I looked pale? I felt worn out; like a whole entourage of clients had squashed out my innards. Work was hectic, more than usual, and the anxiety apparently was flushing out my features. Self-consciously I reached up to touch my waxen glow-y complexion.

Do I look sick? I mouthed to my coworker while making a demented fish face. She vigorously shook her head, but all ready I was calculating the cost of picking up a tube of tanning lotion on the way home from work.

“My boss told me I looked pale today,” I informed Matt that evening.

We were sitting in McDonalds polishing off the last remnants of Greasers — that’s Big Mac and fries — while discussing the cultural implications of ordering a Big Mac over a McChicken. It also presented an opportune moment to drop my woes on him.

“How does my skin look?”

“Flawlessly vibrant,” he replied loyally.

He slid from the booth — his philosophy exposed in bold serif font across the front of his red t-shirt: HARD WORK NEVER KILLED ANYONE BUT WHY TAKE THE CHANCE? — and momentarily returned balancing a tray with two coffees and a couple of baked apple pies.

As we dug into our dessert, a gnarled finger reached over suddenly to grasp my shoulder. “I’m sorry to interrupt, dear, but — you look just like a movie star.”

A bent older woman with a heart shaped face and freckles splashed across her nose had approached our table. She now clasped her knotted fingers over mine and was inspecting me with startling adoration. “Dear, you do.” Her head bobbed. “Why, you look exactly like that actress. The resemblance is uncanny! Katherine…”

This was the second time my face was placed under scrutiny today; I looked like a movie star though, a Katherine? I grinned like an idiot under such unexpected reverence as my mind considered the possibilities: Catherine Zeta-Jones, Catherine Bell, Katharine Hepburn, Catherine of Alexandria …

“… Katherine Heigl,” she pursued, “from Little House on the Prairie.”

“I think she means Mary,” Matt whispered. “You kind of do, with your hair pinned up like that.”

She gave my arm a final affectionate squeeze before hobbling off with an older man who sported a large furry moustache; she and her gentleman companion debating the ‘astonishing resemblance’ as they trailed out the door.

Matt twisted around in the booth. “Hey, what about me!”

[So in case anyone is remotely interested, apparently I look a bit like Mary Ingles, or Katherine Heigl, or the Katherine Heigl from Little House on the Prairie, if anyone is familiar with that one, albeit a paler version. Found a new word for you, Edgar: loquacious. Freshly read in Rolling Stone.]

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Related Posts:

1. I’m So Easily Distracted

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My friend works as a legal aide and felt her company was pretty secure. Yet over fragrant sips of ginger and spicy Chai, it was her parent’s business she was most interested in discussing. Her family specializes in appraising and selling jewelry.

“Business has really been booming for my parents.” She tapped her mug and frowned. “But it’s been a disturbing change over the past few months. More frequently, financially desperate customers are coming to the shop.”

She paused and sighed.

“There’s been a surge of people bringing in wedding bands, precious keepsakes and family heirlooms – treasured pieces held in the family that are now being sold to cover basic financial costs. The stories my parents hear of why people are parting with such sentimental objects is heartbreaking. It’s getting pretty bad out there.”

A woman yesterday was forced to sell a gold diamond necklace and ring set inherited from her grandmother in order to cover family health insurance costs. And a recently laid off man came in to sell his pocket watch to pay utility bills – for him, every dollar counted. This type of situation, my friend mused, was increasingly becoming the norm. To make ends meet, people were raiding jewelry boxes and other personal items to sell whatever they could to turn assets into immediate cash under economic pressure.

On the way home from our lunch, I noticed a neon sign outside a pawn shop that had sprouted up a few blocks from me. “PAYING TOP DOLLAR FOR YOUR GOLD AND JEWELRY!” it screamed.

I didn’t have far to go before I was greeted by the next lurking signboard – “I buy diamonds! Sell us your unwanted gold! Fast Cash Now!!”

Another harbinger of lackluster economic times?

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Featured Resources

Compare prices and read helpful product reviews to make smart buying easy through Ciao! – Price Comparison and Product Reviews for the savvy shopper.

