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Paying for the Grease

Nov 9, 2016


BALTIMORE - "Hey, it says here it is a federal crime to accept a gift in exchange for your vote."

Elizabeth was examining her absentee ballot as we drove down I-95.

"I thought half the population got some form of aid from the government. Shouldn't they at least be disqualified from voting?"

Yes, half the population gets a "gift" of sorts.

Food stamps, welfare, low-interest loans, subsidies, contracts, jobs - not direct Election Day bribes; these are indirect bribes, reminding the voters where their bread is buttered.

This is the big day, when the electorate... that great mass of delusional or suborned voters... must pay for its grease.

It has gotten the stolen goods already. And has been promised much more. Now, it must deliver its vote.

But to whom? The fool or the knave? The showman shyster... or the cool criminal?

Yesterday, the stock market surged and gold fell as investors recovered their confidence.

FBI Director James Comey gave Clinton a get-out-of-jail-free pass. Then it was clear: The fix would stay fixed.

The Dow rose 371 points. Bloomberg says there's more where that came from. If Hillary wins, expect a continuation of the "relief" rally.

Cut Down to Size

You'll recall that investors - like the rest of the zombies and cronies - owe half their fortunes to the fixers.

Eight years ago, the U.S. stock market was at less than one-third of today's levels.

The excesses of the Fed's low interest rate regime... and its fake money system... were being corrected by a terrific debt deflation. Houses, real estate, collectibles - all were being mercilessly sold off.

Wall Street was being cut down to size, too.

In September 2008, the big banks, trading houses, funds, and financial groups all seemed to be headed to the scrapyard of financial history. Anyone who could get his hands on his money was taking it off the table - fast.

But then the phones started ringing. Treasury Secretaries Hank Paulson and Tim Geithner were on the horn with their friends on Wall Street. Within minutes, the deals were done and the fix was in. Paulson, Geithner, and Ben Bernanke, the new Fed chief, had given investors a "put" option... They had to make good on it.

(Later, Geithner went on to head Warburg Pincus, a private equity firm. And Ben Bernanke now collects $250,000 a pop for giving blah-blah speeches to finance companies.)

You'll recall that a put option gives the owner the right to sell a stock at a predetermined "strike" price. This protects him from the risk of his stock falling below that floor.

And so it came to pass. The feds waded deeply into the markets, fake money spilling out of their pockets... waving around buy orders and bailouts... along with an emergency interest rate scheme.

They cut the Fed's key lending rate to "effectively zero" and left it there, allowing all financial assets to reinflate themselves at the public's expense.

Every dollar worth of resources that got shifted to the zombies and cronies had to come from somewhere.

Savers and honest workers lost wealth. The insiders gained it.

Completely Uncorrected

Donald Trump supporters didn't necessarily understand what was happening. But they'd been working hard for the last 40 years with little to show for it. They knew the fix was in.

And they were right...

The feds stopped the correction in 2009, leaving things completely uncorrected. Now, with fake money, fake interest rates, fake statistics, and fake elections, things have returned to a kind of fake normalcy.

Stocks are up again. They are only a few points below their all-time high, with investors confident that the "put" option is as good as ever.

Unemployment fell back below 5% this week, largely by not counting the people who stopped looking for jobs. The Wall Street Journal described the technique on Monday:

  • Employers added 161,000 nonfarm jobs in October. [...] The unemployment rate ticked down to 4.9% owing to a dip in the number of people participating in the workforce.

And now, eight years later, the Fed is considering a move to "normalize" its rate policy.

If nothing goes wrong - and the market doesn't sell off... or the economy doesn't soften... and as long as it doesn't rain... or the Federal Open Market Committee members aren't feeling a little down - it says it will begin to prepare for an initial stage of getting ready to... possibly... raise rates in December. Provided it still feels like it.

By tomorrow at this time, nearly half the nation will be looking for their passports and subscribing to our International Living magazine.

But at least we here at the Diary won't be disappointed. We always look on the bright side and took a hands-off, laissez-faire approach to the election.

To the annoyance of both sides, we refused to pick up either tar baby. And now, at least our conscience... and our hands... are clean.

Whoever ends up in charge at the White House, we will be confident and happy.

The rich will still be rich. The fix is still fixed. And the "put" stays put.

Or maybe not...

BILL BONNER Founder, Agora Inc

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

Disclaimer: The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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1 Responses to "Paying for the Grease"

Govindan Nair

Nov 9, 2016

This is not enough. A law has to be introduce to prevent vacant land lying unutilised and unproductive for decades. Land is a national product, it has to be made use of. Made to yield tax of various kinds as applicable. Government should have the power to take over any land lying vacant for more than two-three years. The realtors cheat the poor, innocent land owners withouit knowing how to make use of govt. subsidies etc. Officials are hand in glove with these unscrupulous fellows. Registrars do not check the patta etc. of the land resulting in enabling the realtors to sell the same land to more than one person etc. Again the slum clearance - the same slum dwellers settle down and make another slum and again claim benefits when asked to move out or whenever there is a natural calamity. The earlier ones having been purchased by the realtors. Govt. should check and enlist the slum dwellers and those have been given benefit of. Those residences should not be allowed to be sold - any such sale should be made invalid. These are some of the suggestions to make black money growth and corrupt practises in government.

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