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Secession anyone?

As California lines up for a bail-out, one must wonder when other states will follow. The states that ran good financial budgets and spending will be victimized by those that don't.

The United States has become a cesspool of corruption and the hatching nest for the new world order vipers. Why should the many states fall to the tyranny of the few?

Arizona has a bill to secede upon certain conditions...

"Be it resolved by the House of Representatives of the State of Arizona, the Senate concurring:

1. That when or if the President of the United States, the Congress of the United States or any other federal agent or agency declares the Constitution of the United States to be suspended or abolished, if the President or any other federal entity attempts to institute martial law or its equivalent without an official declaration in one or more of the states without the consent of that state or if any federal order attempts to make it unlawful for individual Americans to own firearms or to confiscate firearms, the State of Arizona, when joined by thirty-four of the other fifty states, declares as follows: that the states resume all state powers delegated by the Constitution of the United States and assume total sovereignty; that the states re-ratify and re-establish the present Constitution of the United States as the charter for the formation of a new federal government, to be followed by the election of a new Congress and President and the reorganization of a new judiciary, similarly following the precedent and procedures of the founding fathers; that individual members of the military return to their respective states and report to the Governor until a new President is elected; that each state assume a negotiated, prorated share of the national debt; that all land within the borders of a state belongs to the state until sold or ceded to the central government by the state's Legislature and Governor; and that once thirty-five states have agreed to form a new government, each of the remaining fifteen be permitted to join the new confederation on application.

2. That the Secretary of State of the State of Arizona transmit copies of this Resolution to the President of the United States, the President of the United States Senate, the Speaker of the United States House of Representatives and each Member of Congress from the State of Arizona."


Glenn Beck summed things up well last night on his show, "the country I grew up in is gone."


Buffalo Ken

I'm listening to a Bob Marley tune just now --- "Bad Boys". You know.... "what you gonna do when they come for you"...and....
"Why you have to be so mean, don't you know your a human being?"

I'm not now going to post the "Joke-Poem" I came up with earlier today except here is the title: How Many Bankers Does it take to screw in a light bulb?

I'd imagine it taking some sort of banker-pyramid that would likely be very vulnerable for failure causing injury. Better to use someone with common sense or even an engineer or someone who could tell there is a safer way than the "goofy, twisted-and-bound, now flipping & flapping around, previously sort-of upside-down, pyramid-scheme. Please, I think there are many better ways that don't involve schemes really and some of the ideas I've been reading and sites I've been visiting sound and seem awesome to me. This is an opportunity even though perhaps it is a bit disturbing. Oh well, who said anything was going to be easy - not me. Simple perhaps, but I doubt anything is going to be easy for awhile. I don't mind working hard. I think its kind of fun, but that just me. Still I think perhaps there are many in my generation who feel similarly, but I could be wrong.



Ok, let me get this straight, we are paying
so many cents on the dollar for this
Bailout? Rescue? Nationalized? or what-ever
name you give it. Every Week it changes !! Something that bothers me: Has any one
of Wall Streets Famous come forward with
a true APPRAISAL of the derivative market
and books? I guess deregulation isnt all
that cracked up to be: Right Bill-Banks,
and Jimmy-Airlines and Trucking. Next up,
the Govt will take Social Security and ruin it. Democracy at its best...................


"...the derivatives market now estimated to be over $1 quadrillion (that is 1,000 trillion) in global derivatives holdings."


john east

I admire your independance of mind in opposing Roubini's solutions, particularly as he has proved spot on in his analysis and resulting predictions over recent years. I suppose we are all only as good as our last prediction, and this applies to the good professor, just as it applies to you and I.

I understand that Roubini, along with the majority of the commentators I follow, sees deflation as the end game. I see only temporary deflation in the short term today followed by raging inflation further down the road as the monetary authorities throw everything they have to keep their system afloat a little longer. Their game is not over yet. Commodities, and gold, will rise from the ashes again over the next couple of years, to be followed by the final deflationary collapse (or WW3) in 2010-2011....

