Ben Bernanke

Well, It shouldn’t surprise anyone that President Bush picked Dr. Ben Bernanke to head the Federal Reserve. Once he was moved over to Bush’s Council on Economic Advisor's, the handwriting was on the wall. Dr. Bernanke has been hailed and a good choice by Wall Street, financial pundits and political hacks alike. This particular choice that the President made is probably the second most important decision he will make during his term. This is a very important time for the financial markets and it is important for is to see exactly how this man will lead the worlds most powerful financial institution in the months and years ahead.

Where does Bernanke Stand?

Ben Bernanke is a product of our times. He is as much a political animal as he is an economist, just like the current Fed Chief. This should not be surprising as the Fed’s role is as much economic as it is political. Anyone who wants an appointment to the Fed must say and do those things that are politically expedient both to gain the appointment, maintain approval for with it comes the possibility of further appointments. Fed chief's must know where their meal ticket is coming from and not anger those elements who can and do put pressure on those who can make trouble for nominee. If one understands these important political facts, statements and the future of Fed policy pronouncements becomes clearer. In this respect we should examine some of Bernanke’s speeches and comments.

Housing Bubble

Chart courtesy Babylontoday.com

Bernanke does not believe that there is a housing Bubble. Perhaps more accurately, Bernanke wants others to believe that this is his opinion. Mr. Bernanke is far too intelligent to say that he believes there is a housing bubble when he needs to be confirmed by the Senate. This is a time when mortgage bankers will put incredible pressure to maintain the status quo (or at least not rock the boat) which has been quite good for business. Dr. Bernanke knows quite well that housing prices are inflated. He also knows that if he makes this a central issue in his upcoming tenure, enormous forces would gather to attempt to derail his nomination. Mr. Bernanke, who also sat on the president’s Council of Economic Advisers is privy to measures that the administration may have designed to bring the market to more sane levels. Measures such as curtailing the Mortgage Interest Deduction on Income taxes, thus making home ownership less appealing. Yet it is my humble observation that he appears to be one of those appointees that Bush seems to pick for key posts that are not particularly the best of the best, but rather, are personally loyal to the President first and the nation second. This is how I view Bernanke. Granted, it is far too early to tell if this is really the case. But President Bush' picks for key posts on the Supreme Court have demonstrated this unhealthy tendency. Yes, he has all the right credentials, yes all the well-paid for talking heads on TV and newspaper Op-ed writers are heaping much praise on him. So much so that anyone who would dare say anything contra wise regarding him is not taken seriously. When this much praise comes from these bought and paid for opinion makers, I smell the proverbial rat.

So is there a housing bubble? That is a matter of perspective. The real bubble is the irresponsible currency creation that the Fed and Treasury have been undertaking for that past several years. The money first went to stocks during the Clinton era and now have rested in housing prices with advent of extremely low interest rates. So unless the Fed begins a policy of actually attempting to contract the money supply the ‘Bubble’ is likely to remain, or at least a good part of it. Yes, higher rates will certainly cool it off but it is not clear yet exactly how Bernanke will move in this important area at the Fed. Bernanke's comments may have been made to signal that the Fed under his guidance is not going to move against the creative loans (interest only, ARM’s, etc.) that have been used to fuel the rapid increase in housing prices. This is a far more reasonable explanation for his comments. He probably feels that the markets can take care of themselves and sees no major threat in a gradual decline in housing prices.

It is interesting that shortly after Bernanke’s comments Treasury Secretary Snow issued a call saying the exact same thing. So the politically correct view in the Bush Administration is that there is no Housing Bubble and Bernanke is playing ball with Bush as one would expect.

Deflation/Inflation/Global Savings Glut

Where does he stand on these issues? Well, first and foremost are his previous comments on dropping money from helicopters to stave off deflation were indeed rather tongue in cheek, but did show how seriously he viewed deflation and wanted to show what tools were available to policy makers to combat it. The speech is instructive in that it shows that Tax cuts could assist in spurring consumption.

