Curried Wealth Building
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May 3, 2009
Issue 44  -  All in the Family
 
I have a theory, and while in no way original, it is still not written about very often.  It is my contention that the entire country, and probably most of the world, is run by a small group of perhaps 500 people with large sums of wealth or power at their disposal.  This group selects who will win all major elections.  They don't just pick the winner, they also pick the loser.  These people take no chances.  They don't really care one way or the other, which party wins because they control both of the them.  Below this upper echelon group which is sometimes referred to as the Bilderbergs, are echelons of people with less and less power as you descend down the food chain.
 
Both Bushes and Clinton were selected by these people.  Now Obama has been selected (as well as McCain).  As I've said before, all of these selections for major positions in his administration are members of the Council on Foreign Relations and the Trilateral Commission.  Doesn't that seem odd?  Why would they all have that in common?  Is it just a coincidence?  Hardly, the super elite don't take chances.  Why should they when they can buy any result they want?
 
As you move down the hierarchy the media is right in the thick of things.  Why do they get invited to the big fancy parties?  So they don't report anything that might be derogatory, that's why.    Let them sip cocktails and caviar and they won't be as likely to start digging.  Do you think that Andrea Mitchell of NBC being married to Alan Greenspan is another coincidence?  Hah.  Look at this story from GATA:
 

"Wednesday, April 29, 2009

Goldman Sachs Hires Barney Frank Staffer To Be Its Lobbyist

The Goldman Sachs relationship with Congress has just gotten even more intimate. Goldman has grown another tentacle, designed to grab directly at the House Financial Services Committee chair Rep. Barney Frank, D-Mass.

The new top lobbyist, Michael Paese, was recently the top staffer to Frank. He has been a registered lobbyist for the Securities Industries and Financial Markets Association since he left Frank's committee in September and will join Goldman as director of government affairs."
 
 
Remember, Goldman Sachs is an owner of the Federal Reserve.  So ole Barney is looking out for the little guy, just like all good Democrats are supposed to do.  Yeah, right.  As long as the current system is in place, there will be no fixing of the financial mess.  The mess will explode long before that happens.  Think that's just a outlier?  How about this, again from GATA:
 
"Dave from Denver…

Geithner was offered the Citi CEO job while he was at the NY Fed:

"Mr. Geithner was particularly close to executives of Citigroup, the largest bank under his supervision. Robert E. Rubin, a senior Citi executive and a former Treasury secretary, was Mr. Geithner’s mentor from his years in the Clinton administration, and the two kept in close touch in New York.

Mr. Geithner met frequently with Sanford I. Weill, one of Citi’s largest individual shareholders and its former chairman, serving on the board of a charity Mr. Weill led. As the bank was entering a financial tailspin, Mr. Weill approached Mr. Geithner about taking over as Citi’s chief executive"

It sounds like if Geithner were a lobbyist for the banking industry instead of its pimp at the NY Fed, that Timmy would resort to sleeping with Barney Frank if it meant he could influence legislation."

 
These guys are in a big club.  These people all know each other, and know where the bounds are about what to talk about or investigate.  Anyone causing problems is not releected or removed from a position of influence.  The status quo MUST be maintained.  Unfortunately, the status quo is now broken beyond repair.
 
Politicians are allowed to play the game of attacking each other but they must stay away from things that threaten the status quo and you'll NEVER hear them talking about the Fiscal Condition of the U.S.  Let me digress.
 
I've heard democrats expressing great pleasure in the fact that "it's a good thing Bush wasn't allowed to privatize Social Security".  But is that true?  Would you rather have 60% of your money left or 0%?  That's the valid comparison.  The stock market went down about 40% last year so any money placed in the stock market (and there's no way all people would have placed 100% into stocks) then they would be down 40%.  What's the alternative?
 
0%!  All money placed into the Social Security system is GONE.  It's already spent.  The Government just released it's 2008 financial results which can be found here.  It's 194 pages so you might want some NoDoze.  On page 16 there is a chart summarizing the "Social Insurance Future Expenditures".  This is Social Security and Medicare.  The total liabilities for 2007 were $45 trillion.  The total for 2008 is now over $49.1 trillion.  That's an increase of over 9% in one year.  One freaking year!  9%!  So aren't you glad they "saved" you from having your own account where you might be down 40%?  I feel much better knowing my money is gone into a black hole in a bankrupt unsustainable system.  Yeah, that's much better.
 
