Mozilo Buys His Way Out of Prison, Our Two Tier American Justice System Still Working Fine

In 2006 and 2007, while that idiot Cramer of "Mad Money" fame was touting Countrywide Mortgage as a "buy" on CNBC, I was watching Angelo Mozilo. Mozilo was the founder of Countrywide Mortgage and he was selling hundreds of millions of dollars worth of company stock. I was tracking his insider sales on E Trade.

So about the time Cramer had Mozilo on his TV show, I very nearly threw a brick through the Samsung. I remember Cramer saying Mozilo had founded the company and was entitled to take a "little money off the table." To say that Cramer kissed Mozilo's ass is an understatement. He completely avoided any mention of the size of those sales. Mozilo was completely liquidating his ownership in the company.

I truly hope nobody bought Countrywide. Cramer should have been flogged in the square for his role in that interview. To this day, I refuse to watch his show.

I had a mortgage originator insider tell me what kind of loans Countrywide was making at that time. No documentation, no income statements, absolute fraud. I shorted Countrywide. Unfortunately, I covered far too soon. Should have spent my life savings on put options. Countrywide went bankrupt. Mozilo got a cushy job at Bank of America. B of A was forced to swallow Countrywide's toxic assets. Now Bank of America is truly a zombie bank. Mozilo didn't ruin one company, he has helped ruin two. Thankfully, we tax payers get to backstop the zombie mess as well. Trust me, if Bank of America had to actually "realize" their losses- the stock would hover around two bucks instead of 12.

Angelo Mozilo may be one of the great architects of this depression. I've read about all of his shady deals, his signature loans to friends and Senator Dodd's questionable purchase of a little Irish cottage. All of this garbage is on line- and I am desperately trying to avoid an aneurysm by looking it up again.

Today, the SEC announced a 67.5 million dollar fine levied on Mozilo like it was a great victory. I am not convinced that paltry amount even accounts for a quarter of his net worth. Not only that, but he won't get criminally charged.

I absolutely detest this fucking two tier criminal justice system in America that allows criminals like Mozilo to buy their way out of jail. The rest of us peons get sent to prison for a hell of a lot less. This is one of the reasons why people detest government. Mozilo, one of the chief architects of our depression, should be spending the rest of his life in prison and forfeiting ALL of the money he snuck away with while touting his company. I won't be happy until this piece of garbage is bunking with Bernie Madoff. Aneurysms available at the link:

http://money.cnn.com/2010/10/15/news/companies/mozilo_SEC/index.htm

Wishing We Were Japanese

http://www.youtube.com/watch?v=gEmJ-VWPDM4

Just before the two lost decades that is now Japan, I read once where commercial real estate was selling at one million per square inch. I am not sure whether that was in dollars or yen and I am too lazy to look it up. The point is illustrative.

That kind of insanity kicked off Japan's banking melt down and it's two lost decades.

Anything Japan can do, America can do better. Including credit disasters. We extended make believe money to everyone. That the "FED" has mirrored Japan's moves- in the post meltdown period is not news. There is simply no alternative for "one-way" Ben Bernanke.

So when they posted today's usual round of bad news, widening trade gap, PPI at 0.4, and unemployment up again...I was not surprised. I was not surprised to see stock futures up.

The stock market has been marginalized to the extent that it is simply no longer a credible predictor of our nation's economic health. All it has become is a place for bankers to trade stocks with cheap money. The real indicator of our nation's health is the counter indicator- gold.

In the old days- when the market functioned as a true barometer of our nation's fiscal health- gold and equities did not move in tandem. We are witnessing the strange effects of central bankers trying desperately to repair themselves. Sooner or later, equities and gold are going to de-couple and diverge. I think it will be breathtaking when it happens. Commodities are absolutely red-lined now and as they move even higher, the chance of divergence grows dramatically.

