What’s Going on With This Blog?

~~By InsightAnalytical-GRL

UPDATE: October 28, 2009

I continue to be swamped but am trying to post interesting tidbits I find along the way as I try to salvage my economic future.  Don’t forget to check out the section of the blogroll that is full of useful links: Economic News/Analysis/Contrarian Blogs.

Surprise, Surprise: Our Goldman Sachs Buddies Are Knee Deep in the Greek Debt Crisis

~~By InsightAnalytical-GRL

Well, here we go again!

Goldman Sachs had a role in creating the current debt crisis in Greece. Why am I not surprised?

From Spiegel Online International:

How Goldman Sachs Helped Greece to Mask its True Debt

Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country’s already bloated deficit.

snip

Now, though, it looks like the Greek figure jugglers have been even more brazen than was previously thought. “Around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future,” one insider recalled, adding that Mediterranean countries had snapped up such products.

Apparently Italy also hid its real debt, but with another U.S. bank which isn’t named in the article.

The article continues:

Greece’s debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period — to be exchanged back into the original currencies at a later date.

Fictional Exchange Rates

Such transactions are part of normal government refinancing. Europe’s governments obtain funds from investors around the world by issuing bonds in yen, dollar or Swiss francs. But they need euros to pay their daily bills. Years later the bonds are repaid in the original foreign denominations.

But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.

This credit disguised as a swap didn’t show up in the Greek debt statistics. Eurostat’s reporting rules don’t comprehensively record transactions involving financial derivatives. “The Maastricht rules can be circumvented quite legally through swaps,” says a German derivatives dealer.

more

“Fictional exchange rates.”  Incredible.

But not surprising if you’ve followed the recent actions and attitude of Goldman Sachs. You know, the guys who talk about “morality in the marketplace”…

Sigh….

***

This Would Be the Laugh of the Day if It Weren’t So Aggravating: Pious Rationalizations About “Morality in the Marketplace” from Our Buddies at Goldman Sachs 10/21/2009

Goldman Sachs Chairman & CEO Says Company Is Part of a “Virtuous Cycle” With a “Social Purpose” Even as It Apparently Moves Markets in “Miraculous” Ways (SEC, Where Are You?) November 8, 2009

“Lost Generation”? Well, Maybe There IS Some Hope…Perhaps

~~By InsightAnalytical-GRL

We’re all familiar with palindromes, words that read the same backwards and forwards.  Well, I’ve run across this brilliant video in which the script reads as a palindrome…exactly the same, forward and backwards.  And it’s amazing.

It’s only 1:44 seconds long, but is very powerful. It was created by a 20-year old as an entry in a contest run by the AARP called “u @ 50.”  It won 2nd place but apparently when it was shown, everyone watching was awestruck and it received an outburst of applause.  The entire back story is at the YouTube page if you click on “More info” to the right of the video.

The video was first posted there in November 2007, before Obama was in full swing…so, it probably is not something that was part of the craziness of the campaign in 2008.  It’s actually doesn’t touch on politics at all.

It’s brilliant.  So, be sure to read along to get the full impact.

What Do the Commonwealth Club and the U.N. Have in Common? The Great Chris Martenson…

~~By InsightAnalytical-GRL

As you may or may not know, I’ve been a big fan of Chris Martenson, so much so that I’ve posted the link to his site under the economic links section to the right and have quoted him in in previous posts.  

Chris has put together “The Crash Course” which I blogged about last year (Saturday, July 11, 2009: One Year Anniversary of “Peak Oil Day” Makes it a MUST to Watch “The Crash Course”).  At that time, you could hear zip about some of the topics he has woven together.  Now, I’m beginning to see others mention things like “peak oil” and “sustainability” when I flip through the channels…rarely, but it’s a start.

Well, it seems like things have picked up a notch.  Last Thursday (January 28)  in Sonora, California, Chris spoke to 400 people and people had to be turned away. Tomorrow (February 2), Chris will be speaking at the U.N. on the topic “After Copenhagen: Understanding the Energy Trap for Policymakers.“  Along the way, Chris has lectured at colleges, meetings, been interviewed on smaller radio stations…but it seems the venues are getting to be more high profile.

For example, on January 26, Chris delivered a talk at the Commonwealth Club in San Francisco.  I thought I’d share some of it with you.

Big Ideas at the Commonwealth Club (Transcript)

Tonight I want to examine the obstacles that stand way of a full and lasting economic recovery and to illuminate the connection between economic growth and energy.

But before we delve into the details and explore the possibilities for alternative outcomes, let me share a little bit about myself and how this information has radically altered my life, and the life of my family.

