Saturday, January 29, 2011

The Christian Nation

More and more, commentators like Glenn Beck and politicians like Newt Gingrich invoke the sentiment that America is a "Christian Nation". This is an unusual concept for those of us who revere the founders, because their writings contain lines such as this one:

[T]he Government of the United States of America is not, in any sense, founded on the Christian religion - Treaty of Tripoli
So who are we to believe? Socialist Progressives surely fight the idea of a Christian Founding, and Conservatives seem hell-bent to push the idea at every turn. There are thousands of articles, blogs and discussions on the web pro- and con- about the historical validity of the question. Both sides quote particular founders out of context to push their side of the agenda. Neither side budges an inch. I'm no historian, and neither are most Americans. So what's the answer?

I think we're going about the question wrong. It is impossible and non-objective to try and gauge the personal convictions of men who lived 200 years ago. Even if their letters were replete with paeans to mysticism (which they aren't) it would tell us nothing about their true motivations. Trying to argue this point historically is not going to convince anyone, I'm afraid. We need to take a different approach.

First we need to ask-- IF America were a Christian Nation, what would that mean? Why is it an important question at all?

How do we define a "Christian Nation"?

Is it a nation composed primarily of Christians? If so, Italy is certainly a far more Christian nation than the US. The United States is about 78% Christian, if you believe the polls. Italy is 93%. Panama is 99%. Mexico is 95%. So does the "Christianity" of a nation dependent on its demographics? If so, then this "Christian nation" idea is nothing more than tribalism and racism. It says, essentially, that no matter the form of the government-- whether it be a monarchy, a republic, a theocracy, or a dictatorship-- if that nation is composed primarily of Judeo-Christian peoples then that nation is "Christian". By this standard, in world history we have seen many bloody and murderous "Christian nations" that none of us would want to live in. Israel creates much of its own troubles by being a tribalist country-- insisting on its own "Jewishness" when all that is required is that Israel be a nation that protects all citizens equally. But the tribal or racist standard is corrupt and pernicious wherever it's applied. And if this is a numbers game, I cannot imagine that Conservatives see America as being of lesser moral credit and stature as Hugo Chavez' Venezuela, which is 98% Christian. So we must conclude that a "Christian Nation" is to mean something else in this context besides a mere numbers game.

So, do we define a "Christian nation" as being "founded on Christian principles"? Okay. Which principles are those and what does it mean? First, let's define "Christian principles" as all that which was taught or preached by Jesus in his ministry. Is that not broad enough? Okay-- let's say it is all that was taught by Jesus, his disciples, the church fathers, the Catholic Church, the Protestant churches, and every other denomination of Christianity prior to 1776.

Here is the Sermon on the Mount. I think it may be considered representative of the best Jesus' teachings:
http://bible.oremus.org/?ql=91693103

Where will anyone read within this a doctrine of individual rights, separation of powers, a bicameral legislature, ANY of the distinctive features of the American political system?

The Pump and Dump

Where money is concerned, men are widely irrational. They fear to lose it, and they fear to gain it, they fear to have less than the man next to them, and they fear to have more -- lest they become a victim of theft or fraud. Ironically, it is these irrational fears and hungers that make markets so very easy to manipulate and which account for most of the losses people suffer in business. Blinded by fear or irrational greed, people make mistakes and get duped. Whether it is the con man who claims to have an inside scoop or the Nigerian prince on the Internet, scammers count on your desire for the unearned and your fear of loss. They know how to manipulate you.

Manipulation is practically the only game on Wall Street these days. As the 60s generation comes to uncontested power and the last vestiges of the 50s wane, a rash of irresponsibility and fraud has enveloped our financial world. As the generation of Father Knows Best rides off into the sunset, the generation of Woodstock smashes and grabs for immediate gratification without consideration of the future.

Easy money is the name of the game, and this mentality extends to the very top of our economic and political power structure.

I believe we are witnessing the biggest heist in human history. When we read stories of Quantitative Easing, inflationary and deflationary fears, bank bailouts, deficits, fiscal reform, World Bank, IMF, G20, Keyesianism, commodities pricing, etc we throw up our hands in confusion and bewilderment-- too intimidated by the arcane complexities of credit default swaps and derivative markets to form certain opinions or make decisions about the future. What the hell is going on? We can sense it's phony and someone somewhere is pulling the strings, but we have no legend for the map, no key to make sense of it, no Rosetta stone to translate the business page into plain english.

Unless we know where to look.

As I've written earlier in this blog, I have been trying to understand the financial collapse and the subsequent actions of the government. I fear a dollar collapse in the future. But I too have had trouble understanding exactly what our officials are up to until recently-- now I have a theory as to what's going on.

