Bonuses to be Paid to Bankrupt AIG!

Despite Fed Chairman Bernanke's lie before Congress last week, AIG is a zombie institution. It is only alive because of the life support, 4, Huge infusions of Billions in taxpayer funds. It cannot exist on its own without government help.

This is the firm that single handedly issued enough fraudulent insurance on securities across the world that the world's financial markets would collapse if the insurance claims were not paid. We, the taxpayers are now making good on AIG's fraud!

Now, are you ready for this? It turns out that AIG is going to give Bonuses, over $161 Billion of our money to the top executives of the AIG unit that wrote the fraudulent securities!

And some Pea Brains are complaining about the possibility of some unworthy home owners getting relief under the Presidents Home Owner Bailout! Open your Goddamn Eyes!

The rules of the game are now Startlingly clear. They are taking literally the Wall St saying that the Banks are too big to fail and the taxpayer is too little to Bail!

Well, ladies and gentlemen, I come from the mean streets of Bedford Stuyvesant in Brooklyn, NY.

There we always treated each other equally. If someone came after you with a knife, you defended yourself with a knife. If a gun, you used a gun and so on.

The banks, unfettered by the effete Federal Government; and I am being charitable, are trying, with boldness, arrogance and unfettered greed to take every single penny they can from us. That in my view constitutes an attack on me and my family!

We must defend ourselves, equity and justice demands that.

What I am recommending here and to all of my clients is that they should do everything in their power to put themselves and the welfare of their families first.

We are currently in a Deflation, heading into a the 2nd Great Depression, I believe.

In a Deflation, which few of the Experts seem to be aware we are in, and god help us the know nothings among the public and Congress that are calling for a Reduction in spending which is exactly opposite to what needs to be done to break out of a deflation; the only thing going up is the value of our debts.

As the money drains from the economy, strangling demand, the very definition of deflation; asset prices fall across the board as they are now as do dividends and wages. The only thing that does not go down is the debt.

Look at it this way. If you were making $50,000 year and you owed $10,000, that is 20% of your income. If your income is cut, say you have to take a new job at a greatly reduced salary, the amount of your debt stays the same. But now it has grown to represent 40% of your income therefore sucking up the much lager percentage of your income.

To save yourself and your family, get out of as much debt as possible before it depletes all the remaining resources you have; your retirement funds, your children's educational funds, the money you are saving for a down payment on a house, etc.

If that means stop paying and defaulting on bank debts, credit cards, etc. then do it! Go bankrupt if at all possible to wipe the debts out. Fuck the banks!

I know, I know, what about the integrity of this approach? Remember, fight knives with knives, guns with guns? You are fighting against godless criminals who are out to rob you!

What about your credit score you ask? Well, you can either be the one with the highest credit score among the other "responsible citizens" living under the viaduct, or you can be among the few who come out on top on the other side of the depression by investing their cash in precious metals, gold and silver, the only form of money that goes up in chaotic financial times.

This will be the only way to survive the inevitable devaluation of the dollar which will be required to get us out of this Depression, just like it helped get us out of the last; but this time, instead of gold going from $20oz to $35oz, you will probably see it go from $1,000oz to $10,000oz!

I believe silver will be an even better investment for many reasons. If you would like to read more, go to http://tw1.us/BC

In any event, that gold or silver will either be in your pocket or the bank's, the choice is yours!

You are invited to read this entire blog to get a better understanding of the very real dangers that what we, the citizens are facing from the banks and their compliant handmaidens the politicians.

The bonuses will be paid to executives at A.I.G.’s financial products division, the unit that wrote trillions of dollars’ worth of credit-default swaps that protected investors from defaults on bonds backed in many cases by subprime mortgages.

Ugghh! It is Getting Harder and Harder to Report This Stuff!

I mentioned in an earlier Post that this year is the end of the Government Bailouts! You know why? Because it is coming down to either the Banks, GE and AIG go under or the Federal Government goes under! It is coming to that.