I am reminded of an old cliche' here, "Every problem looks like a nail- to a hammer." One way Ben Bernanke just can't see the solution. His very survival depends on his ignoring the solution.
That solution is what separates men from boys. Heroes from survivors. He will just keep hammering away- trying to inflate us out of the mess his own central bank caused.

Before this over, I think there is a very good chance that we are going to gaze fondly upon the Japanese.

Like Sands Through The Hour Glass...

At some sort of rally in Philadelphia, someone apparently hucked a book at President Obama while he was on stage. Obama was probably doing what he does best, talking.

Three things instantly came to mind. First, it did not appear that the book was a first edition "War and Peace." It was thin and had it actually hit him, it is doubtful that it would have knocked any sense into him. http://www.dailymail.co.uk/news/article-1319448/Obama-book-thrown-Philadelphia-rally.html

Secondly, it reminded me of how utterly useless the Secret Service is at preventing real attacks. They serve some deterrent effect for lunatic opportunists like Squeaky Fromme and mainly I think that all of that looking around they do is a reminder that a small army of men and women and dogs will descend upon any attacker forthwith and seal their fate. That in turn reminded of the myth of "pro active" law enforcement. The idea that law enforcement actually prevents crime. It was and still is- a grand delusion.

What saddens me most about all of this, is how angry this nation has become. They are mad. I see it everywhere. People out of work, frustrated, hurling insults and books it seems, at whatever person, place, or thing they deem as the source of their frustration.

I don't see it getting better. And I don't expect Obama to wake up anytime soon, rollover in bed, and say, "Michelle, I've been doing this all wrong. We need to end the fed, and install real campaign reform. Our country needs to stand up and admit we are a mess and administer the medicine that it will take to get well. It will be painful and it will cause a lot of suffering. We need to dismantle and reform government, we need to set the example."

Rather what I envision happening, is that Obama is sensing that he is a failure. He is lashing out on many fronts and entrenching himself in ego. Hurling insults, or books, at him is pathetic and cowardly. You see, Obama doesn't realize that he is part of the same old problem. A 50 year problem. Hurling insults and books at this cat, won't do a damn bit of good. He just doesn't know he is part of the problem. Ask him, and he might tell you he is the solution. He is just going to entrench himself even further. Become angry like the rest of us. Hell, he is already there.

Obama has the same problem, the same common denominator, as the rest of us. We have created a monster and it is terrorizing and pillaging the country. Man, I hope we can do something a little better than throw books at each other or we're in a lot of trouble.

Turbo Tax Tim Defends TARP- Dispels Myths for Drooling Idiots

I recently read a Washington Post piece by our Treasury Secretary, Tim Geithner. Tim tries to dispel the "myths" about T.A.R.P. You can read the article in it's entirety at http://www.realclearpolitics.com/

I very nearly entitled this blog, "Tim Blows Smoke Up Our Asses."

The first rule of FED bankers is, Never Jeopardize the FED. You see, letting the FED's member banks fail was in fact the right thing to do. You see Tim, those are the same business rules that all of us peons have to play by. When we play fast and loose with the operating capital- leveraging non existent money and making loans to deadbeats- we generally fail.

We don't give a shit whether the banks pay us back or not. That's not the point and you know it. Letting those banks fail and be put into receivership may have exposed the entire FED to scrutiny. The same scrutiny they try very hard to avoid. At that point, the American people may have asked some weird question like, "Just why do we need this FED anyway?"

And somebody might have said, "We don't." We can print our own money, not charge ourselves interest, and we will be just fine.

We can't have that shit, huh Tim? That would ruin the whole FED monopoly. The entire 4th branch of government could have been eliminated. Kaput. Adios.

Tell me Tim. When are you going to force banks to adhere to the same accounting methods employed by rational people? That would mean putting those 9 million, unrepossessed and value chopped in half homes- on the ledger. All that make believe equity. All that shadow inventory could finally get counted and we could see just how healthy your member banks really are.