If you continue through the report and add up all the liabilities and debt it now totals over, are you sitting down?  $93 trillion!  And this is what they admit to.  Just think what's not reported.  Oh by the way, this doesn't include a lot of the monies associated with the bailout so the number is now over $100 trillion.  Can you say screwed?  Boy, am I glad my money is in that Social Security "lock box".  Whew! 
 
This chart from contraryinvestor.com shows why the Social Security system is finished.
 
Age Demographic Growth In Age Specific US  Population From 1950-Present
  
20-24 years 85%
25-34 75
35-44 99
45-54 158
55-64 153
65+ 237
 
 
 
The huge growth in those over 65 has broken the system and no easy fix will work.  Still glad they "saved" you from a personally owned account?  No, me either.  Look at this chart showing the breakdown of expenses and inflows:
 
 
 
A couple points here.  Notice the largest expenditure category is "other".  That gives you a warm and fuzzy doesn't it?  Notice the TARP outflows nearly equals all of the Social Security inflows and the total TARP money that is "off the books" is over $10 trillion.  Just a joke.  The spending is TWICE the inflows!  TWICE, and that' without counting the bailout.
 
Another one from GATA:
 
 
"Dave from Denver…

Great commentary on housing prices

The Case-Schiller Feb data was released to day and showed that year over year, home prices fell 31% and another 2.2% from Jan to Feb. Key points in this article:

- Despite the government’s efforts to put a floor under house prices—printing money to buy MBSin order to hold down interest rates, acting as lender of last resort via Fannie/Freddie/FHA—prices continue to fall

- This gets us back to the cheap credit "trap" being set by the Fed. It can’t raise rates, even when the economy returns to "normal." If it does it will blow a bigger hole in bank balance sheets as the values of interest-rate sensitive assets decline.

The other key component not mentioned in the article is inventory. Data released yesterday showed 1 out of 9 housing units is vacant, and 10% of the rental market inventory is vacant. This means downward pressure will be applied to rental rates, which will also put downward pressure on housing prices. The nefarious so-called "negative feedback loop" applied to housing prices.

The other key consideration, in terms of money supply management by the Fed, is that Bernank has assurred all of us under oath in front of Congress, that he's developed the "tools" to remove all the money he's printed and released into the system. One of the effects of these "tools" will be higher interest rates, if he ever gets to the point where he implements these "tools," which will crush housing values even more. My point is that Bernanke has created a flood of liquidity that he has no way on earth of fixing.

 
So we have 11% of the houses vacant and the bottom is in?  How stupid do they think we are?  The bottom in housing is YEARS away.  Now our "investments" need more money:

Bank of America’s Lewis Loses Calpers Support, May Need Money ,

April 28 (Bloomberg) -- Bank of America Corp. Chief Executive Officer Kenneth Lewis lost the support of the largest U.S. pension fund as an analyst said the bank needs as much as $70 billion of capital.

The California Public Employees’ Retirement System said it will vote against Lewis and all 18 directors at the annual meeting tomorrow in the bank’s hometown of Charlotte, North Carolina. The lender needs $60 billion to $70 billion, according to Friedman, Billings, Ramsey Group Inc. analyst Paul Miller, who cited stress tests performed by his firm.

Bank of America should consider converting preferred shares to common stock, including $27 billion in private hands “as soon as possible,” Miller wrote in a note to clients today. Miller said his firm’s versions of the stress tests were “somewhat tougher” than those performed by U.S. regulators..."

Now didn't everyone coo and caw about the $3 Billion in earnings from Citi and BofA?   AND NOW THEY NEED $70 BILLION?  What a scam!  We are the biggest suckers in the history of the world.
 
Future indicator from GATA:
 
 
"Dave from Denver…

Trucking tonnage cliff dives in March

Truck tonnage was down 4.5% in March from February and was down 12.2% compared to March 2008.

"Trucking serves as a barometer of the U.S. economy, representing nearly 69 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 10.2 billion tons of freight in 2008"

So-called economic experts like Ben Bernanke can sing all they want about "green shoots and sprouting roots" of the economy, but the hard data suggests otherwise."
 
 
The bottom line is that we are just ENTERING the rough period for this country.  Things will only get worse over time until all the excesses are wrung out of the system and fiscal discipline is restored.  The end of the tunnel isn't even a speck of light at this time.
 
I hope to have a rough draft of my plans for the coming depression for next week.  These plans consist of self sufficiency tools, plans for worst case scenarios and items to have on hand.  Have a great week!