The Big Banks, those that are too big to fail hold about $200 Trillion in Toxic Derivatives, CMO's CDO's and CDS's. Last time I looked, they were estimated to be worth anywhere from 50% down to 5% of the value noted on the bank's balance sheets. There is simply not enough money in the world to keep these cash sucking vampire zombies and their blood thirsty management afloat, period.

Look at this. I fully expect the employment numbers to be released on Friday to be north of 700,000, maybe not when they are released, but perhaps when they are "revised" next month when even worse figures will make them look not so bad.

It is official, the stock market has now lost 50% of its value since 10 '07 meaning that 10-12 years worth of accumulated wealth, over 5 Trillions in asset values have been destroyed.

Where will the Dow end up? I predicted in Oct Nov when it was about 10,000 that it would hit 5000 in the next 6 months, and it looks right on target. After that? Below 3,000 is likely. Why?

Corporate profits, the driver of stock prices are down 61% that is the biggest drop in 141 years and they are going lower. Assisting will be a default rate of at least 10% in corporate bonds which will ripple through the bank's asset valuations.

They say that 1 in 5 mortgaged homes is underwater, the owners owe more than the property is worth with prices down about 30% since the peak and since there was only a 25% equity cushion to begin with... With prices slated to go down another 15% this year, that will mean between 25 and 30% of mortgaged homes will be underwater. What was that sound? Jingle Mail, the sound of keys being mailed to the banks! They won't have to bother to foreclose.

10% of mortgages are delinquent, about 4x normal.

Let's see, total consumer debt is is closing in on 350% of GDP, and that GDP is an inflated number! We'll see a record level of credit card defaults as the debt bloated consumers flatulate their way back to normal debt and spending levels.

Where does that leave you, and me? Relying on the Internet to generate cash flow. This is the only out for the Middle Class to become the Internet Class. High paying jobs, like Master's degrees will be nostalgic relics of a time long ago before this century is out.

The only train out of here? Not the feeble pokes the Obama team is making at the problems, with Rush and the Kno Nothings cowering them into feebility.

Precious metals will be the only antidote to the Ultimate Solution to the problem, probably though in Obama's first term, will be precious metals as they have always been in times of chaos and hyper inflation.

Stay tuned as I fleshout these options.

No More Bailouts!

I told a colleague of mine, wait until you see the losses in the 4th Qtr for the banks and corporations.

It is now apparent to nearly everyone that the banks are insolvent, the auto companies are bankrupt and throwing more millions into these vampires is only increasing the losses to society.

The US has reached the breaking point. We simply do not have the money to keep these zombies walking.

There has to be a wholesale flushing of the system. They need to release a pack of rabid dogs in Citibank, AIG, Countrywide and other dens of iniquity and flush them out.

The very people who caused the problem are still running the show. That is insane. Jack Welsh former CEO of GE, last month was crying for the bank CEO's saying if we cut their compensation, they would leave!

Sorry Jack, you old fool. They caused the problem, they pocketed huge, immoral and in some cases, illegal profits now they want us to baill them out, and the fact that so far we have; proves the point that politicians are nothing more than the levers through which the rich bankers control us.

However, the age of the Government Bailout is coming to an end.

With AIG, GM,Citi and more to come going back to the government for more money, the ability for the Fed or Treasury to keep issuing money, is rapidly evaporating.

At some point, soon, it is going to become glaringly obvious that the US will never be able to meet the financial obligations it is creating.

Like my father use to say, never write a check with your mouth that your ass can't cash! We are rapidly approaching that point where if we print more money or issue any more Multi Trillion dollar guarantees, the world will downgrade our debt and stop buying it, since it will be obvious that we cannot meet our obligations and are in fact bankrupt!

The whole idea of even trying to reflate the banks to the pre crash dimensions is ludicrous. Funny, just like there are no atheists in foxholes, there are no capitalists when the system is crashing, they all want to be bailed out by a socialistic government bailout.