....but I will still keep respect for Roubini, and follow his developing arguments as best I can, because his track record has earned him this respect.

Keep up the good work, epecially your ability to think for yourself.


Deflation means that prices fall. Hmmm sounds like the computer industry. What would have cost you $3000 three years ago costs you $300 today. See the thing about deflation is that the dollar goes farther if you are a spender, or you can save more if you are a saver; without your paycheck having to increase. Why is this scary? Because if everyone can save, they can pay off their debts. When you are not in debt, fear loses some of its sting. Why do central banks hate deflation? Because deflation takes away their power. Nobody needs more fiat currency if they are not in debt. But CK you say, in deflationary times don't the workers wages fall ... and I answer thusly: as long as each workers productivity increases faster than his wages rise, deflation is the natural course of affairs. As long as demand is not falling, in a deflationary economy there is no need for workers wages to fall. And what happens to interest rates in a deflationary economy, they reflect the expectation of future individual failures and general natural disasters and the true time value of money to both the borrowers and the lenders. In other words, interest rates become a reflection of reality not a tool to try to manipulate reality for the benefit of the bankers and whoever is the current administrations special clientelle. For the mathematically inclined, interest rates are a dependent variable not an independent variable in societies without central banks, floating currencies and state monopolies and monopsonys.

Buffalo Ken

Article Title I saw on Yahoo: "Stocks mostly lower as GM declines"

I wonder if perhaps some of this derivative mess is tied into many company pension plans. I don't think anyone really knows - this makes it hard to know the risk if you are a stock investory for example. This is not good because the risk could be extreme for those corporations that "played or are still playing at the casino".

Maybe there aren't any of these corporations but I doubt it. If I was a corporate entity exec I'd ask my accountants to check, and then, if this risk was not there, I make a public announcement to this effect. If the risk is there, I'd want to find out what the risk is. Just a friendly suggestion.


Buffalo Ken

Warning - Rambling somewhat kooky-shaped message follows....

Of course, the accountants would need to check REAL close. They would need to dig deep. I suspect many questions might arise for which only a few "computer-programming and/or mathamatical-dreaming, sometimes a scheming, whiz-kids would know the answer, but maybe not even them. Well, that speaks to the problem I suspect. I could be wrong, buy I think "Funny Money" is "flying" all over the place in all sorts of "funky-string-type-instruments" (mainy in bits and bytes) connected in ways that have become so complex, nobody can unravel the mess.

Well, the more periphery and other-type connections to this "black-hole/box-sort-of-web" the easier it will become to find some common connections. These common connections might even have names and addresses associated with them for which it would be worthwhile to gain some additional understanding about how the connections came to be. As more is discovered, I suspect it will end up looking nothing different than a witless attempt at "history repeating amended version 2", but history can never really repeat now can it? When something happens its a one time deal in its contextual framework. But after it happens, we ought to be smart enough to learn something and not make the same mistakes twice, or heaven forbid, three times.

Anyhow, sorry for all of this rambling, but if something has been made it can be unraveled eventually.




How can any country in the world (or all of them together) possible unwind the (1 quadrillion) derivative beast? How can this play out any other way except for a long hard global depression?


Thanks for another great article and bringing people like me who have only been reading on investments for a year, up to date on the 0% madness of Roubini.

It's interesting to see how dangerous iceburg ideas sometimes emerge from the sea and mist of economic understanding to sink whole nations.

Buffalo Ken

last post for today, buy it seems to me that once "the mess" is better understood, it will become evident (maybe even relatively clear) where there is value amongst corporate entities (remember they are NOT alive) and where there isn't with respect to capital, employee skill level, "fiscal-soundness", and other measurable indicators.

For those with little value as a single corporate entity, I'm sure there is value in many of the parts. This value should be utilized shouldn't it? This may provide some good opportunities for new-type mutually beneficial arrangements to be established.

