includes hoarded cash)... But in other cases they just borrowed the funds.  According to the latest data from the Federal Reserve, corporate debt surged again last quarter — to the highest levels on record.  Debts for nonfinancial corporates hit $7.3 trillion by March 31, reports the Fed. That's up more than $100 billion since the start of the year.

The total at the end of 2007, at the peak of the so-called "credit bubble," was just $6.7 trillion."

~  Now if/when there's another financial crisis and corporations are crumbling like in 2008, and claiming they're all 'too big to fail', where do they get the funds to resuscitate themselves?  Correct-- the US government.  And who really pays?   Yes-- you and I, the taxpayers.

So corporations borrow heavily to acquire the funds to invest into their own stocks to give the appearance of strength.  Shareholders are happy because their profits rise.  Everyday Americans are suckered in to believing there's a 'recovery' going on.  Novices put their money into the market and hope for some kind of return.. and its all one elaborate dupe.

And people get fooled because they want to be.  They want hope and optimism and a belief that all will be well again, while trusting in the most corrupt and soulless individuals-- politicians and corporate businesspeople, to make it happen.

* "Who wants the American Dream?  Ha Ha! Step right up, folks.."

The author of the MarketWatch commentary puts it best...

"When a company borrows money to bolster its own stock price, it makes me wary of the bonds. When the executives aren't even willing to invest their own money, it doesn't exactly make me enthusiastic about the stock either."

Nothing is getting better.  Personally I do not know how much if any, the 2012 Election will matter in terms of improving things.  I do know that in spite of the market rising as it has this week, the most fiscally sound advice one can give is to not invest.  And if you Have to invest, don't commit any money that you will miss when you lose it.

Quick thoughts-- 6/30/11

More quick thoughts coming your way... flying in the air like hand-flung chocolate creme pies..  Don't forget to duck!

Goldman Sachs Informs New York State of Plan to Cut 230 Jobs (Bloomberg) --  I guess this is what it was like in 'Star Wars' when Darth Vader handed out pink slips to some of the stormtroopers.

Stocks rise as Greece nears debt solution (AP) --  Let's see: market went up 72pts while 46 Greek people were injured fighting for their nation's survival.  So that's 1.565 US market points raised per Grecian person beaten or kicked.  Isn't math the coolest?

Amazon battles California sales tax ( -- Cali has a $9.6 billion deficit yet expects who didn't cause the debt, to pay towards it.  Amazon will leave state if tax law enacted.  Greece's leadership needs to take a page or two from Amazon how to stand up to bullies.

Should You Interview for a Low-Paying Job?  (US News & World Report) -- Only if you can handle the pressure of competing vs other candidates with multiple doctorates.  Dunkin' Donuts expects a lot from their workers, don't ya know...

New York set for boom in Gay Weddings ( --  How beautiful.  ~Thinking out loud.."Is it too late for me to go to law school, pass the Bar, and start practicing Divorce & Child Custody Law? Hmm.."

Obama: End Tax Breaks For Rich, Not Middle Class (CNBC)  -- I know I heard that somewhere before.. When was it?  Hmm.. Oh yes, right before the President signed an extension of the Bush tax cuts for EVERYONE last December.

Pending home sales up 8.2% in May (MarketWatch) -- Yippee!!  Oh wait, pending home sales were minus 11.3% in April - Darn!  But sales rose in Feb and March- Woo Hoo! But they had dropped in January - Double-darn...

John Kerry: "I Would Have Been A Good President, Maybe Even A Great One"  ( -- Ehh.. Or maybe not...

'To Catch A Predator' Host Chris Hansen Allegedly Caught Cheating On His Wife  (Radar) -- Headline made me laugh.  Nice to see someone who profits from false entrapment get trapped via National Enquirer sting

Wednesday, June 29, 2011

WWII history- Bank for International Settlements

The Bank for International Settlements (BIS) is an intergovernmental organization of central banks. It fosters international monetary and financial cooperation and serves basically as a bank for central banks.  It is not accountable to any national government and provides banking services, but Only to central banks, or to international organizations like itself.  It is based in Basel, Switzerland.

Its origins and history are interesting and quite disgraceful...

The BIS was formed in 1930, established between Montagu Norman the then-Governor of The Bank of England,  and Hjalmar Schacht, his German counterpart who later served as Adolf Hitler's finance minister. The Bank was originally intended to facilitate reparation payments imposed on Germany by the Treaty of Versailles after the First World War.

~ Montagu Norman, Governor- Bank of England

During the period 1933–45, the board of directors of the BIS included Emil Puhl and Walter Funk, a prominent Nazi official, who were both convicted at the Nuremberg trials after World War II.  In addition was Herman Schmitz the director of IG Farben and Baron von Schroeder, the owner of the J.H.Stein Bank, the bank that held the deposits of the Gestapo.  It is alledged that the BIS had helped the Germans loot assets from occupied countries during World War II.

As a result of these allegations, at the Bretton Woods Conference in July 1944, Norway proposed the "liquidation of the Bank for International Settlements at the earliest possible moment". This resulted in the BIS being the subject of a disagreement between the American and British delegations. The liquidation of the bank was supported by other European delegates, as well as the United States but opposed by John Maynard Keynes, head of the British delegation.

