Friday, November 21, 2014


The Federal Reserve recently said that they're "ready to end QE3, but not the QE concept." Huh?

When I first read this I thought to myself, "I guess that means we still have QE Eternity."

If you're one of the many millions of Americans (the vast majority) wondering what "QE" is all about think of it as industry gobblygook, or market-speak, for continuous bailouts. By easing a large quantity of money into the economy the Federal Reserve - with a wink and a nod from Congress - is trying to make sure that Wall Street's market players don't go bust ... again.

Of course, in addition to getting saved, the market players on Wall Street make a lot of money in the process. Whether Wall Street wants to admit it or not, it really is corporate welfare at its finest.

If you're wondering what QE looks like in graph form, the red and blue areas below represent what the Federal Reserve has been purchasing.

By purchasing toxic "assets" other market players won't purchase, the Fed is effectively dumping trillions of dollars into our economic system. In return they we get toxic crap (red area) and low interest Treasury bonds (blue area) in return.

In case you're wondering, yes, the process of dumping more than $4 trillion into our economy has also artificially inflated it. The chart below makes it clear that every time the Fed puts money into the system our markets do well. When they don't make purchases ... well you get the picture.

Final thought: We are living on borrowed time.

- Mark 

Thursday, November 20, 2014


To give you an idea of how much money we've turned over to Wall Street since the 2008 market collapse take a look at the picture on the right. In the top left corner we have a crisp $100 bill.

If we put 100 of these $100 bills together we end up with a stack worth $10,000, as we see to our immediate right.

Good so far? OK.

Right below the $10,000 stack we have a standard pallet stacked with enough $100 bills to make $100 million. The small stack in front of the pallet represents $1 million.

OK, now it gets fun.

If we put together ten pallets stacked with $100 million we have $1 billion (check out what you can buy with $1 billion dollars here and here).

The 20 pallets you see stacked on the trailer of the semi truck at the bottom (below the red flag) is worth $2 billion.

The smallish square base of pallets to the right of the semi truck represents $10 billion. As a point of comparison, the U.S. government will spend a little over six of these square bases - $64 billion - on traditional welfare programs (like TANF and HUD) programs this year.

The tallest stack of pallets in the picture is scaled to represent a 465 foot skyscraper, and is worth $1 trillion (with a "T"). This amount is about what the United States government owed on its national debt in 1981.

In case you're wondering, no, we're still not close to what we coughed up to Wall Street after they helped collapse the economy in 2008.

* * * * * * * * *

If you're still with me then you should enjoy (get teed off by) what's presented in our second visual.

Below we see four 465 foot pallet skyscrapers, and one smaller stack. Together these towers hold about $4.3 trillion.

$4.3 trillion represents what the U.S. government and the Federal Reserve dumped into the market to help stabilize Wall Street and America's financial institutions after the 2008 market collapse.

But we're not done yet.

Believe it or not, in spite of dumping $4.3 trillion into our financial sector, Wall Street has yet another financial lifeline.

In addition to the four towers of money we see above, we would need between $12 and $14 trillion more - or 12 and 14 more 465 foot skyscraper pallets full of $100 bills - to fulfill the lines of credit that Wall Street has been promised by the Federal Reserve and the U.S. Treasury Department. You know, just in case they need it, again.

So, yes, Wall Street has been promised between $12-14 trillion in financial guarantees for market bets that you and I ultimately get to backstop through the Federal Reserve and U.S. Treasury Department.

Let me make this point again. There is no domestic welfare program in America that comes close to sucking the trillions that Wall Street has been sucking out of America since 2008.

As an aside - and in the FYI category - the $4.3 trillion that we've handed over to Wall Street, plus the $12 trillion that is still available to the financial sector, far and away exceeds the $2.7 trillion that the U.S. Congress has borrowed from the Social Security trust fund. You remember, the $2.7 trillion that Washington says we can't pay back because it's too expensive.

Sigh ...

- Mark

Wednesday, November 19, 2014


As Presidents before Him, Obama Has Authority to Act
By Nancy Pelosi, Luis V. GutiƩrrez & Zoe Lofgren / Oct. 30, 2014

Last year, the Senate passed a bipartisan measure to repair our broken immigration system and strengthen our economy. That bill would be law today, but Republican leaders in the House refused to allow a vote. Consequently, President Obama promised to use his authority under existing law to achieve reform. We do not know exactly what the President will do or when he will announce it, but we are confident he will act.

