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There's a New Sheriff in Town

bi·o·met·rics [bahy-uh-me-triks]

noun ( used with a singular verb )

The process by which a person's unique physical and other traits are detected and recorded by an electronic device or system as a means of confirming identity: Scanning of the human iris is a reliable form of biometrics.

         Apparently technology isn’t finished driving chronic un/underemployment to previously uncharted heights.  Whether it’s digital currency eliminating tellers entirely or branch lending officers getting replaced by holographic images of home office personnel who can interact with customers anywhere without needing to be physically present at the interview, it’s starting to look like commercial banking will someday be conducted in your town without using any employees at all.

         As for biometrics, that game-changer is looming like a force that’s too big to be stopped, even by Bill of Rights jocks.  Having a means to make sure you are really who you purport to be, pops up as the ultimate crime stopper in so many areas of life, the rosiest projections have us filling our prisons with all the right people for once – if someone can figure out how to put the right sensors in the right places at the right times.

         That part considered, biometrics seems like a pretty good idea to us.  While we’re at it, putting the criminal out of work too.  Definitely the way to go.

The Shadow Banking Bugaboo and Counterparty Risk

         Cockamamie spin doctors have come to apply the term "shadow banking" to financial operations conducted in this country with funds garnered outside our Federal Reserve System (Fed) and the public credit markets.  By definition then, almost all shylocking taking place prior to 1913 got hidden in these shadows, wherever they are, so we’ve never been quite certain what to make of the silly concept.  1913, of course, was the year the Fed got foisted on a brain-dead electorate by higgledy-piggledy Washington power-mongers.

         Our best guess is that nail-biting bureaucrats, threatened by stuff going on that they don’t even know about, let alone try to regulate, have to invent catchy hooks to make sensible flights away from Big Government sound really, really onerous, and “shadow banking” seemed sinister enough for this one. 

         Anyway, near as anybody around here can tell, what’s left after you take out “sunlit banking”, our term for what today's moneylending regulators do manage to wrap their arms around, is a proud, centuries-old tradition carried on by what used to be known as “private banks”, a staid arena crammed chock full of conservative institutions that politically correct troublemakers are now spinning as “non-banks”.  Really.  We kid you not.  Non-banks because they don’t take, what are these days, %$#&ing Government handouts to keep %$#&ing bought and paid-for politicians in %$#&ing office.

         The Orwellian nature of this nonsensical assault on private enterprise is mind-numbing.  Do we actually live in a world where the morons who still can’t figure out how to throw bank CEO’s in jail for destroying the civilized world and Iceland half a decade ago are to be given something else to %$#& up?

         Valued subscribers, despite all the jibber-jabber about these practices, in 2013, shadow banking isn’t even the point.  The paper instrument is.  Nowadays, with a traditional portfolio consisting of common or preferred stock, U.S. Government, municipal, or corporate bonds, claims on physical assets like gold or silver, and such, you hold stuff that at least represents a binding legal ownership interest in what it purports to be.  Dally in options, futures, swaps, and/or God knows what, the arenas where all that nefarious shadow banking is said to take place, and you’ve got yourself a side bet with some unknown entity through what amounts to a casino, and any successful outcome therefrom is solely and totally dependent upon that party’s ability and desire to pay you off if you win and he/she/it loses.

         That’s counterparty risk, folks, and the investing public didn’t know this threat even existed until Lehman went under and AIG turned up insolvent and Washington had to find some way of keeping afloat every too-big-to-fail counterparty those gamblers had booked bets with, (well, everyone favored by Washington at the time, which is how Lehman got thrown under the bus,) or let the world financial system collapse under the weight of all those he/she/its stripped of the ability and desire to pay anybody off.

         But hold on here.  There’s more.  Even with a traditional portfolio in 2013, you’ve got a problem if your investments are held by a Crime Family, and whose investments aren’t?  The U.S. Government only insures the first $500 thou of securities in your account.  Private insurance covering amounts over $500 thou, offered by the Family’s insurer, will be subject to, guess what, counterparty risk, that insurer thence becoming your counterparty, and in another financial apocalypse, with Washington saying they’re going to let financial institutions just go ahead and fail now, you would do well to think about opening separate accounts with other Crime Families for every $500 thou you’ve got and spread your stash around that way to rely totally on the portfolio insurance offered by Uncle Sam and his magical ability to pay off anybody and everybody simply by printing up the cash.

          Invest traditionally and stick it in $500 thou accounts to obviate counterparty risk, and you should keep the shadow banking bugaboo at bay. 

Perpetuating Obscene Wealth

         And this, the family that helped destroy blue-collar America with the made-in-China explosion:

http://finance.yahoo.com/news/wal-marts-waltons-maintain-billionaire-040100941.html

The War against Jesus Raging in Egypt

         What's up with political concern over Muslim killing Muslim with whatever they want?  Where's Washington when Christianity comes under attack?

http://www.foxnews.com/world/2013/09/06/islamist-takeover-south-egypt-town-leaves-christians-in-fear/

The Curious Case of Communist China

          The People’s Republic of China (PRC), a single-party state run by the Communist Party, was established by Mao Zedong in 1949.  Through late 1978 it sported your prototypical Soviet-style centrally planned economy.  Since then the PRC has adopted a policy dubbed “state capitalism”, privatizing farmland and creating special economic zones for private enterprise outside “pillar” sectors like energy and heavy industry, owner-managed by the Party, and the Commies have brought private operating capital in from outside China, mostly through one-sided partnerships placing the Party in majority control of those enterprises.

         Media reports claim that Western technology is stolen this way and then transferred to Chinese-owned competitors, which soon dominate the domestic market and compete effectively against the original “partner” throughout the globe.  Furthermore, China is known as 1) the world’s Number One manufacturer of counterfeit goods, 2) a predatory manipulator of foreign exchange rates, and 3) the leading provider of the kind of scab labor that destroyed the demand side of the American economy through the loss of “outsourced” blue collar jobs.

         On top of all this, good old American stupidity has made the PRC one of this nation’s largest creditors, and now, we’re recently told, mobs of Communist functionaries have been flocking to these shores snagging upscale homes at distress prices with the exchange rate-rigged money we’ve been squandering over there amidst the flat-out destruction of our own Middle Class.

         Common stock in Chinese corporations has been sold to private investors, including US citizens, who’ve been buying into whatever is going on here, as nobody owns up to the blatantly abusive nature of this relationship.  Macro statistics supplied by the PRC indicate the Chinese economy grew by 10.5% from 2001 to 2010, but exactly what was growing isn’t at all clear, nor what part of that could possibly be owned by anybody other than the Communist Party, and this claimed success story has not filtered down to the Chinese stock market at all.  Apparently there are empty cities over there, if our own media is to be taken seriously, and populations get shifted en masse for the benefit of Western photographers documenting Chinese progress.  Maybe that has something to do with the growth/stock market disconnect.

         Years ago, a savvy B-school professor convinced us that a huge part of what you’re getting when you invest American is this magnificent legal infrastructure of ours and everything it means for the protection of your financial interests.

         Play the PRC market, and, clearly, what you’re dealing with is a lawless Commie house of cards.