~ John Maynard Keynes

The dissolution of the BIS was eventually approved. however the liquidation of the bank was never undertaken.  The British delegation did not give up trying to prevent the bank's dissolution and still had not yet been accomplished when Roosevelt died in April 1945.  New president Harry S. Truman and the British agreed to suspended the dissolution and the decision to liquidate the BIS was officially reversed in 1948.

Currently, the BIS is composed of 60 member central banks or monetary authorities.

~  Makes one wish FDR had lived...

Never be loyal to an employer

The headline should be obvious to everyone..  like telling a person to brush one's teeth after eating a meal or turn the TV off when you leave a room...

I always find it humorous when I meet people who are deeply loyal to the companies they work for; taking pride in the success of profitability of the corporation they're attached to and believing their company cares about them.

I usually listen.. nod.. smile..  then think about situations like this:

"Deeper cutbacks will be made throughout Goldman (Sachs)... especially in the U.S.  Goldman still plans to add more employees in Singapore, Brazil and India." -- WSJ

All that hard work spent helping Goldman make untold billions..

And here's your reward.. Pink Slip.  Why?  Because someone else can do your job the same but at a fraction the cost...  Isn't Capitalism wonderful?

Greece: Fire Sales, Spilt Milk & "Lemonade"

Are you an International Investor?

Looking for a good deal?

Want a piece of a nation at rock-bottom prices?

Maybe a motorway?  Or a sewer system?

Why look no further friends... just head over to Greece..

From Guardian UK:  "While Greece erupted in protest again, representatives of the country's government were at Claridge's hotel trying to drum up international investors' interest in a "fire sale" of its national assets.  Up for sale are 39 airports, 850 ports, railways, motorways, sewage works, a couple of energy companies, banks, defence groups, thousands of acres of land for development, casinos and Greece's national lottery...

George Christodoulakis (Greece's special secretary for asset restructuring and privatisations) denied that the hastily arranged sell-off was a fire sale, preferring to describe it as a "professionally managed privatisation plan"... When a fellow Greek interrupted to say the sell-off was "destroying our country", Christodoulakis said there was "no point crying over spilt milk" and told his countryman to "try and be optimistic"."

~ Remember kids, when you're government takes your lemons then sells them to foreign banks and investors to pay debts you did not personally accrue, that's when you need to turn that frown upside down and make pretend lemonade...

Quick thoughts-- 6/29/11

Since yesterday's "Quick Thoughts" went so well,  and we had so much fun doing it, we thought we'd try two days in a row-- So, take a cup of sarcasm, a teaspoon of irrelevance, a smidge of meanness, a dash of clever-clever, and bake at 350deg for 30min.. and here's your daily 'treats':

Lagarde's selection marks a break with IMF's past (AP)  --  Hmm..  She's the 11th European to head IMF and she's replacing Strauss-Kahn who was Also from France.  Yes, a nice clean Break.

Why France's Rescue Plan for Greece Won't Work Either (CNBC)  --  Shhhh, don't tell the Greek Parliament or the MPs may not go through with their bribed pro-austerity vote...

Palin, in Iowa, ‘Still Thinking About’ Running (NY Times)  -- Wonder what's less likely- Sarah deciding not to run for President, or finding 1 person on CNN Headline News' 24 hour Casey Anthony coverage who will take her side?

Romney Camp Pushes Utah to Move Up Vote (WSJ)  --  It will cost state taxpayers $2.5 million but Heyyy, C'mon!-- its for Romney's benefit.. And what's $2.5 million anyways?  Utah is 41st in education- they don't need the money...

Saab can finally pay workers... to do nothing (CNN Money) --  Where do I submit my resume?

Fears About Jobs and Wages Depress Consumer Confidence (The Atlantic) -- AND.. Cue the automated response: "Recovery... Recovery",  "Soft Patch",  "Headwinds",  "a Blip.. Bleep.. Bloop",  "Jobless Recovery", "All is well.. repeat... All is well"

J&J recalls more Tylenol Extra Strength pills (AP) -- All because of a musky odor?  Hell, back in my day, we'd live in musky homes, eat moldy bread and drink mildewed milk and Not One Complaint...

Declines in Home Prices Ease  (WSJ) --  When a 4% National decline in home values vs this time last year is celebrated as a positive, I know a certain paper is losing its trustworthiness.

Cramer: Things Are Looking Up (CNBC) --  Yes, Jim. Usually when you are fully bent over and clasping your ankles like a good Wall St. employee, you find yourself looking "Up"

Scenes From a 'Playboy' Playmate Casting Call (The Atlantic) -- Old joke: "Are you willing to pose nude for $100k?" ~ "Sure" ... "Will you pose for $10?"  ~ "No! What do you think I am?" .... "Well I know what you are--just negotiating price."

Tuesday, June 28, 2011

Photos: The Greece that Investors Ignore

Yahoo! Finance had this headline:  'Ignore Greece, Earnings Matter Most'

This meant Greece's economic situation was supposedly 'priced in' to the markets and that everyone should assume austerity measures will pass tomorrow.  And even if it doesn't,  the bankers will cleverly come up with some trick or scheme to make sure no one is financially hurt by Greece but perhaps Greece themselves.  So, don't think or concern oneself with that little country  Focus on Earnings.. \Mmm.. Yummy Profits.. MMmMmm..  ~Rubs hands together~

And this allows the sociopath investor/trader to ignore this:

And this..

