Wall Street Warzone

In the WARZONE

Lobbyists Rule, Reform a Joke, Democracy Dead: “Washington’s Biggest Business” is Delivering Mega-Billion Payoffs to Wall Street, CEOs & Forbes 400

by Paul B Farrell, JD, PhD

| Discuss | Print | 7/30/2010

Wall Street is single largest lobbyist and donor to politicians and their election campaigns. Lobbyists operate in the shadows, yet are arguably the most powerful force in America’s pseudo-democracy today, far more powerful than our elected officials and certainly more powerful than the voting public. They work behind the scenes as conduits for big money seeking big favors, what are often called “bag men” peddling money for influence through campaign donations to Senators, Congressmen and presidential candidates, to secure favorable legislative, regulatory policies, and most of all, huge tax benefits and grants of cash from the federal budget now dispensing about $3 trillion annually to the favored elite.

Lobbyists are hired guns, influence peddlers. Their allegiance is to whomever’s paying their fees—a foreign dictator, an Indian casino, farm conglomerate, oil giant, even a small town in Middle America. And yes, lobbyists often push the agenda of one or the other political party. But in every case, lobbyists are paid to get specific government favors, money or tax benefits for a specific “client.” Their focus is narrow, their goals selfish. They are not voters, not patriots and they’re definitely not acting for the common good, in “best interests of the country.” In fact, the “special interests” of a lobbyist’s clients are usually not in best interests of America.

How bad is it? In “Congressional Revolving Doors: The Journey from Congress to K Street,” Public Citizen (LobbyingInfo.org) wrote: “The revolving door on the journey from Capitol Hill to the lucrative world of federal lobbying is spinning at a rapid rate. Congress is no longer a mere destination for those seeking a seat in one of the world’s most famous legislative bodies. For many lawmakers, it has become a way station to wealth, a necessary period of job training and network building so that after leaving their public service jobs they can sell their influence to those with deep pockets … Lobbying is the top career choice for departing members of Congress.”

Lobbying is now “Washington’s Biggest Business”

Lobbying is actually quite new in American history. A couple years ago the Washington Post ran a revealing 25-part special series: “Citizen K Street: The Life & Career of Gerald S. J. Cassidy: How Lobbying Became Washington’s Biggest Business.” Cassidy is the founder and owner of “the most lucrative lobbying firm in Washington … a godfather of the influence business.” The series later became Robert Kaiser’s brilliant: So Damn Much Money: The Triumph of Lobbying & the Corrosion of American Government.

Cassidy’s “innovation was the first modern ‘earmarked appropriations,’ federal funds directed by Congress to private institutions when no federal agency had proposed spending the money. Over the subsequent three decades, the government dispensed billions of dollars in ‘earmarks,’ and lobbying for such appropriations became a booming Washington industry.” The Post concluded that Cassidy has profited handsomely along the way: He “helped invent the new Washington, which had made him seriously rich. His personal fortune exceeded $125 million.”

Politicians and lobbyists—mutual back-scratching society

Lobbyists have to work closely with the politicians—to get the votes they need, and the big perks for the big money they represent. So both benefit from these chummy relationships as we see in a New York Times story, “Big Money Still Learning to Lobby: On a cold evening in late January 2007, Senator Charles E. Schumer invited a who’s who of hedge funds to dinner at Bottega del Vino on the Upper East Side of Manhattan. More than $100 billion worth of wealth sat around the table … Mr. Schumer, the New York Democrat, had some simple advice for the billionaires in his midst: If you want Washington to work with you, you had better work better with one another.”

And presumably, work closely with Schumer, a member of various Senate committees, including Banking and Finance, and chair of the Economic Policy Subcommittee. The Times continued: “Now, united by a desire to avoid stringent regulation and a healthy sense of competition—there are three hedge fund lobbying groups—the industry seems resigned to no longer being a wallflower and looks set to join the dance with Congress. So far the industry’s efforts have witnessed remarkable results.

More than two years after the Securities and Exchange Commission required that funds register with the agency—a move overturned by a federal appeals court last summer—the Treasury Department, the Federal Reserve, Congress and the SEC seem to agree: hedge funds are as regulated today as they should be.” The Times quoted David Tittsworth, head of the Investment Adviser Association, commenting that hedge funds have been “extraordinarily effective in lobbying … The hedge fund industry—whoever they are and whoever is representing them—has been successful in fighting a centralized and comprehensive regulatory scheme.” So, their veil of secrecy remains protected, thanks to lobbyists brokering a deal between members of Congress and these financial power-players.

