Let the free press die?

Journals ranging from Time, The New Yorker, The Atlantic and The New Republic to the New York Times and the Los Angeles Times concur on the diagnosis: newspapers, as we have known them, are disintegrating and are possibly on the verge of extinction. (Source.)

Newspapers are increasingly filing bankruptcy. Why is there no clamour to bail them out? Can government do that? Perhaps the government would be better off if some of the free press went away?

What can’t be paid, won’t be paid

Recently in the news:

The Chairman of the US Federal Reserve, Ben Bernanke, made an unprecedented TV appearance on 60 Minutes last night. (WashingtonPost.com)

President Barack Obama will take his economic strategy to Jay Leno's comic couch on Thursday in the first appearance by a sitting U.S. president on a late-night TV talk show. (Source.)

Here is what they will NOT tell you:

What can’t be paid, won’t be paid.

The total American debt of $75 trillion ($250,000 for every American man, woman and child) is too great to ever be repaid in full. As a nation, we can’t pay our debts; not all of ‘em; not even most of ‘em. Individuals are currently holding [paper] debt instruments with a number like “$10,000,” “$100,000” or “$1 million” written on them and believe that those pieces of paper are assets actually worth their declared face value. (Source.)

Those waiting to hear the "D" word from economic experts, talking heads and TV anchors before taking action will most certainly regret their indecisiveness.

By the way, Anglo American has sold its remaining 11.3 percent stake in South Africa's AngloGold Ashanti for around $1.3 billion to Paulson & Co, the hedge fund run by John Paulson. You know, John Paulson, the same guy who shorted subprime two years ago and made an unearthly fortune.

Trust me . . . "This is your captain speaking, everyone remain calm, everything is under control."

Global trade collapsing

The global economy is likely to shrink this year for the first time since World War II, and trade will decline by the most in 80 years, the World Bank said this week. "The global volume of trade has collapsed," said Christopher Low, chief economist at FTN Financial.

U.S. gross domestic product is forecast to contract again this quarter after shrinking at a 6.2 percent annual pace from October to December, the most since 1982. U.S. imports and exports both slumped for a sixth straight month in January in what may be the biggest collapse of world trade since the 1930s, raising the threat of protectionist measures to shield domestic industries. The figures may add to pressure on the Obama administration to rework international agreements and include protections for U.S. workers and the environment. (Source.)

US assassination ring?

Am-Bushed: Seymour Hersh claims that under Bush/Cheny (1) The CIA "was very deeply involved in domestic activities against ... enemies of the state." (2) The Joint Special Operations Command operates without oversight by DoD or Congress, reported directly to Cheney's office, and operated as " an executive assassination ring". Mr. Hersh always cites multiple sources for his reporting.

The People versus the Oligarchs

Former chief of the IMF Simon Johnson believes we have been and continue to be ravaged by the business elites in the US (source). Just look at the large number of Goldman alumni who have taken over positions of immense political-economic power. Can you say "coup d’état"?

What's Dead (Short Answer: All Of It)

What's Dead (Short Answer: All Of It)