And this...

Well I guess on the 'bright side', as Americans, we never have to worry about scenes like this taking place in US cities, because our economy is Strong, our leaders care, and no one pulls this nation's financial 'strings'.

So let's 'relax' and look at some more photos & snicker at those "silly Grecians"; those people the corporate media summarize as 'lazy tax dodgers who get to retire in their 50s with 80% pensions and who obviously are to blame for their mess'.

Quick thoughts.. 6/28/11

The news is just chock full of headlines.. 99% of it completely irrelevant and immaterial to people in any meaningful way.  So for fun, and a quick read, here's a new segment on A&G called "Quick Thoughts" where we post headlines and give observations in as few words as possible.  Sometimes astute, sometimes smart-alecky, but at least you have something to contribute to the proverbial "water cooler".

Here we go...

Fed May Buy $300 Billion in Treasuries After QE2 (Bloomberg)   -- Funny, could have sworn QE2's end was supposed to mean end of Fed Treasury purchases.  Guess instead of calling Q3 by a different name, call it No name.

Can't ban violent video sales to kids, court says (AP) -- Whew, last thing we need is anything preventing increased desensitization of young people to violence.  That skill will come in handy one day when they enlist or are drafted.

Michele Bachmann confuses John Wayne Gacy with The Duke (LA Times) -- Hmm, which is funnier:  that or the Entire corporate media confusing a global recession/depression with 'recovery' and 'soft patches'?

Euro debt news lifts stocks after last week's loss (AP) -- Guess the adage is true: higher they lift, the harder they will drop.  Check back on Friday to see what I mean.

Germans Becoming Resigned to Euro Divorce  (MarketWatch)  -- If nations or people never get married, they wouldn't have to worry about divorces.  On bright side, at least there's no child custody battle awaiting.

Why Some Pros Still Believe a Big Stock Rally Is Coming  (CNBC)  --  A) They're clairvoyant,   B) They're experts or, C)  Because their soulless, greedy sociopathic monsters who will say Anything to get you to risk your last dollars in the market.

Neb. nuke utilities say safety prevails amid flood  (AP)  --  I coulda' sworn I heard the same thing from 'experts' in Japan.

French banks agree to Greek debt rollover  (Reuters) -- In plainspeak: picking shit out of thin air to get out of a bind.  Whatever it takes to avoid dealing with reality Mr Sarkozy... Whatever it takes...

Facebook hires PlayStation hacker George Hotz, aka GeoHot  (Washington Post)  --  See kids, that's how you get a good paying job in today's economy.

Monday, June 27, 2011

Debt Slave Nation- Degrees not worth it

Found this article from CNN Money..  They talked to people overloaded with student debt to share their thoughts, experiences and basically if it was all worth it.  Personally, I feel anyone taking on tens of thousands of dollars in debt for a worthless piece of paper (or making their parents pay for it) are Fools.

But I could be wrong.. let's see what these others had to say...

(These are real people, and not made up by A&G to make a 'point'. Their thoughts/opinions were expressed in the CNN Money article.  With the exception of anything underlined or highlighted, A&G did not inject any viewpoints into the following commentaries..)

Erik Solecki

Student debt: $185,000
Degree:   Bachelor's in industrial engineering from Kettering University

Was my college degree worth it?   Hell no.

I graduated from one of the top engineering schools in the nation, thinking my starting salary would be between $70,000 and $80,000 a year.

Such a specialized, technical degree is supposed to lead to a great career, so I was willing to take out the debt.  Instead, I was hit with 9 months of unemployment after graduating. And now that I finally have a job, I'm making about $15,000 a year less than I had hoped.

Even if I were able to afford the $1,800 payments each month, it will probably take me 30 years to pay off my student loans.  I engineer high-end autos. Ironically, I'll probably never be able to afford one.
~ * ~ * ~ * ~ * ~ * ~

Saniquah Robinson

Student debt:   $82,000
Degrees:   Master's in Health Science from Chatham University; Bachelor's in psychology from Temple University

After holding my Master's for three years, I'm still fighting to find a Master's level position.  I have been seeking employment in the medical field and after about a hundred interviews, I'm left doing contract work for $19 an hour.

I once believed that part of the American Dream was to earn a college education and this would ensure a great career and financial freedom. Unfortunately I am losing hope. I'm a mother of three, and my husband and I have been turned down from purchasing a home due to our income-to-debt ratio.
~ * ~ * ~ * ~ * ~ * ~

Shane Dixon

Student debt:   $72,800
Degrees:   Master's in public health from University of South Carolina; Bachelor's in biology from Clemson University

In my early years after high school, I wavered between trade school and college, but eventually opted for college and earned a Bachelor's in biology.  I quickly found work, but at an abysmal wage of $7.25 per hour, which did not even allow me to live on my own.

After an exasperating year at that wage, I decided to go back to school and I graduated in 2004 with a Master's in Public Health, thinking I was on the road to recovery.

During that time, I had been married, had a child, gotten divorced, and ended up raising my son on my own. I took a low paying government job in Southern Florida, and because I couldn't even make the minimum payments on my debt, I took forbearance after forbearance.