Wow, this seems quite relevant while we’re on the topic of hyperinflation so what exactly is going on here? An article from the Telegraph UK yesterday:

The Government is set to throw out the 165-year old law that obliges the Bank to publish a weekly account of its balance sheet – a move that will allow it theoretically to embark covertly on so-called quantitative easing. The Banking Bill, which is currently passing through Parliament, abolishes a key section of the law laid down by Robert Peel’s Government in 1844 which originally granted the Bank the sole right to print UK money.

The ostensible reason for the reform, which means the Bank will not have to print details of its own accounts and the amount of notes and coins flowing through the UK economy, is to allow the Bank more power to overhaul troubled financial institutions in the future, under its Special Resolution Authority.

However, some have warned that it means: “there is nothing to stop an unreported and unmonitored flooding of the money market by the undisciplined use of the printing presses.”

Although the amount of easing is likely to be limited, news of this increased secrecy will spark comparisons with Weimar Germany and Zimbabwe, where uncontrolled use of the central banks’ printing presses ultimately caused hyperinflation.

The Bank said it will still publish details of its balance sheet, but, significantly, the data – the main indicator of the extent of quantitative easing – will not be presented until more than a month has elapsed. For instance, under the new terms of the law, if the Bank were to have embarked on a policy of quantitative easing last month, the figures on this would not be published until the end of this month.

The reforms, which are likely to be implemented later this year, will make the Bank of England by far the most secretive major central in the world, experts said.

“Quite why the Bank has to keep its operations so shrouded in secrecy is a mystery to me,” said Simon Ward, economist at New Star. “This [reform] will make it much more difficult to track what the Bank is doing.”

Full article: Reform plan raises fears of Bank secrecy

Lack of transparency and accountability is what brought us into this exorbitant financial mess in the first place so I honestly can’t understand their reasoning behind this. When will the general public become fed up with all the secretive schemes before finally declaring, enough is enough?

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Featured Resources

Compare prices and read helpful product reviews to make smart buying easy through Ciao! – Price Comparison and Product Reviews for the savvy shopper.

The country’s acting finance minister, Patrick Chinamasa, made the announcement in a government gazette released Saturday. Although Chinamasa did not give the date on which the $50 billion and new $20 billion notes would come into circulation, an official at the Reserve Bank of Zimbabwe said the notes would be distributed to all banks by the end of Monday.

Zimbabwe is grappling with hyperinflation now officially estimated at 231 million percent, and its currency is fast losing its value. As of Friday, one U.S. dollar was trading at around ZW$25 billion.

When the government issued a $10 billion note just three weeks ago, it bought 20 loaves of bread. That note now can purchase less than half of one loaf.

Full article: Zimbabwe introduces $50 billion note

Is this the largest hyperinflation ever?

It was fun to relish that second and roar in merriment last night

“5, 4, 3, 2, 1 …. 1…. Happy New Year!”

With financial scandals cascading through Wall Street and the economy, is 2009 destined to be just as wacky?

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(because we do the thinking for you.)

Love,

Ben Bernanke, Federal Reserve Chairman of a Central Bank

Henry Paulson, US Treasury Secretary and former Chairman and Chief Executive of Goldman Sachs

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Volcker Says Finance System `Broken,’ Losses May Rise
The Bloomberg News
September 5, 2008

This bright new system, this practice in the United States, this practice in the United Kingdom and elsewhere, has broken down,” Volcker said today at a banking conference in Calgary. “Growth in the economy in this decade will be the slowest of any decade since the Great Depression, right in the middle of all this financial innovation.”

The former Fed chief projected “a lot” more losses from the collapse in the mortgage-backed debt market, after the more than $500 billion tallied so far, should the U.S., European and Japanese economies fail to pick up. He urged changes in financial regulations, echoing calls among sitting officials and legislators.

“It is the most complicated financial crisis I have ever experienced, and I have experienced a few,” said Volcker, who ran the Fed from 1979 to 1987, and engineered an increase in interest rates to 20 percent to quell inflation that exceeded 10 percent.

U.S. growth has averaged 2.3 percent so far this decade, down from 3.4 percent in the 1990s. The current growth rate is the weakest since at least the 1940s, when the government began compiling figures on quarterly gross domestic product.

