Best Spill Your Guts, Guy

         The Swiss Parliament is expected to approve a decision to allow that nation’s banks to cooperate with U.S. tax investigators going after secret bank accounts held by U.S. citizens, and knowledgeable sources inform us that you will be nailed with confiscatory penalties of 50% per year if outed before telling the IRS all about it.  That’s half of your total secreted assets each and every year you had them stashed away in Switzerland.

         Subscribers will note that this over-the-top calculation comes to 1,000% of hidden family wealth for every twenty years you and the old man have been screwing with the tax code.

         Turning yourself in will bring a one-time fine ranging from 5% to 27.5%, depending on how much we’re talking about here, making what to do now a genuine no-brainer, even for you.

         Thing is, U. S. prosecutors just got done shutting down Wegelin, the oldest bank in Switzerland, by getting some high stakes lowlifes there to plead guilty to aiding tax evasion, and our G-men are planning to do the same to the entire Swiss banking system, one sniveling Shylock at a time if necessary.

         Valued subscriber, it’s time to save your sorry a$$.

European Travel Advisory

         The likelihood of jihad breaking out in England and/or France, ratcheted up by last week's public beheading of a British soldier and stabbing of a French soldier, has reached the point where we recommend monitoring the situation through The Guardian and The Local at the following websites:

http://www.guardiannews.com
http://www.thelocal.fr

         Civilians in these countries are not provided with weaponry needed to mount a proper defense against armed ragheads, and the MacDougal Post would advise American tourists traveling in these countries to sample the local cutlery immediately upon arrival and at least carry a good carbon stainless steel cleaver, maybe a chef's knife, with them at all times.  Or you could just stay at home with your guns, and use that airplane fare to buy more ammo.

The Quantitative Easing Scam

         Quantitative Easing (QE) refers to Washington’s abhorrent policy of rigging prices in the credit markets by selling bonds to itself.  One arm of the Federal Government, the Treasury Department, credits these securities to its books, while another arm, the Federal Reserve Bank, debits the same paper in its records, transactions that cancel themselves out in arriving at parent company financial statements.  QE lets Washington print oodles of money and crush interest rates at the same time, allowing our failed government to keep running without facing free market rates on the huge debt they amassed by fighting two Republican wars while providing lavish social benefits to Democratic voters at the same time.  QE is paid for by investors who are forced to allocate way too much of their savings to the stock market because they can’t live off the paltry sums Treasuries offer today.  This house of cards will tumble down at some point in the future, but whether or not the inevitable catastrophe will reach the horrific depths of the recent Global Financial Apocalypse is still uncertain.

         Lately we’ve been reading drivel that QE is a stab at trickle down economics, trying to use stock market gains to spark a recovery.  That’s a total crock.  QE is cynical politics at its most despicable, a delaying action designed to keep failed politicians in power by screwing you and me.

         Stop voting for incumbents, we beg of you.  All of them, especially those in what you think of as your own party.  It isn't, and they don’t represent you.  Crooks in the Republican Wing of the Plutocratic Party and crooks in the Democratic Wing of the Plutocratic Party are just telling voters what voters want to hear while Washington enjoys huge paydays from the 1% who own it.

Housing Recovery

         A disturbing report out of Phoenix informs us that "Wall Street" has been bidding up the price of abandoned homes across the country, reducing supply by 25-50% while using methods that bully potential homeowners out of the market.  “Investors” have been showing up with cash, offering quotes above asking prices, effectively taking new listings off the market before buyers who have to borrow can get their loan paperwork in – and PRICING EVERYONE ELSE OUT OF THE MARKET.  Housing stocks in former bubblicious metro areas like San Diego, Sacramento, Los Angeles, and Las Vegas have been similarly beset by the crime families.

         Subscribers, it’s all “stock option” money sunk into hedge funds and them.  Our stolen savings will never be deployed to benefit the American economy, only to fuel reckless speculations of the nation's corporate elites, thieving b$st$rds who are taking this country down.

         Every day their wealth and power grows exponentially, and nobody gives a sh!t but Macdougal, so the band just marches on.

Negative Deposit Rates

       Today’s news that the European Central Bank (ECB) may lower its Deposit Rate into negative territory struck us as Hooverian, basically insane in the Post-Financial Apocalyptic Period.  Readers will recall that deflationary policies wrought upon our country’s economy by Herbert Hoover’s administration just made the Great Depression worse until his successor, Franklin Delano Roosevelt, turned that catastrophe around by doing the exact opposite thing – inflating business activity back to health.  We rushed to the blogs to see if anyone could explain exactly WTF is going on with this one.

       Apparently, the Deposit Rate is the interest rate the ECB pays on funds deposited with it by the commercial banks you and I would have accounts with if we lived on the Continent, which is growing increasingly unlikely by the moment as our subscribers read this, we’re sure.  Dropping the Deposit Rate below zero means our banks would receive 1) no interest and 2) less money back than they put in.

