Is an odd remark in the Madoff “giant Ponzi scheme” failure concerning Lawrence R. Velvel from Massachusetts School of Law a menacing “message” in disguise?
by Jake, the Champion of the Constitution
Originally published December 13, 2008 at http://www.nolanchart.com/article5637.html
I am sure everyone is quickly becoming aware of a $50 billion (allegedly in Madoff’s own words) “giant Ponzi scheme” as Bloomberg and the AP reported here. I am not going to elaborate here on my thoughts like “What about the REST of them?”, “Duh, what took the FBI so long?”, that this news pales in comparison to the fact that the American banking system is insolvent save for the ability of that ultimate Ponzi scheme known as the Federal Reserve to create money from thin air and destroy it at will, so buy physical gold and silver, do you not see the government is hanging the dollar out to dry, you idiots, etc., etc. Others can share their outrage, plus those who follow this column are well aware of my opinion from many prior articles.
What concerns me is this quote from the AP article from Dr. Lawrence R. Velvel of Massachusetts:
“One investor, Lawrence Velvel, 69, dean of the Massachusetts School of Law, said he and a friend may have lost millions of dollars between them. “This is a major disaster for a lot of people… You work all your life, you finally manage to save up something, and somebody who’s entrusted with it, it turns out suddenly he’s a crook. Lots of people are getting fully or partially wiped out.”
Quite odd, I thought. You see, as fellow columnist Sherry Baker pointed out in her July article “Hang ‘Em High? Law School Dean Makes SERIOUS Plans To Try Bush Regime for War Crimes“, Velvel was the editor-in-chief of this compiled collection of legal opinions entitled “Are Our Highest Officials Guilty of Torture?“ As a result of reading this paper, Bugliosi’s book, The Prosecution of George W. Bush for Murder, and plenty of other reading and research, the opinion of this column is that, regardless of whether there is 1 day until the next President is enthroned or 4 years, Bush needs to be impeached by the House. Following his removal from office, Bush needs to be arrested for the murder of our servicemen and -women in Iraq and allowed to defend himself in a court of law.
“Gold is Money, and Nothing Else.” – JP Morgan before Congress’s Pujo Commission, 1913
by Jake, the Champion of the Constitution Originally published December 8, 2008 at http://www.nolanchart.com/article5611.html
In a dynamic duo of articles published this weekend, I predict the fall of the Dollar via a Gold-based perspective, and a US Treasury-based perspective. I want to round off and perhaps even reinforce my theory with a few more opinions and thoughts, which of course may be faulty as the major decisions are still at the mercy and discretion of the FED, whom I have learned to never underestimate. To be a real “expert” in economics today requires one to be an “expert” in predicting government interventions, so it is all guesswork unless one is an insider. I am highly interested if there are any crucial facts I am missing by the way, please leave any counterarguments below.
“I own some gold and if gold goes down I’ll buy some more and if gold goes up I’ll buy some more. Gold during the course of the bull market, which has several more years to go, will go much higher.” – Jim Rogers, famed commodities trader, last week
I have written previously how the FED creates and destroys money, but the example I used of open market operations (OMOs) has changed dramatically in 2008. The FED is on a daily basis still altering its Treasury holdings, but more importantly propping up other assets by buying them, such as mortgage-based securities, Citigroup, AIG, etc. The FED balance sheets has plunged from its historical levels of ~95% Treasury securities to less than 32% Treasuries, which hampers OMOs since the assets purchased will likely find no willing buyer on the market.
It may seem like the FED is creating lots of money (and they are) but remember that $7.76 trillion, $8.5 trillion, WHATEVER the new number will be by the end of this week, pales in comparison to the amount of financial derivatives in existence, which per the BIS at last count (and just over-the-counter!) was $684 trillion. I am not sure if I ever wrote this phrase in this column before, but I’ve always viewed the financial crisis as a “Triple-D” crisis. Dollar. Debt. Derivatives.