Oh yes, and in other news. The U.S. Treasury announced a take-over of Freddie Mac and Fannie Mae this weekend – a historical federal rescue operation and bailout when these two mortgage giants collapsed into insolvency under the strain of billions of dollars of losses during a housing crisis that shows no signs of improving.

And taxpayers should be truly worried as they will be responsible for Freddie’s and Fannie’s considerable and expected losses. The Congressional Budget Office predicted in July that a bailout could cost between $25 billion and $100 billion, reports the Los Angeles Times. The two companies lost about $14 billion last year and such steeping numbers coupled with our current national deficit guarantees future generations to be shackled with enormous debt.

Few Stand to Gain on this Bailout, and Many Lose
The New York Times
September 7, 2008

But even after the government seized the mortgage finance companies on Sunday and dismissed their chief executives, the companies’ outgoing leaders could see big paydays — a prospect that angers many investors, particularly because ordinary stockholders could be virtually wiped out.

Under the terms of his employment contract, Daniel H. Mudd, the departing head of Fannie Mae, stands to collect $9.3 million in severance pay, retirement benefits and deferred compensation, provided his dismissal is deemed to be “without cause,” according to an analysis by the consulting firm James F. Reda & Associates. Mr. Mudd has already taken home $12.4 million in cash compensation and stock option gains since becoming chief executive in 2004, according to an analysis by Equilar, an executive pay research firm.

Richard F. Syron, the departing chief executive of Freddie Mac, could receive an exit package of at least $14.1 million, largely because of a clause added to his employment contract in mid-July as his company’s troubles deepened. He has taken home $17.1 million in pay and stock option gains since becoming chief executive in 2003.

Fannie Mae and Freddie Mac have enriched their top executives for years. Mr. Mudd’s predecessor at Fannie Mae, Franklin D. Raines, took home more than $52 million while he was chief executive from 1999 to 2004, according to Equilar data.

“This is completely outrageous,” said Richard C. Ferlauto, the director of corporate governance and investment for the American Federation of State, County and Municipal Employees, a large pension fund. “It is really a slap in the face to shareholders and homeowners whose loans are at risk and taxpayers footing the bill for a bailout.”

I agree with Volcker, the financial system is hopelessly broken. And as I gaze into my baby niece’s expressively promising eyes, the moral impact of these maddening decisions overwhelms me.  This bailout will directly affect every American wallet sooner or later, while the departing heads of Fannie Mae and Freddy Mac are entitled to $9 million and $14 million in severance pay, respectively.

September 7, 2008 will be now historically be remembered as the day the U.S. government took over the mortgage market, a move that has no other precedent in history.

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Featured Resources

Compare prices and read helpful product reviews to make smart buying easy through Ciao! – Price Comparison and Product Reviews for the savvy shopper.

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Large U.S. Bank Collapse Ahead
Yahoo! News
August 19, 2008

The worst of the global financial crisis is yet to come and a large U.S. bank will fail in the next few months as the world’s biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff said on Tuesday.

“We have to see more consolidation in the financial sector before this is over,” he said, when asked for early signs of an end to the crisis.

“Probably Fannie Mae and Freddie Mac — despite what U.S. Treasury Secretary Hank Paulson said — these giant mortgage guarantee agencies are not going to exist in their present form in a few years.”

Rogoff said the U.S. Federal Reserve was wrong to cut interest rates as “dramatically” as it did. “Cutting interest rates is going to lead to a lot of inflation in the next few years in the United States.”

Legendary Wall Street investor and commodities guru Jim Rogers is back on the prowl and seems to be in agreement with Rogoff’s stunning assessment, as seen during an exclusive interview with Money Morning this week.  I have to admit, every time I see Jim Rogers on television sporting his little bowtie during interviews, I just want to reach through the screen and give him a great big big. His direct, no nonsense and no holds barred way of speaking somehow reminds me of a crabby but wise grandfather.

Exclusive Interview: Jim Rogers Predicts Bigger Financial Shocks Loom, Fueling A Malaise That May Last For Years
Money Morning
August 19, 2008

Jim Rogers believes that “America had such a magnificent and gigantic position of dominance that deterioration will take time … it takes a lot of hard work by a lot of incompetent people to change the situation.”