• All pension funds, private and public, are done. If you are receiving one, you won't be. If you think you will in the future, you won't be. PBGC will fail as well. Pension funds will be forced to start eating their "seed corn" within the next 12 months and once that begins there is no way to recover.
• All annuities will be defaulted to the state insurance protection (if any) on them. The state insurance funds will be bankrupted and unable to be replenished. Essentially, all annuities are toast. Expect zero, be ecstatic if you do better. All insurance companies with material exposure to these obligations will go bankrupt, without exception. Some of these firms are dangerously close to this happening right here and now; the rest will die within the next 6-12 months. If you have other insured interests with these firms, be prepared to pay a LOT more with a new company that can't earn anything off investments, and if you have a claim in process at the time it happens, it won't get paid. The probability of you getting "boned" on any transaction with an insurance company is extremely high - I rate this risk in excess of 90%.
• The FDIC will be unable to cover bank failure obligations. They will attempt to do more of what they're doing now (raising insurance rates and doing special assessments) but will fail; the current path has no chance of success. Congress will backstop them (because they must lest shotguns come out) with disastrous results. In short, FDIC backstops will take precedence even over Social Security and Medicare.
• Government debt costs will ramp. This warning has already been issued and is being ignored by President Obama. When (not if) it happens debt-based Federal Funding will disappear. This leads to....
• Tax receipts are cratering and will continue to. I expect total tax receipts to fall to under $1 trillion within the next 12 months. Combined with the impossibility of continued debt issue (rollover will only remain possible at the short duration Treasury has committed to over the last ten years if they cease new issue) a 66% cut in the Federal Budget will become necessary. This will require a complete repudiation of Social Security, Medicare and Medicaid, a 50% cut in the military budget and a 50% across-the-board cut in all other federal programs. That will likely get close.
• Tax-deferred accounts will be seized to fund rollovers of Treasury debt at essentially zero coupon (interest). If you have a 401k, or what's left of it, or an IRA, consider it locked up in Treasuries; it's not yours any more. Count on this happening - it is essentially a certainty.
• Any firm with debt outstanding is currently presumed dead as the street presumption is that they have lied in some way. Expect at least 20% of the S&P 500 to fail within 12 months as a consequence of the complete and total lockup of all credit markets which The Fed will be unable to unlock or backstop. This will in turn lead to....
• The unemployed will have 5-10 million in direct layoffs added within the next 12 months. Collateral damage (suppliers, customers, etc) will add at least another 5-10 million workers to that, perhaps double that many. U-3 (official unemployment rate) will go beyond 15%, U-6 (broad form) will reach 30%.
• Civil unrest will break out before the end of the year. The Military and Guard will be called up to try to stop it. They won't be able to. Big cities are at risk of becoming a free-fire death zone. If you live in one, figure out how you can get out and live somewhere else if you detect signs that yours is starting to go "feral"; witness New Orleans after Katrina for how fast, and how bad, it can get.

The Credo (abridged)

I believe it is divine justice that those who cause financial catastrophes are rewarded with public money, while innocent bystanders are punished in their stead. I believe that central banks can print all the money anyone will ever need. I believe that if one stimulus package does not work, the next one surely will.

I believe in worldwide Ponzi schemes and universal gullibility. I believe that reckless lending can be cured by reckless borrowing and that fraudulent borrowing can be healed by fraudulent lending. I believe that each trillion of hallucinated dollars that disappears in a puff of Wall Street smoke then always reappears magically from behind a Treasury Department mirror.

I believe that economic stability and confidence will return when every failing business is bailed out, with no failure too small to be left behind.

I believe that the end of days shall come when there is only one institution left, comprehensively unified, far too big to fail, owning everything and controlling nothing. It is in this one true financial institution that I put my faith, truly gigantic, truly bankrupt, amen. Source

The bailouts: EXPLAINED!

Here's the Plan: The administration [i.e., Timmy the Tax Cheat and Zimbabwe Ben] intends to give unlimited amounts of taxpayer dollars to the 19 largest banks. Treasury folks will go door to door asking the banks how much stress they feel, the banks will lie, and then the Feds will back up the truck and shovel dollars into the banks until they feel better. Or something like that.

At some point, a boondoggle event horizon is reached, like the light event horizon that exists at the surface of a black hole. Beyond that horizon, the only possible course of action is to create more boondoggles. Source: Orlov

"when you see that money is flowing to those who deal, not in goods, but in favors--when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you--when you see corruption being rewarded and honesty becoming a self-sacrifice--you may know that your society is doomed" - an excerpt from Atlas Shrugged, by Ayn Rand

What is needed, of course, is a concerted effort to build a new, vastly different economy, not squander remaining resources on attempts to resuscitate the current, moribund one. But politicians are never willing to dismantle the system that got them into power, and, like Gorbachev before him, Obama will do all he can to restart the current economy instead of letting it shut down and concentrating on planting the seeds of a new one. Source: Orlov

Home prices crash

Home Prices Post Biggest Drop in 21 Years

The S&P/Case-Shiller U.S. National Home Price Index plunged 18.2% during the final quarter of 2008, the biggest annual decline in the closely watched index's 21-year history. The most severe declines were in Phoenix, Las Vegas, and San Francisco, which all dropped by more than 30% in December compared with December 2007.