Nickel Rant: Dead Cat Bounce

Nickel Rant:

Dead Cat Bounce
by Edgar J. Steele


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My name is Edgar J. Steele.

I've been off having surgery, to answer all the questions. But I'm getting back into it now, thanks for the expressions of concern. That's the great thing about working for free - you get to pick your own hours.

The Dead Cat Bounce

Ever seen a dead cat? Ever seen one bounce off the pavement? Use your imagination, then. That's all that is going on right now, economically. If that.

Fact is, the government lies about everything now. Everything. I've become so jaded that I automatically disbelieve everything I hear from official sources. Everything.

This past week, US Treasury Secretary Henry Paulsen said there is nothing wrong with the dollar. Federal Reserve Chairman Ben (Whirlyben) Bernanke said there's nothing wrong with the banking system. US President George W. Bush said there's nothing wrong with the economy. Be afraid. Be very afraid.

Not only is something wrong with the dollar, the banking system and the economy, there almost literally is nothing right with any of them. Truth is, that whistling noise you hear is the air streaming past your ears as we all plummet into the deepest economic abyss every seen by mankind. Things seem normal only if you listen and believe the usual suspects. Look over the edge of the cart, folks. The onrushing Depression II will so redefine depressions that it may well co-opt the term "depression" altogether unto itself.

I was Right Then ...

When I wrote Defensive Racism four years ago, I hoped that I might be overstating things a bit when I said:

"The cycle we are in is non-interruptible, too. Even if they wanted to, the central bankers could not stave off what now has become inevitable, because they have exhausted the means of supporting the economic bubbles they created: lowering interest rates (already negative when inflation is factored in) and expanding the money supply (Herculean quantities were added in 2004 with no effect other than to maintain the status quo for a brief additional period - raining money down from helicopters would be the next step, but that would lead to hyperinflation just as surely as will interest rates already set to rise by demand of the world economy).

"Record personal and corporate bankruptcies are occurring. Major auto companies, who really make their money financing the sale of their cars, and America's major federally-guaranteed mortgage lenders all are insolvent, though operating on cash flow for the time being. Their eventual bankruptcy now is a foregone conclusion. In the face of a real estate/mortgage bubble, America is experiencing record foreclosures by banks of their loans to American homeowners, ranchers and small businessmen. Bad though that already is, what it portends for the future is positively hair raising."

Indeed.

Keep in mind that I wrote those two paragraphs just as the housing boom was achieving liftoff. While I was cautioning others to cool it and step back, home prices were ratcheting up fast enough to entice others into becoming "flippers" of multiple houses, both new and old, even some not yet built. Some got out, but most did not and now are regretting at their leisure having bought in near or at the top, as they watch prices slide 20-50% per year in some areas. Too bad.

... and I'm Even More Right Now

Even I was something of a victim. I tried to convince my wife, two years ago, to sell out at what I described to her as the peak and rent something comparable for a few years. She would hear nothing of it. I would have put the entire proceeds into silver bullion, of course. Lessee now, that would have been, easily, $750,000 more than what the ranch is worth today, going into silver at half the current price. You do the math.

Sigh.

Where was I? Oh, yes. These are the "good old days" to which you will refer in years to come. Right now. Today. Mark my words well. Better yet, buy a copy of Defensive Racism and read what I have forecast for the coming years. I no longer think there is any danger of my having overstated things. If anything, I was conservative. And that should scare the living hell out of you. It does me.

This morning brought notice of three banks in the American Southwest having been taken over by the FDIC. There are others, to be sure. The FDIC takes over banks during the night after the close of Friday business. There will be more ... lots more. For years, I have said the FDIC would become insolvent before this is over. Last week's IndyMac Bank failure, alone, absorbed ten percent of FDIC resources, don't forget.

Mr. Mental Explains Bailouts

Of course, the FDIC will get bailed out, just as the Feds now have promised to bail out the two largest mortgage backers in the world: Fannie Mae and Freddie Mac. I placed a call to Mr. Mental, somewhere off in the Andromeda Galaxy, to explain bailouts for us:

"Bailout? By the Feds? You simpering earthlings haven't a clue. No wonder we refused to let them go public at Roswell in 1946. You simply have yet to develop the cranial capability to see that bailout means taxation, both direct and indirect. Nor do you perceive that indirect taxation means monetary inflation - printing unbacked money - as much as WhirlyBen needs, in fact. That thereby decreases the purchasing power of the small pittance you currently possess, of course, leading to astronomical price inflation.

"Don't make me come out there and slap you around, though you richly deserve a smack up alongside the head for allowing them to do this to you and for actually queuing up to elect even more morons later this year to do it to you even more. What maroons you lowly bipeds truly have become!

"What's more, you maroons aren't getting bailed out. It's the banking elite - the people who already own almost everything - who are getting bailed out. As usual, you get the shaft along with your foreclosure notices! You maroons."

Yes, Mr. Mental is rude. But that doesn't mean he isn't absolutely correct. By the way, the TV series "House" is a blatant ripoff of Mr. Mental, you know. Always rude. Always right. Mr. Mental should get royalties.

Night of the Living Debt

As I said, be very afraid. Word came out this past week that Mountain House, a premier supplier of long-term storage food, had its entire stock for the next two years bought up by some mysterious government agency. This is the second food-storage company in the past month to tell this tale. What does that tell you? They are making sure that they take care of themselves (using our tax and inflationed-away dollars, naturally). Once again, what is it that we all get? (The shaft, of course.)

Four years ago, I naively believed that the FDIC, FNMA (aka Fannie Mae) and FHLMC (aka "Freddie Mac") all would be allowed to fail when they became bankrupt, with their stockholders and bondholders going bust. I never dreamed the Feds actually would simply print the money to keep them lurching through the night, zombie-like. Money that creates debt once it is printed - our debt. Night of the Living Debt, in other words.

We unwittingly have enslaved our children and grandchildren to the massive debt we continue to allow the louts who run things to mount up in our name, but for their benefit.

Wait until our little red wagon hits the bottom of the chasm into which we have been falling, some time during the next few months and, certainly, within the next couple of years. Then you will see. Then you will be ready, at last, for ...

New America. An idea whose time has come.

My name is Edgar J. Steele. Thanks for listening. Please visit my web site, www.ConspiracyPenPal.com, for other messages just like this one.


-ed
Copyright ©2008, Edgar J. Steele

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