Maybe, maybe not, I suppose, but it is possible.

One thing though that I think is basically irrefutable is that LABOR holds key value and LABOR needs to recieve a fair wage for other "values" to manifest. Labor is essential and no damn robot will ever be able to do what a human can especially when we work together as we are capable of when push comes to shove.

I really think an investment in a New Railroad Infrastructure would so be money well spent. Real investment and real results.


CEO Nutcracker

Oww! -633 on the DOW! I think the shorts are getting even.


ELAINE: you were right all along.
When you have an economy and financial
instruments based on CREDIT, you dont
know where the HOLE or the bottom is.

CEO Nutcracker

I wonder where the DOW would be if the Plunge Protection Team hadn't been bailing in out for the past year and a half? I suppose we will find out very soon.


Came across this...


Good site this,worth a look around...



Is it at all possible, that Greenspan, the one time gold proponent, has pulled off the biggest coup in history. Intentionally creating the biggest bubble in recent memory in order to kill off the Federal Reserve once and for all? It is most certainly more exposed than ever before, as being a socialist cartel beast ready to devour anything it so chooses. The question remains open, as the demise of the Federal Reserve will either culminate in a more competitive banking system, or, as most media lap dogs will clamour for, a global banking solution, starting first with collaboration, and ending with World Bank/IMF ultimate control .... exciting times, to say the least.



You and I have discussed how the many-trillion-dollar CDS market represents not only the clearest symbol of the insanity of American financial greed, but the biggest theromonuclear bomb that could (and probably would) go off in the financial world.


There are $400 billion in Lehman Bros Credit Default Swaps (CDS) that have to get settled tomorrow. That's right - tomorrow, Friday 10/10/08, starting at 9:45 A.M. Eastern Time. The CDS have to get settled because Lehman has defaulted on its debt, which is precisely the event the CDS are supposed to insure against losses from.

Current projections are that $.10 on the dollar is recoverable from Lehman-derived sources. If true, that leaves $.90 on the dollar for the CDS "insurers" (e.g., JP Morgan, Morgan Stanley, etc.) to come up with. THAT WOULD BE $360 BILLION IN HARD CASH PAYABLE TOMORROW.

Maybe they'll conduct an auction for Lehman debt and mayble there'll be more than $.10 on the dollar recovered. No one knows.

Today, Paulson announced he will interpret the spirit (it sure ain't in the language) of the $700 billion TARP to let him give hundreds of billions of dollars (the number "$300 billion or so" is being bantied about) "directly to banks" in exchange for some preferred stock options. Coincidence? I think not.

No matter what else you have planned for tomorrow, watch this CDS settlement carefully, as it proceeds. It will either get manipulated successfully to spare the "insuring banks" the real cost of the risks they have taken; or Paulson will "make good" their losses (also called "re-capitalization") with up to half the TARP money; or Armaggedon will no longer be a figure of speech.

Buffalo Ken

Thank-you Michael for so much and I hope you know what I mean. I remember so many months ago when you said to me "be at peace" and this meant something to me.

I think there is a way out of this quandary but one thing for sure is "flash" decisions (particularly the unitary type) made in moments of passion are undesirable. Undesirable in general. Undesirable for all of us. There needs to be discussion.



"Is it at all possible, that Greenspan, the one time gold proponent, has pulled off the biggest coup in history. Intentionally creating the biggest bubble in recent memory in order to kill off the Federal Reserve once and for all?"

This has always been a constant suspicion of mine also. I think of it every time I see his reptilian face and that weird smile.

So far, he hasn't tipped his hand. Maybe he will on his deathbed.

Buffalo Ken

I think we could basically all agree on that can't we. Talking at the table is best? It happens small-scale for sure and the scale increases. It can happen on all sorts of levels.

Sorry for the additional posts, but when I hear such dire talk I understand that it is based on history, but I just don't think history can repeat. Plus, you know what I think about learning. I love it.