The U.S. financial crisis has cut so deep – and the government has taken on so much debt in misguided attempts to bail out such companies as Fannie Mae (FNM) and Freddie Mac (FRE) – that even larger financial shocks are still to come, global investing guru Jim Rogers said in an exclusive interview with Money Morning.

Indeed, the U.S. financial debacle is now so ingrained – and a so-called “Super Crash” so likely – that most Americans alive today won’t be around by the time the last of this credit-market mess is finally cleared away – if it ever is, Rogers said.

The end of this crisis “is a long way away,” Rogers said. “In fact, it may not be in our lifetimes.”

Some key points Rogers stated:

• U.S. Federal Reserve Chairman Ben S. Bernanke should “resign” for the bailout deals he’s handed out as he’s tried to battle this credit crisis.

• The U.S. national debt – the roughly $5 trillion held by the public– essentially doubled in the course of a single weekend because of the Fed-led credit crisis bailout deals.

• U.S. consumers and investors can expect much-higher interest rates – noting that if the Fed doesn’t raise borrowing costs, market forces will make that happen.

• And that the average American has no idea just how bad this financial crisis is going to get.

The entire interview is worth reading through and here are a few snippets.

(Q):What would Chairman Bernanke have to do to “get it right?”

Rogers: Resign. (Hah! Love it.)

(Q): Is there anything else that you think he could do that would be correct other than let these things fail?

Rogers: Well, at this stage, it doesn’t seem like he can do it. He could raise interest rates – which he should do, anyway. Somebody should. The market’s going to do it whether he does it or not, eventually.

The problem is that he’s got all that garbage on his balance sheet now. He has $400 billion of questionable assets owing to the feds on his balance sheet. I mean, he could try to reverse that. He could raise interest rates. It would cause a shock to the system, but if we don’t have the shock now, the shock’s going to be much worse later on. Every shock, so far, has been worse than the last shock. Bear-Stearns [now part of JP Morgan Chase & Co. (JPM)] was one thing and then it’s Fannie Mae (FNM), you know, and now Freddie Mac (FRE).

The next shock’s going to be even bigger still. So the shocks keep getting bigger because we kept propping things up and this has been going on at least since Long-Term Capital Management. They’ve been bailing everyone out and [former Fed Chairman Alan] Greenspan took interest rates down and then he took them down again after the “dot-com bubble” shock, so I guess Bernanke could try to start reversing some of this stuff.

(Q): Earlier this year, when we talked in Singapore, you made the observation that the average American still doesn’t know anything’s wrong – that anything’s happening. Is that still the case?

Rogers: Yes.

(Q): What would you tell the “Average Joe” in no-nonsense terms?

Rogers: I would say that for the last 200 years, America’s elected politicians and scoundrels have built up $5 trillion in debt. In the last few weekends, some un-elected officials added another $5 trillion to America’s national debt.

Suddenly we’re on the hook for another $5 trillion. There have been attempts to explain this to the public, about what’s happening with the debt, and with the fact that America’s situation is deteriorating in the world.

I don’t know why it doesn’t sink in. People have other things on their minds, or don’t want to be bothered.

(Q): What do you think [former Fed Chairman] Paul Volcker thinks about all this?

Rogers: Well, Volcker has said it’s certainly beyond the scope of central banking, as he understands central banking.

Volcker’s been very clear – very clear to me, anyway – about what he thinks of it, and Volcker was the last decent American central banker. We’ve had couple in our history: Volcker and William McChesney Martin were two.

You know, McChesney Martin was the guy who said the job of a good central banker was to take away the punchbowl when the party starts getting good. Now [the Fed] – when the party starts getting out of control – pours more moonshine in. McChesney Martin would always pull the bowl away when people started getting a little giggly. Now the party’s out of control.

(Q): This could be the end of the Federal Reserve, which we talked about in Singapore. This would be the third failure – correct?

Rogers: Yes. We had two central banks that disappeared for whatever reason. This one’s going to disappear, too, I say.

[/end snippet]

With my limited broke-ass financial knowledge, I do believe we’re in a painful but necessary cleansing period of massive global deleveraging and (unfortunately) tremendous inflationary pressure. When the system is corrupt, it becomes prudent for people to embark on personal wealth preservation protection and with current shoddy interest rates, savers continue to suffer as we struggle to find creative ways to protect purchasing power.