My favorite part of your piece was blaming Bush and carrying your bosses' water. We understand ass kissing Tim. Especially Obama's willingness to chop the head off anyone that doesn't attend worship services. I think of that Inspector General Walpin dude. I bet you remember that guy, the one who tried to have Obama's buddy, that Sac town Mayor brought to justice? We remember how well that worked out, don't we?

http://online.wsj.com/article/SB124511811033017539.html


Here's the bottom line Tim. We are pissed off. I am not sure the American people are going to buy your bullshit much longer. It's not just you. We understand you are just trying to play by established rules. But we don't like those rules anymore. We are growing weary of a government that operates above the law and rationalizes and changes the rules as it sees fit. A government more than willing to lie to us and sell us out. A government that demands respect but shows its citizens none.

So go find some other drooling idiot and try to convince him or her how their eternal indebtedness and loss of economic freedom is a good thing. Get busy, you may be running out of time.

This May Be..."As Good As It Gets"

I loved the operative scene in the movie, "As Good As It Gets."

That's the one where Jack Nicholson, a neurotic and obsessive compulsive, steps out of his psychiatrist's office and into the waiting room. There in the waiting room are people waiting to see the shrink. It is as though Nicholson has just realized that he is never going to get well. As he looks around at the room full of mentally ill folks-he tells them this may be, "As good as it gets." He then departs.

A few months back, I wrote a blog about why we can't afford a recovery. We are in the midst of a perfect storm. Any recovery will cause the FED ultimately to raise interest rates. Of the approximately 20 trillion (I do count Fannie and Freddie) we owe, all but 550 billion, must be refinanced within 10 years. Shorter term debt. Therefore we will be in the rather nasty position of having to refinance 19.5 trillion into higher and higher yields at greater interest. At about that same time all of those Social Security obligations are due- thus adding to what must be financed.
The unfortunate demographic problem of the baby boomers.

We can't service that debt load or interest. To top it all off, no country will buy that debt. It is not rocket science, in fact- it is just simple math.

I want to mention two other things. Every thing I say here, I can back up with facts. This is not an opinion piece.

The last thing I want to mention is the stock market. It has no predictive value at this point. It has become a facade of health. A paper tiger. It is the last cookie jar that can be raided. As the FED conducts POMO or permanent open market operations each week, it buys treasuries from banks. Banks then take this money and buy stocks. Think Glass Steagall.

What has happened is that high frequency traders, computer algorithms, banks, and investment funds are all that trade on the exchange. They account for virtually all of the volume. Retail investors are fleeing in droves. So far this year, 75 billion has been withdrawn by small investors. Insiders, generally the officers of public corporations are selling stock at alarming rates. I saw one print put the figure beyond 4000-1. We are talking billions. Last month there were virtually no insider purchases.

You can't even short this market because of the FED's willingness to print money and keep giving it to banks to buy stock with. They have effectively frozen out the shorts out of fear that they will get squeezed. Shorting Apple would be like a swan dive off the Golden Gate.

The economic news is bad and the government continually tries to under report it and massage it. Every figure coming out of the Bureau of Labor Statistics is essentially bullshit.

Here's the good news. Ultimately, I think the FED will eat itself out of existence. The public outcry at future tax rates- an attempt to pay that impossible debt (interest and never principal) will cause drastic changes in America. Sooner or later, the FED is going to get exposed for the fraud that it has become. It will have to go away permanently in order to get our country back.

Until then, don't fall for this market bullshit and false rallies. Re-entry into this market will allow these banks to unload those worthless stocks- into weaker hands. Private investment funds are the last cookie jar. Short selling just enables the algorithms to pile into stocks with large positions to cover. So just stay out. It's a game you can win simply by not participating. Let the banks try to unload equities onto each other. For now, this may be as good as it gets.

The Perfect Con- The Bank That Masquerades as a Country

On CNBC this morning, they asked viewers- if they thought banks were responsible for the depression we are all experiencing and whether or not banks were getting a bad rap.