Lobbyists outnumber elected officials by huge margin

Lobbyists power exists at the state level too. In a 2006 Barron’s magazine article citing data from The Center for Public Integrity, we learned that: “The number of lobbyists and the amount spent on lobbying has swelled over the years … New York State had 3,842 lobbyists, 18 for each elected legislator. Colorado, Florida, Illinois and Ohio each had 10 per legislator,” a total of about 40,000 state lobbyists. In addition, Washington lobbyists doubled since 2000 to about 35,000. That’s a ratio in excess of 65:1—sixty-five lobbyists per elected official, a total of 435 Congressional representatives, 100 Senators, one President and one Vice President.

And things are getting worse according to another Washington Post report, “The Road to Riches Is Called K Street,” quoting one of America’s elected-officials-turned-lobbyist: “There’s unlimited business out there for us,” said Robert L. Livingston, a Republican and former chairman of the House Appropriations Committee, now president of a thriving lobbying firm, “companies need lobbying help.” Get it! They focus on helping businesses, not the public. “Lobbying firms can’t hire people fast enough,” says The Post. “Starting salaries have risen to about $300,000 a year for the best-connected aides [which is luring] nearly half of all lawmakers who return to the private sector when they leave Congress, according to a forthcoming study by Public Citizen’s Congress Watch.”

Unfortunately, this is not good news according to the critics. The story goes on to say: “Political historians don’t see these as positive developments for democracy. ‘We’ve got a problem here,’ said Allan Cigler, a political scientist at the University of Kansas. ‘The growth of lobbying makes it even worse than it already is in the balance between those with resources and those without resources’.” And you thought your vote counted … now that is irrational!

FirstPubDate: Mar’07

Collapse of The “American Empire” in 5 Stages: Silent, Swift, Certain. New Historians Warn of a Sudden “Thief at Night!” an “Accelerating Car Crash!”

by Paul B Farrell, JD, PhD

| Discuss | Print | 7/24/2010

“One of the disturbing facts of history is that so many civilizations collapse,” warns anthropologist Jared Diamond in Collapse: How Societies Choose to Fail or Succeed. Many “civilizations share a sharp curve of decline. Indeed, a society’s demise may begin only a decade or two after it reaches its peak population, wealth and power.”

Now, Harvard’s Niall Ferguson, one of the world’s leading financial historians, echoes Diamond’s warning: “Imperial collapse may come much more suddenly than many historians imagine. A combination of fiscal deficits and military overstretch suggests that the United States may be the next empire on the precipice.” Yes, America is on the edge. Dismiss his warning at your peril. Everything you learned, believe, everything driving our political leaders is based on a misleading, outdated theory of history. The “American Empire” is at the edge of a dangerous precipice, at risk of a sudden, rapid collapse.

Ferguson is brilliant, prolific, contrarian. His works include the recent Ascent of Money: A Financial History of the World; The Cash Nexus: Money and Power in the Modern World; Colossus: The Rise and Fall of The American Empire; and The War of the World, a survey of the “savagery of the 20th century” where he highlights a profound “paradox that, though the 20th century was ‘so bloody,’ it was also ‘a time of unparalleled progress’.” Why? Throughout history imperial leaders inevitably emerge and drive their nations into wars for greater glory and “economic progress,” while inevitably leading their nation into collapse. And that happens sudden and swift, within “a decade or two.”

You’ll find Ferguson’s latest work, “Collapse and Complexity: Empires on the Edge of Chaos,” in Foreign Affairs, the journal of the Council of Foreign Relations, a nonpartisan think-tank. His message negates all the happy talk you’re hearing in today’s news about economic recovery and new bull markets, about “hope,” about a return to “American Greatness,” from Washington politicians and Wall Street bankers.

“Collapse of All Empires:” 5 stages repeating through the ages … and in 2010

Ferguson opens with a fascinating metaphor: “There is no better illustration of the life cycle of a great power than The Course of Empire, a series of five paintings by Thomas Cole that hang in the New York Historical Society. Cole was a founder of the Hudson River School and one of the pioneers of nineteenth-century American landscape painting; in The Course of Empire, he beautifully captured a theory of imperial rise and fall to which most people remain in thrall to this day. Each of the five imagined scenes depicts the mouth of a great river beneath a rocky outcrop,” If you’re unable to see them at the Historical Society, they’re all reproduced in Foreign Affairs, underscoring Ferguson’s warnings that the “American Empire on the precipice,” near collapse.

