SO-POLITICS: The Conundrum

 You have a part-time job, and that's better than no job at all.
                                                                              -Dan Quayle (1947 - )

For years we have been ruminating about an economy that is doing exactly as predicted. There should have been no surprises for local politicians or the populace – it has been heading straight down since 2007. Only the major financial media have been able to temporarily fool people, due either to wishful thinking or a not-so-hidden agenda that promotes Wall Street.

Consider the realities:

The entire subprime ABS “asset-backed security” mess (mortgages, credit cards, car loans), which practically brought down our financial system was fracturing back in 2005. But, those on the inside were making such stupid money that protecting the game that could only last another one to two years was worth the gamble. It was worth the calculated, planned fraud to individuals at a handful of Wall Street firms because it would bring in billions more in income. It was really worse than anyone could imagine. The ultimate “screw you” from Goldman Sachs and Deutche Bank, for example, was the “synthetic CDO.” Few people understand what that particular derivative really was and most don’t want to know. Those who do know were fans of W.C. Fields.

Morgan Stanley, Goldman Sachs, Merrill Lynch, Bear Sterns, Lehman Brothers – were betting against the CDO’s they created and sold with the complicity of Moody’s, Fitch and S & P (who falsely rated these bonds) by buying enormous positions in CDS’s (credit-default swaps). They created phony bonds and then bet against them as they inevitably failed – while continuing to sell them to any suckers they could find. Those “suckers” were Towns, Villages and States across America (not to mention pension funds), as well as Sovereign funds around the world.

Then we have the little money supply problem, based upon Bernanke’s fealty to Geithner and Paulson -- resulting in the purchase of toxic securities – AFTER, it was acknowledged to be what they were – in order to justify the printing of more fiat money while bailing out the banks. Keep in mind that the Fed under Roosevelt when he took over in 1933 had 20% of real gold versus 80% in high quality corporate paper in its warehouses to support the basis of the money supply.

Now we have virtually NO gold and toxic assets (all of those cratering mortgage-backed bonds) and a green light to start the presses.

The stock market is living on borrowed time.

The real estate market is living on borrowed time.

America’s workers are living on borrowed time.

The double-dip recession is on its way because housing is about to head down again, unemployment is on its way back over 10% (20% in real numbers), and when the stock market hits its next speed bump, the situation will not be pretty.  Not even gold will help once deflation hits.

What’s the plan?  Wait.

Don’t buy a house unless its value is not a concern. Renting is cheaper and the deals keep getting better.

Do not invest in Wall Street. The buy and hold set are the casino junkies that have been screwed for the last 20 years.  Only the brokers have made any money at all. Insider trading is so passé that it’s not even worth discussing. When Goldman Sachs has SEC approval to locate their servers so close to the Market that they intercept and benefit in “flash trading” – what is the point of even discussing it. That’s the only way money can be made on “the Street.” It’s not an even playing field.

Small business has been rejected by the Obama administration. All that matters now, to State agencies, prosecutors, the Federal government, is to ramp up the collection of taxes, fines, and penalties – and to justify their existence whereby they maintain cash flow for themselves and their agencies.

Whether we are talking about the Town of Southampton or the State of New York, the object is to collect cash. The civil service workers want to keep their jobs and it is irrelevant as to whether small business winds up shutting down and dismissing all of its employees.  With the contraction of credit and the increase in punitive actions, we will no longer be able to look to small stores and companies to save America.

The Southampton Town government, under the tutelage of Anna Throne-Holst has opted for selective employment termination. Having benefitted from an increase in the Preservation Fund receipts (which politicians have learned to dip into willy-nilly despite its original justification for purchases of open land), we face a future of paying more and getting a lot less. Of course, this will have no affect upon the huge number of seasonal workers who will be released within 2 months.  A more serious question is what will be done when the millions of workers drop off the extended unemployment benefits expected by November? Will Unemployment become the new Welfare and be continued indefinitely – through yet another unaffordable bailout?

This Fall may be the beginning of Depression 2.0.