I have had a good life, but now at age 37, the weariness of carrying this financial burden frustrates me to no end.
~ * ~ * ~ * ~ * ~ * ~

Michelle Shipley

Student debt:   $140,000
Degree: Bachelor's in political science and international development from Tulane University

Like many, I had no idea what money meant when I was 17. My family is not wealthy. I simply didn't have the information or knowledge to know what it would be like now.  I had to pay for college on my own and took out loans for everything - rent, food, books, tuition, etc.

Then, during my sophomore year, I lost everything to Hurricane Katrina. I finished my degree, but continued to take loans to make it possible.  I'm now working at a non-profit and I love it -- but I don't make much. I've been able to put off the payments through forbearance, but I know the $1,400 a month bills are coming soon.  Not to mention, I've also racked up about $7,000 in credit card debt.

My debt is a life-swallowing, all-consuming, hole in my life. No college degree is worth that
~ * ~ * ~ * ~ * ~ * ~

We all want to be Doctors and Lawyers.. We all want to be multimillionares.   And if that's your dream (and not something your parents are Pushing you into), then super-- best of luck to you.  But understand no matter the degree you're seeking, the system is set up so that you are to be a debt slave before you turn 22years old.

Unless you are choosing a field that is truly expanding or have some kind of job placement when you're done schooling,  you should think long and hard about attending a University, especially one far away from home where room & board costs have to be factored in.

Be SMART- Don't be a Debt Slave if you can help it..

Lastly,  If you are curious to see an A to Z list of drop-out Successes:

Greece's people say 'No'- Will Parliament listen?

Read a really good piece in this morning's Guardian UK entitled Greece Is Standing Up To EU Neocolonialism.  For the full article, one can click below...

Nonetheless, I wanted to highlight a few astute points from the article (in blue font):

"It is perhaps time to revisit some basic facts that have been seriously misrepresented.

1. The bailout of Greece is not a gift or grant but a loan bearing high interest. Crucially, bailout funds are not used to pay civil servants' salaries and pensions, but to pay off debt held by German and French banks...

2. This unprecedented punishment led to an increase in debt and to permanent economic depression. The European governments now propose to offer a second loan, if Greece accepts an even more odious set of measures and sells off the family silver. Acceptance of these measures has been made a precondition for the payment of the fifth instalment of the initial bailout.

This is blackmail worthy of a backstreet loan shark. The privatisation plan includes the sale of 17% of the public power corporation, the engineroom of growth, which will remove the state's controlling interest. ... This post-Soviet style privatisation will pass valuable public assets to private hands...

3. The loss of economic sovereignty is accompanied by unprecedented attacks on the political and legal integrity of the country. IMF and EU inspectors visit the country on a regular basis, examine the records and dictate policy. Under the new plan, foreign emissaries will be assigned to the main ministries and will run the companies that will privatise the public wealth. Government capitulation is not enough. The European authorities demand that all political parties should accept the new austerity measures before the next loan instalment is paid. Surreptitiously, a new type of colonialism is emerging, in which the Brussels elites treat the European south as undeserving poor or colonial subjects to be reformed and civilised..."

I read yesterday that the Damned Chinese now wish to offer to bailout Greece and the rest of the EU.   Funny how a supposed Communist nation born from the philosophies of Marx, Lenin & Mao would have its own stock exchange, have 3.3 millionaires amongst its population and conduct its economic policy like every other capitalist nation... Just funny.  But I digress...

The US made the same financial pledges last month even though we're $14.5 Trillion in Debt as it is.   Only when you print your own money can you get away with such irresponsibility.

You would really think after 33 months since the global Crisis of 2008, that banks and financial entities would be allowed to simply fail, and that Greece could just default before it loses its infrastructure and national identity.  You would think these magical tricks and schemes would come to an end and the baddies would get just desserts?  

You'd think?

~ sings: "Felix the Cat.. the Wonderful, Wonderful Cat!  Whenever he gets in a Fix, He reaches into his bag of tricks!"

Sunday, June 26, 2011

Lying Quote of the Day- 6/26/11

Hey Boys & girls, if you want to be a Serious, Professional fear mongerer, look how it is properly done:

"Returning to the (Greek) drachma would mean that on the following day banks would be surrounded by terrified people trying to withdraw their money, the army would have to protect them with tanks because there would not be enough police... There would be riots everywhere, shops would be empty, some people would throw themselves out the window ... And it would also be a disaster for the entire European economy."

-- Greece's Deputy Prime Minister Theodoros Pangalos speaking to Spanish newspaper El Mundo about if the Greek Parliaiment didn't vote Tuesday to sell out its people  (Oops, I mean if they didn't vote for more austerity)

Whewww.. If I was a bank or special interest, I Definitely would want to OWN him!

~ Perhaps Mr Pangalos should start with some personal 'austerity'

Questions, Expectations and Courtship

Most people think there's distinct differences between Republicans and Democrats.

There isn't.

Now I concede on social and 'hot button' issues- topics such as gay marriage, abortion, burning of flags, etc,  there are distinct differences.  And this is because both parties find these topics relatively harmless and allow the extreme elements of both sides to express themselves and parties pretend these people matter.

But on important issues.. the economy in particular, there's very little difference.

