Paralytic Debt Poisoning
Financial rescue nears GDP as pledges total 12.8 trillion, reads the Bloomberg headline.
As I turn from the almost daily news of the $12.8 trillion worth of rescues of Wall Street to the relative non-response from the taxpayer, I am reminded of a story that a South African friend told me about getting hit by a consequence of red tides, Paralytic Shellfish Poisoning. My friend had eaten some shellfish straight from the sea, not realizing there was a red tide. Within half an hour he was (temporarily) paralyzed. Fully alert but immobile on the ground, my friend watched as a man came over and calmly removed the wallet from his pocket. The robber, of course, knew that my friend could do nothing to fight back. The robber, furthermore, must have been aware of the poisonous red tide, but had done nothing to stop my friend from eating the shellfish, but perhaps waited for him to eat the poisonous shellfish so as to take advantage of the subsequent paralysis.
I look around America and I see Paralytic Debt Poisoning (PDP).
A red tide of toxic debt has poisoned the nation's financial system. And the American taxpayers are paralyzed as the financial oligarchs brazenly plunder their Fed and Treasury pockets.
The collateralized debt obligations, the credit default swaps, the mortgage backed securities and other debt instruments were, of course, only able to bloom to toxic levels in an environment overly rich in the necessary nutrients (deregulation, lax oversight, etc.).
And we over-fed the debt markets because we had lost our real wealth and incomes since the end of the gold standard and the beginning of financial deregulation. And the subsequent explosion in personal debt has left us further unable to respond to the financial meltdown. Without the resources to survive on our own incomes, we had grown ever more dependent on the very debt choking off the oxygen to our real economy.
Many of the financial pundits who cheerleaded us into this toxic red debt tide are now calling the bottom. There are, however, hundreds of trillions of dollars of more toxic derivatives remaining in this red tide of debt. Do you think the Fed & Treasury pick pocketers are going to stop at the mere $12 trillion they have taken?
My guess is that there is another round of bailouts coming for these 'too big to fail' financial institutions. And another. And another. Until we rise up and stop taking it lying down.
There should have been only one institution too big to fail in America and that is/was the US Constitution. And we all know what happened to that 'piece of paper.'
I know you are lying there paralyzed with PDP, but I also know you can hear me. You are being robbed! You will NOT have that private pension you think you have. And the Pension Benefit Guaranty Corporation will, apparently, be too broke to make you whole as it appears its pockets have also been picked:
Pension insurer shifted to stocks:
Just months before the start of last year's stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.
Switching from a heavy reliance on bonds, the Pension Benefit Guaranty Corporation decided to pour billions of dollars into speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds.
Get up. Stand up. It's time to get all Howard Beale folks!
By the way, I warned the red tides were coming right here on Huffington Post in January 2006 when I submitted this mash up to the Huffington Post "Contagious Festival."
Loading comments…
Want to reply to a comment? Hint: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to
Max is the best, I wish more people listened.
Max
Welcome back.
Get up, stand up, shout up, and do WHAT?
To Jade and TheNewWayForward - and do what?
Max and these are trying to breathe or beat some life into that dying frog as the water is coming to a boil.
Some say Obama can handle it.
He is obviously a nice guy over his head when it comes to finance.
What we have is a debt money system gone broke.
Read this
The two options we have are a new money system, or turn this shebang over to laissez-faire capitalism.
So, what new money system.
I am advocating that these enraged, shouting, marching and pissed off masses settle down and read up on the Chicago Plan for Monetary Reform.
The proposal sent to FDR last time we went past this point called for the separation of BANKING from MONEY-CREATION.
We should save banking for private entities - even credit unions are private entities.
We should restore the MONEY-CREATING function to government, where money can be government-issued on a debt-free basis.
Max called for the restoration of one institution that SHOULD be too big to fail - the Constitution.
Article 1, Section 8
ONLY THE CONGRESS SHALL COIN MONEY....
The Chicago Plan.
Look it up.
Let's get on with our monetary transformation.
I'd like to hear Max explain how "we lost our real wealth and incomes since the end of the gold standard and the beginning of financial deregulati
Real median household incomer per family member (which adjusted for families having few children now days) has exploded even more.
http://3.b
Are your serious??? Median household income has to be adjusted for cost of living. Gas, real estate, labor and materials went up disproportionately to income.
Median income properly adjusted went down. http://www
Thank you, sophist, for that link!
Only in the last decade. Oil was predicted to get more expensive around the millennium in 1956, so that's hardly news. Toyota offered you the Prius and presidents Carter and Clinton tried to mitigate that problem for you. So if you didn't wise up and follow the good advice that's a self inflicted wound.
Real estate went up because people were speculating. Another self inflicted wound, right there.
Labor cost went up because income went up. You can't have it any other way.
Materials did not go up disproportionately. They simply scale with supply (limited by geology) and demand. And as we all know Chinese demand is mostly US demand that is being produced in China. Buy less and stuff will get significantly cheaper.