Elaine Meinel Supkis

Maybe if we waterboard Greenspan, he will tell us...heh.

The DOW collapse is the pre-Derivatives Beast Bust tremors. We can afford exactly 9 days of this sort of mess then it is all zeroed out.

This is a classic Gordian knot. An interesting mythology behind the Gordian knot. It was how the Goddess of Inflation tied the yoke of King Midas' ox team. You see, he wasn't a king but this made him a king.

And then Alexander cut it in two and then went off to die, fighting in Afghanistan and Iraq. He died! And was cremated.

The Law of the Goddesses are not easily set aside. They take revenge.

Frankly, the attempts at evading a correction that balances our books is turning into a bloody, awful mess. We can't short-shrift these celestial, natural systems. They WILL correct no matter how hard we work to keep these things all out of balance.

Buffalo Ken

Balance is undeniable and inherent. No doubt.



Elaine and Ken,

After the inevitable fall, there will be a period of silence (shock and awe) followed by screams and cursing on all sides. Stop looking at this spectacle as this is like the tsunami waters going out at Phuket with fishes stranded on the beach. The mother of all waves is coming in fast.

I believe we have about 2 weeks most to stock up. Shipments of grains are probably going to stop due to payment issues from this global mess. Anything from JIT (just in time) deliveries is going to get hit. Get ready for a harsh winter without power as this will kill those unprepared. Don't count on any services or backup from aid agencies. It will all be gone. We are on our own.


I have been almost exclusively posting my comments on your blog because I like your style and even though we disagree about the centrality of gold and the effects of fractional reserve banking (me against, you for), your attack on pirate coves and corruption in the financial "industry" (what do they produce again?) is spot on.

As a final gift to you and your readers, I say this one more time: This is it, and it is now. Buy physical gold, and farmland if you have the $$$s.

I have never been more serious.

D. F. Facti

Ken - I think that's Human Bean (Little Big Man - if you'll recall).

Watching the ticker today was too upsetting. Susie Ormand (SP?) was on Larry King Live last night (again) relating stories of her listeners calling in telling her they're living in their cars. And she says, expect a lot more of that. Expect bread lines. This will take years to get out of.

This is momentum. Like a mud slide.

Why the HELL are we bailing the bastards out? Either way we're screwed. Why lighten THEIR load? And the McCain hooey about buying distressed mortgages - now there's a great bargain for the taxpayer/rescuer. Relieve the libertine, devil-may-care bankers of non performing assets and dump them in the government's lap - - - except I don't think they can tell us where the bad debt is - they CAN'T separate it, because they have no idea where it is. Whoops. Call the Queen.

Thanks, Hank. And Greenspin.



Don't forget to include the means of protecting your investments. Ha! Ha! Ha! Them boys from the hood and the suits will be calling once they realize the currency will have to be backed by gold.

More mundane things like food, medicines and skills will be just as critical once this period of madness is over. Put your house in order first - I mean make sure your property is in good physical condition like good thermal insulation and heating (without relying on electric grid or gas as in good old fashion way). Be prepared to work at home as jobs and payments will be difficult to come by. Cut all useless expenses and debts asap. Improve on security as crime rate is definitely going to go up everywhere in the world.

Elaine Meinel Supkis

Well, I produce my own heating energy. And have guns and lots of live game that forage on my lands. And I know how to gut large mammals as well as deal with their hides.

Useful life skills. But then, I lived in a tent complex for ten years in a very hostile climate. We live if we want to live. We go up and we go down. I have lived in mansions and slums.

The main thing is to be ALIVE, AWARE and to deal with neighbors however they are since rich people are much bitchier than poor, I frankly enjoy the non-rich more than the rich, frankly!

Communities matter when our 'choices' are limited. Some of the best communities I lived in were poor.


Excellent silverbear posting! Absolutely amazing! Inflation the 'hidden tax'. That is oh so true.

Three can keep a secret if two are dead.

Benjamin Franklin

Elaine Meinel Supkis

Inflation is a raid on SAVINGS and worse, prevents even any chance of saving money.