The next step will be the nationalization of the big banks, breaking them up and selling the pieces back to the private sector after their balance sheets have been cleaned up. This is not some Communist takeover. The exact same thing happens whenever the FDIC takes over a bank and it is handled in orderly and effective manner and the sun still rises the next day!

And, yes the stockholders and executives will be wiped out as the price the capitalist system exacts for failure, sorry about that Jack!
T

A Quick Update on Where We Stand...

How about housing? New, luxury condos in Manhattan now loosing air too with new Battery Park condos selling for up to 56% off! Homes in Detroit and Cleveland being dumped by the banks for $1,000 each. 10% of all mortgagors late on payments, 15% of all homeowners with a mortgage owe more than the house is worth. The new restrictions banks are putting on potential home buyers, such as 30% cash for downpayment, closing costs and mandated bank reserves, has closed about 50% of willing buyers out of the market.

Mass unemployment spreading to every sector, 34,000 more from Circuit City bankruptcy alone. If you count unemployment the same way they did during the Great Depression, and there is no reason we shouldn't, our unemployment rate is really 16%

We are looking at an unstoppable avalanche of bankruptcies: US Airways, Saks, Best Buy, Kmart, BN Furniture store, Bronx, NY etc are all on the brink. Circuit City was just the first big name. Retail is moving to the Internet, just like travel. There is no need for the big overhead of a physical location in many instances. Half of all electronic purchases are now made over the Internet.

US Government will wise up later than sooner that they can not continue to save everyone. The big banks and financial institutions are already dead, the only thing keeping the lights on is tax payer money and that will soon come to a halt. Citi, Bank of America, AIG have already had several hits on the public tit and will need more. Just in: "Friedman, Billings, Ramsey analyst Paul Miller made waves Tuesday by suggesting that Bank of America Corp. (BAC: 5.78 +13.33%) needs more than $80 billion in new common equity capital. The bank begins the year with $61.7 billion of tangible common equity, supporting $2.4 trillion of tangible assets, Miller’s note said according to a MarketWatch report. That’s well below the 6 to 9 percent ratio that Miller believes is needed." Can the bank earn the Billions it needs? It just lost $1.7 Billion in the 4th qtr. Earnings are headed the other way, down, not up.

Consumer delinquencies will destroy entire industries: housing, credit card (banks), autos, etc.

Commercial real estate will soon join the party. You don't need Malls if the customers cannot afford to buy. Just in: "Suggesting that capital markets turmoil is now affecting multifamily apartment owners and developers, the National Association of Home Builders suggested Wednesday morning that apartment developers are finding it difficult to fund future projects."

Obama will have no choice but to devalue the currency to provide enough inflated dollars to pay the Trillions of debt we have and are continuing to build up. A deficit of over $2Trillion is very likely this year.

Internationally, the Chinese economy is heading for recession too. Plus, they see the growing recklessness with which the US prints money to prop up failed financial institutions. This means that they will stop, sooner than later, buying US Treasury Bonds. This will extinquish the last real estate bright spot, low interest rates which will be yet another stake in the real estate market's heart.

What about gold and silver, you ask? The current deflation has beaten down gold and silver by 30-40% in the last year. prices of gold and silver have been d
The baby has been thrown out with the water. Their prices, especially those of silver, have been hammered in the past 14 months and I expect they will continue to trend down as the deflation persists. This makes it an IDEAL time to buy gold and silver at such deflated prices. As the only real money in the world, people will stampede to these metals once the economy crashes.
Oh, yes, stocks. I predict that within the first qtr, 2009, we will see a Dow of around 5,000. The current deflation is sucking the life out of businesses. No financing for businesses, failure of more major financial institutions, bankruptcies of major retailers, no sales, dropping corp profits, possibly rising interest rates all point toward a crippled stock market in free fall.

Anyone ever hear of the Amero? Google it!