First. The Savage State, before the Empire rises
“In the first, The Savage State, a lush wilderness is populated by a handful of hunter-gatherers eking out a primitive existence at the break of a stormy dawn.” Imagine our history from Columbus’ discovery of America in 1492 on through four more centuries as we savagely expanded across the continent. (more)

“Soul-Sickness:” Wall Street’s Secret Moral Pathology. 15 Symptoms of a Deadly Disease That’s Destroying Capitalism & America’s Democratic Values

by Paul B Farrell, JD, PhD

| Discuss | Print | 7/20/2010

In The Battle for the Soul of Capitalism Jack Bogle no longer sees Adam Smith’s “invisible hand” driving “capitalism in a healthy, positive direction.” Today, his “Happy Conspiracy” of Wall Street plus co-conspirators in Washington and Corporate America are spreading a contagious “pathological mutation of capitalism” driven by the new “invisible hands” of this new “mutant capitalism,” serving their selfish agenda in a war to totally control America’s democracy and capitalism.

The “Goldman Conspiracy” is the perfect B-School case study of Wall Street’s secret contagious pathology, with insiders like Blankfein, Paulson and others pocketing billions more of the firm’s profits than shareholders, evidence the new “mutant capitalism” has replaced Adam Smith’s 1776 version which historically endowed the soul of American democracy as well as our capitalistic system. But sadly for America, Goldman’s disease is rapidly becoming a pandemic spreading beyond Wall Street’s “too-greedy-to-fail” banks, infecting our economy, markets and government, as it metastasizes globally.

What are the symptoms of this growing “soul-sickness,” this “pathological mutation of capitalism” Bogle fears? Recently we reviewed the consequences of this “soul-sickness.” Several months ago we collected and paraphrase news reports about fifteen symptoms spreading “soul-sickness” further beyond the boundaries of this Goldman case study, and reform failures prove the disease is speading: These are the 15 signs of a moral pathology undermining not just banking, but American democracy and capitalism.

1. Gross denial of any moral damage caused by their rampant greed
Seeking Alpha: ‘Goldman is America’s most hated corporation. We cheer as Rolling Stone’s Matt Taibbi calls Goldman “a giant vampire squid wrapped around the face of humanity.” Banks triggered a global crisis. Main Street suffers. Greedy bank CEOs raid the Treasury then stuff $30 billion in their bonus pockets, up 60% from last year.’ They are our 21st century General Motors, convinced ‘What’s good for Goldman is good for America.’ We saw how that arrogance ended. Wall Street has similar suicidal symptoms.

2. Narcissistic egomaniacs with secret “God complexes”
London Times’ John Arlidge interviewed Goldman CEO Blankfein: ‘He paid himself $68m in 2007, now worth more than $500 million, yet insists he’s a blue-collar guy. He says banking has a ‘social purpose,’ just a banker ‘doing God’s work’.’ When I was at Morgan Stanley in the seventies the firm ran an ad: “If God Wanted To Do a Financing, He Would Call Morgan Stanley.” Today, all of Wall Street is dual diagnosed: They’re morally blind money addicts who believe they’re “God’s chosen.” AA would say: They haven’t “bottomed,” won’t recover from their disease till a disaster hits, with another market meltdown and the “Great Depression 2.” Then maybe they’ll “quit playing God.”

3. Paranoid obsessives about secrecy, guilt and non-disclosure
Bloomberg: “New York Fed’s Secret Deal: Taxpayers paid $13 billion more than necessary when government officials, acting in secret, made deals with banks on AIG, buying $62 billion of credit-default swaps from AIG. The government would eventually cover about $180 billion in AIG swaps backing toxic CDOs when Paulson and Bernanke double-teamed to bailout Goldman, saving them from bankruptcy. (more)

Wall Street’s “Propaganda Machine” Manipulates You With Toxic “Happy Talk” About New Bull Markets: 1929-33…2000-03…2007-08…More Dead Ahead!

by Paul B Farrell, JD, PhD

| Discuss | Print | 7/12/2010

Yes folks, we’re all optimists, blind optimists. We dismiss facts, block reality, deny history, even recent meltdown. Not just Wall Street, also Main Street’s 95 million investors. Yes, you. We all want to be deceived. We want to trust in a better future, want the good news, optimism, happy talk, bull markets. We desperately want to forget the harsh reality of the recent past. And Wall Street and co-conspirators in cable TV know this too. They have you profiled (yes, psychologically profiled) as a “loser.” To them, you are a sucker for their happy talk.

Wall Street’s “Propaganda Machine” is feeding the media a steady diet of happy-talk. And the number one rule for ratings success is: “Know what the masses want and feed it to them.” Audience become sheep, cheer, want more. Today people are desperate for good news after the tragic lack of leadership the past few years. We got a dark reminder last week as two former Citigroup bosses (one a former US Treasury Secretary), admitted they “did not have a grip on what was happening” in their “too-big-to-fail” bank. Yet those bozos created a disaster and still pocketed hundreds of millions. And far more evil, their fat-cat successors are spending hundreds of millions of their shareholders’ money to defeat financial reforms that will prevent this from happening to them again.

