Crash ...!!!

http://atlasshrugs2000.typepad.com/atlas_shrugs/2009/06/busted-the-134-billion-smuggled-bonds-were-fake.html

BUSTED: The $134 Billion Smuggled Bonds Were FAKE
Last week I reported on the silence of this explosive news story: Italy’s financial police Seize $134.5 billion US Bonds on the Border between Italy and Switzerland: Smuggling Or Counterfeit
The relevant question was the authenticity of this mind boggling bust, $134 billion - larger than the GNP of many a small nation.

I speculated if the bonds were fake (which it is now being reported that they are) that it is the work of the North Koreans. This is what the NORKS do. Counterfeit. And they are bloody good at it. So good in fact, it took tow weeks to determine that they were fakes. Asia News wonders the same thing:
Italy’s Guardia di Finanza has a reputation for being a highly specialised and expert financial police agency. How could it be so easily duped! And if the bonds are “clearly fakes” why did it take US authorities two weeks to find out.

Another discrepancy is the fact that, along with the securities, original and recent bank documents were seized as proof of their authenticity.

If what Meyerhardt says is true, some major financial institutions have been deceived by the securities carried by the two Asian men. This would be a bombshell and raise serious questions as to how many bank assets are actually made up of securities that for Meyerhardt are “clearly fakes.”
If counterfeit securities of such high quality are in circulation the world’s monetary system, let alone that of the United States, is in danger. International trade and exchanges could come to a halt.

U.S. Says Bonds Seized in Italy Are ‘Clearly Fakes’ Bloomberg (hat tip Rut)
June 18 (Bloomberg) -- U.S. government bonds found in the false bottom of a suitcase carried by two Japanese travelers attempting to cross into Switzerland are fake, a Treasury spokesman said.
“They’re clearly fakes,” Stephen Meyerhardt, a spokesman for the U.S. Bureau of the Public Debt in Washington, said yesterday. “That’s beyond the fact that the face value is far beyond what’s out there.”

Italy’s financial police last week said they asked the U.S. Securities and Exchange Commission to authenticate the seized bonds, with a face value of $134 billion. Colonel Rodolfo Mecarelli of the Guardia di Finanza in Como, Italy, said the securities, seized in Chiasso, Italy, were probably forgeries.
Meyerhardt said Treasury records show an estimated $105.4 million in bearer bonds have yet to be surrendered. Most matured more than five years ago, he said. The Treasury stopped issuing bearer bonds in 1982, Meyerhardt said.

Had the notes been genuine, the pair would have been the U.S. government’s fourth-biggest creditor, ahead of the U.K. with $128 billion of U.S. debt and just behind Russia, which is owed $138 billion.
According to the Italian authorities, the seized notes included 249 securities with a face value of $500 million each and 10 additional bonds with a value of more than $1 billion, as well as securities purported to be “Kennedy” bonds. Meyerhardt said no such securities exist.

This is an interesting interview from early this morning with Bryan Marsal, CEO of Lehman Brothers Holdings, who is unwinding Lehman Brothers ... especially at the 18 minute mark:

One of my partners said yesterday that we are going to call this phase the "extend and pretend" phase in our economy. Which is you extend someone's maturity - because they are going to default - and you pretend that business will come back or that leverage factor is going to come back.

Then we'll enter phase two, which he said is the request to extend or "amend".

Then "send". In other words send the keys.

That is the phases we are in right now. Everyone is trying to buy time, as opposed to dealing with the leverage, they are trying to buy time. Whether you are a banker or a company, they are all trying to buy time. I don't see the leverage coming back, and I don't see the consumption of good and services coming back.
Bryan Marsal, CEO of Lehman Brothers Holdings.

This applies to all kinds of debt - extend and pretend - that sounds like most of the residential loan modifications! But eventually many of those same loans will reach the "send" phase.

Yesterday, the Hair Club Vice President Joe Biden did it again. He said “we have to keep spending to avoid going bankrupt”!

Wow, even my wife isn’t that stupid about money!

I still say Biden’s hair plugs have done something to his brain, cuz he can’t stop saying stupid things. They should rename that Toy-lette’s Syndrome where you swear all the time after Biden!

Except that when Biden talks, I bet Obama’s the one who does the swearing.

July 6 (Bloomberg) -- Chevron Corp.’s oil refinery near the San Francisco Bay will keep using equipment that dates as far back as the 1930s to process crude into gasoline and other fuels after a judge halted replacement of the oldest units.

Fuel production will continue at the Richmond, California, plant with existing equipment, some of which is seven decades old, while Chevron and municipal officials decide how to respond to the court order, Brent Tippen, a spokesman for second-largest U.S. oil company, said today in an interview.

"San Ramon, California-based Chevron has dismissed 100 construction workers and other contractors since July 2 and plans to send another 900 home by the end of August after Contra Costa County Superior Judge Barbara Zuniga last month ruled the environmental permit covering the project was inadequate. "

July 17th - California's fiscal crisis has left the US state without courts and some administration offices were ordered to close on Friday.
A predicted 24 billion dollar budget deficit over the next two years has forced Governor Arnold Schwarzenegger to order massive cost-cutting measures.