       With a negative 1% interest rate therefore, a commercial bank making a 100 million Euro deposit at the ECB would receive 99 million Euros at the annualized end of whatever time period they’re talking about.

       The blogs say there is no historical precedent for this at the central bank level.  There, charging rates less than zero has never been done by anybody anywhere at any time.  The idea does have one thing going for it anyway.  The logic appears to be unfettered by any known economic theory yet devised by man: taking money away from banks will encourage them to remove their ECB deposits and make loans with that freed-up money.

       Assuming that European loan officers are not lending money today because they’re worried about getting it back, credit practices we’re familiar with would give bankers a fascinating choice:  do we make bad loans to customers or bad deposits to our central bank?

       Does anyone else see a bank failure issue here, or is it just us?

Floating Rate Treasuries

        Washington doesn’t want to see our economy gain steam.  Given the outsized National Debt, their outsized National Debt, a healthy bump up in Gross Domestic Product would trigger inflation, which only means one thing to officialdom: free-market interest payments on Treasuries.

         See, along with a coterie of central bank profligates in the ethics-challenged world of sovereign finance, Ben Bananas over at the Fed has been gaming interest rates to hold dollar payments on Treasury securities down to comically manageable levels, comical to anyone who isn’t living off retirement savings anyway.  Should the G-Men have to pay out amounts that would entice us to hold their perilous paper, Washington couldn’t cover the tab without printing oodles and oodles of play money for many insolvent years to come.

         Everyone knows this.  That’s why nobody wants to buy their stupid Treasury Bonds, Notes, Bills, and Whatevers, including Agencies and Quasi-Agencies and anything else they’ve got.  By law, some financial institutions have to.  Basically nobody else in his/her right mind will take on the risk associated with financing the United States Government at Ben Bananas’ rigged prices, hence he and the other sovereigns are gobbling them up en masse in order to push dysfunctional governance issues off the front page and keep our failed Washington politicians in office.

         Economic growth would disrupt the whole stinking charade, but we’ve started to see glimmers of just that lately, so much so that the Feds seem to have swung into damage control mode this past weekend, scrambling frantically to cover their budget-busting fannies.

         Feds sent up a pathetic trial balloon: floating rate Treasuries.  Morons think we’ll want to buy floating rate Treasuries if the economy heats up.  See, that way, they’d offer to raise and lower your interest payments to keep pace with changing market interest rates when the inflation mess hits the fan.

         Sound like a winner?  Well, here are the numbers behind this particularly ill-advised scam …..

         Lets say come January you buy a million dollars worth of floating rate Treasuries.  Perceived inflation has jumped to 5% a year, and you’re getting paid 6.25% interest. This would seem to cover rising prices and then some, wouldn’t it?

         Fact is, in order to keep up with perceived inflation, you’d have to add that 5% to principal, making the concept unworkable for most, if not all, individual investors.  On a million bucks, 6.25% garners $62,500 a year.  Reinvesting 5%, which is $50,000, only leaves you with $12,500 to 1) pay income taxes with (on that $62,500) and then 2) live on.

         Spending the whole $62,500, which is what really happens with most people, 20 years of 5% inflation would mean your annual income has to rise to $126,348 after two decades just to maintain your beginning cost of living.  Since you’re not reinvesting anything, your annual income bears no relationship whatever to the impact of rising prices.  In fact, if your stupid floating rate Treasury was still factoring in a 5% inflation factor and the same real rate of interest, your annual income from this bright idea would remain at $62,500 after 20 years, a total train wreck, to be sure.

         With floating rate Treasuries, these b$st$rds are asking you and me to foot the bill for their National Debt by letting them erode the purchasing power of our savings.  We don't know what you folks think of that, but to us it's just one more reason why all these cashsucking Washington politicians belong in jail.  That's right, all of them.  From Sambo on down.

         Day comes when these things get hyped and issued, pleeeeeeeeeeze, valued subscribers, don’t buy them unless you stick the entire inflationary factor back into the wealth management account.  All of it.  Every single dime.

         Even then, that inflation assumption is going to be calculated by, guess who?  The same thieving pickpockets who bring us our cost of living adjustments? 

         Yup.  The very same.  Government “statisticians” who’re now chipping away at your hard-earned social security benefit every single month of our allegedly Golden Years.  Do you really want to trust these lowlifes with more of your income from now on.  If so, jump into floating rate Treasuries and let the “statistical” games there begin.

         Forget floating rate Treasuries.  Make Washington pay for their own mistakes, not you and me.  Vote the incompetent politicians out, keep your dough in the widest of wide-moat, blue chip equities, and, for God’s sake, subscribers, hang on tight.

         The safest income stream money can buy, that’s where real investors bury their wherewithal amidst all the make-believe “opportunities” financial predators are offering their naive counterparties in the rigged-market, sell-side derivatives fantasyland of today.  On the near banks of the widest of those legendary wide moats.