“We are in danger of being overwhelmed with irredeemable paper, mere paper, representing not gold nor silver; no sir, representing nothing but broken promises, bad faith, bankrupt corporations, cheated creditors and a ruined people.”
Daniel Webster, speech in the Senate, 1833

Here we go again......different generation, same old congame and conmen.


“I sincerely believe ... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”
Thomas Jefferson to John Taylor, 1816

"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it."
Frederic Bastiat, The Law

"Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.
George Washington, in letter to J. Bowen, Rhode Island, Jan. 9, 1787

"You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out."
Andrew Jackson: To delegation of bankers discussing the Bank Renewal Bill, 1832

"You can fool some of the people all of the time, and all of the people some of the time, and that's good enough."
Dr. Edwin Vieira

CEO Nutcracker

Yes, rockpapersizzors. I just finished reading
an article by Bob Chapman about the lengths and machinations the bankster's are using to keep gold and metals suppressed. It is AMAZING how desperate and fearful they are of losing this credit ponzi scheme to gold.

This article is worth it's weight in gold.


CEO Nutcracker

Sorry. It got cut off.




If the derivatives are only $500 trillion (only???) that would be around 10 times the global GDP. Let's face it, if the derivatives unwind, it will vaporize everything in it's path.

The fact that most people have no idea it's coming is a testament to the power of the MSM...those bastards!

Elaine Meinel Supkis

Japan is openly talking about no longer using the US dollar to settle international trade and commerce accounts.

THIS IS THE END OF THE FIAT DOLLAR. Kiss it goodbye. I bet the US will rush to placate Japan tomorrow. Like, make the dollar strong against the yen again. Already, the yen has risen from 127 to the dollar to 98 this night. They are struggling like hell to inch it up to 99 yen to a dollar. But this is killing them, big time.

Read my next story. It is a doozy.

Glen Mikkelsen

Elaine: While agreeing on the interest rate argument in principle, I think you're giving Roubini much too raw a deal here. He has often admitted that further interest rate cuts are not desireous as they will pave the way for inflation in the long run - and that they have been already too low for a long time. See also the CFR debate the other day: http://www.cfr.org/publication/17365/financial_crisis.html

At the same time, his view - which I find to be correct and guides his latest recommendations - is that no matter that lots of banks and financial institutions have to fall while assets find a realistic bottom and derivatives are settled, there HAS to be an operational banking sector in place, because otherwise the damage arrests even the solvent and profitable companies in the real economy. Not just in the US, but worldwide. Moral hazard or not, and as much as it would pain me to see only JP Morgan and the likes survive, we HAVE to have some modicum of a functioning banking sector, because otherwise everything stops (even if recession/depression is unavoidable in any case).

The rate cuts Roubini suggests are not due to ideological preference for low rate regimes. Fundamentally, you can hardly find an economist who is gaining main stream attention (belatedly) who is agreeing with you more.


If you think the private sector (banking) should control the price (interest rate) and creation of money (fractional reserve banking) instead of Congress, as defined by the US Constitution, you are a CORPORATIST and GUILTY OF TREASON.


A more accurate term for the system that erases the boundaries between Big Government and Big Business is not liberal, conservative or capitalist, but corporatist. Its main characteristics are huge transfers of public wealth to private hands, often accompanied by exploding debt, an ever-widening chasm between the dazzling rich and the disposable poor and an aggressive nationalism that justifies unlimited spending on security. For those inside the bubble of extreme wealth created by such an arrangement, there can be no more profitable way to organize a society. But because of the obvious drawbacks for the vast majority of the population left outside the bubble, other features of the corporatist state tend to include aggressive surveillance (once again, with government and large corporations trading favors and contracts), mass incarceration, shrinking civil liberties and often, though not always, torture. (The Shock Doctrine: The Rise of Disaster Capitalism, New York: Metropolitan Books, 2007, p. 15)

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