Unfortunately this historical cycle’s doomed to reoccur. Except the next time it’ll end in another, bigger meltdown, and the “Great Depression 2” that the Fed and Treasury keep pushing downstream. So expect the “Propaganda Machine” to keep feeding sound-bites to the media, as this “Happy Conspiracy” between Wall Street, Washington and Corporate America keeps manipulating Main Street’s 95 million investors. It never ends. Here are three historical reminders:

“Propaganda Machine” in 2007-08 subprime meltdown

BusinessWeek, Kiplinger’s and USAToday reported on the false predictions made before the 2008 subprime credit meltdown spread rapidly across America and the world:

Bernanke: “I don’t anticipate any serious [failures] among large internationally active banks.”
Ken Fisher: “This year will end in the plus column … so keep buying.”
Mad Money Cramer: “Bye-bye bear market, say hello to the bull.”
Goldman’s Abby Joseph Cohen: “The fear priced into stocks is likely to abate as recession fears fade.”
Barney Frank, “Freddie Mac and Fannie Mae are fundamentally sound.”
Barron’s: “Home prices about to bottom.”
Worth magazine: “Emerging markets are the global investors’ safe haven.”
Kiplinger’s: “Stock investors should beat the rush to the banks.”
Madoff: “It’s virtually impossible to violate the rules.”

Bad calls? Very bad. But Main Street’s a willing victim, we want to believe the happy talk.” We’re all trapped by this deadly disease, like sheep waiting to be slaughtered.

“Propaganda Machine” in 2000-2003 dot-com crash & recession

Back a few years ago we reviewed a 2003 book, Bull! 144 Statements from the Market’s Fallen Prophets, published during the 30-month recession, when Wall Street was losing $8 trillion in market cap. Here’s a few of America’s opinion leaders spreading their misleading happy-talk as the market slowly disintegrated for 30-months from 11,722 to 7286 in October 2002. Yet they prattled on. Unfortunately, many of these “Fallen Prophets” are still misleading investors as members of the new “Propaganda Machine.” (more)

10 Reasons President Obama is Failing 95 Million American Investors: Piling Trillions of Debt on Future Generations, on Top of Bush-Cheney Trillions

by Paul B Farrell, JD, PhD

| Discuss | Print | 7/12/2010

Back in January one of my MarketWatch columns was an “open letter” to the president: “10 reasons Obama is failing 95 million investors: Why his ‘Fat Cat Bankers’ are destroying both capitalism and democracy.” The response was strong. Today, given all the financial reforms now being secretly contested in Washington, especially the Consumer Financial Protection Agency that the banks are spending millions to kill, those “10 reasons” seem far more important. Read them closely, not as some short-term critique, but for the long-term historical consequences, not their impact on your retirement but the impact on future generations of Americans …

Mr. President: We know that the future—seen through a broader historical lens—will reveal a natural cycle with you cast in the predictable scene of a Shakespearean-style plot driven by fate, the same dramatic destiny of all great nations and civilizations. We know a “Happy Conspiracy” of Wall Street, Corporate CEOs and the Forbes 400 controls Washington, limiting and manipulating you. Shakespeare says: “All the world’s a stage, and all the men and women merely players. They have their exits and their entrances.” As this past year unfolded it became painfully obvious you are indeed playing a role in a historic drama, along with other leaders in a staged, life-cycle, endgame that includes Presidents Reagan, Clinton and the Bushes, Fed Chairmen Greenspan and Bernanke, and Wall Street’s bosses Paulson and his “Fat Cat” banker buddies. The final scene of this historic Shakespearean drama is playing out this very moment, with 10 improvisational plot points driving your character’s role:

1. Failing to grasp John Adams’ warning: All democracies “commit suicide”
“Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide:” Yes John Adams, a great American president made that famous prediction at the beginning of our great nation. And yet, paradoxically, when a democracy commits suicide, it also kills off the very capitalism that made it powerful, the economic system Adam Smith identified the same year our Declaration of Independence was signed. Today we are neither independent nor free, King George has been replaced by a far more powerful moneyed conspiracy that you sold out to last year.

2. Failing to sense the psychological impact of being an aging democracy
Yes, our time is up says Scottish historian Alexander Tytler, recently quoted by economist Marc Faber: “The average life span of the world’s greatest civilizations has been 200 years.” Then “once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent … overspends … costly wars … wealth inequity and social tensions increase; and society enters a secular decline.” We’re on ‘suicide watch,’ acting out the final scenes President Adams predicted for democracy, as Wall Street murders capitalism. (more)

Double Dip? Great Depression II? Game Over. Bye-Bye Bull. Crash Dead Ahead. Sell. Get liquid. Now. Dow’s “Slam Dunking” Below 6470 (Again!)

by Paul B Farrell, JD, PhD

| Discuss | Print | 7/4/2010

“This game’s in the refrigerator! The door’s closed, the lights are out, the eggs are cooling, the butter’s getting hard, and the Jell-O is jiggling …” That was legendary Lakers’ radio announcer Chick Hearn’s signature way of calling a game early, telling fans the home team won … you can head for the exits before the final buzzer. Chick wrote the book with popular sports phrases like “slam dunk,” “airball,” “charity stripe,” and a “bunny hop in the pea patch” for a traveling violation.