In practice, the effectiveness of anti-deflation policy could be significantly enhanced by cooperation between the monetary and fiscal authorities. A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman's famous "helicopter drop" of money. Bernanke(2002)

Many believe that Bernanke will be an inflation hawk. This remains to be seen. Until he gets in the big chair and looks at all the data and confers with his fellow governors it is simply not possible to say which way he will go. He may continue Greenspan's policy of slow rate rises. He may slow the pace of these rises or he may leave rates alone for some time to allow the markets to digest the increases. The real focus of his decisions will probably be the banks and bond markets. How those rates will effect these two extremely powerful and important parts of the financial system. The other factor that will eventually be faced by Bernanke will be his ability to deal with financial crisis. Crisis such as one that could appear in the Bond markets or a major Hedge Fund going belly-up or a derivatives meltdown. Both Volker and Greenspan faced financial crisis early in their tenure as Governors and as Stephen Roach at Morgan Stanley points out

Every Fed chairman that I ever worked with or observed over the past 33 years has had to face circumstances that he was unprepared for.  Arthur Burns was a business cycle expert ill-equipped to cope with inflation.  G. William Miller was a businessman untrained for the vicissitudes of financial markets.  Paul Volcker was a financial expert who struggled with a wrenching recession.  Alan Greenspan was a business consultant who was quickly thrust into the thicket of financial crisis management.  Ultimately, Volcker and Greenspan learned to adapt and cope — but not without initially going through wrenching financial market corrections – Stephen Roach

Keeping Wall Street happy has been the Greenspan legacy and it is not at all clear that Bernanke will be any different over the long term. I do not see any sign that fiscal sanity in terms of money creation will return under Bernanke. While many economists such as the extremely experienced and knowledgeable Stephen Roach talk about ‘inflation targeting’, such a concept seems almost comical when one looks at M3 during the Greenspan era. Mr. Roach knows far more about economics than I do and certainly has been around the block more than once. In fact, I would feel more comfortable with Roach heading the Fed than Bernanke, whose ties to the Bush administration give me the heebie-jeebies. Roach has been tireless in pointing out the real dangers to the US economy in the form of asset bubbles and the monstrous current account deficit.

America has far more serious problems on its plate that a new Fed chairman will quickly have to confront.  Two of them are especially worrisome — a monstrous current account gap and the mother of all asset bubbles.  And it turns out that the external deficit and the housing bubble are joined at the hip — thanks to the policy strategies of the man who is about to pass the baton to Bernanke… Alan Greenspan – Stephen Roach

Bernanke has said all the right things to get the appointment. The most ridiculous of which is that the (purported) ‘global savings glut’ belongs in US Treasuries. Translation: that America does not need to change its profligate ways because we can and should induce yet more foreigners to keep us financially afloat. This is music to the ears of Wall Street, no its symphony to them!. It says we have a future Fed Chief that will allow things to go on as before and there is no need to change our ways, just keep printing money, keep borrowing and keep on spending, all without requisite fiscal disciple. Bernanke is playing that ancient and longstanding of Washington political games because if he says anything different regarding the current account deficit, he earns a new set of enemies what will work to derail his nomination. The rule: speak nonsense and win the appointment, speak truth and get derailed.

While many see Bernanke as an inflation ‘hawk’ who will carefully watch inflationary trends, it must be noted that many very competent economists will tell you that deflation is still in our the future after the ill effects of inflation have run their course. These economists say that the US consumer is already at his wits end, already deep in debt and unable to make purchases for things at higher and higher prices. To put it mildly inflation is where Greenspan's policies have led us, but the real question is can the American consumer continue to borrow at the same rate the Fed can create money? The answer to that is, not for much longer and that is the argument many deflationist's make. Bernanke made clear that there are tools in the Fed’s arsenal to combat it, but will they ultimately work? No. Ridiculous suggestions of forcing consumption by causing currency held by individuals to depreciate in value¹ if not spent within a certain time frame have been suggested to stave off deflation². This is not real economics. This is merely a form of slavery that says, ‘If you don’t spend your money when and the way I want you to, I will steal it, little by little, until you do'. This kind of policy can only come into existence or even be suggested when disaster is looming in an economic system. The Fed under Greenspan has created a monster that Bernanke is going to be asked to control without being allowed to fix the actual root of the problem, that being the excesses of the fiat money system in general. I think Bernanke will differ from Greenspan in this important respect. While Greenspan has been rather outspoken perhaps even relentless in speaking out about US deficits, Bernanke will probably be far less so.

