Saturday, June 26, 2010
Tuesday, June 22, 2010
The Final Bubble
The Final Bubble
In our era we had the stock market crash of 1987, the Dot com bubble in the 90’s, the Real Estate bubble and the stock market bubble of 2007. Now we are facing the final, and perhaps the most traumatic bubble, the mother of all financial bubbles…..the bubble in the U.S. treasury market.
Where the Dot com bubble and the stock market bubbles effected stock investors, and the Real Estate bubble effected the middle and upper class the final bubble, the U.S. treasury bubble will be the one that engulfs our economy and society, leaving vast devastation in its wake.
That might sound like a wild claim, but it is important to think through all the ramifications of this and the ripple effects on our economy, our society and the world at large.
Right now, as of June, 2010 the U.S. government owes 14 Trillion dollars in U.S. Treasury securities. This is the "published" national debt. But in addition ther are "off the books" debts. The U.S. government is liable for a large quantity of Fannie Mae, Freddie Mac and Ginnie Mae securities plus the liability for the future expenses of social security, medicare and medicaid. In addition the Federal government has an estimated 2 Trillion dollars of liablities in the coverage of bank failures under FDIC insurance. The grand total of the actual federal debt, including all of these “off the books” liabilities are estimated to be around $61 Trillion dollars.
Due to the economic downturn that was started by the Real Estate crash and the financial meltdown that took place in 2008 the Federal Reserve entered the financial market, at that time, in an extreme way in an attempt to rescue the economy. On the Federal Reserve balance sheet they now own $5.259 trillion dollars worth of U.S. Treasury Bonds and Bills. Just for perspective just prior to the crash the Federal Reserve owned less than one Trillion dollars worth of Bonds and Bills. Right now the Federal Reserve is the single largest holder of U.S. debt, with private investor, brokerage houses, investment banks coming in second $1.193 trillion, China coming in third (900 billion). Japan is fourth with 795 billion, mutual funds hold $663 billion, state and local government $531 billion, U.S. pension funds $513 billion, the United Kingdom $321 billion.
The U.S. government is in a unique position in that it can create money out of thin air. The Federal Reserve did not have to raise taxes to come up with the four Trillion dollars in new U.S. debt purchases it made recently. Instead it just gave the U.S. treasury a credit in their account and literally the money was created…..out of thin air. This flood of new U.S. dollars into the economy during any other time in the past 40 years would have created an instant massive boost to inflation…..but because the economy is so depressed the effect, for now has been muted.
In response to the fear and mounting losses in the U.S. stock market and the U.S. real estate market private investors, retirees, hedge funds, mutual funds, and pension funds have all frantically entered the U.S. treasury market. Since the stock market crash of 2008 close to 480 billion dollars has fled the stock market and the same amount of money has entered the U.S. treasury market with the idea that their money would be safe.
What many private citizens don’t seem to realize is that the bond market can be subject to the same turmoil that has roiled the stock and real estate markets. While the federal government can print or create new dollars, that expansion of the money supply, will, over time create intense inflationary pressures. In times of crisis the Federal Reserve can print or create new dollars to solve the immediate problem of liquidity, the problem comes when the crisis passes. As the economy recovers those new dollars will, if not withdrawn from the market devalue the value of money itself, or in other words create inflation.
Even if some miracle could occur and through magic the Federal Reserve could keep inflation under control the bottom line is that the rapidly expanding federal debt creates a problem in itself, the mounting cost of the interest on the debt.
Right now the Federal government is financing most of its borrowing needs by selling short term U.S. treasury bills, with terms ranging from one month to two years. At present, the interest rate on these short term loans is low, however if interest rates should rise then when these short term loans are refinanced the new interest rate could be considerably higher.
At the current spending and borrowing rate of the federal government we are adding at least one trillion dollars worth of new debt each year far into the forseeable future. If interest rates should rise that amount of new indebtedness would rise as well, since we are, in effect using the Visa card to pay minimum payments on the American Express.
In the news over the past week the Federal Reserve has begun putting out feelers on ways to try to recapture some of the vast quantity of new dollars it has created, in order to reduce any future inflation in the economy. If the Federal Reserve withdrawals liquidity too soon from the money supply or too rapidly the economy could go into another nose dive. If the Fed waits too long inflation could begin to rapidly accelerate.