Chick’s our inspiration today: March 2009 I wrote “6 reasons we’re calling a bottom and a new bull.” We scored a bullseye. It was a great run. Net gains over 50% in 2009. Now it’s time for a new call: “Game over, head for the exits.” Bears trashing bulls.

No, no, “it’s a buying opportunity,” says another legend, hedge fund manager, Barton Biggs. Buying opportunity? For who? Remember, Biggs isn’t advising Joe Lunchbox about what to do with his little 401(k). Biggs’ customers are mega-millionaires in his $1.5 billion Traxis Partners Fund. Main Street investors like Joe are prey in his casino. Read on, you decide: As you stare from high up in the nose-bleed bleachers watching the game, staring at a Dow that not long ago was above 11,000 and heading for 12,000. Now the Dow’s sitting on the bench, ready for the showers, weak after a couple airballs around 10,000. No more timeouts. “This game’s in the refrigerator.”

How bad is your bookie’s point spread in this game? A blowout? Will the Dow drop below 9,000 again? Now that it’s broken technical supports, will it drop below 6470, where the last bull rally started in early 2009? Can you handle the nerve-racking volatility generated by Wall Street’s high-frequency traders playing the game at warp-speed with algorithms making thousands of micro-bets in milliseconds, betting billions daily? So who should you listen to? Barton and I arrived at Morgan Stanley about the same time. He stayed decades longer, became one of the world’s leading strategists, advising the kind of high-rollers who also bet at private tables in a Vegas casino.

You remember Biggs: In his book Wealth, War & Wisdom he advises his high rollers to prepare for a “breakdown of the civilized infrastructure.” Buy a farm: “Your safe haven must be self-sufficient and capable of growing some kind of food … It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc. Think Swiss Family Robinson.” Biggs is not advising small investors on what to do with their 401(k)s. If you’re gambling at “Wall Street’s Casino” folks, the odds-makers are betting against Biggs. It’s “game over.”

Wake up! Main Street lost 20% of your retirement last decade …
Only a fool would trust Wall Street another 10 years!
Yes, if you’re channeling Chick, here’s your “mixed metaphor” cue card: “This game’s in the refrigerator … Wall Street won (proof, Goldman’s $100 million profits trading days and Blankfein’s $68 million bonus) … Main Street’s headed for another losing streak … Congress’ lights are out … the refrigerator door’s closing on financial reforms … the lobbyists are laying some rotten eggs, poisoning capitalism … the Tea Party-of-No-No ideologies are hardening … the bull’s Jell-O is jiggling to a flatline … and this market’s going into hibernation, with the bears … run, don’t walk, to the exits, folks.”

But will Main Street exit? Will we ever learn? No. The “Wall Street Casino” makes mega-billions for insiders like Blankfein and the Goldman Conspiracy. Yet “The Casino” is still below the 2000 record of 11,722. So after accounting for inflation, Wall Street lost over 20% of Main Street’s 401(k) retirement money between 2000 and 2010. Yes, Wall Street’s a big loser the past decade. Their advice is self-serving. Period. Given their miserable track record, only a fool would bet with Wall Street. Betting odds are Wall Street will lose another 20% in the next decade from 2010-2020. Yes, today’s market is a “buying opportunity,” but only for “Wall Street Casino” insiders like Biggs, Blankfein and even low level staffers inside “The Casino.” But not for our 95 million Main Street investors, there’s more pain ahead, this market’s dropping.

Correction? New crash imminent, worse than 2008 … Great Depression II? (more)

Doomsday Conspiracy: 12 Warnings, New Global Market Meltdown: Stiglitz, Faber, Grantham, Ferguson, Taleb, Kaufman, Soros, Johnson, Biggs, Shiller

by Paul B Farrell, JD, PhD

| Discuss | Print | 6/27/2010

Test time: Take a neuroeconomic peek inside your brain’s new strategy for the “Doomsday Decade” (2010-2020), while leaving behind the “Lost Decade” (Yes “Lost” because the Dow dropped from 11,722 to 10,428 between 2000 and 2010, while Wall Street got richer wiping out 20% of your retirement money and dumping an estimated $23.7 trillion on taxpayers in the bailouts). First, check out your brain’s natural bias. Are you an …

(A) Optimist? As the new decade starts, are you an optimist who trusts Wall Street’s advice that 2010 will be a great time to buy stocks. Wall Street says the “Lost Decade” (what a great title) is now behind us. So you believe that the 60% market rally since the March 2009 bottom will continue, with at least 20% gains in 2010.