Last week in a previous posting, I quoted the incoming Commerce Secretary stating during confirmation hearings that the Administration supports lowering the taxes on companies i.e. corporations.    I also provided a quote from Obama's Secretary of Treasury, Geithner stating that the Administration feels it is important the taxes of small and medium businesses go UP to keep the size of the government where it currently is.  Quotes found in link below:

Funny, but Every Single Republican presidential nominee and Every Republican in Congress agrees with these two Democrats and the Administration when it comes to cutting taxes, and yet calls Obama a 'socialist'.  Funny how liars think..

Found this quote today in the New York Times- pretty innocent stuff, no 'gotchas'

"President Obama traveled to Manhattan on Thursday for several fund-raising events, including an extravagant dinner for some of his administration's top Wall Street supporters. The $35,800-a-plate dinner... was hosted by a committee of bankers, private equity executives and hedge fund managers"

As I said nothing illegal or 'gotcha' about it.  Yet, ask yourself some questions:

1)  Why would anyone spend $35,800 for a plate of food?  I don't mean that humorously.  I mean- what would someone feel they had to gain from spending that much to meet the President?   A photograph?  A story to tell their children?

2)   A follow up would be, what would someone feel they had to gain from donating that much money to the Democratic Party, which traditionally (prior to Clinton) put concerns of Main Street before Wall St.? Wasn't this the exclusive domain of the Republicans-- to rub elbows with riff raff and money-hungry monsters dressed in fine attire?

3)  Is it more likely someone would spend that much money in the hopes the President would 'Finally' listen to their concerns and fulfill their needs, or as a thank-you to a man who already has served the banking and finance community well?  And what expectations does someone who spends $35,800 for dinner have for 2013 and beyond?

There used to be a time the Democrats were distinct from the Republicans on issues of economy, taxation, war, providing social services, etc.   It is no accident things changed.

It used to be that the biggest contributors to the Republicans were Wall St 'fat cats' and Democrats got their money from unions. As unions weakened in the 80s thanks to Reagan in particular, they were donating less and less, and a booming Wall St was donating more and more.   In 1988, a genuinely liberal Michael Dukakis got severely trounced by George Bush Sr. and the disparity in 'war chests' was profound.

The Democratic party decided afterwards they would change tactics.  Because they allowed 'liberal' to turn into a dirty word during the '88 campaign, no longer would they embrace 'traditional' Democrats and in 1992, when they backed Bill Clinton, they supported a very Wall St friendly candidate and in turn, money from the financial sector was being placed in the Dem party's coffer.

Clinton did good things in office during his eight years but he also got NAFTA and the Free Trade Act passed, which has completely decimated the American manufacturing base and stunted workers' wages in all non-technical fields.  And in was Clinton who passed the Welfare Reform Act which to the delight of Republicans made it very difficult for the poorest people to get government assistance to survive.

Fast forward to 2008- Obama is elected President.  And before he is even inaugurated, he fires his entire economic team and replaced them with Wall St Clinton-cronies.  And the rest is history.  No 'Jobs Act' passed.. No extension of benefits for '99ers' (those out of work 99weeks and unable to receive any more assistance).. No law placing a moratorium on evictions or foreclosures..  Nothing.

Well.. not 'nothing' I suppose..  Trillions of dollars did find their way into the hands of Wall St and the stock market.. so I guess that's "something"

I end with this thought to consider:  When a man pays for lobster on a date, he's expecting more than a kiss on the cheek.    And when a Wall St. man pays $35,800 to eat "Maine lobster salad with roasted beets, duos of Black Angus beef, braised short ribs with young spinach, and roasted tenderloin with stuffed potato and hen of the woods", he's expecting more from the President than a handshake.

Saturday, June 25, 2011

This Day in History- June 25th

Many interesting things occurred on this day in history- Virginia ratified the Constitution and officially became a US State in 1788,  the Battle of Big Horn or 'Custer's Last Stand' was fought in Montana in 1876, and the Korean War officially began in 1950.  In addition, "The Diary of Anne Frank" was published in 1947 and Michael Jackson sadly passed away two years ago today (2009).

But I wanted to focus on a very special event (depending on which side of the Atlantic you live on) which took place today that fits with the broader themes of Ants & Grasshoppers-- resilience, determination, and to never be discouraged or quit in the face of adversity or monumental hurdles, etc..  

Following is from (in blue font):

"On this day in 1950, an American team composed largely of amateurs defeated its more polished English opponents at the World Cup, held in Belo Horizonte, Brazil. Dubbed the “Miracle on Green,” the game is considered one of the greatest soccer upsets of all time.

The English team at the time, known as the “Kings of Football,” boasted a record of 23 victories, 4 losses and 3 draws in the years since World War II ended. Its members were professional footballers culled from England’s domestic leagues. The Americans, by contrast, had lost their last seven international matches. Hastily assembled just days before the match against England, the U.S. team included a dishwasher, two mailmen, a teacher and a mill worker. The Belfast Telegram described them as “a band of no-hopers drawn from many lands,” ostensibly because some of the men were recent immigrants to the United States.

By the time the two teams squared off at Belo Horizonte, bookies had given the Brits 3-1 odds to take the World Cup, compared to 500-1 for the Americans. The newly appointed American coach, Bill Jeffrey, apparently agreed with them, telling a British reporter, “We have no chance.”

The game began with the Americans on the defense as the English assailed them with one clear shot on goal after another. The goalkeeper, Frank Borghi, a former minor league catcher who now drove a hearse in St. Louis, managed to tip each one.  Finally, with less than 10 minutes to go in the first half, U.S. midfielder Walter Bahr centered a ball from 25 yards out, and Haitian-born forward Joe Gaetjens scored with a diving header. 