I want to explain something here for anyone who thinks banks are getting a bad rap.

Joe and Mary Citizen are marks. They don't know it. They had no control over home prices. They had no control over hybrid mortgages which required essentially nothing down, they had no control over all the cheap money that flooded into the marketplace prior to 2007, they had no control over houses that appreciated 100% in two years. They had no control over loans that were made to people who mis-stated their income. They had no control over the QUANTITY of money (debt) available. It was the QUANTITY of our debt that fueled the feeding frenzy that enabled everything else to happen; and the fractional banking rules that allowed banks to lend 9 times what they actually had on deposit and thus leverage some leverage.

Banks fueled and stoked the fire. Banks were more than willing to let virtually anyone participate. Thus the great Ponzi scheme imploded when it ran out of marks.

It is the QUANTITY of money controlled by the FED that allows this shit to happen. Always.

All Joe and Mary Citizen did was react to a market place gone nuts. They were used quite honestly, by bankers. They were marks. Fleeced.

In the law enforcement world we call this a confidence game. In fact famous movies like the "Flim Flam Man", "The Sting", or "Paper Moon" demonstrate how people are exploited by hustlers. Here is a definition from wikipedia on a confidence game...

A confidence trick or confidence game (also known as a bunko, con, flim flam, gaffle, grift, hustle, scam, scheme, swindle or bamboozle) is an attempt to defraud a person or group by gaining their confidence. The victim is known as the mark, the trickster is called a confidence man, con man, confidence trickster, or con artist, and any accomplices are known as shills. Confidence men or women exploit human characteristics such as greed and dishonesty^{[dubious – discuss]}, and have victimized individuals from all walks of life.

When using that definition, I'll let you decide who got swindled. It sure as hell wasn't bankers. In fact bankers were always in control. They were in control of the money and the math. And in the end, when their con game went to hell, government didn't bail out the victims of this con game. They bailed out the con men.

And they hosed us all. Not just the participants. We all lost equity, houses, investment dollars, jobs. Our taxes and inflation are rising as the FED tries to keep the lid on this worldwide mess- bailing out the con men. Their stockholder member banks- are who they work for. The FED doesn't exist to help taxpayers- they exist to fleece taxpayers and provide wealth for the banking system.

I was neither con man nor mark. I wouldn't have particularly cared if all the con men and marks got flushed. But the damage wasn't limited to them. Nobody is giving me a good conduct medal for my decisions, either. But I am damn sure paying for them. I keep wondering if even one of these crooked bastards is ever going to see a jail cell.

The big finish follows.

This boom and bust cycle will continually repeat itself until we accept the following truths as self evident.

1. Currency issuance and control is always a MONOPOLY. Allowing private banks to control this is insanity. Like asking a sex offender to run the daycare.

2. Fiat currency works. It is the QUANTITY of that currency that causes the boom and bust cycles. The gold standard is a myth. All of the world's gold would fit in three olympic sized swimming pools. There is simply no way for all of the world's fiat currencies to get on the "gold standard." Gold would be priced in the stratosphere with no objective price point.

3. Banks almost single handedly caused this crisis. Go ahead and blame the marks if it makes you feel better or if you happen to be a FED supporter.

I can't completely dismiss the individuals who acted and spent recklessly. But their ability to do that was completely governed by a banking system that preyed on the greed and stupidity of the marks to lure them in. That's how confidence men and games work. Go rent a movie and see for yourself.

The perfect con game always occurs when the mark doesn't know what hit him. It is a complete and utter success if the con men can convince the marks that they didn't even exist to begin with.

For a perfect illustration- read this speech delivered days ago by Ben Bernanke of the FED. These are the same guys that engineered the collapse and are now pretending to offer the solution. The perfect con.

http://www.economicpolicyjournal.com/2010/10/bernanke-tells-truth-united-states-is.html

Honey, Did I Leave My Prozac in the Suitcase?

I like the part where he says, "Jump you fuckers."