My generation may experience a radical financial transformation from the insatiable consumerist lifestyle we’ve grown so accustomed to.

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Western New York really has been hammered this summer by severe lightning, with some pretty odd hail storms gracing our area. It seems as if one storm blows through just in time for the next to take over. A fellow Western New Yorker snapped this photo when we got pelted by enormous hail.

Should I start building an ark soon?

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The End of Credit Card Consumerism
U.S. News and World Report
August 8, 2008

Is the insatiable credit-binging party nearly over?

Today, America finds itself at a once-or-twice-a-century economic tipping point. A sharp slowdown, record-high gas prices, high consumer debt levels, a plunging real estate market, and the growing green movement all seem to be conspiring to dethrone King Consumer and transform the economy and the American way of life for years to come. “The process of bringing our wants and our needs into realignment,” says Merrill Lynch economist David Rosenberg, “is going to involve years of savings and frugality.”

Many consumers, of course, don’t have much choice but to scale back. Total credit card debt has increased by over 50 percent since 2000. The average American with a credit file is responsible for $16,635 in debt, excluding mortgages, according to Experian, and the personal savings rate has hovered close to zero for the past several years. High gas and food prices are causing real incomes to fall. Even worse, rising inflation will probably cause the Federal Reserve to start jacking up interest rates once the credit crisis on Wall Street has passed, tightening credit even further. “We’re shedding jobs, it’s much harder to borrow, and what used to be capital gains are now capital losses,” says Scott Hoyt, senior director of consumer economics at Moody’s Economy.com. “There’s no source of funding for spending.”

We continuously buy on credit and our government does the same, so are we in fact reaping what we deserve? The ripples from the bubble busted housing debacle continue to ricochet and the latest batch of stimulus checks are but a fleeting memory for the average American consumer.

Consumer Spending Heading for a Fall
Marketwatch
August 10, 2008

“Frugality is now replacing frivolity,” wrote David Rosenberg, chief North American economist for Merrill Lynch, who suggests that the consumption patterns of the 1950s could be coming back. “Ozzie and Harriett” is in; “Sex in the City” is out.

The first official data on third-quarter consumption will be released in the coming week. In addition to the retail sales report for July, the calendar also includes July numbers for consumer prices and industrial production for July, and the June figures on foreign trade. The data “should reinforce the view that the U.S. economy is in recession,” said economists for Goldman Sachs.

The developing slump in consumer spending will make it increasingly difficult to sustain positive growth, said David Resler, chief economist for Nomura Securities. If the U.S. consumer falters, then global growth probably will too. Consumers face three hurdles: Higher energy may be easing, but their wealth is still falling. And wage growth has been very weak.

David Walker, the former U.S. Comptroller General and director of the Congressional Government Accountability Office (GAO), had a job to audit the government’s books and serve as the investigative arm of Congress to ensure the fiscal accountability of our federal government. (I’ve written about him before in The US Economy Is Unsustainable.) Mr. Walker has since resigned from his position in order to hit the road and spread awareness of what he believes to be America’s precariously dire financial future coming straight down the pike.

‘I.O.U.S.A.’ a big screen look at the U.S.’ monster debt
The Washington Post / Seattle Times
August 10, 2008

In March of this year, Walker resigned from the GAO so he could be even more vocal on the debt crisis, becoming chief executive of the newly formed Peter G. Peterson Foundation, set up by Peterson, billionaire co-founder of the Blackstone Group, a major private-equity player.

Their message: You probably know that the national deficit stands at $9.6 trillion and rising. What you don’t know is how bad things really are. If you include all the unfunded entitlement obligations — Social Security, Medicare, Medicaid and so forth — we are actually in a $53 trillion hole, Walker says.

And it will only get deeper as we get older.

In an interview, Walker is full of grim one-liners, such as: “The debt has increased our risk of being held hostage by foreign lenders” and “Our situation is serious, and it is deteriorating with the passage of time” and “The financial condition of the U.S. is worse than advertised.”

The nation’s debt now accounts for 66 percent of the gross national product. But unless things change, the film argues that the cost of aging baby boomers will push that proportion to 244 percent by 2040, twice what it was at the end of World War II, our highest level of national debt.

A debt that high, even super-investor Warren Buffett says in the film, “could create real political instability.”