Mr. Bernanke is cut from the same mold as the other Neocons; The economic model the Neocons work from is to cut taxes for the wealthy and corporate campaign donors, increase government borrowing, continue and increase job outsourcing and leave the real issues to be solved at some future date. His appointment is no surprise but in these perilous times his appointment is a potent symbol of the nation’s unwillingness to come to grips with reality, its foolish political leadership, its deep seated antipathy towards its own citizens and yes, its immovable political and financial corruption. Bernanke's appointment is symptomatic of Washington's malaise and demonstrates why positive change is impossible in 21^st century America.

Job Losses

Job losses are continuing right on schedule. The US economic train should arrive at Poverty Station in a couple of years, with stops at Hobo Junction, and Bankruptcy Crossing along the way. Hurricane Katrina was blamed for the abysmal job performance in September, especially in the hurricane affected areas. There were 2069 mass layoff actions (seasonally adjusted) effecting 257,454 workers according to the Bureau of Labor Statistics. Which industries were hit hardest? Elementary and secondary schools with 14,126 being made redundant. Temp workers were the second hardest hit. Neither of these industries is known for high wages and with some of the municipalities facing fiscal difficulties after the storm, these people may be unemployed for months or years to come, it is impossible to say. These storms were far, far more devastating than we have seen on the nightly news³, people are still awaiting help that will probably never arrive. Where is the assistance? Where is the money promised? Did you know a lot of people are still living in tents (not provided by FEMA), many cannot return to their homes and evictions are in the rise? In Florida as I write this, millions are still without power, water and other essentials. This is not a sign of a robust economy. The slowness of the response and the lack of aid is in my humble opinion a sign of deeper economic problems that the nation is facing. I have maintained that our current account deficit is a much deeper problem that is being let on in the mainstream press and I still hold this view. I have watched the government renig on its commitment to our troops who are fighting a war. The Navy says that it will not pay re-enlistment bonus money to soldiers who were promised it. I have seen the extreme slowness in getting aid to hurricane devastated regions along the Gulf. I have seen our DOD refuse to pay for body armor for our troops and refuse to reimburse soldiers who pay for it our of their own pockets and only eventually do so under extreme pressure from congress. These are not signs of economic strength. These are fundamental things the Government should be doing but just does not seem to have the money for unless Halliburton or Gilead,which were once formerly headed by the Vice President and the Secretary Of Defense respectively, are the recipient of the money. It is the little things that I notice. No, the government is not broke in the practical sense as long as it has Greenspan or Bernanke at the Fed, but the signs of fiscal strain can be seen if one takes the time to look beneath the surface. Let us remember that just before the Senate went into secret session the topic was the budget and the Deficit Reduction Omnibus Reconciliation Act Of 2005 a summary of which can be found here.

The Senate realizes that some thing's gotta give and the war in Iraq is a massive drain on the federal budget, hence this is one of the reasons so much controversy is being waged over it. It has as much to do with stopping the war, the Democrats trying to embarrass the President as it does with plain old fiscal reality.

Yet the Job market is going to soon be reeling from more mass layoffs from GM probably Ford and almost certainly Delphi. Corporate Layoffs in general rose 13% in October Novell is also planning laying off part of its 'non-core' workforce. Even Dell is considering layoffs. While none of this is really 'news' it does show that the employment situation is very fluid and depending if you have just received or are about to get a pink slip, it could be much worse for you personally.

Banking/Hedge Funds/Derivatives

“It won't be the bad people who destroy this country. It'll be the good people who rationalize the bad people's conduct” - A Nevada Judge

CNN reported that Hedge Fund fraud is higher in the US than in Europe, where it is almost nonexistent. The story struck me because this is endemic of a deeper malaise that has crept over the nation since Bush entered the White House. I cannot forget that it was people connected with this administration (and even the Presidents own brother) that were involved in the the scandals of the Savings and Loan debacle in the 80's⁴. Yes, the story has become lost in the memory hole these days. No one really remembers it. It took the government years to 'figure out' that there was a massive problem. In 1987 the FBI announced that fraud and embezzlement cases had risen 42%.The comptroller of the currency in 1988 surveyed the banks and found that in less than 10% of the cases of failed thrifts were due to economic reasons. The other 90% of the reasons were that senior personnel inside the banks were involved in fraud or were guilty of extremely poor management. Organized crime elements were involved as well as a small number of intelligence personnel in our own government. They were apparently using the proceeds to support nefarious policies⁵ in Central America using criminal networks to rob the banks to pay for projects that could not be funded legally.