Some Republicans claim the President has no authority to act, but they are wrong. The fact is, just as presidents before him, President Obama has broad authority to make our immigration system better meet the needs of our country and reflect our shared values.

And every Administration since President Dwight D. Eisenhower has used executive authority to do just that.

In addition to taking steps to make our immigration enforcement efforts more humane, there are dozens of reforms that the President can adopt. Two that could have the greatest impact involve the expanded use of his deferred action and “parole” authorities.

Presidents have broad authority to defer removal when it is in the national interest, and past presidents have regularly used this authority. In the years immediately following the enactment of the 1986 Immigration Reform and Control Act, Presidents Ronald Reagan and George H.W. Bush took bold action to protect the spouses and children of people who received status under that law.

Although Congress explicitly chose not to grant status to these people – an estimated 1.5 million people – Presidents Reagan and Bush recognized that it was not in the national interest to separate families. Using their authority to establish a “Family Fairness” program, they offered spouses and children indefinite protection from deportation and work authorization.

Presidents have used this authority repeatedly in the face of congressional inaction. Dating back more than 50 years, presidents have granted Extended Voluntary Departure to nationals of more than a dozen countries, including Cuba, Vietnam, Laos, Cambodia, Chile, Poland, Afghanistan, Ethiopia and Uganda.

President George H.W. Bush granted Deferred Enforced Departure to Chinese nationals after the Tiananmen Square massacre even though he vetoed a similar bill passed by Congress. Several years later he granted the same status to 200,000 Salvadorans.

Likewise, President Obama could defer action against persons who would be covered by the Senate-passed bill that Republicans blocked. Like Presidents Reagan and Bush, he could use his authority to prevent family separation – this time of undocumented close family members of U.S. citizens, lawful permanent residents, or DACA beneficiaries. Similarly, he could recognize that it is “essential for agriculture” that farmworkers who toil in our fields do so without fear.

Another broad authority under existing law the President has at his disposal is to “parole” persons into the country “on a case-by-case basis for urgent humanitarian reasons or significant public benefit.”

Once again, this authority is not unprecedented. Presidents Ford and Carter “paroled” into the country hundreds of thousands of Vietnamese.
Presidents Carter and Ford "paroled" thousands. 
Presidents George H.W. Bush and George W. Bush both used “parole” authority for families who were ineligible for or denied refugee status. President George W. Bush also created a program to “parole” into our country Cuban nationals who would otherwise be forced to wait abroad for a visa number. President Obama recently announced plans to create a similar program for certain Haitians.

Similarly, the President could “parole” into the country the spouses, sons, and daughters of American citizens and lawful permanent residents who face lengthy separation waiting for a visa. Doing so would not permit family members to skip the line, but it would allow them to wait in line with their family until a visa number becomes available.

Last year, the Administration also formalized a policy of paroling “in place” the spouses, children and parents of military personnel and veterans already here in the United States. Through parole in place, military family members who entered the country without being inspected may become eligible to obtain lawful permanent residence without having to leave the country for ten years. This corrects a gross unfairness in immigration law that overwhelmingly harms persons from the Americas.

The President can build upon his “parole in place” policy for military families to benefit countless other mixed-status families. He can similarly use this authority for immigrants whose talents are so great that they can create jobs here in America, who are part of significant research, innovative efforts or professional work that makes our economy stronger. These initiatives are of significant public benefit to our country.

Those who oppose immigration reform would have us believe that administrative action amounts to “rewriting the immigration laws.” We all know that no president can rewrite the laws. But it is important to remember that Congress and the Constitution give presidents broad authority to take executive action on immigration policy, and past presidents have used this authority generously. That President Obama has pledged to do so as well is not cause for consternation, but is consistent with a president’s well-established authority under existing law.

Although it is ultimately the job of Congress to reform our immigration laws, we nevertheless look forward to the President’s bold and meaningful action to improve the lives of Americans and immigrants alike and advance the interests of our nation.

* * * * * * * * * * * * *

Additional links on Reagan/Bush amnesty news here, here, herehere, and here.

- Mark 

Tuesday, November 18, 2014


- Mark


With the Federal Reserve turning 100 this week I thought it would be a good idea to share a few things about the Fed that most Americans never think about. The information below helps us understand why middle America is not doing so well in spite of record streaks on Wall Street, and record profits in the financial sector.