Six years ago as a married, 42 year old professional with three young children, I lived in a suburban, five-bathroom house on the coast of Connecticut, had a secure position as a corporate Vice president with a very large company, and a twin-engine fishing boat in a slip.

I loved that boat.

Today I live in house that is less than half the size of my prior one, now located in a semi-rural location, I have a strong local community, and a kayak.

A small one.

Perhaps I could summarize my journey that way; I went from twin engines to a double paddle.

Yep, that about sums it up.

Now, why did I do that?

For the past 6 years I have been combining information and trends in the Economy, Energy and the Environment into a single comprehensive story.

Instead of delving deeply into any one of these subjects, I discovered that there’s immense value in looking across all three at once.

Instead of being like a blind man trying to describe one part of an elephant, I chose to be like a blind man examining the whole elephant.

Okay, this took me a few years, I’ll admit, it was a big elephant, but it was worth it.

This exploration altered my investments, my work, where I live, who I know, what I value and the things I choose to do.

The results of this exploration were put into video form which I made freely available to everyone on the internet about a year and a half ago.

It is called “The Crash Course” and has been viewed more than a million and half times and translated into numerous languages.

I have to say that I’ve made some changes as a result of watching “The Crash Course.”  The biggest is a mental change…a fierce desire to break away from “the system” as much as possible in terms of protecting my assets.  For example, I’m not listening to the financial crowd that, once again, is back to the old “buy and hold” mantra.  No, it’s time to take more control of my money and to that end, I’m in the midst of studying technical aspects of the market.  I want to make money, not get if siphoned off by handing over control to the “experts.”  I’ve also yanked money out of the “big banks” and it sits now in the local banks where I’ve known the folks who run them for years.

I’ve stored some food and started using a solar oven for some of my basic cooking.  The thing costs nothing to run and can purify water and dehydrate fruits as well as baking the most fantastic sweet potatoes you’ll ever taste!  I figure I save cooking gas that way and don’t heat up the kitchen and then have to run the A/C as much, either!

I keep up with my vegetable garden and have planted two more grape vines. I plan to plant a couple of more fruit trees.

In short, in my small way, I’m trying to be more self-sufficient!

Chris continues:

Here’s an example of how I connected the dots for the current economic crisis at a very high level.

While the entire narrative of this crisis is riddled with strange acronyms, unfathomable derivatives, and complicated regulatory lapses, my view is that these were just elements of the story.

The main plot line can be summed up in just three words; “Too Much Debt.“

The big picture view of our difficulties is nothing more complicated than the fact that from 2000 to 2008, eight short years, the total amount of debt in this country doubled.

You heard me right, it doubled.

Meanwhile no net jobs were created and median incomes actually went backwards.

When it comes to owing a debt your options are to either pay it back or default on it, and I don’t care if you are an individual, a family, a town, a state government or a corporation, the same basic rules apply.

As we all know, in order to pay your debts back you’ve got to have earnings and cash flow. If debts are growing but earnings are not, then sooner or later a debt crisis will result.

Which is exactly what happened, and was utterly predictable.

I’d love to take credit for having had a keen insight here but I really don’t consider this extraordinary.

It was common sense.

Common sense. Gee, how creative!

So, where are we?

A very large credit bubble developed right before our eyes and it was completely obvious to anyone who cared to see it for what it was.

My view is that we’ll be living with it for some time yet because I do not believe that it is possible to “solve” a crisis rooted in ‘too much debt’; by going deeper into debt.

And that is exactly what we are doing.

I think it’s like trying to cure an economic heart attack by feeding the patient a few more tubs of greasy debt.

So my assessment is that we’ll face an even bigger fiscal and maybe monetary crisis in the future.

We are compounding our mistakes.

But you know what? We’ve faced economic problems before as a nation and solved them, and if this were the only problem we faced, we’d solve this one as well.

However, even as we’re attempting to recover from our self-inflicted economic wounds several vital facts stand in the way of a full and lasting recovery.

Let’s discuss a few of those facts:

Fact #1: There are 70 million more people on the surface of the planet this year than last year.

Fact #2: Each of these new humans consumes some amount of resources such as food, oil, air, soil, water, copper, coal, or timber.

Fact #3: Someday, perhaps already, maybe a little later, the global flow rate of oil coming out of the ground will peak and then decline inexorably thereafter.

Fact #4: Every dollar in circulation was loaned into existence, with interest. We’re going to get back to this one in a minute.