There are very few ways, really, to manipulate a market. You can buy low and then drive a financial instrument up in price, or take a short position on something and drive it down. That's really it. All profits are made on the differences in value you can predict or generate. In the small-cap penny stocks, manipulators have been at it for decades-- spreading rumors to drive a stock up, and then unloading it to the investors that buy on the rumor. The smart money is in the know, gets out early, and pockets profits. The dumb money comes in last, and is left holding the bag.

Understanding this dynamic, the dynamic of penny stock manipulation, is the Rosetta stone to understanding the magnificent heist going on at the national level.

Our Fed policy is indistinguishable from a pump and dump scheme.


Let's first look at how a pump works.

IMAGINARY COMPANY: EXCELSIOR OIL (EXCO)


#1) THE COMPANY
Let's say you want to rip people off with a pump and dump scheme. You first need a company. Not to say that you need actual production-- all you really need is a name, an address, and proper paperwork (preferably spread across several jurisdictions just in case-- Las Vegas and Delaware are popular.) For the purposes of this discussion, let's say you create the imaginary company of Excelsior Oil. You might give your company some assets, maybe legitimately purchase a few oil leases. Maybe you get the rights to some experimental drilling equipment. Or maybe it's all a fiction and the company headquarters is your Mom's basement. Doesn't matter, as long as people believe in it.

#2) THE STOCK
SEC regulations are very lax. You can get your "company" publicly traded with no trouble. You may have reporting requirements etc, but these can be evaded or you can meet the basic requirements with bookkeeping tricks etc. No one really bothers to check financials anymore. Let's say you get 100million common shares issued publicly-- to be traded as EXCO on the largely unregulated Pink Sheet market. BUT-- at the same time you also issue your officers another stock EXCR which are "restricted" shares convertible at their discretion. You have to report these, but very few people in the general public will know what's up and what to look for-- even if they pull copies of your SEC filings. These EXCR shares are key.

#3) THE IPO
So you offer your shares on the market, and let's say you sell them at .01 apiece. If you sell all 100 million shares of EXCO, you've immediately made a capitalization of $1 million dollars for your troubles (usually it's far less, but I'm using round numbers). What happens then? Well, ordinarily you would be expected to start showing profits, production, earnings etc but remember you're not really going to drill those wells -- you're a stock manipulator not a real company. Remember EXCR? You convert those shares and create another 100million common stock EXCO, releasing those secretly to your insiders. Maybe the public holders see a sudden dip, maybe not.

#4) THE PUMP
Now it's time to make money. You take your 1 million and go to a shady market maker-- they certainly exist-- and arrange for him to pump the stock. Such firms are expert price manipulators. They can drive the stock price up by colluding with others-- trading the stock back and forth to drive it higher, releasing newsletters full of exclamation points and breathless adjectives to their subscribers ("Hot new penny stock" "Fast Cash" "Don't miss out!"), releasing bogus trumped-up "news" about your eminent directors and imminent partnerships or some any-second-now breakthrough in crude production-- maybe a combo of all of these.

The shares go shooting up.

#5) THE DUMP
As new investors buy the stock, your insiders are unloading their secret shares. Maybe they sell at thirty cents, maybe forty, maybe a dollar a share-- it all depends on how good your pumper is and how much you could pay him. Your initial investors make a profit too so they don't complain unless they hold the shares too long. Because eventually your insiders have made their money. And they tell the market maker there is no need to support the price any longer. The shares crash, the people who held too long or bought at the top are wiped out. There's no one buying, volume dries up, and they are stuck with worthless shares in a worthless company which they can't pass on to anyone else.

They're called the bagholders.



Now what would those 5 steps look like at a national level?



IMAGINARY NATION: THE UNITED STATES OF AMERICA



#1) THE COMPANY
You can think of the United States as the company. It has limited production, runs entirely in the red, and has been running as a bankrupt for decades. People believe it to be strong and sound, though, which is crucial. It is unimportant for the purposes of the pump whether we're talking an economic powerhouse or a two-man operation in a basement. As long as people believe it to be a real economic entity, the stage is set.

#2) THE STOCK
What is the stock on a national level? In the US, our stock is the dollar. The Federal Reserve is printing the common stock of the United States in enormous quantities. They can do this on their own authority-- there is no SEC for them. Where is all this money going?