Our overseas brethren are feeling the pain as well.

It’s worse than we thought, admits CBI. The CBI, the UK’s largest employers’ organisation, has warned that the UK economy is deteriorating faster than it previously thought.

UK Economy ‘Worse Than Thought’
BBC News
August 10, 2008

Letters Warn of Darkening Mood in the Economy
The Guardian / Observer
August 10, 2008

Leading employers’ organisation the CBI will this week perform a significant U-turn and warn its members that the economy is deteriorating at a faster rate than it had predicted.

As recently as June, Richard Lambert, the CBI’s director-general, took a relatively optimistic view, saying we should avoid talking ourselves into recession. But in a letter to mark the first anniversary of the credit crunch, he writes: ‘There is no doubt that the mood has darkened in the last two or three months,’ and warns that growth prospects for next year and 2010 ‘look no better than anaemic’. It is the most pessimistic assessment of Britain’s economic prospects that Lambert has delivered.

He concedes that: ‘The CBI, along with most other forecasters, has been consistently over-optimistic about the economic outlook over the past 12 months.’ He blamed the volte-face on a surge in inflation that ‘took us by surprise’ and the prolonged credit crunch, which has been ‘bigger and broader than at first appeared likely. A year ago, it seemed reasonable to hope that the worst would by over by now. That has not turned out to be the case.’

Lambert criticises ‘years of unsustainable increases in government spending’, which have ‘left the public finances in poor shape to cushion the economy against these adverse shocks’, and warns Gordon Brown not to take measures which he claims would make the situation worse, including changing the Bank of England’s 2 per cent inflation target.

So what are productive solutions for a service-based society with a waning manufacturing sector to compete in a globalized economy? The situation feels like being trapped in a maddening Catch-22 with no easy answer. How do strapped Americans effectively divert a monetary crisis through conservation and savings when the foundation of our fiat currency and financial system is based off credit and debt?

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Bush Aides Project Record $482 Billion 2009 Deficit

Being the incredible insomniac I tend to be, I was snuggled in bed last night flipping through various channels when I came across a late night re-run of Glenn Beck interviewing Congressman Dr. Ron Paul on CNN. I found the conversation rather intriguing since they focused quite a bit on monetary policy, as well as the general lack of initiative that sadly seems to be prevailing in Washington these days when it comes to tackling disturbing financial issues.

Dr. Ron Paul gave a compelling speech to the House floor in Congress on July 9, where he hinted at fast-approaching big events that were about to be unleashed; chaotic events, he believed, which would not only affect the United States, but the world economy and entire political system as well.

Glenn Beck asked for more clarification on what was meant during this particular speech, to which Dr. Paul replied;

Paul: “…this is associated with the loss of a standard of living. The standard of living of Americans are going down, especially for the middle-income, low-income, and poor people. It`s going down much more rapidly than those in the high-income bracket.

You know, there is a transfer of wealth with the monetary system we have, and they are suffering. And that is why they`re really hurting. But they usually see this generalize when they go to the gas pump and they say, “Oh, oil prices are too high. We have to do something,” without analyzing it and figuring out why is it that our dollar isn`t buying much. Instead of saying prices are too high, people should always ask the question, why is our dollar not buying what it used to buy?

The dollar has held up relatively well in the last 35 years. Since 1971, there`s been no backing of the dollar [by gold], and we`ve been able to get away with inflating the dollar and exporting it by literally spending it overseas. And that`s one of the reason our jobs go overseas, because it`s cheaper to print paper and spend it overseas.

But the event that I anticipate is that people will get tired of this, and they`re starting to. That`s why the dollar has been slipping. China owns a huge amount of housing securities, and when they start selling those, which they have, our dollar has to go down. When our dollar goes down, prices have to go up. When prices go up, the standard of living goes down.

And prices never go up uniformly. And one thing that you talk about a lot is why — why are we putting this on the backs of the poor? It`s because their income never keeps up with the prices. If all prices went up evenly and salaries went up evenly, it wouldn`t be a big deal, but that`s not the way inflation works.

Some people get richer. Wall Street could get richer. The poor could get poorer. There is an elimination, ultimately, of the middle class with runaway inflation, and the rich could benefit, certainly, in the early stages. When a political crisis comes, then of course, everybody is threatened.