England lashed back with a battery of shots throughout the second half, but nothing got past Borghi. The no-hopers had defeated the Kings of Football with a single goal. The 30,000 Brazilians in the stands went wild, knowing that a British loss could help their own team fare better in the tournament. Gaetjens, who would later return to Haiti and disappear during Fran├žois Duvalier’s repressive regime, was carried off the field in celebration.

Appalled English fans could not fathom that the Americans had beaten them at their own game. In the United States, meanwhile, the improbable win barely made a ripple. Only one American journalist had traveled to Brazil for the World Cup in the first place: Dent McSkimming of the St. Louis Dispatch, who paid his own way when his newspaper would not send him. He later said that the American victory was “as if Oxford University sent a baseball team over here and it beat the Yankees.”...

After the upset, both teams were quickly eliminated and returned to their respective sides of the Atlantic–the Brits chastened, the Americans essentially ignored. It would be 16 years before England won its first and only World Cup title. The United States, meanwhile, would not even appear in the tournament again until 1990."

No matter what happens with the global economy; the soulless bankers, corrupt politicians and Evil money-junkies in the markets in collusion... no matter how bad things seem or are in reality, the human spirit rises.  It overcomes, and achieves great things.  As individuals.. as family.. as communities, people who take control of their lives, prepare for the future and are not intimidated by the unknown-- they are Winners.

Tulips shall always grow ~

Friday, June 24, 2011

Economic factoids & Supermodels

~ Bar Refaeli

Admittedly I prefer not doing postings like this.

Ants & Grasshoppers provides useful information and is one of the few sites on the blogosphere that not only represents and genuinely cares about the everyday person, but does not advertise, or seek any kind of financial compensation. We aren't hawking gold or silver.  We don't seek donations or subscriptions.  A&G's wants nothing from you the reader except for you to spread the word to friends, family, coworkers, etc, about this site so others can be informed and aware of the reality of the economic situation facing us all in the near future.

We currently receive on average about 21,000 visitors a day. All of you, from the US & Canada, to Brazil & Germany, to Great Britain & Australia are appreciated for taking the time to visit.  But as stated previous, A&G wants to inform as many people as possible so we will use humor, pop culture reference points or photos of supermodels to bring people in that otherwise would ignore an economics blog.

To those offended, apologies given, but the ultimate purpose of A&G does not change nor waver- to present knowledge of the global economic reality, and prepare people for the future, by any creative means as necessary.

Without further ado.. Some factoids and of course- supermodels...

~ Brooklyn Decker
**  As of June 11th, the number of 'officially' unemployed Americans is 3,697,000.  This doesn't count seasonal hires, part-timers, those out of work for extended period or those who've given up looking for work completely  -- source:  Bureau of Labor Statistics

~Gisele Bundchen
**  Commercial Real Estate dropped 3.7% in April, 2011 compared to March and dropped 13% from a year earlier. It’s now 49% below the peak of October 2007 and at its lowest point in data going back to December 2000.  Source:  Moody's

~ Adriana Lima
**  the International Energy Agency (IEA) and US plan releasing 60 million barrels of oil from their reserves. This equals about 80% of the amount of oil the world uses in one day.  Source: Business Insider

~ Joanna Krupa
**  Did you know: The last time the United States had a President that did not send the US military into any war, "Operation", 'limited' conflict or military action of any kind was Jimmy Carter (1977-81)

~  Heidi Klum
**Time to stock up on Coke (Coca-Cola that is).  The beverage company announced plans to hike prices 3 to 4% due to still surging commodity costs.  Prices go into effect on July 1st.  Source: AP

~ Laetitia Casta
** Part time workers average $19,000/yr in salary - 50% of the median income.  Source: AP

~Noemie Lenoir
**  The last time the US National Debt was paid off was in 1835- the great Andrew Jackson was President (the guy on the $20 bill)

Happy Saturday everyone...

Into "Stocks"? Aye! Nudge Nudge..Say no More!

I make no secret I dislike stock market investors/traders.  Equal heaps of scorn and derision are directed upon the financial TV networks and newspapers that constantly Push the purchasing of stocks and bonds.. Buy Buy Buy! no matter the reality of the economic situation.  The only entities I can think near equivalent as bottom feeders are those in the insurance industry, but in the overall rankings of annoyances, they are mere bedbugs in comparison to Investors and the professional pitchmen who treat every event as a glorious investment opportunity.

Normally the attitude should be, 'Ehh, so what!  Those who invest are adults..they can make their own minds up and sink or swim on their own.'  But this isn't a normal stock market or even a slightly rigged one- The Fed has successfully artificially inflated it by 35% vs its low point in March 2009.  And these are not normal times.. the global economy is heading into a bad 'winter' and cash will be king; you don't want your money tied up in anything- homes. cars, stocks, etc..  I don't want to see everyday 'Mom & Pop' investors lose their life savings by putting their figurative 'feet' into these shark infested waters.

The people that write articles and speak on TV networks like CNBC-- they are hucksters..  peddlers..  gypsies, tramps and thieves dressed in nice clothing.  The mantra is simple-  when the stock market is strong, its time to buy stocks.  And when the market is weakening or depressed, its time to buy stocks.   And when there's dramatic drops in the Dow, its Really time to be buying stocks.