#3) THE IPO
Like the EXCR registered shares in the Pump above, the Fed is giving millions of shares-- largely in secret and without public accounting-- to insiders, friends, and co-conspirators. All of these dollars, though, are not allowed into the system. You can think of them sitting in Scrooge McDuck-style money bins at Goldman or JP Morgan. The banks are not loaning because to do so would increase the velocity of the money. In the pump scheme, the secret converted shares could not be immediately sold without crashing the "real" common stock market. Similarly, allowing all the secret dollars into the system would cause huge inflation and devalue everyone's holdings. So the insiders either sit on them or, more likely, they put them where they know they will be valuable-- in gold or silver.

#4) THE PUMP
But some of the new dollars do find their way into the equities markets, and the Fed's constant buying of treasuries does support the bond markets and allow for endless stimulus spending. So the economy starts to be pumped up by all this bogus money indirectly. As the market rises, you hear new voices chiming in from media outlets (Bloomberg, etc, controlled by insiders) saying the economy is getting better. Or you have a push to declare "recovery summer" on the political front. But the US is not gaining productivity. If people spent 10% more on milk than last year, you can't consider that a real increase of value if what's driven it is a 10% increase in the price thanks to inflation. The numbers will go up as prices go up, just as stocks will rise as more fake money flows into the system. It is in the insiders' and the politicians' interest to trick you into thinking you have a robust economy. It's like a trainer pumping adrenaline in the heart of a racehorse. They're not doing it for the sake of the horse, but because they have very large and precarious bets on the race.

#5) THE DUMP
Okay, there's several things to keep in mind. What is happening in the rest of the world? Because the dollar is the global reserve currency, central banks worldwide hold large positions. Think of them as fund managers holding shares of EXCO. They start realizing that they are holding shares in a pump and dump. It is in their interest to unload them. As the dollar inflates, we start to see inflationary price increases around the globe-- Egypt is rioting because of food costs. Tunisia falls. China is experiencing inflation. Everybody is. Eventually they have to dump the dollar for their own survival. And a global dump of the dollar is the crash at the end of this particular pump and dump scheme. We know that it's coming eventually. The housing bubble made it a mathematical certainty. No austerity measures can reverse this 14 trillion in debt. America will lose its credit rating and its global reserve status. Count on it.

And they are counting on you to be the bagholder.


2008: HATCHING THE SCHEME?
I believe that in 2008 when firms began falling the powers that be saw that there was no avoiding a dollar collapse. Instead, they began a pump and dump scheme to enrich the banks and the insiders. They pumped trillions more into the already inflated money supply and gave it to their friends. These banks never released the cash into circulation to create jobs. Instead, they began buying commodities. Now, with exuberance coming back to the stock market, the large banks will start to unwind their stock positions as best as they can as small-fry investors, speculators, grandmas and whiz kids start gaining confidence in stocks again. When the dollar collapse comes, it will cream the financial markets. The average American will be the bagholder. Classic pump and dump.

The insiders will have used printed dollars to buy commodities and inflation-protected assets. The politicians will have a crisis upon which they can capitalize and push more global governance and controls upon us. America will lose its standard of living, while the lot of other nations will be largely improved-- a redistributive result that is much desired in many circles. A new global reserve currency will come into effect-- either the Yuan, the Euro, or a new reserve fashioned from the IMF's SDR basket will be the new standard. Perhaps this will be called the Bancor after John Maynard Keynes' 1944 design.

As the dollar collapses globally, we will see massive hyperinflation. Banks that are unconnected to the administration will fail. The FDIC will be on the hook for deposits, requiring more money printing to cover the obligations. Failed banks will be seized by the FDIC, recapitalized by the treasury, and cronies of the administration from Goldman or Chase will be placed in charge (already happening). Food shortages will be commonplace. The responsible American with savings will be wiped out. The irresponsible will see the real value of their debts dwindle. We will be unable to maintain our empire, and the dollar will revert to a mere national currency-- no longer a global powerhouse.

People will rush to safe havens. Gold will soar, and the insiders will be further enriched.


This is, I fear, what we're dealing with. That's why they aren't making serious cuts-- they are stepping on the accelerator. A dollar collapse is coming, and they are counting on you to be the bagholder.

I hope this post helps you protect yourself, or at least gives you food for thought about the nature of the social system under which we are living.



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Sunday, January 2, 2011

The Extinction Event

Hello all!

I haven't posted in my blog in months, for the reason that I have been completely occupied on a major project for a South Korean theater company. I just completed a libretto of a new musical for them. Now that the holidays are over, I'd like to look forward to 2011 and, if I can, warn people about what may be on the horizon.