The sad truth is the Federal Reserve works for the banks - as the 2008 bailout demonstrated - and can create money out of thin air to help America's largest financial institutions.

From the "10 Things That Every American Should Know About the Federal Reserve" we also learn the following ...

* * * * * * * * * * * * * * * *

Did you know that the Federal Reserve is actually paying banks not to make loans?

It is true.

Section 128 of the Emergency Economic Stabilization Act of 2008 allows the Federal Reserve to pay interest on "excess reserves" that U.S. banks park at the Fed.

So the banks can just send their cash to the Fed and watch the money come rolling in risk-free.
So are many banks taking advantage of this?

You tell me. Just check out the chart below. The amount of "excess reserves" parked at the Fed has gone from nearly nothing to about 1.5 trillion dollars since 2008....

But shouldn't the banks be lending the money to us so that we can start businesses and buy homes?

You would think that is how it is supposed to work.

Unfortunately, the Federal Reserve is not working for us.

The Federal Reserve is working for the big banks.

Sadly, most Americans have no idea what is going on.

Another example of this is the government debt carry trade.

Here is how it works. The Federal Reserve lends gigantic piles of nearly interest-free cash to the big Wall Street banks, and in turn those banks use the money to buy up huge amounts of government debt. Since the return on government debt is higher, the banks are able to make large profits very easily and with very little risk.

This scam was also explained in a recent article in the Guardian ...
Consider this: we pretend that banks are private businesses that should be allowed to run their own affairs. But they are the biggest scroungers of public money of our time. Banks are lent vast sums of money by central banks at near-zero interest. They lend that money to us or back to the government at higher rates and rake in the difference by the billion. They don't even have to make clever investments to make huge profits.

That is a pretty good little scam they have got going, wouldn't you say?

* * * * * * * * * * * * * * * *

The Federal Reserve is currently giving billions of dollars away, in the form interest payments to banks who "deposit" money with the Fed. This policy was put in place well before 2008, and could cost the American taxpayer close to $80 billion.

In effect, what we have is another bailout program, sanctioned by the Federal Reserve, and winked at by the U.S. Congress.

The fact that few people understand how any of this works should be a problem.

- Mark 


- Mark 

READING FOR THE WEEK (Nov. 18, 2014)

The city council of Nome, Alaska wants to remove tax exempt status of nonprofits and churches (KNOM Radio Mission).

The United States is the developed world's second most ignorant country (Mother Jones).

Scientists are afraid to talk about the Robot Apocalypse, and that's a problem (Business Insider).

The 8 hour sleep myth: How I learned that everything I knew about sleep is wrong (Raw Story).


Half of U.S.-Mexico border now patrolled only by drones (The Guardian).

Illegal border crossings at lowest levels in 40 years (CNN Politics).

4 out of 5 drug busts on U.S.-Mexico border involves U.S. citizens (Center for Investigative Reporting).

Mexico reels, and the U.S. looks away (LA Times).

When government succeeds (NY Times).


How a European spacecraft has chased a comet for 300 million miles, and is now poised for a landing (CS Monitor).

European comet-landing spacecraft, now silent, was an 'incredible scientific success' (CS Monitor).

Meanwhile, in America, we're privatizing NASA and watching simple cargo rockets that we used to send in our sleep blow up on launching pads (BBC / Mark Martinez).


NC rejects Medicaid expansion, rural hospital closes, woman dies (Non Profit Quarterly).

This explains why the GOP wants to repeal Obamacare: Over 70% of Americans who bought health insurance policies through Obamacare rate their health care coverage as "excellent" or "good" (Gallup). 

The brazen messages among bankers that rigged markets and produced a $4.3 billion fine (WP).

Monopoly Men: How two billionaires are destroying high speed rail in America (ATTN).

After nonsensical comments on Net Neutrality, conservatives rage against Ted Cruz (Daily Kos).

Right wing freaks out over China-U.S. climate change deal (David Horsey / LA Times).

Republican Trey Radel busted on cocaine charge, voted for drug testing food stamp recipients (Huffington Post).


Are you a real SF Giants fan (CS Monitor)?

Which Beatles song describes your life (PlayBuzz)?

What type of Californian are you (Brain Fall)?