(B) Pessimist? Or, you’re distrustful, cynical and pessimistic about all predictions made by Wall Street’s bosses and pundits. You’re particularly skeptical of any and all forecasts by the “too-greedy-to-fail” bankers who stole trillions from taxpayers, the Fed and Treasury, then failed to stimulate the economy, and now pocketing mega-bailout bucks as record bonuses, just one year after we saved Wall Street from near-bankruptcy.

This is a simple test of your mindset. Betting odds say most of you will pick answer “A.” Why? America was founded by optimists. You believe that a “happy conspiracy” binds politicians, CEOs and Wall Street, making capitalism work and America a powerful nation: So you accept Wall Street’s greed, lies and thievery as the price of “free-market capitalism,” and part of America’s DNA. So you embrace “capitalism-without-morals.”

Unfortunately, optimism also blinds us to our individual and national faults: Hidden saboteurs tell us we know more than we do, have amazing skills we don’t, and are protected by divine forces against dark enemies and even our own irrational stupidity. Yes, optimism is our inner-enemy that periodically triggers trillion dollar meltdowns.

New Strategy: “Getting back to even” means new risks, more debt, gambling

True optimists are gung-ho about the future, expecting to recover losses and, as Mad Money’s Jim Cramer preaches, “get back to even” in 2010. But the problem is: No one has a clue if the market will ever “get back to even.” Quite the opposite, since Bernanke is pushing the same optimistic cheap-money fantasies that Greenspan used to create the dotcom and the subprime crashes, we can expect to see the next bubble fizzle and pop, pushing us deep into the dreaded “Great Depression 2” that the Fed and Treasury are trying to avoid by down-streaming today’s problems onto future generations.

But soon, future generations will start screaming: “The buck stops here” and revolt when the buck isn’t worth much, and they’ve lost faith in the dollar (just like China). Then the game of musical chairs will end, tragically, sadly, stupidly, unfortunately. Why? Because we failed to stop short of total disaster, failed to prepare, and it’s too late.

So to all you optimists who plan to actively invest in 2010 because you accept that America’s “capitalism-without-morals” is working in spite of Wall Street’s quasi-criminal behavior: Here’s some darkside input to factor into your investment equation for 2010 and beyond. Listen closely to the words of our 12 “Drs. Doom.” For a moment, take off your rose-colored glasses, step out of your denial, see the “Great Depression 2” dead ahead, really look at the future our “Drs. Doom” see in their “Doomsday Scenarios:”

One. Faber: The “American Empire” has peaked, is on a decline
Hong Kong economist Marc Faber says “the average life span of the world’s greatest civilizations has been 200 years … Once a society becomes successful it becomes arrogant, righteous, overconfident, corrupt, and decadent … overspends … costly wars … wealth inequity and social tensions increase; and society enters a secular decline.”

Two. Grantham: Learned nothing, doomed to repeat past, only bigger (more)

World War III: The 12-Bomb Equation, Exploding Population times Accelerating Demand minus Scarce Commodities equals New Resources Wars Everywhere!

by Paul B Farrell, JD, PhD

| Discuss | Print | 6/26/2010

So what’s the biggest time-bomb for Obama, America, capitalism, the world? No, not global warming. Not poverty. Not even peak oil. What is the absolute biggest? One like the trigger mechanism on a nuclear bomb. One that’ll throw a wrench in global economic growth, ending capitalism, even destroying modern civilization. The one that – if not solved soon – renders all efforts to solve all the other problems in the world, irrelevant, futile and virtually impossible. Yes, that one.

News flash: the “Billionaires Club” knows: Bill Gates called billionaire philanthropists to a super-secret meeting in Manhattan last May. Included: Buffett, Rockefeller, Soros, Bloomberg, Turner, Oprah and others meeting at the “home of Sir Paul Nurse, a British Nobel prize biochemist and president of the private Rockefeller University, in Manhattan,” reports John Harlow in the London TimesOnline. During an afternoon session each was “given 15 minutes to present their favourite cause. Over dinner they discussed how they might settle on an ‘umbrella cause’ that could harness their interests.”

The world’s biggest time-bomb? Overpopulation say the billionaires. Too many people! Yes, over-population is the world’s #1 problem. And yet, global governments with their $50 trillion GDP, aren’t even trying to solve the world’s “over-population problem.” G-20 leaders ignore it. So by 2050 the Earth’s population will explode by almost 50%, from 6.6 billion today to 9.3 billion says the UN. And what about those billionaires and their billions? Can they make stop the trend? Sadly no. Only a major crisis, a global catastrophe, a collapse beyond anything prior in world history will do it. Here’s why.

