Thursday, April 30, 2009

A Pre-Travel Screed

One final comment before taking a day or two off for travel.

Yahoo/Finance reports that Jim Cramer says to ignore the comparison of the U. S. to Japan.
EBR agrees.  The financial position of the U. S. consumer is vastly worse than that of the Japanese, who have been net savers throughout their 20 year post-bubble experience.  Thus, Japanese consumers are not financial serfs to financial companies, unlike Americans, who have been successfully and deliberately marketed by the Merchants of Debt to transfer most of their equity in their most important and long-term stable financial asset, their personal residence, to financial companies to finance either current consumption, more debt, speculative investments, and the like.

When evaluating Barack Obama's post-100 day performance, please recall that companies and even governments that were marketed "AAA" collateralized debt obligations based on these mortgages by Big Finance have written these securities down to fair value, with fair value often being zero or close to zero.  The Citigroups of the world that created and marketed these same securities financed their growth and their bonuses with this garbage and are specifically and self-consciously overpricing them at near 100 cents on the dollar, and Barack Obama and his party that controls Congress is doing what even George Bush and Henry Paulson shied away from doing, which is going along with this obvious falsehood and misusing the Fed and the FDIC to have hedge funds and even these same Big Finance companies purchase this debt at inflated prices.

It is the transparency of the lie that these "legacy" securities are "illiquid" and therefore in need of your funding that has led the blogger Yves Smith of Naked Capitalism to say that Team Obama engages in the "Big Lie" technique.

It may be quixotic, but I for one am rooting for the failure of the PPIP and the failure of an economic recovery if it is built upon a Big Lie.  

The banking predecessor to Citigroup led the financial abuses of the late 1920s.  Citigroup is the worst big "bank" in this cycle.  The best thing for America would be for Citi to die and the bondholders of the troubled banks provide the bailout funds they need rather than taxpayers.

Copyright (C) Long Lake LLC 2009 

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