Do you have the same sinking feeling that I do that something very fundamental has changed in the Western (ostensibly) capitalist nations? Reading the newspapers, following politics, listening to the news, do you not feel an increased sense that things are... phony? We are being lied to. I don't really have any doubt anymore. And I think the reason for the lies is that the lies are actually necessary to stave off disaster. We are being lied to by our governments because, if we knew what was really going on, it would actually create the crisis. What we are facing is an economic meltdown-- and keeping us in the dark and happily spending and going into debt is one of the mechanisms that is staving off the inevitable.

Now, I don't usually blog on financial issues. Hell, I'm a broke playwright. What do I know? But I do have some history to share. I used to be a stockbroker a long time ago, and I parlayed that into a job at Morgan Stanley as an executive assistant. I rose very fast and found myself as E.A. to all the top executives. I worked with the CFO, the CEO, the Presidents, the Chief Legal Officer-- all the top guys. I got to (literally) rub shoulders with major bigwigs. Here's me and Bill Clinton:


And I had a unique vantage point from which to watch the events of 2007-2008.

What did I see?

I saw fear. I saw scrambling. I saw a panic. I scheduled a lot of emergency meetings. I printed up a lot of handouts. I organized folders crammed full of confidential information. And I made a lot of mental notes: I decided I wanted to understand Credit Default Swaps and Mortgage Backed Securities and the like-- I decided I wanted to learn the specifics of the financial collapse. I didn't set out to learn finance or banking-- hell, I can't balance a checkbook. But I did set out to understand-- just from simple curiosity-- what in the world I had seen and lived through.

After Morgan Stanley fired me (and a lot of other people) I found I had plenty of time to research.

At first, I thought I would write a play about what I'd seen. So I started reading books like "Too Big To Fail"-- delighted when I found names and faces I knew and had worked with: Colm Kelleher, Walid Chammah, John Mack-- or men I had scheduled meetings with like Paulson and Geithner and Dick Fuld. It is an interesting cast of characters.

But I really didn't grasp a lot of what I was reading, and I lost interest.

Until Fall of 2009 when I started to glimpse some new questions. The Obama administration began piling on stimulus and deficit financing. I had started to play stocks to make spending cash, and I started to follow stories like the CIT bankruptcy-- started to try and understand credit markets and the like. I followed federal seizures of banks for a while. I started to realize just how bad of a state the economy was in. I started to research how various markets were being manipulated.

I called my mom in November 09 with a warning: "I think you should buy silver. All you can. The silver market is being manipulated and has a larger upside than gold. I'm scared that something bad is going to go down."

She, of course, scoffed. And, after silver dropped from 17.50 in November down to as low as $14/oz by March '10, she was saying thank the lord she hadn't listened to me. And I shut up making recommendations.



But I continued to follow stories and do research. This past Summer I heard a commentator mention "quantitative easing" being on the horizon. So I started looking into that-- the Federal Reserve would be announcing a $500billion+ scheme to buy treasuries by printing money. When? The day after the election.

All my hairs stood on end. The timing was so suspicious-- I had to understand. Silver had crept back up to $21 or so. I called mom again-- "Look, silver is going up and I think it might explode after this QE thing is announced." she didn't listen, but I put my little cash in mining stocks.

And since November, Silver has shot up to over $30 an ounce.

But why? What is going on?

Guys-- I don't want to sound like an alarmist, but we are facing something like an extinction event. This is like what the asteroid did to the dinosaurs.

I feel I have to warn any readers of this blog (all two of you) that a currency crisis is imminent. Commodities are shooting up even as house prices are going down. Treasury yields had an unusual spike in the past month. And the administration is spending like mad-- as if to rape the treasury while there's still a treasury there to be raped. The Pentagon is wargaming civil unrest and economic collapse. Also, bill after bill has been passed-- establishing control of food, finances, practically everything including the air we breathe. With an incoming Republican congress, there will be a convenient scapegoat on whom to blame the collapse-- "those greedy Republicans who insisted on their tax cuts for the wealthy" will be the fall guys. I think that's the only reason Obama went uncharacteristically over to the GOPs side.

The fuse is lit, and the big day is coming.

I don't know about timing, but what we need to watch is the treasury markets. A sell-off in treasuries, either domestic or international, will likely precipitate a panicked rush into commodities. It will catch everyone unawares, it will crash the stock market, and it will cost America the reserve currency status that has made our consumption (not production) society possible.

I will blog further about the pending collapse, its aftermath as I imagine it, and my attempts to convince my mom to get out of securities and bonds and into more hard assets. If this situation is new to you, let me recommend an article that lays the case out better than I can.

How Hyperinflation Will Happen

All best. Be smart. And take care of yourselves.