So what's your problem? The facts and causalities are clear. This ain't rocket science.
"Real" as in "real median household income", means it's adjusted for inflation. Plus, if you want to take taxes into account, which any data should, incomes have gone up even more as evidenced by the continued large increases in real disposable income.
http://www
..and a big FO to you, bourgeoisie mouthpiece.
How's this for the real raising of the median income, Nationalize Wall Street and forgive all credit card debt for most. That will put some money back into the family budget just as the banks have gotten their debts forgiven, paid for and subsidized with even more money we'll never get back. Then once WS is Nationalized punish any and all who fall under RICO.
Nationalizing Wall Street will result in lower economic growth in the US and worldwide and unemployment rates will consequently remain high. Capitalism is not perfect, but it's worked for the most part throughout American history and has certainly worked better than socialism or communism.
Well done Max. As you point out there are hundreds of trillions in future liabilities that have yet to be addressed. I am attaching an article by Dr. Weiss that addresses the issue of interest rate swaps. They are another form of derivatives which could eclipse the credit default swap losses.
http://www
I am wondering what the next step in this game is? It seems to me that the banks sitting on the sidelines, with our cash in their pockets, are poised to take advantage of a specific event. If this were a real emergency for banks they would have already started lending again competing for what business there is left in the market. They don't need to do that because they are sitting on tax payer money.
If there is a larger and sharper contraction in our economy when we learn that the problem is much bigger than originally disclosed, when do we hit the threshold of a depression? What happens at that point and who benefits?
As much as I want to believe that we are getting close to the bottom, and that things are turning around, how can that be possible when hundreds of trillions in liabilities have not yet been recognized are still hanging in mid-air?
If the tax payer is on the hook for these losses as well, we, and our offspring for the next 5 generations, are little more than indentured servants.
The world economy as a total is only worth a couple hundred trillion. So there can't be hundreds of trillions of future liabilities. Try again.
Try reading the article I attached before demonstrating your intellectual prowess next time.
AIG and many others were selling thin air, aka derivatives, without any assets to back them up. We happen to own 80% of the assets AND liabilities of AIG. There were up to 62 trillion in uncovered derivative losses alone in AIG and they are not even a part of the to 5 banks listed in the article I posted that have a combined exposure of over 200 trillion.
What you don't seem to understand is that the net result of all of the unregulated speculation is equivalent to leaving a guy at the betting table until he owes more money to the casino than the casino is worth.
The volume of our economy has nothing to do with the size and scope of the bets made that have failed.
I agree with sophist's reply, below, and also wish to point out that just as you have stated many times, the value of homes in America was bid through the roof based on "greedy speculation, ignorance, and poor personal hygiene!"
The values were only real on some accountants ledger. The value of these derivatives were likewise inflated far beyond their "true market value" whatever that might be. I think we can all agree, however, that it is quite a bit less than what we will be conned into paying for them.
Some estimates for that inflated value tops 500 trillion dollars. Is it real money? No, of course not. Not any more than an 85K home in the SF Bay Area is suddenly worth a Million!
The difference is that the Banksters actually expect somebody--The US taxpayer, for instance--to pay that book value, not the real worth today. And that book value, bogus as it is, is very much greater than the total GDP--the basis for the world economy--you reference.
No, you try again...
Derivatives the new 'ticking bomb'
Buffett and Gross warn: $516 trillion bubble is a disaster waiting to happen
http://www
Don't miss
Let Them Have Stained Carpets - Obama's Marie Antoinette Moment - recent huffpo by Max Keiser & Amazing french tv appearance
youtube "Max Keiser on Bankers' Bonuses - 27 March 2009" parts 1 & 2
http://www
http://www
So what you gonna do about it? Try this.
If you have your checking and or savings account in a big bank, you know who they are, then you are a chump.
Do not pass go. Go straight to your local credit union and get your checking and savings transfered. Get your mortgage there. Get your car loan and everything you can.
Remember the last Credit Union scandal? Me neither. Owned by its members. Your money stays local. You could end up on the board. They were not doing subprime loans. They are well managed. They are where you need to be.
If you are sick and tired and don't want to take it anymore, go to your credit union.
BTW I do not work or have any interest in any credit union.
Great advice I love hearing. I pulled all my funds out of the market in July 2007. I have paid off all debt except my mortgage. I refuse to use credit, buy second hand cash. I put all my $$ in a sound credit union 2 years ago.
STARVE THE BEAST.
You want to cheat when playing ball .gov and Wall street? Fine then, I will just take my glove and ball and head on home.
April 11 bank protests in US:
http://ane
More sponsors and protests have been added throughout the week.
I believe that the Dems under Obama will work until the current financial meltdown is put right. It won't be pretty, it won't be easy, and it may not be quick, but just like they did the last time the GOP ruined the world economy, back in 1929, the Dems will set things right.
I also believe that once things are set right, the American populace will forget the lessons of the Bush Depression, will once again elect Republicans to rule the roost, and the cycle of good government/bad government will be repeated over and over again.
