Taboo Plaza

I probably don't need to tell you that economic forecasts are not looking good.  The Bush Administration seems to be scrambling but saying everything is fine.  Investor Jim Rogers has an interesting perspective on what is taking place in the U.S right now.

Jim Rogers on CNBC: ABOLISH THE FEDERAL RESERVE and Bernanke

It seems that Jim has a philosophical difference with some of the people in the government-system.  Some people believe our civilization- any civilization, or society if you prefer- is built on the stories that are told to one another.  If a story is accepted it is true and therefore like reality.  I believe there is some of that taking place in our world today.  According to Jim- and I think he's correct- people like Bernanke deny reality in the hope that their story will change reality.  Simply because people will have confidence in their telling of the tale.

If I say it's okay enough, maybe they'll believe me. 
It's B-S and sugar pies, sweeties. 
Smoke and mirrors if you prefer.

The creator of reality is one and the same as the acceptor of reality.  I tell you a story because I believe the story.  Did I create it?  Does it matter?  That question always gets so abstract and hard to understand. 

Why go there?

We don't with money. 

We just accept that money will get us what we need, but the bank needs to build us up and make us feel good about their system.  There's always a lot of talk about consumer confidence.  There's worry that the money you and I have will not make it back into the bank.  I found a very interesting site last night that really breaks down the banking system in America. 

It starts basic and builds.

What makes money work?  "Mainly, it is the confidence people have that they will be able to exchange such money for other financial assets and for real goods and services whenever they choose to do so."

In the grand scheme of what takes place around you- the economic you- you don't really mean a whole lot to the overall "economy" unless you have a significant portion of money to move through the economy.  One theory says, "For all banks taken together, there is no net drain of funds...a check drawn on one bank normally will be deposited to the credit of another account, if not in the same bank, then in some other bank."

It sounds like the economy works well on that premise because individuals are withdrawing and depositing their money in the bank system so that bankers trade rocks and paper for debits and credits.  It's not about the majority of people's money really, because the majority of people have an insignificant amount of money.  It's about confidence in bankers calculations. 

Last week, I posted a piece about Warren Buffett's corporation having something on the order of $40 billion in savings.  Money they were just holding for a rainy day.  The U.S. Federal Reserve "provided $30 billion in funding" for JP Morgan to buy Bear Stearns investment bank for less than 90% of its value last year.

You are an economic being if you live in the United States, because eating is dollars.  You do what you do for many reasons, but you must deal with money.

In Tibet, protestors have been met with riot police.  The protestors have been accused of doing such things as, "defying a directive not to gather in groups, marched to a hill where they set off fireworks and burned incense."  They were met with riot police who had batons and reportedly marched in groups of ten to twenty officers.  "The unrest in Tibet began March 10 on the anniversary of a 1959 uprising against Chinese rule of the region. Tibet was effectively independent for decades before communist troops entered in 1950."

The Dalai Lama- the Tibetan spiritual leader- went into India in exile.  These protestors apparently want him back, so they burned incense.  That's the story they tell and their story generates real action in response.

"James Miles, a BBC correspondent in Lhasa, said troops carrying automatic rifles were 'letting off the occasional shot.'"

Jim Roger's thinks that the U.S. Fed Chairman should resign and the U.S. Federal Reserve should be abolished.  No government involvement with money at all.  It would all be private banking in such a system and I'm not really sure how the general public does in such a scenario, but it gives me a bad feeling.  It makes me feel like one company might buy another company in a sweet deal and somehow get more for their investment than you or I ever could.

It wouldn't feel right, especially if my money is also contributing to that sweet deal.  There's something wrong with that.  If you recall, in government-speak, welfare is bad.  Republicans don't like it and Democrats don't say it. 

"The Federal Reserve announced on Wednesday a rescue package that it would put around $200 billion into banks and investment houses and allow them to put up risky home-loan packages as collateral."

Jim Rogers has his argument nailed when he says, "if you bail out every investment bank that gets in trouble, that's not capitalism, that's socialism for the rich."

I'd take it a step further and say that's insanity.  Why would people give their resources to those in society who are least in need?  Maybe the answer is because of the banking system.  It's a series of debits and credits.  Certain banks make their own money.  You can in theory make your own money (e.g. writing and cashing a check.) 

Those that control the ledger control a bit of reality within the your culture. 

Blogger reaction is all over the place to the JP Morgan acquisition.

"The stock market has become comedy, not a free market. Obviously, for every dollar lost there was a dollar gained on the demise of Bear Stearns stock, but oh my f@#king god it is not a free market anymore."

"Capitalism without financial failure is not capitalism at all, but a kind of socialism for the rich."

"Unless public money is used on a very temporary basis to achieve an orderly wind-down or merger of Bear Stearns this is another case where profits are privatized and losses are socialized."

U.S. Treasury Secretary Henry Paulson defended the bail out of Bear Stearns with federal money.  He said, "I'm...aware of the importance of keeping our economy strong, of orderly capital markets, of the stability of the financial system doing things that promote orderliness and minimize the disruption."

I need to be plain.  The economy sucks.  Why at this point is anyone concerned with the orderliness of the "market?"  Companies like Bear Stearns took risks and made a ton of money.  Although it is unfortunate that 14,000 jobs could be eliminated, the people at that corporation should have to go through the same meat grinder you and I would be processed through if only the chance presents itself.

Your venture didn't work, file bankruptcy.
You need a job, wash a car.
Can't afford the Jag, get a VW Bus.

In the face of all this economic suck-titude U.S. Gold prices are going up.  (We're devolving from a modern capitalist perspective.)

"NEW YORK, March 14 (Reuters) - U.S. gold futures rose 1 percent to a record high on Friday, trading firmly above the $1,000 an ounce, lifted by a record low dollar and as investors fled to bullion as a safe haven due to a worsening financial market crisis."

Make sure you move all your money into gold, agriculture (i.e. hard, tangible assets) and you'll be all right.  At this rate, bartering is probably not far off.  Somewhere in here we fit in, but we really don't.  Sometimes we're allowed to feel as if we participate in the process, but those with the goods simply plan they will hold onto most of your money more than you.  They figure your money will either immediately get spent so the person you gave it to can put it back into the bank; or that you will put it back into the bank yourself.  The bank likes to hold onto your money because then it doesn't really have to have your money.  It's only requested to have a percentage of your money on hand at any time.

All you can really do at this point is ride the wave and see where it takes us. 
We're on the wave and there is no getting off. 
Pay off your credit card debt.
Live within your means. 
The only question to be concerned with then is, how bad does it get and for how long? 

No one can tell you, but the one thing that is known for sure is- when we get back on our feet, if we keep the same system we have now we'll being going back through the same problems at some point in the future.  This is not the first time the market has done this and under the current formation it won't be the last.  If we continue forward with the same forward planning, we- as a species- might simply be waiting for a meteor to one day wipe us into extinction.

There's got to be a better way to live with one another.

Tip of the week

Check out the Shanghai Tour if you're ever in Portland, OR.

Birthday Shout Outs

3/21/1685 Johann Sebastian Bach- He wrote haunting music.

Belly Laugh

Dave Chapelle's "Popcopy" skit always cracks me up.