Fact #5: During the industrial revolution, humans have consumed vastly more energy each decade. During the lifetime of a 22-year-old, humans will have burned more than half of all the oil ever consumed throughout history.

Fact #6: Oceanic fish stocks, ancient aquifers, and topsoil are all being depleted at unsustainable rates.

When I review these facts I come to this opinion – within our lifetime and that of our children, these disparate facts will coalesce into the greatest economic and physical challenge ever faced by our country, if not humanity.

Then, Chris takes you on an imaginary journey:

Let’s get back to those pesky facts.

Each one was tied to all the others by a single common feature.

In each case the thing being described was tied to exponential growth in some way.

Now I know that most of us aren’t accustomed to thinking about exponential growth, so before you start counting the ceiling tiles, let me see if I can bring the dynamic of exponential growth to life.

Suppose I had a magic eyedropper that could dispense a drop of water with a most unusual trait – this drop of water will double in size every minute – and I place a drop of water in your hand.

At first you’d just have a lonely drop of water sitting there, but after one minute it would double in size, and after six minutes you’d have a blob of water that could fill a thimble.

Do you have a sense of that growth?

Good. Let’s go to a Major League Baseball Park and start over.

To make this interesting, let’s assume that the park is water-tight, and that I’ve handcuffed you to the highest row of bleacher seats.

Now imagine that it’s tomorrow at twelve O’clock noon, you are manacled to a bleacher seat and, way down there, on the pitcher’s mound, you see me bend over to plop down a magic drop of water so small you could not possibly see it from where you are sitting, and it begins to double.

My question to you is, at what date and at what time would the park be completely filled? That is, how long do you have to escape from your handcuffs? Do you have days? Weeks? Months? Years?

The answer is this: in only 49 minutes the park is completely filled.

You have only 49 minutes to escape from your handcuffs.

Now let me ask you this, at what time do you suppose that the park is still 97% empty space (and how many of you will appreciate the seriousness of your predicament)?

The answer is that at 12:44 pm the park is still 97% unfilled. The first forty four minutes filled just three percent of the park, while the last five minutes filled the remaining ninety-seven percent.

It took from all of human history until 1960 to reach a population of three billion people; but only forty years to add the next three billion.

Forty four minutes for the first three percent, five minutes for the final ninety-seven percent.

And because we are surrounded by exponential growth we need to appreciate it.

For quite a while, everything seems just fine, but a few minutes later your park is overflowing.

MMM …do you feel wet yet?

The next section of the talk addresses our future path that exists if we don’t start making adjustments to our lives:

An energy crisis rooted in resource limits will quickly translate into an economic crisis unlike any other.

What follows next will be a disappointing string of associated crises starting with a food crisis, progressing through a profound fiscal crisis that could even result in a dollar collapse, before proceeding to a population crisis.

But you know what? If we choose, we can avoid that future.

Feeling overwhelmed?  Chris Martenson has decided our challenges should be met with a sense of optimism and adventure. But, there IS a sense of urgency, too.

In the past, with extremely abundant resources at hand, we had the luxury of making bad choices without really suffering any significant consequences.

But the stadium is now mostly filled, the water is rushing up the stairs, and our margin for error has shrunk considerably.

The longer we fiddle around the more our options shrink.

Today our wrong choices will be magnified many fold by virtue of where we are in our resource depletion curves.

And so will the good choices.

We must be intelligent and creative stewards of what remains.

The best news? I know we can do this.

We need our bright and shiny kids in the next generations to know that they’ve got an important role and that we’ve got their backs as they wrestle with the challenges now laid at their feet.

Change is not easy, but sometimes it is necessary and we find ourselves in a time of need.

How the future turns out is up to us. We have this responsibility at this time.

I don’t have all the answers and I can barely conceive of all the things that need to be done, let alone imagine their details.

But I do know that the first step begins with a proper understanding of the issues and that we are now in an era where it is the very largest picture that will serve us best.

There’s an elephant in the room, and we need to put our hands on it and describe it fully and accurately.

The alternative is to somehow miss seeing the next most predictable crisis in all of history coming towards us.

In closing, I am not all depressed by what I see coming, or exhausted by the thought of all the work laid out before us.

Truth be told, I am excited to be alive at this time – to be in the game when the entire trajectory of humanity may shift course.

You really can’t ask for more than that.

I have a proposal: Together, let’s create a world worth inheriting.

I again enthusiastically refer readers to ChrisMartenson.com. Check out the great community for the latest REAL news and the forums that discuss many of the ideas and suggestions that Chris has proposed.