"We will be closed this Friday, as the last and the oncoming Friday, due to the ordering of three furlough days each month by the governor," an official from the Hollywood Department of Motor Vehicles (DMV) office, which issues driver's licenses, told AFP.

The DMV is one of many state offices to close on Friday, one of three unpaid leave days a month ordered for state workers to help the government reduce its expenses.

The furloughs declared earlier this month are expected to save more than one billion dollars over the next year in California.

On Wednesday, authorities shut down most of the operations of the Los Angeles County Superior Court, the largest court system in the country with approximately 100,000 people passing through its 600 courtrooms every day.

Presiding Judge Charles McCoy said he was forced to take the step in anticipation of a 138-million-dollar funding shortfall for the fiscal year that began this month.

It’s rare to find reason to praise Newsweek Magazine. But in the July 20 issue, they revealed a little something about the high cost of taking too much from the rich.
Quote: “Trickle-down economics is a despised phrase and concept to many, but it also embodies a harsh reality.” (Note the word: reality.) Continuing: “The rich often play a pivotal role in U.S. economic growth, and if they are enfeebled, then the consequences are widespread.”

The trouble with slowing the engine of the train is that the caboose slows down too; it doesn’t get anywhere faster. The problem with Obama’s plan to send all the bills for his every scheme to the rich is all the collateral damage.

Summarizing from the Newsweek article:
Households with more than $200,000 in income corral only 3.4 percent of all income but do 14 percent of the consumer spending, the only real force that creates and sustains jobs. What I’d point out is, if put upon, it is infinitely easier for us rich folks to cut back our spending by half than it is for low income earners to cut their spending at all. The lower on the income ladder, the higher the percentage of income is spent on necessities. The higher the income, the more discretionary spending and flexible spending choices. If the $200,000+ earners cut their spending by half, and contribute only 7 percent of all consumer spending instead of 14 percent, what then? Well, yes we can. And don’t kid yourself, we already are.

Next from Newsweek: the rich also pay most of the taxes. In 2006 – the last year for which complete data is accessible – the richest 1 percent paid 28 percent of all federal taxes, the richest 10 percent paid 55 percent. Might I point out, should the rich decide they are being ruthlessly and unjustly targeted and take twice as much time off and cut their incomes intentionally by 10 percent or 20 percent for a few years, the federal government will find itself starved of incoming tax revenue. As a result, tax increases on everybody else – notably the middle class, who have no such choices – will multiply fast and furiously.

And I assure you hundreds and hundreds of high 6-figure and 7-figure earners intend doing exactly that. I have close consultative relationships with them, and I know that in both their strategic business plans and personal goals they will deliberately cut back. They’ll take on less responsibility, invest less, delay new store openings or other expansions. They may take extra time off or even complete sabbaticals. They’ll reduce their incomes and just coast until they no longer feel Obama’s crosshairs on them. The more taxes he aims at us, the less tax revenue he’ll get, which will send him to your middle class door.

Next from Newsweek: the wealthy dominate charitable giving. The top 10 percent in income and wealth account for nearly 50 percent of all contributions to charities. Oh, and by the way, if you’d like to see a big jump in health care costs, get rich people to stop building hospital wings and donating to research groups.

And if that top 10 percent just cut back on their charitable giving a little, I wonder how many jobs disappear from the non-profit sector? How many food banks and theaters and zoos and community centers and what-have-you’s will have to cut back services and programs? Shuttle buses for seniors stop, food deliveries to shut-ins stop, free medical clinics shutter.
Finally from Newsweek: wealthy individuals are an important source of venture capital – funds invested in start-up companies. I would mention that a robust start-up of new businesses is essential just to replace the dying out of antiquated industrial businesses, the outsourcing of jobs overseas, the closing of business starved for capital and financing; just to stay even. If we evil rich stop putting our money at risk, even for a little while, the total number of available jobs shrinks and shrinks and shrinks.

Oh, and yes we can. Yes we can. Yes we can.

http://townhall.com/columnists/DanKennedy/2009/08/20/the_terrible_cost_of_eating_the_rich

August 21, 2009
New 10-year Federal Deficit: $9 Trillion, Up from $7 Trillion
The Obama Office of Management and Budget tells Fox the federal deficit over the next decade is projected to be $2 trillion higher than previous estimates.
The new 10-year aggregate federal deficit is $9 trillion.

An official said the prolonged recession and the ensuing decline in federal revenue prompted a recalibration of the deficit numbers.

The numbers also reflect a projection that post-recession economic growth may not be as robust as after previous recessions, the official said.
http://whitehouse.blogs.foxnews.com/2009/08/21/new-10-year-federal-deficit-9-trillion-up-from-7-trillion/