“In virtually all cases the boards of directors of resolved institutions were found not to have acted prudently”. - Danny Wall, FHLBB

This was quite an admission back then because this man had continually said originally that there wasn't a problem. What was the number one reason these things happened? One word - deregulation. Once this happened, the mafia and other organized crime networks⁶ moved in and started opening up and running financial institutions across America. Regulators across the country now were put on notice, the Reagan Administration wanted less regulation not more in order to 'free the markets'. This is relevant today because today it is not the S&L's who have been taken over by nefarious and criminal elements, increasingly many believe it is the Hedge Funds that have been infiltrated. These entities are shadowy by design, many reside off shore to make the identity of their patrons difficult to discover. These entities are being used by many of the same elements that brought down BCCI. Yes, I mean the terrorists, third world dictatorships, drug traffickers and yes even our own intelligence services. The global crime syndicates (make no mistake they really do exist) goes from one scam to another under the banner of 'deregulation'. Deregulation of the energy sector is a perfect example of their definition of deregulation and Enron is the result.

Deregulation, as it has been put forward by the GOP is a codeword for allowing shady transactions and criminal activity to go on without any oversight.

The Massachusetts Bay Transportation Authority Retirement Fund yesterday confirmed that it was among the investors in Stamford, Conn.-based Bayou Hedge Fund, currently under federal investigation after the disappearance of hundreds of millions of dollars of investors' money. - Boston herald

"It's pretty clear that we will not be knocking on (hedge fund) doors very often," Campos told several hundred hedge fund managers, industry lawyers and others. And even if it did, "the SEC will never have the degree of knowledge or background that you do." - Reuters (Sept 14) FYI: Campos is an SEC regulator

The founder and the chief financial officer of a beleaguered hedge fund pleaded guilty to conspiracy and fraud charges Thursday for their role in a scandal that allegedly cost investors millions of dollars. Samuel Israel III, the founder, and Daniel Marino, 46, the CFO of the Stamford, Conn.-based Bayou hedge fund, pleaded guilty in federal court. - ABC

JERUSALEM -- Boaz Manor, co-founder of collapsed investment company Portus Alternative Asset Management Ltd., has pleaded through his lawyer to receiver KPMG Inc. to reconsider moves towards placing the company into bankruptcy. - Globe And Mail

All of which brings us to...

In court papers filed Thursday in U.S. Bankruptcy Court in Manhattan, the unsecured creditors committee in Refco's Chapter 11 case want to subpoena records of 11 former officials of the New York-based brokerage, including ex-board members and two former chief executives. AP

Some observers also wonder how some of America’s smartest financial firms missed the sums that are alleged to have been taken out of Refco. These include Thomas H. Lee Partners, a big private-equity firm which holds a big stake in Refco, as well as the investment banks that underwrote the company’s IPO: Credit Suisse First Boston and Bank of America joined Goldman Sachs in taking the lead. - The Economist

In case you have not been reading the financial news lately Refco was forced into bankruptcy when its CEO allegedly hid millions in debts, about $430 million to be more precise. Mr. Bennett who headed the company was removed and did repay the money, but the damage was already done. Obviously the company, like so many in America had inadequate internal controls that would have prevented such a thing from happening. The watchword here is deregulation and our financial elite seem bent upon keeping these entities as unregulated as possible. Realistically, any business person is going to hate having to comply with regulations. They cost money to comply with, extra staff must be hired, corrections to business processes must often be implemented and so on. In a word, they are a pain. So no industry is going to welcome increased oversight. It is often viewed as an unnecessary intrusion into business. Yet the problems in the hedge fund industry, as I see it, are that no one knows that there is criminal activity going on until one of them fails. This is a criminals dream but most unhealthy to the global financial system. Remember LTCM.

The stakes in the Hedge fund industry are enormous. These funds can and in my opinion, probably will one day bring down the global financial system. One massive loss on a derivative position could trigger a host of these funds to get into deep trouble. You couple that with the get rich quick fraudsters that operate in the shadows of the global economy and you have a recipe for disaster.

Dear readers, I am not the only one sounding the alarm. Listen to what one of London's biggest fund groups is saying.