And start taking control!  Every little bit each of us does is part of reinventing our world…

Obama Administration U-Turns on 911 Responders’ Health Fund

~~By InsightAnalytical-GRL

After grinding any chance of real health care reform into the ground, you probably won’t be surprised by the latest from the Obama gang.

The New York Daily News is reporting:

Team Obama to double budget for treating 9/11 responders in an amazing same-day U-turn

WASHINGTON – The White House suddenly boosted funding for ailing 9/11 responders yesterday – pumping more government money into the treatment program than ever before.

Team Obama ponied up the cash only after outraging New York lawmakers with the news the administration won’t back a permanent plan to help the dying Ground Zero responders.

The White House confirmed it will more than double the budget for treating ill responders to $150 million in 2011.

The abrupt reversal came after the Daily News revealed New York lawmakers were shocked Wednesday when Health and Human Services Secretary Kathleen Sebelius said the administration does not support an $11 billion permanent treatment plan.

Surprised?

The delegation hopes President Obama will reconsider and put victims of the terror strike on a footing close to wounded soldiers, perhaps even funding the 9/11 health bill with the military.

Don’t hold your breath…

Although 911 responder advocates are happy that there will be more money available in 2011, it’s not a real solution to the lack of  permanent funding:

But lawmakers still believe a permanent fix needs to be made so responders don’t have to go hat in hand every new budget and political cycle.

“Sebelius made it clear that the administration does not support any kind of funding mechanism that’s built into the bill,” said Bronx Rep. Eliot Engel. ”They find money for everything else, they need to find money for this.”

Yes, Rep. Engel, they sure do find money for everything else, don’t they?

Hey, if 911 responders can’t get money for their health needs, what chance do the rest of us have for secure access to health care??

First Rumblings About Retirement Savings Plan in the State of the Union Address Tonight?

~~By InsightAnalytical-GRL

I won’t be watching the SOTU address tonight…sort of got out of the habit during the Bush years because I found him unbearable to watch and these days, the same thing applies to Obama…

A few days ago on an NPR report on the possible content of the SOTU speech I heard a passing reference to something about “retirement.” Having just completed two posts on the subject of IRAs and the talk about “encouraging workers” to sign up for a new savings program, my interest was piqued.

The New York Times also offered a preview of the speech and lo and behold!  there was a similar reference…in the first paragraph and later on (my bolding).

Obama to Offer Aid for Families in State of the Union Address

By SHERYL GAY STOLBERG

Published: January 24, 2010

WASHINGTON — President Obama will propose in his State of the Union address a package of modest initiatives intended to help middle-class families, including tax credits for child care, caps on some student loan payments and a requirement that companies let workers save automatically for retirement, senior administration officials said Sunday.

snip

Another of the president’s proposals, a cap on federal loan payments for recent college graduates at 10 percent of income above a basic living allowance, would cost taxpayers roughly $1 billion. The expanded financing to help families care for elderly relatives would cost $102.5 million — a pittance in a federal budget where programs are often measured in tens if not hundreds of billions of dollars. And the automatic paycheck deduction program would simply be a way to encourage workers to save, and would include tax credits to help companies with administrative costs.

Might one of those companies be AIG?   See the previous posts on the matter, links below.

Now, of course, the reporter follows up this paragraph immediately with this (which sort of sounds like a bit of editorializing, no?):

Such programs are, notably, much less far-reaching than Mr. Obama’s expansive first-year agenda of passing an economic recovery package, bailing out the auto industry, overhauling the health care system, passing energy legislation and imposing tough new restrictions on banks. That agenda has left him vulnerable to criticism that he is using the government to remake every aspect of American society.

Well, it remains to be seen whether this “encouragement” will be “much less far-reaching” than the New York Times writer assumes.

As I mused in the last post I did on the subject, the idea may be a good one in theory, BUT…the devil is in the details. And those details involve how much money is involved and which companies will be getting all those tax credits.  It seems to me that we might be looking at lots of nice credits being passed around as well as lots of fees that will cut into the amount of money that actually gets saved.    Sort of like Medicare Part D wound up…companies charging a bundle so we can have the honor of a prescription “plan” that often winds up charging about the same than what someone paid with a discount card and no premiums before Big Pharma got involved!

I’m sure we’ll be hearing more about this in the future, unless it’s stuck in another bill somewhere where the sun don’t shine…

RELATED POSTS

The Next Shoe to Drop: IRA Grab Being Set Up NOW–Heads Up! (UPDATE 1X) January 14, 2010

More on the Possible IRA Grab–What the Vision Is and Who’s Behind It January 19, 2010

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