Let's take headlines just from today June 24 to illustrate this point..

First, a couple headlines expressing the reality of today:

Wall Street Drops As Angst over Europe Rises --  Reuters

US Stocks Slump as Oracle Tumbles -- Bloomberg

Basically you get the gist..    Did you know....

On May 31, 2011, the Dow closed at 12,569.79

Today, June 24, 2011, as of 3:20p, the Dow is at 11,945.59

It has LOST 624.20 pts in a span of 18 trading days...  And yet if you read financial news you will still read nonsense with shit headlines like this:

Why Fear in Financials Is Your Friend  -- Barron's

Rising Fear Means Stocks Are At or Near the Bottom -- Yahoo! Financial

Have the bulls retreated enough?  -- MarketWatch

How You Can Join the Ranks of the New Millionaires -- Fox Business

~ The best stock advice I can give right now is to not be in the stock market at all.  But if you have to be doing something with your money, I mean Really Really Have to be investing,  look at companies that provide need more than want.  If/when things get bad, people will not need iPads and shirts with silly horseys on them as much as they will need food and water.  

So with that, 'Caveat emptor'  (Buyer Beware)
~ "AYyyyeee, yo, Have I got a deal for youss!"

PS-  Its 4:12p..  Dow closed at 11,934.58 so that makes an official drop of 635.21 pts in 18 trading days.  

For 'Fun' I turned on CNBC - Maria Bartiromo hosting 'Closing Bell' as she always does.  She gives the grim figures for today, introduces her two guests, then first first words from her mouth are "Ok, where does one invest?"  One guest advises to tread cautiously.  The other says the market is due for a good bounce as it gets into 'earnings season'.  

The empty interviews end and as the show is heading into commercials to sell investing products, Bartiromo gives teasers for viewers to return to watching after the break. The specific teasers aren't important but she did use the word 'recovery' twice and 'soft patch' once.

~ shakes head..  guess it shows 'huckster' is a gender-neutral term.

June 24: Official 2nd Anniv. of 'Recovery'

Today, June 24th is the 2nd Anniversary of the Official end of recession and the start of continual economic 'Recovery'..

Yippeee!! Yayy~  Whooo-hooo~

Remember that kids for when you read this next part...

Now, every month, the Bureau of Labor Statistics release data on employment and unemployment which government, the media and Wall St usually either trumpet, minimize or outright ignore based on personal agendas.

A little known statistical grouping the Bureau compiles is called the Mass Layoffs Summary which is usually released at the end of the third week each month.  This is what it had to say about May, 2011:

"Employers took 1,599 mass layoff actions in May involving 143,540 workers, seasonally  adjusted, as measured by new filings for unemployment insurance benefits during the month... Each mass layoff involved at least 50 workers from a single employer. The number of mass layoff events in May increased by 35, or 2 percent, from April"

Repeating... there were 1,599 'actions' or incidents where 50 or more employees were fired at the same moment by a business.  This was specifically in May 2011 only.  In April, there were 'only' 1,564 mass layoff actions.

If you combined April and May's layoff numbers, taking into consideration that April was 2% less than May, about 284,000 Americans lost their jobs within a 61 day window (April 1 to May 31).  This does not count those fired in mass layoffs where 49 or fewer people were fired at a given time.  Stats weren't kept on that.

All this as the Administration, the media and Wall St tout 'recovery' again and again until you choke and gag on the word.

Well why shouldn't they?  Today's an Anniversary after all..

Thursday, June 23, 2011

Little person: No one is on your side

Two articles that touch on a similar theme- taxation and businesses.

Here's article #1:   "John Bryson, President Barack Obama’s nominee for Commerce secretary, sided with Republicans in Congress, saying companies need lower taxes and that a labor complaint against Boeing Co. (BA) was “not sound.”.  (He) said today he would push as Commerce secretary to curb rules burdening companies, cut taxes and spur trade. - Bloomberg

Here's article #2:  "Treasury Secretary Timothy Geithner told the House Small Business Committee on Wed. that the Obama administration believes taxes on small business must increase so the administration does not have to “shrink the overall size of government programs.”  (He) responded that the administration felt it had “no alternative” but to raise taxes on small businesses because otherwise “you have to shrink the overall size of government programs... We're not doing it because we want to do it, we're doing it because we see no alternative to a balanced approach to reduce our fiscal deficits,” said Geithner."

So what can be deduce from this?

1)  To, Bryson and many others, 'company' means Corporation

2)  To just about everyone in public office, Dem and Rep, the corporation is always more important than the small business.  The small businessman and businesswoman can go essentially 'fuck themselves'.

3)  The corporations received the bailouts and stimulus- they receive tax breaks.  The Main Street businessperson who is responsible for the Majority of US employment, is left to dangle in the wind- they must pay and pay and pay...

4)  Obama is a liberal Democrat in the same way Megan Fox is a good actress or Arnold Schwartzenegger is a loving, devoted husband-- i.e., they're not.

5)  The Entire system is rigged against the bottom 98% and the solutions will not be found at the ballot box. Your needs and wishes are not being responded to by Anyone.

6)  The US' plight is no better or different than Greece, Ireland, Portugal or Spain except we can print our own money and delay the reckoning.