As we’ve mentioned quite a few times here at Liberty Maven, Peter Schiff is one, along with Ron Paul and other Austrian Economists, who accurately predicted the current economic crisis years ago. Here’s an amusing little video made up of video clips from 2006 and 2007 in which Peter Schiff makes his dire predictions and warns people away from stocks (especially bank stocks) while people like Arthur Laffer and Ben Stein were lauding the “stable financials” and predicting a rise in housing prices and the DOW at 16,000 in 2008. One even offered a BUY recommendation for Washington Mutual!
Yesterday, Secretary of the Treasury Henry Paulson published an Op-Ed piece in the New York Times. It was filled with doublespeak, platitudes, lies, and incredible ignorance. Chris Martenson parsed Paulson’s words, paragraph by paragraph, to shed some truth of the situation. Here’s a snippet:
[Paulson writes:]
I have always said that the decline in the housing market is at the root of the economic downturn and our financial market stress. And the economy, as it slows further, threatens to prolong this decline, as well as the stress on our financial institutions and financial markets.
My Comment: Um, no, Hank, sorry, this is not true. Here are some recent quotes from you:
April 20, 2007 — “I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained.”
July 26, 2007 — “I don’t think it [the subprime mess] poses any threat to the overall economy.”
This article by Chris Martenson is quite revealing, even entertaining (if you’re into black comedy). Read the whole thing here.
Just about any new regulatory law comes with unintended consequences. Even though this “confiscation” will be painted with a positive brush by those in government when/if it shows up within a bill being debated in Congress, one has to wonder if it will “scare” those of us who lack any trust in the government into taking early IRA distributions where possible. I would guess there may be a run on such distributions even with the high penalty imposed on early withdrawals. It is unclear if such withdrawals would be widespread enough to constitute a “run” on them, but the potential is certainly there.
We are barreling toward socialism at an alarming rate, and every day I become more and more afraid for the future of our country. Teresa Ghilarducci is an economist at the New School for Social Research in New York who wrote a policy paper on the subject of retirement account, and followed that up with a book entitled, When I’m Sixty-Four: The Plot Against Pensions and the Plan to Save Them. She was called to testify before Congress on her harebrained scheme to have the federal government take over all our private 401K plans (which have historically realized at least 10% annually, on average) and “guarantee” a rate of return of 3% over inflation. From ABC News:
Here are the basics of her proposed Guaranteed Retirement Accounts:
Employees would make mandatory contributions equal to at least 5 percent of the earnings. Workers could contribute higher amounts if they wish.
Those contributions would be offset by a $600 federal tax credit each participant would receive.
As with a 401(k) plan, workers would have individual accounts they could track. The balance of each account would depend on each worker’s contributions and income level.
The Social Security Administration would handle account management, and the Thrift Savings Plan — a well-regarded retirement plan for federal employees — would manage the money.
Participants would be guaranteed a fixed rate of return that exceeds inflation by 3 percent. For instance, if inflation stood at 2 percent, the worker would earn 5 percent; if inflation reached 3.5 percent, the worker would earn 6.5 percent. Participants could receive an inflation-beating return above 3 percent if the government’s investment returns were high enough.
At retirement, participants’ account balances would be converted into a lifetime stream of income that adjusts for inflation. There would be options to take partial lump sum payments, opt for lower payments in return for survivor benefits and, upon death, leave a portion of a financial account balance.
The intent of the plan is not to replace Social Security. Rather, Guaranteed Savings Accounts would supplement Social Security, Ghilarducci said.
Given the government’s horrendous track record (i.e. Social Security, Fannie/Freddie, Medicare, Medicaid, etc.) it’s preposterous to think the government would handle your 401K money wisely.
NEW YORK – Wall Street headed for another precipitous drop Friday as fears of a punishing global recession stirred panic among investors and sent world financial markets into a tailspin. The Dow Jones industrial average futures fell as much as 550 points, triggering a freeze in selling.
Hmmm… Apparently government intervention only prolongs the inevitable and makes it worse. Sure it’s too early to know for sure, but things are looking bleaker by the day and Ron Paul is looking more and more like a genius by the minute.
Turn off your stock market tickers and your favorite financial news channel and go watch Chris Martenson’s Crash Course instead. You’ll thank yourself later.