Fears of a financial fallout in the hedge fund industry were fuelled today by a warning from Gartmore, one of London's biggest fund groups, that 'something is broken' in European equity markets. The ominous statement - in a letter to investors from Gartmore managers Roger Guy and Guillaume Rambourg - comes as the firm calculated October has been its worst ever investment month. - Thisismoney

The Refco scandal is reverberating around the globe. In Austria BAWAG is set to file lawsuits. BAWAG is owned by trade unions.

Another problems is as stated before by me and other is the lack of transparency. This does not appear likely to change as there are powerful elements that have stifled efforts at reform with great success.

Poverty Watch

The USDA says that hunger in America has risen by 43% since Bush has taken office.

Hunger in American households has risen by 43 percent over the last five years, according to an analysis of US Department of Agriculture (USDA) data released today. The analysis, completed by the Center on Hunger and Poverty at Brandeis University, shows that more than 7 million people have joined the ranks of the hungry since 1999. - Science Daily

Nationwide, 38.2 million Americans live in households that go hungry. 14 million of these are children. Nationwide 11.4% of American households run the risk of hunger. In Minnesota, some 380,000 people are hungry at some point of the year. That is 7.1% of the population. How is the GOP responding to this growing national crisis? It proposes to cut the food stamp program by $840 Million. The group that suffers most in this situation is the children. The reductions in the program are to help reduce the federal deficit, but as Robert Forney of the Nations Food Bank Network says;

"Hungry and poor Americans are not responsible for creating the federal deficit, and they should not be expected to pay for it." - Robert Forney

This is a very real problem nationwide. There is a growing underclass of people who are no longer being counted on various government statistics and are being impoverished as the money for the traditional safety nets gets shifted to Halliburton, Worldcom, Lockheed Martin to name a few. Texas has the highest rate of households going hungry.

From 2002 to 2004, more than 16 percent of Texas households were food insecure, meaning that at some point they had trouble providing enough food for all their family members, the USDA report said. In nearly 5 percent of Texas households, at least one family member went hungry at least one time during that period because they couldn't afford enough food. That's the fourth-highest rate in the country. AP

The U.S Conference of Mayors conducted a survey in 2004 on Hunger and Homelssness in America's Cities. It is quite enlightening as it shed light on growing problem in America. Among the findings were:

· Officials in the survey cities estimate that during the past year requests for emergency food assistance increased by an average of 14 percent, with 96 percent of the cities registering an increase. Requests for food assistance by families with children increased by an average of 13 percent. Requests for emergency food assistance by elderly persons increased by an average of 12 percent during the last year, with 72 percent of the cities reporting an increase.

· On average, 20 percent of the requests for emergency food assistance are estimated to have gone unmet during the last year. For families alone, 17 percent of the requests forassistance are estimated to have gone unmet. In 48 percent of the cities, emergency food assistance facilities may have to turn away people in need due to lack of resources.

· Fifty-six percent of the people requesting emergency food assistance were members of families – children and their parents. Thirty-four percent of the adults requesting food assistance were employed.

· The overall level of resources available to emergency food assistance facilities increased by 18 percent during the last year in the cities registering an increase.

· Forty-four percent of the survey cities reported that emergency food assistance facilities are able to provide an adequate quantity of food. Sixty-seven percent of the cities’ emergency food assistance facilities have had to decrease the number of bags of food provided and/or the number of times people can receive food. Of these cities, 63 percent have had to increase
the limit of food provided. Eighty-one percent of the survey cities reported that the food provided is nutritionally balanced.

· In 100 percent of the cities, families and individuals relied on emergency food assistance facilities both in emergencies and as a steady source of food over long periods of time.

· Unemployment and other employment-related problems lead the list of causes of hunger identified by the city officials. Other causes cited, in order of frequency, include lowpaying jobs, high housing costs, poverty or lack of income, medical or health costs, substance abuse, high utility costs, mental health problems, homelessness, reduced public benefits and high childcare costs.

Their is indeed a wide gap in access to basic goods and nutrition in America. What can make matters worse for some low income neighborhoods is that there may not be enough (or any) supermarkets to meet the communities needs, forcing an expensive trip to the store across town. For most Americans the couple of bucks it costs to get across town is not something to consider. For someone who can barely make rent (or hasn't for the past couple of months) this can be a real problem.

But thankfully the spirit of American charity is far from dead. There are many who have set up food banks, set up large areas where the homeless can live. Listen my dear readers, there are entire families that are homeless. Children who do not eat regularly, mothers who must do the unspeakable to feed their children. I will not judge these people, and until hunger pangs rack you and your child's stomach for months on end, neither should you.