And that`s what I fear is coming, because this dollar bubble has essentially been building for 35 years. It`s world-wide. It`s never happened before. We`ve had fiat money and inflation before, but it`s usually more localized. But this time, because the dollar was the reserve currency of the world, it`s a much, much bigger bubble, and we`re seeing it coming apart.

And that`s why I think we`re on the verge, if not in the very early stages, of a gigantic financial crisis.”

(The statement below in particular made me absolutely cringe and pound my pillow in frustration.)

Paul: “You know, I won`t say the person`s name. One time, this subject came up at a hearing, and I mentioned about the backing of the dollar and the gold, and this individual afterwards came up and said to me, ‘Is the dollar not backed by gold?’ And that person was on the banking committee. So that`s something…”

Ouch. How can someone on the banking committee not realize we’ve been using a fiat currency for the past thirty odd years?? I can only wholeheartedly agree with Glenn Beck when he made these following comments.

Beck: “But they`re not talking about anything. When is the last time you heard any of these politicians really talk about the border? When did they really talk about something that made any sense on the economy? They`ll talk about more giveaways.

They haven`t talked about $482 — what is it — billion deficit now. Four hundred and eighty-two billion dollars is what Bush will leave in this year alone, along with this Congress. Nobody will talk about it, except to blame each other for it. I believe there are irresponsible people in Washington, and they`re focused on other things.

But you have a responsibility, if you`re in Congress, or you`re in the White House, you`re in the Senate. I don`t care where you are. If you are serving the American people, you have a responsibility to figure out how the dollar works. You have a responsibility. And how hard is it?

We all learned in Germany, you print more money and all of a sudden, you`re buying bread with a wheelbarrow. I mean, look at what`s his name, Mugabe, and his economy right now. It only — you don`t need to go to college. I didn`t. I get it.”

Yes!!! I silently cheered from my bed perch. Finally, someone says it, and it was so refreshing to hear the mainstream media focusing a bit of attention on real issues behind our monetary policy and how it affects the economy and American purchasing power in general. The former U.S. Comptroller (that’s guy who balances the government’s budget sheet) has been loudly warning us for years that our economy is unsustainable with current irresponsible fiscal policies. But when will the government stop this reckless devil-may-care spending where the brunt of burden will fall squarely on the taxpayers?

I still feel enormously frustrated but wanted to share this particular interview – it’s the first time I’ve witnessed some of these looming financial issues being discussed so candidly by a mainstream television reporter. So thank you, Glenn Beck, for embracing this financial pickle and actually opening a discussion.

You can view the entire transcript here;

CNN Transcript – Glenn Beck Interviews Ron Paul (July 30, 2008)

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America’s House Price Time Bomb
BBC News
July 29, 2008

Faced with seemingly never-ending falls in the value of their properties, some American home-owners are taking radical action; they are choosing to walk away from homes and their mortgages.

In May 2006, at the height of the housing boom, Karen Trainer bought a $500,000 apartment in California – with money borrowed from her bank. By this year, Karen still owed $500,000 on her mortgage, but her apartment was worth $200,000 less. So she was deep in negative equity and, to make matters worse, the interest rate on her loan was about to increase.

“I thought ‘this is crazy’,” Ms Trainer says. “It just does not make financial sense… Is the bank going to pay for my retirement because I was a good girl and paid my mortgage?”

As a successful professional, Karen could comfortably have managed the higher mortgage payments her bank demanded. Instead, she decided to stop her mortgage payments altogether and let her bank repossess her apartment.

Previously, folks were losing their homes because they couldn’t afford to pay. Now an increasing number of financially secure buyers on upside-down mortgages are turning in their keys, abandoning their residence and voluntarily defaulting.

As a sign of the changing times, some 60% of borrowers do not even bother to contact their banks to attempt a renegotiation of their loan, Mr Moran explains. “They stop paying and they stop talking,” he says. “They just plain walk away.”

Which leaves U.S. policymakers now scrambling for a multi-billion dollar initiative to dissuade this disturbing new trend, aiming to make simply deserting a mortgage appear much less attractive.