Vern McKinley, at Cato.org, suggests that all the so called “tools” in the recently passed bailout legislation have implications all liberty seeking free marketeers should be concerned about. He steps through some of the more talked about provisions in the rescue legislation and examines what their implications are in the real world.
…a primary source for depositor fears has been their effort to acquire a number of what they have called “tools” to address the crisis, including the power to make up to $700 billion of asset purchases. The tools that Paulson and Bernanke have sought have had one characteristic in common: a lack of confidence in markets to resolve the imbalances caused by government policy in the financial markets. In overpromising the soothing effects of one tool, Paulson and Bernanke have then moved on to securing the next tool.
McKinley looks at the implications of other tools such as raising the FDIC insurance limit, the allowance for the FDIC to borrow unlimited funds from the Treasury, and Treasury injecting capital into the banks. He concludes with what we’ve learned from the bailout fiasco.
The big lesson here is that making major legislative changes in times of crisis leads to bad policy (recent examples in the financial sector are the Patriot Act and Sarbanes-Oxley). These “tools” are a euphemism for extraordinary powers that would not be considered in a calm market. They are largely preemptive, and aimed at avoiding bank failures.
I couldn’t agree more. Vern McKinley lives in my district and ran against the incumbent big spending Congressman Frank Wolf in the GOP primary earlier this year. McKinley didn’t win, unfortunately. If he were representing me in Congress during the bailout debate I wouldn’t have had to send emails and make phone calls to him pleading to vote against it. I would have already known that his vote would be an emphatic “NO”, unlike my current so called representative.
Many people, especially those on the left, such as Barack Obama and his disciples, are insisting that it was deregulation (or lack of regulation) that contributed heavily to the current economic woes. The main problem with that theory is that there has been no relevant deregulation in the last 25 years. The failing banking industry has been heavily regulated, in fact. John Stossel says that deregulation wasn’t the problem, and reregulation isn’t the solution:
“It’s deregulation’s fault!”
That’s the conventional explanation for the economic mess.
Barack Obama said, “This is a final verdict on the failed economic policies of the last eight years … that essentially said that we should strip away regulations, consumer protections, let the market run wild, and prosperity would rain down on all of us.”
Is deregulation is the culprit? It can’t be. There was no relevant deregulation in the last 25 years. Meanwhile, highly regulated institutions eagerly bought risky government-guaranteed mortgages, stimulating excessive housing construction and an unsustainable price bubble.
Deregulation wasn’t the problem, and reregulation isn’t the solution.
It’s intuitive to assume that regulation prevents problems, but it’s rarely true. First, how would regulators know what to do? Leaving aside the bias they might have and the brutal fact that regulation is physical force, how can a small group of people understand the workings of a market sufficiently to regulate sensibly? Markets, especially financial markets, are far more complicated than any mind can grasp. They consist of many millions of participants making countless decisions on the basis of unarticulated know-how and intuition. To attempt to regulate such activity requires knowledge no one can possess.
I’ve been a big fan of Peter Schiff ever since he endorsed Ron Paul early in the primary campaign. The Washington Post has published an article by him that quickly, clearly, and directly sums up the United States economic situation. As I read it I could not help but nod my head in agreement with each passing sentence. If you read nothing else regarding our financial situation please read this.
Amid the chaos of recent days, as the federal government has taken gargantuan steps to stabilize the financial markets, realigning the U.S. economic system in the process, comes a nearly universal consensus: This crisis resulted from government reluctance to regulate the unbridled greed of Wall Street. Many economists and market participants who were formerly averse to government interference agree that a more robust regulatory framework must be constructed to cage the destructive forces of capitalism.
For the political left, which has long championed the need for such limits, this crisis is the opportunity of a lifetime.
Absent from such conclusions is the central role the government played in creating the crisis. Yes, many Wall Street leaders were irresponsible, and they should pay. But they were playing the distorted hand dealt them by government policies. Our leaders irrationally promoted home-buying, discouraged savings, and recklessly encouraged borrowing and lending, which together undermined our markets.
Liberty Maven
“I own some gold and if gold goes down I’ll buy some more and if gold goes up I’ll buy some more. Gold during the course of the bull market, which has several more years to go, will go much higher.” – 
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