Well, Repubs had better get hopping on that whole representing the Notorious GOP in urban/suburban settings, b/c we're becoming more and more diverse as a population & the older whites won't be around forever to vote GOP.
Yeah the dems will put it right by giving the banksters a blank check backed by the US taxpayer.
This is not a dem/rep problem, this is a corruption problem afflicting .gov and all the members within.... regardless of party
Yes, both parties are corrupt and that is a huge problem. Who do we turn to? Is Obama different from other politicians? We'll see what happens. So far it seems both parties, including Obama, are still whoring themselves out to the corporations who donated to their campaigns.
The Red Tide tells it all, and explains how it happened, wow you did a great job in this Post thanks.
Many knew this was coming (maybe not as early as Max). I listened to Joseph Stiglitz definitively predicting a US and global depression for 2009 back in September 2006. And where did he publicize that? On Alex Jones' InfoWars web site - the only place a Nobel Prize winner and ex-Chief Economist for the World Bank could get any airplay! On a "fringe" web site, folks. The MSM wouldn't give him the 2 minutes needed to warn us all. I guess the opinionator was just regarded as a shrill and kooky downer.
The MSM has morphed into something like the media from Running Man. They keep us entertained and distracted so there's no food riots or popular revolutions. They make editorial decisions on what we should hear, operating in our "best interests" which they deem to be the status quo. No TV program or paper has even now bothered to explain the alternative possibilities suggested by Max and/or Stiglitz. The only 2 options as presented unchallenged on CNN by Geitner are: Do Nothing, or Do As I Plan.
But Max is being a little hard on the common schlobs like us. All avenues of action to the man and woman in the street have slowly been illegalized or choked off with corruption. People cannot risk their freedom and livelihood of their families to do what's necessary without any social safety net. "The Powers That Be" know this and can hold us hostage accordingly.
I agree with you especially about the part about him being hard on the common schlobs like us. 8 years ago, and even 4 years ago with the re-election of Bush I do think the common schlob deserved all sorts of critisism for blindy continuing down the path of national self-destruction. As a whole we obviously didnt do enough to try to go another direction (or at least didnt freak out enough when the Florida Supreme Court stole the election, and the US Supreme Court chose to stay out of it due to partisan ideology).
But this last go round we pumped huge amounts of our own money to canidates who promised a new positive focus on the middleclass. Here in North Carolina actually went blue voting for Obama and even replaced Republican senator Dole with Kay Hagan. Within 2 months Hagan goes back on her support of Obama's vision of change which she happily campaigned on, joins the blue dog group, and begins the work for her corporate masters to obstruct any progressive aspects of the Obama agenda. Sorry everyone, NC voted yet another corporate shill into office.
And then Obama turns around and appoints several of the same folks that helped deregulate the market, appoints Henry Paulson 2.0 (Geithner) as Treasury Security, and then stands aside as they continue to sell the taxpayer out to the benefit of the Financial Sector, and specifically the uber rich of that sector. (cont)
"the financial oligarchs brazenly plunder their Fed and Treasury pockets. "
That's fairly obvious. So what are you gonna do about it?
He's inciting you to RISEUP!
GREAT article Max!
How is it possible to expose the greater population
too the truths expressed in these truthful and honest articles?
This kind of writing is what brought me here to HP.
I wish the US population was paying attention.
Wall Street created Bubble after Bubble to cash in on trades, I think. So, for the last ten years, all of these people in the financial industry have been making millions every year and pocketing the money. Now they get to keep all of that money they took home. And the consequences of the way they enriched themselves have become our problem as a whole. They put everything we value in a burning house, and then when we show up to fight the fire, they say they will sell us the key to the locked fire hydrant for 12 trillion dollars. Every executive who has in any way shape or form been employed in the financial industry in the last ten years should have all of their american assets seized. I don't see why they should get to keep everything they made from commissions and fees and bonuses deriving from bogus financial transactions that ultimately cost everyone else trillions of dollars. But the way the current system is set up, for me to keep the value of my tiny little 401k, they have to be able to keep untold millions of dollars and many luxury houses, cars, etc etc. The executives in the financial industry are holding us all hostage with this "too big to fail" nonsense. It has to end somehow in a way that is fair for real people who actually have jobs that pay normal wages. There is something very deeply wrong happening in the world.
Max, I believe you're tapping into something very real: the paralysis. Sort of like Naomi Klein's "Shock Doctrine."
One thing that is definitely playing into the paralysis is that it's likely that the majority of Americans aren't following the real news. I can't tell you how many I've come across who just refuse to even learn about derivatives or anything of the sort--mostly because they're intimidated and don't think they could understand it.
Thanks for another good piece.
Get up, stand up:
http://www
"There should have been only one institution too big to fail in America and that is/was the US Constitution. And we all know what happened to that 'piece of paper.'"
Every word is golden...
You must be logged in to comment. Log in or connect with