Basic 101: Derivatives and Credit-Default Swaps

I wanted to use this posting to explain the terms 'derivatives' and 'credit default swaps' (CDS) in the most easy to understand manner possible and connect them to what's going on in Greece so people can really understand what the terms mean and what's going on currently in the news.  But rather than write like a dry economics textbook  and put the reader to sleep, I will do my best to explain using real-world everyday examples.

Let's start with derivatives.  The best way to explain what they are is to take you with me on a magic trip to a casino, specifically the roulette table.  If you're not familiar with roulette and how you bet, etc, hopefully you can still follow along and understand.

The picture above shows what the roulette table looks like.  You can bet on anything- whether the ball on the roulette wheel will land on a specific number, odd or even, black or red and so forth..

Let us say for this example you take $50 in chips and place on the 'Even' box.  This means if the ball lands on an even number between 2-36, you win, if its Odd, you lose.. BUT..your odds are not 50-50.  There are two other numbers on the wheel, 0 and 00 and if the ball lands on either, you will lose your $50

So what do you do to prevent the possibility of the ball landing on 0 or 00 and losing your $50?  You 'hedge' your bet so as to minimize your potential losses.  If you were to place a $10 chip on the 0 and 00 boxes separately, you've just created two derivatives i.e. insurance bets.

Now you're still open to risk because the roulette wheel's spin can land on an Odd number and you lose everything, but the risk has been minimized.  Now usually those entities that engage in derivatives make sure they're protected as much as possible.

So using this example, say you placed a $10 chip on 'Odd' as well, then you have all scenarios covered- 'Even', 'Odd' and 0 & 00.  Your chance at a big payday is greatly minimized but if you were in roulette for the long term, and not just 3-4 spins, then its a safe way to bet and gradually make money.  

Banks and financial  entities are not in the investing game for the short term. They are constantly investing and as long as nothing puts them at risk of a Lehman Bros-type collapse, they will continue wheeling & dealing, and using derivatives as stopgaps against big losses.

Now that you understand what basically derivatives are, let's focus our attention on credit default swaps (CDS).

In this example, we have 4 people- Amy, Beth, Cindy and Dara.

Amy needs money badly so she borrows $500 from Beth at high interest.  Beth lent it to Amy because the profit potential at high interest was too great to pass up, but she really doesn't have a lot of faith she'll get her $$ back.  So Beth contacts Cindy.

Cindy says to Beth for a $25 fee she will insure the loan so that if Amy defaults, she will pay whatever portion of the $500 + interest wasn't repaid if Amy stops paying Beth.  So for the nominal fee, Beth feels secure she'll get all her money back no matter what and at this point it doesn't matter Who the money comes from.  Cindy is acting as an insurance agent.

Now Dara believes Amy will never repay so she wants to get in on the action.  She is a speculator.  Dara also pays Cindy $25 because if Amy defaults, Cindy will be now responsible to two people, Beth and Dara, to cover the portion of the original $500 loan + interest which Amy stops paying.

So here's where it gets tricky...

If Amy pays on time and Beth gets her money back, then Cindy profited $50 while Dara lost her $$ on a speculation bet.  BUT- if Amy stops paying after let's say $100, then Cindy is on the hook for $400 + interest to Beth and Dara EACH!

Oh yes- I forgot, Cindy only has $300 in her life savings so there's absolutely No way she will be able to make good on the insurance to both Beth and Dara.  She only offered the CDS as a means to get quick money and never imagined she'd have to cover the loan!

So Cindy is now forced to 'loan' Amy the $$ she needs to pay Beth even if Amy never repays her back, so as to not trigger the CDS making Cindy on the hook to repay both Beth And Dara, the speculator, which Cindy is in no position to do.

Now let's tie this all into what's currently going on in Greece.

Investors purchased Greek bonds or 'debt' at high interest rates because Greece's credit rating was so poor.  Because they felt a bit insecure as to what happens if Greece stops paying i.e. default, investors made hedge bets in the form of CDS to banks and financial institutions in Europe who received money at this point for doing nothing but giving assurances to insure the Greek debt so investors would not take a loss or 'haircut'

If Greece pays their debts, the banks keep the money with no losses.

If/when Greece defaults, it means the CDS trigger in... this means they have to pay back the difference of the billions in euros the Greeks defaulted on, not only to the investors, but also speculators who do not directly hold Greek debt but still got in on the action to bet on Greece's default.

Now the European financial institutions thought to themselves, "Maybe we've over-extended ourselves with all these CDS".  So they made insurance bets or sold derivatives to US banks and financials so that if Greece did default, it would somewhat minimize their losses because these US banks would have to pick up the difference.

This exposed US banks and financial institutions to risk from Greek default while keeping 100% of the money if Greece pays their debts.

So basically what's happened is this-  Greece is pretty much insolvent.  It needs more loans to keep making its payments to the investors who hold its debt.  The money is lent by the IMF and ECB not because they expect Greece to pay them back.  Its because its more financially beneficial to give Greece 100 billion euro, let's say, then to have to pay out trillions of euro in CDS to all the investors and speculators upon a default.

I hope this helps people understand what's going on with Greece, the Eurozone, the US and why everyone is so scared of Greece defaulting even though realistically the nation has no chance to survive on its own, and this everyone is in a great quandry.