California water officials aren't following own call for conservation (Center for Investigative Reporting).

Out of the Box: 10 amazing underground homes (Details).

1912 eighth grade exam: Could you make to high school in 1912 (CS Monitor)?

Paying for college in 1978 vs. paying for college in 2014: Why almost no one can pay for college without going into debt (ATTN).

Roseanne destroys every Republican who just won the 2014 mid-term elections ... 20 years ago (Addicting Info).

- Mark 

Monday, November 17, 2014


After securing its charter in 1913, 100 years ago yesterday (November 16, 1914) the 12 cities chosen as the official "branch offices" of the Federal Reserve began operations.

Fast forward 99 years and we learn via Zero Hedge that by December of 2013 the Federal Reserve has over $4 trillion in "assets" to its balance sheet. Yeah, that's a "t" for a trillion.

If you're wondering, $4 trillion is almost the functional equivalent of one-quarter of all the goods and services that the United States produced in 2013 ($16.2 trillion). But $4 trillion is not a static number. By May 2014 the asset sheet of the Federal Reserve reached $4.3 trillion.

Today, the total value of what's on the books of the Federal Reserve now stands at about $4.5 trillion.

What this means is that the Federal Reserve has purchased about $4.5 trillion in contracts and other assets, which they would like you to believe are marketable, and hold real value in the market.

Here's the problem. If the products, or assets, they have purchased were so marketable why aren't market players lining up to purchase the goods themselves?

Good question.

Here's the answer: No one's lining up to purchase what the Federal Reserve is purchasing because the assets are either toxic crap no one wants, or they don't generate the kind of rate of return that market players want. Ergo, the Federal Reserve has to make these purchases to keep our market system from tanking, again.

Put another way, the successes we see in the market today are buoyed by trillion dollar purchases from the Federal Reserve. It's that simple.

So, what does the Federal Reserve get in return for the trillions that they've dumped into the market? Simple. The Fed's asset sheet is pretty much made up of the toxic crap we took off of Wall Street's books - which added billions in profits to America's financial sector - plus the U.S. Treasury Bills the Fed has been purchasing because few investors want to load up on T-bills that pay out less than 1 percent.

Happy Birthday Federal Reserve! It has officially become the Sugar Daddy of both Wall Street and our national economy.

Aren't free markets great?

- Mark 

Friday, November 14, 2014


For six years House Republicans couldn't pass a jobs bill unless it was drenched in poison pill tax cuts and more deregulation for corporate America. Well, guess what? They're at it again. Except this time they're doing the very specific bidding of the Koch brothers.

Today House Republicans approved the Keystone XL pipeline which will run Canadian tar sand oil, produced on land leased by the Koch brothers, through the American Midwest, and into U.S. ports in the Gulf of Mexico.

If built Keystone will generate perhaps $100 billion in profits for the Koch brothers, while making the American Midwest little more than the Koch brothers tar sand backyard.

Here's President Obama explaining in 30 seconds, and in very simple terms, what the Keystone pipeline actually does for America (Hint: Nothing) ...

To put not too fine a point on it, here's one artist's rendition of the Keystone XL pipeline project ...

The threat to the Ogallala Aquifer, which lies beneath 6 states, is explained here.

- Mark

Hat tip to Robin and Donna for the links.

Click here for Rep. Peter DeFazio's comments on the exemptions and legislative gifts (tax and "private taking" clause) that the Koch brothers get (as a pass?) from the U.S. Congress.

P.S. Here's Robert Reich's FB comments on Keystone, and the Koch brothers:

Question: Who’s the largest foreign lease owner in Canada's oil sands region of Alberta, Canada? Answer: Koch Industries, which holds leases on 1.1 million acres -- an area nearly the size of Delaware -- capable of producing tens of thousands of barrels of the region's thick brand of crude oil in the next few years. The Keystone XL pipeline will lower transportation costs for all oil sands producers, bolstering the Koch’s profit margins. Do you think this might explain why Republicans (as well as some Democrats like Louisana Senator Mary Landrieu) are so eager to have the pipeline approved?

Thursday, November 13, 2014


Real Americans don't participate in a decades long race to the bottom with the goal of making their ideas look better. Nor do real Americans make pledges that promise to undermine the President of the United States so that he and America fail together.

More to the point ...

- Mark

Hat tip to Cathee for the Reich quote.