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Concerns Mount About FDIC Deposit Fund
Global Financial Newswires
July 18, 2008

NYU Economics Professor Nouriel Roubini predicts that Congress will have to intervene in order to bail out the FDIC deposit fund.

“They’re going to run out of money, with certainty,” he predicted. “Congress is going to have to recapitalize the FDIC, those $50 billion plus is not going to be enough, by no means.”

Indeed, on Friday afternoon FDIC Chairman Sheila Bair said in an interview on C-SPAN television that banks holding brokered deposits may be charged higher premiums in order to bring back the reserve to an acceptable size.

This means higher premiums for FDIC insured banks, analyst Ely noted, further complicating an already tenuous situation for the U.S. banking system. Banks will most likely pass the increased costs onto their customers, he said.

“Banks are going to pass it through to their customers through higher interest rates on loans, lower interest on deposit,” Ely predicted.

The FDIC has around $53 billion set aside to back up bank deposits up to $100,000 per depositor, one of the ways the organization is designed to ensure confidence in the banking industry. However, according to Ely, that $53 billion is “not really available.”

“The deposit insurance fund is as real as the social security trust fund,” Ely said, noting that only a “small fraction” of the $53 billion is actually available and “any losses beyond that will be assessed on the banks.”

Ouch, ouch, ouch. All around painful stuff.

I explored the topic of FDIC Banking Insurance in Is Your Money Safe In The Bank? and there is simply no comforting news coming from the sundry financial sectors as of late.  How many more banks will prove to be fallible as giant financial oligarchies struggle to deleverage themselves on borrowed time?

James Grant from The Wall Street Journal shares a blistering yet spirited debate as he questions why folks aren’t displaying more antagonism and widespread condemnation toward such a crass financial crisis. A crisis, he admonishes, where the brunt of burden will be laid upon honest hard working taxpayers to bail out unscrupulous lenders, even as the Federal Reserve continues to shower gluttonous financial support toward the people who would seem to need it least.  

A malign doctrine, Grant argues, that has sacrificed the quality of the Federal Reserve’s own balance sheet while simultaneously allowing the average American’s hard-earned dollars to suffer.

Yet the populace victims have been amazingly tolerant and protest ever so softly.

Why No Outrage?
The Wall Street Journal
July 19, 2008

… the Wall Street of the Morgans and the Astors and the bloated bondholders is today an institution of the mixed economy. It is hand-in-glove with the government, while the government is, of course — in theory — by and for the people. But that does not quite explain the lack of popular anger at the well-paid people who seem not to be very good at their jobs.

Since the credit crisis burst out into the open in June 2007, inflation has risen and economic growth has faltered. The dollar exchange rate has weakened, the unemployment rate has increased and commodity prices have soared. The gold price, that running straw poll of the world’s confidence in paper money, has jumped. House prices have dropped, mortgage foreclosures spiked and share prices of America’s biggest financial institutions tumbled.

Now began one of the wildest chapters in the history of lending and borrowing. In flush times, our financiers seemingly compete to do the craziest deal. They borrow to the eyes and pay themselves lordly bonuses. Naturally — eventually — they drive themselves, and the economy, into a crisis.

And to the scene of this inevitable accident rush the government’s first responders — the Fed, the Treasury or the government-sponsored enterprises — bearing the people’s money. One might suppose that such a recurrent chain of blunders would gall a politically potent segment of the population. That it has evidently failed to do so in 2008 may be the only important unreported fact of this otherwise compulsively documented election season.

Have We the People unwittingly tarried by neglecting to decry our fragile emplacement – indeed becoming too complacent – even in the midst of being plundered by such saucy financial debauchery?

It’s always good to remain critical, and these debates certainly serve as prudent motivational reminders to continue developing a sharp awareness of where our money is going and how it’s being utilized.

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Sayings of the Wise

If the American people ever allow private banks to control the issue of their  currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of  all property until their children wake-up homeless on the continent their fathers conquered … The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. – Thomas Jefferson

Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety. – Benjamin Franklin

[On leaving Independence Hall at the end of the Constitutional Convention in 1787, Benjamin Franklin was asked "Well, Doctor, what have we got -- a Republic or a Monarchy?"] According to Dr. James McHenry, a Maryland delegate, Franklin replied, “A Republic, if you can keep it.”

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