Civilizations collapse fast, crises trigger, leaders clueless

“One of the disturbing facts of history is that so many civilizations collapse,” warns Jared Diamond, an environmental biologist, Pulitzer prizewinner and author of Collapse: How Societies Choose to Fail or Succeed. Many “civilizations share a sharp curve of decline. Indeed, a society’s demise may begin only a decade or two after it reaches its peak population, wealth and power.” Other voices are darker, shrill: “We’re past the point of no return.” “It’s already too late.” “The end is near.” As with Rome’s collapse, it happens fast. Clueless leaders are caught off-guard, like Greenspan, Bernanke and Paulson a couple years ago.

Call it “WWIII—the Population Wars.” A few years ago Fortune analyzed a classified Pentagon report predicting that “climate could change radically and fast. That would be the mother of all national security issues” Population unrest would then create “massive droughts, turning farmland into dust bowls and forests to ashes.” And “by 2020 there is little doubt that something drastic is happening … an old pattern could emerge; warfare defining human life.” War will be the end-game: For capitalism, civilization, earth?

Diamond’s 12-part equation is very simple, fits perfectly with a global warfare scenario: “More people require more food, space, water, energy, and other resources … There is a long built-in momentum to human population growth called the ‘demographic bulge’ with a disproportionate number of children and young reproductive-age people.” And if the “bulge” stops for any reason, game over. Economic “growth” ends, killing capitalism.

So look closely: Diamond’s equation has 12 time-bombs. But note, the first two are the biggest triggers in the formula. The other 10 are derivative variables driving what we call the “WWIII-Population Wars” equation. We’ve expanded on Diamond’s source data.

One. “WWIII-Population Wars:” the “Over-Population Multiplier”

According to TimesOnline: A few months before the billionaires meeting Gates noted: “Official [UN] projections say the world’s population will peak at 9.3 billion [up from 6.6 billion today] but with charitable initiatives, such as better reproductive healthcare, we think we can cap that at 8.3 billion.” Still, that’s 23% more than today’s 6.6 billion.

Can it be stopped? In a recent special issue of Scientific American, population was called “the most overlooked and essential strategy for achieving long-term balance with the environment.” Why? Population’s the new “third-rail” for politicians. So they ignore it. Yet, if all nations consumed resources at the same rate as America, we’d need six Earths to survive. Unfortunately that scenario is unstoppable. Because by 2050, while America’s population grows from 300 million to a mere 400 million, the rest of the world will explode from 6.3 billion to 8.9 billion, with over 1.4 billion each in China and India.

Two. “WWIII-Population Wars” equation: “Population Impact Multiplier” (more)

Oliver Stone’s New ‘Wall Street’ Film: Market-Timing Signal for ‘Crash of 2010?’ Or the ‘Death of America’s Soul?’ Michael Lewis Discovers Both for Vanity Fair

by Paul B Farrell, JD, PhD

| Discuss | Print | 6/17/2010

Yes, Oliver Stone is suddenly America’s hottest market timer, as well as the voice of the inner “American Soul,” warning investors of a collapse. Remember the Crash of 1987? One-day 23% drop. Happened just before his 1987 “Wall Street” film hit the theaters. He says he can’t predict the future. Don’t believe him: Even if he’s unaware of his “source,” it’s stirring again, rising from deep in what Carl Jung would call the “collective unconscious” of the “American Soul,” warning us again of a collapse, using Stone as a stock trader’s “alert.”

Wake up Wall Street!
This film’s your biggest market timing signal of 2010!
Seriously, why now? Why after 23 years, did Stone decide to update the message of his famous 1987 “Wall Street.” Great question: The interviewer was Michael Lewis, former Salomon trader, author of Liar’s Poker, a guy who understands Wall Street’s soul.

Stone’s answer is in “Greed Never Left,” Lewis’ Vanity Fair review of Stone’s new movie, “Wall Street: Money Never Sleeps.” Stone had to think about it: “Why did I go back?” Why? “Because it’s important. It’s the collapse of capitalism and the collapse of our society. It is. Our way of life is going to change.”

The “collapse of capitalism?” Yes, Stone’s predicting the “collapse of capitalism.” Not just a stock market crash, the “collapse of capitalism.” He’s predicting the “collapse of our society.” Worse, Stone’s predicting: “Our way of life is going to change.” Is this really a market timing signal? Hey, it was in 1987. Will history repeat? The odds say yes.