If Katrina did one positive thing it made clear that poverty has not gone away. Surprisingly even the mainstream press is covering this story regularly, showing just how devastated the entire region is and how the government is NOT helping. Once again I cannot help but wonder just how serious our current account crisis is now when I see a large swath of America in shambles and so very little is being done. None of these things are signs of the economic 'robustness' that are constantly touted. They show deep problems in the American economy and its sense of priorities.

Poverty is real in America and just because certain agencies in the government try to remove the very poor from its statistics does not man that there are not millions of Americans who live in real poverty. I also think that soon, millions more will join them, while our national news networks ignore the problem and focus in on Janet Jacksons breasts.

National Security

This may not have much to do with economics but it is important. I will not get into the partisan game regarding the Plame affair. But some commentary is in order. Some have suggested that what was allegedly done by Libby and possibly Rove, was no big deal. For those of you who have loved ones who serve in the military think about your son or daughters commander pointing out to the Taliban or some Al Qaeda operative exactly where your son will and exactly at what time as he serves his nation. He does this so that he can be exposed to danger or even be killed because the Commander found that his daughter had the 'hots' for him. He deliberately abused his power to settle a personal score and exposed a serving solder to danger to settle a petty squabble. You son or daughter may come home in a body bag because of it.

When one is dealing with an undercover personnel in the CIA this is clearly a serious crime because you have exposed not only the agent but also any operation that he or she may be working on and those agents that are working with him or her. This is exactly the kinds of things a spy or a traitor would do. If it is ever established that this was done of behalf of a foreign government (Israel?) this is high treason, and it is punishable by death. What this administration tried to do to punish its own diplomat is reprehensible and strikes at the heart of our security services and frankly, it is the very definition of treason. I say this because this was no innocent mistake. They knew exactly what they were doing.

Next year, hundreds of CIA personnel will be leaving the agency. They have already submitted their papers. There is a mass exodus taking place right now. People are so fed up with the Bush administration, its arrogant and incompetent policies that many a career officer is leaving. Who would want to put their life in danger for this administration and the nitwits who voted him into office? Who would willingly put their lives in danger when your own leaders may expose you to be murdered to satisfy some cheap political vendetta? This loss in irreplaceable. It takes years just to train one of these people and at least a decade to get the necessary experience before they are of any real use. Folks, in my considered opinion, George W. Bush, and Richard Cheney are the greatest menace to American security this nation has ever faced. No, I am not saying that they are maliciously trying to destroy America or are deliberately working against its interests. It is just that profits seem to be far more important than the nations security. They have demonstrated again and again where their priorities lie. If America's security must suffer so they can make money, America's interest will suffer. They have seriously undermined our national security with policies that can only destroy our national standing in the world, wrecked our military and have stubbornly refused to change course.

It is not the headlines that will tell you this, it is the things that are being done inside the DOD, CIA, DHS and other agencies that one never hears about that makes me say this. The corruption is truly hideous. This nation cannot survive as a free and prosperous nation under 3 more years of Bush. The corruption and incompetence are too great, the damage he as already done will take decades to repair. Our ability to forge coalitions, and lead the world have been severely and probably irreparably damaged under his leadership. We are now viewed as a nation of decadent perverts, bent on war, kidnapping, rape and torture, while all the Presidents men get the contracts to build new torture facilities. These policies will eventually create a new market; the torture market. Perhaps they have plans to create a torture stock exchange in the not too distant future. Don't laugh they tried to do it with a terrorism casino couple of years ago. Perhaps you will be able to bet on how long someone can stay alive under the most extreme forms of torture. Perhaps they will start abusing children, and torturing 6 year olds and betting how long they can stay alive under their twisted regimen of 'renditions' and torture. Maybe they will create a torture Czar. Anybody want to buy shares in TORTEX futures? I will not apologize for these questions. The leadership of this nation is foul enough to bring such things into being.

The DNI

The creation of a DNI is a great idea if you like inefficient bureaucracies. As one Intelligence Officer stated to me recently, 'Having his new layer of bureaucracy and trying to get anything done in it is like trying to stir frozen molasses'. The creation of this position is exactly what our intelligence services do not need, another bureaucracy. It isn't working and it is not going to work. What is the effect of this? I will tell you bluntly. It means that we are far less prepared for a 911 event now than we were before Sept 2001. Be afraid, my fellow Americans, be very, very afraid. We are not prepared and every change that should be made isn't being made and those things that add inefficiency to the system is being touted as a solution.