Remember Stone’s predictions when you see the sequel, “Wall Street: Money Never Sleeps.” Lewis says Stone’s goal is not just to entertain you for a couple hours then send you back home to continue denying everything Wall Street’s fat-cat bankers, the real Gordon Gekkos, are doing every day to destroy capitalism, destroy democracy, destroy your retirement portfolio … no, Oliver Stone, the All-American filmmaker of Born on the Fourth of July, Platoon, JFK, Nixon, W, World Trade Center has a message … wake up America, you’re sleepwalking.

Wake up? America is unprepared for the coming disaster
Stone’s message is clear and powerful: You’re ignoring the coming collapse of capitalism … of our society … collapse of America. We are ignoring the end of our experiment in democracy. We are unprepared … “our way of life is going to change.” Wake up.

Unfortunately, Stone’s voice will likely be as ineffective in 2010 as in 1987. Few listen. Since the first film we’ve had bigger bubbles, bigger busts. Remember the Asian-Russian crises of 1997-98? Dotcoms in 2000? Subprime meltdown of 2007-08? “Oliver Stone’s 1987 Wall Street succeeded brilliantly in capturing a culture,” says Lewis, “and failed miserably as a call for change. To the director’s dismay, thousands of financial hotshots dreamed of becoming Gordon Gekko.” It was like a recruiting poster for terrorists. Why? (more)

Buffett Resign? Yes, Credibility Shot Defending Rating Agencies. Massive Conflicts in “Too-Greedy-Too-Fail” Stock in Moodys & “Goldman Conspiracy!”

by Paul B Farrell, JD, PhD

| Discuss | Print | 6/16/2010

Yes, he should resign, probably won’t. But something’s definitely wrong with his defense of the credit rating agencies, especially since his 20% ownership in Moody’s is a clear conflict of interest that taints his credibility. Reuter’s Felix Salmon says Buffett’s testimony before the Federal Crisis Inquiry Commission was a “PR Disaster.” Buffett claimed he made “a mistake like virtually everyone in the country made.” Wrong, ol’ Uncle Warren is not like “everyone else.” Worse, he should have been in there with all the other leading critics who between 2000 and 2007 were warning of a subprime credit meltdown coming. See my June 2008 summary of those warnings: “20 reasons new megabubble pops in 2011: Greed blinded us to subprime meltdown, it’ll blind us next time too.”

That’s why ol’ Uncle Warren’s defense of the credit rating agencies is so unAmerican, lacking true leadership character. Here’s the diagnosis I made of his problems when he was defending Moodys, Goldman and the rest of the corrupt Wall Street banks earlier in my MarketWatch column: ”Buffett defends Goldman, joins Greed Conspiracy: Uncle Warren strums ukulele, in denial of Wall Street’s toxic business model.” A few key points: Ol’ Uncle Warren has a bad case of denial. Remember, not too long ago Buffett was calling derivatives “weapons of financial mass destruction.” And yet, there he was on stage at his Berkshire shareholders annual love-fest defending Wall Street’s most toxic companies, trapped in denial, defending the greedy culture that got America into its current mess:

Praising Moody’s “business mode,” and by inference all rating agencies that rubberstamped Wall Street’s toxic debt, setting up the last meltdown …
Defending Goldman Sachs bad behavior despite the fraud suit and a possible criminal indictment (while hiding his own conflicts-of-interest as a big investor in both Moody’s and Goldman) …
Praising Goldman’s CEO Blankfein, Wall Street’s greediest fat-cat banker who paid himself $68 million of his stockholders profits last year …
Defending Goldman with a bizarre argument that Goldman is no more guilty than the other Wall Street banks, a tacit approval of the bad behavior of all Wall Street banks in the Goldman Conspiracy …
Worse, ol’ Uncle Warren also tried deflecting attention from Wall Street’s corrupt business model by blaming government regulators for the meltdown, another example of Uncle Warren’s blind denial, ignoring the fact that in the past year Wall Street spent over $400 million on lobbyists and campaign cash to make absolutely certain regulators, Congress and the Obama team all played along with Buffett’s songs that guarantee Wall Street controls Washington regulators.
Ironically, all this comes from a man who once lectured Congress on “Moral Integrity: I want employees to ask themselves whether they are willing to have any contemplated act appear on the front page of their local paper the next day, read by their spouses, children, and friends … Lose money for my firm and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.”

Yes, Buffett’s in denial … just like his banker buddies … like his friends in Obama’s White House … so short Buffett, short Baby Berkshire, short Goldman, short Moody’s. Why? Because they’re all “shorting America” piling on debt that’s pushed our debt-to-GDP ratio to 92%, past the IMF’s 90% danger zone. (more) Sorry Uncle Warren, but your credibility is shot, maybe you should resign.