These things could be dismissed as typical government inefficiency but today, for good or for ill, we are in an very serious unconventional war and that war has already and will once again come onto our shores in the form of terrorism and crime⁷. Folks, there are more ways to attack this nation than flying aircraft into buildings. There are many vulnerabilities to our national infrastructure that are not being addressed with any kind of seriousness by our leaders. There are no 'outside of the box' thinkers who can point out the real problems and give creative solutions. Those thinkers are gone and have moved out to the country or in some cases, out of the country, far away from the hustle and bustle of Washington. Until we get leadership that listens to sanity rather than sycophants, understands the need for new solutions in this new age, America will go the way of all empires, it will be destroyed from within while our leadership scratches their heads and says, 'We never saw it coming.

OBL

I really hesitate to put this up, but I think it is necessary for some of you to understand how screwed up this administration is. Folks in the DOD and the CIA have a pretty good idea where Osama bin Laden is (I still believe that he is dead). Some inside these agencies have even tried to get him. But there have been some indications that elements at the highest level from within our own government have attempted to hinder and obstruct efforts to capture him (or high level personnel in Al Qaida), which dwell in the eastern parts of Afghanistan and sections of Pakistan. For obvious reasons, I cannot go into great detail here other than to say this. A top level decision has been made to finally capture him at a politically important moment. Why am I telling you this? Stopping Osama Bin Laden and Al Qaeda are not the primary motives for our wars, despite what you are hearing and seeing on TV. Once one understands this, what this administration is doing becomes increasingly clear. Sadly when (or if) pictures of OBL inside a prison are beamed onto the boob-tube in nitwit-land, other problems will emerge. Many in the Saudi government are not going to like it. The Bin Ladens are very prominent in Saudi Arabia and have received government contracts from the US. This has led many to wonder what is really going on. When the Khobar Towers were destroyed by Osama Bin Laden's network, it was the Bin Laden Group that the US chose to rebuild the US Airbase. What a way to make money! Folks, I ask all you to do is to try and think on a different level. These folks seem to have a completely different morality and ethical code than most people, so if you try to impute your moral code to them you will never figure out what is going on.

In Conclusion.

I think America is on the cusp of some dramatic changes. When the US Senate goes into secret session over concocted War Intelligence during debate on an extremely important budget resolution while America has about a $600 Billion account deficit (probably more in real terms) that it absolutely must fill in order to continue keeping the nation in operation, you know there is a crisis. Let it be noted here that whole topic of the discussion was the Budget before the Senate went into this secret session. Folks, listen to the talk coming out of Washington. It is exactly as I said it would be, a focus on the deficit now is on the front burner as is the inflation watch. Inflation will be a serious problem if the Fed is monetizing our debt, and I strongly suspect that at least to a small degree they will have to. This is a crisis make no mistake, don’t let pundits feed you a load of garbage and tell you things are OK and that there is no problem. There is and the worst of it is, even if some miracle happens that allows is to continue as is for another year, there is still next year to think about when the debts will be even higher. This problem is not going to go away until fundamental changes are made. Listen to all of the talk about tax reform, ending the Mortgage Tax deduction, taxing oil profits... anything to get more revenue into the Treasury, this after rather high tax revenues this year. Why? Well one answer is the interest on our debt. yes folks things are getting pretty ugly. I will leave you with some thoughts here. Some have said that America's leadership is preparing for an internal crisis. I cannot vouch for the authenticity of these reports but I can say this. Something big is happening in Washington and the Rove-Libbey situation is just one important aspect of it. I contend that we may soon be on the verge of a economic crisis that will show itself to every American in the months ahead.
Stay tuned...

Great links

Jim Puplava has a special round table on Are The markets Rigged? Another very interesting audio presentation from Jim's site is on The Long Emergency. This is really a long view on where the US economy is heading with an emphasis in energy. Worth a listen!
Transcript

Audio

By Mark S. Watson

Anyone interested in purchasing a copy of Conquer The Crash At A very reasonable price can e-mail me at offer-crash@markswatson.com
Only While Supplies Last!!