Since the gimmicks we are currently using to manipulate the economy are very similar to the gimmicks used by South American countries in the 1970’s to stimulate their economy, and continue to win elections, it might be useful to look at their experience.
The initial reaction of their economies to massive borrowing and a flood of new currency was initially positive. The Latin American economies experienced a surge of economic activity. Business started or expanded, new employees were hired and the surge of new currency created waves of spending and investing. However these artificial stimulations to the economy wore off quickly and inflation quickly began to appear. In Latin America those counties borrowed even more heavily, printed money more rapidly and continued spending quite freely. In response the inflation rate continued to accelerate until it hit inflation rates of over 20%, then 30% then 50% then 100%. Governments continued to print money, float bonds and spend. To do otherwise would have provoked a coup or even a revolution. Inflation rates exploded in some countries reaching over 1,000% a year. Governments defaulted on their loans. International banks refused to continue lending to South and Central American governments. Liquidity dried up and the economies of those countries collapsed.
In reading this you might think, “This can’t happen here”, but it can. Right now the U.S. government has relatively good credit, but our spending habits, funded by high amount of borrowing using short terms Treasury Bills cannot continue for much longer. The U.S. government may be powerful, but the financial markets are bigger and more powerful. Retirees and pension funds that are lending money to the federal government for less then ½ of 1 percent are barely getting any compensation for what could turn out to be a very risky investment. Many are invested in bond mutual funds. With a bond mutual fund there is no expiration date on the bonds. If the bonds decline in value the bond fund declines in value. In a bond fund you cannot hold the bonds to maturity.
Many company retirement programs offer two choices: a stock fund or a long term bond fund. Right now both are lottery tickets, which may or may not pay out.
The Federal Reserve has made it very clear over the last week that interest rates must eventually go higher and the flood of new dollars that it created must be brought back under control, whether that is next week or next year is uncertain, but rates must increase.
The sad part is that those retirees, pension funds and private investors who fled the risky real estate market and dangerous stock market may have accidently stumbled into a market that is equally dangerous.
In our era we had the stock market crash of 1987, the Dot com bubble in the 90’s, the Real Estate bubble and the stock market bubble of 2007. Now we are facing the final, and perhaps the most traumatic bubble, the mother of all financial bubbles…..the bubble in the U.S. treasury market.
Where the Dot com bubble and the stock market bubbles effected stock investors, and the Real Estate bubble effected the middle and upper class the final bubble, the U.S. treasury bubble will be the one that engulfs our economy and society, leaving vast devastation in its wake.
That might sound like a wild claim, but it is important to think through all the ramifications of this and the ripple effects on our economy, our society and the world at large.
Right now, as of June, 2010 the U.S. government owes 14 Trillion dollars in U.S. Treasury securities. This is the "published" national debt. But in addition ther are "off the books" debts. The U.S. government is liable for a large quantity of Fannie Mae, Freddie Mac and Ginnie Mae securities plus the liability for the future expenses of social security, medicare and medicaid. In addition the Federal government has an estimated 2 Trillion dollars of liablities in the coverage of bank failures under FDIC insurance. The grand total of the actual federal debt, including all of these “off the books” liabilities are estimated to be around $61 Trillion dollars.
Due to the economic downturn that was started by the Real Estate crash and the financial meltdown that took place in 2008 the Federal Reserve entered the financial market, at that time, in an extreme way in an attempt to rescue the economy. On the Federal Reserve balance sheet they now own $5.259 trillion dollars worth of U.S. Treasury Bonds and Bills. Just for perspective just prior to the crash the Federal Reserve owned less than one Trillion dollars worth of Bonds and Bills. Right now the Federal Reserve is the single largest holder of U.S. debt, with private investor, brokerage houses, investment banks coming in second $1.193 trillion, China coming in third (900 billion). Japan is fourth with 795 billion, mutual funds hold $663 billion, state and local government $531 billion, U.S. pension funds $513 billion, the United Kingdom $321 billion.
The U.S. government is in a unique position in that it can create money out of thin air. The Federal Reserve did not have to raise taxes to come up with the four Trillion dollars in new U.S. debt purchases it made recently. Instead it just gave the U.S. treasury a credit in their account and literally the money was created…..out of thin air. This flood of new U.S. dollars into the economy during any other time in the past 40 years would have created an instant massive boost to inflation…..but because the economy is so depressed the effect, for now has been muted.
In response to the fear and mounting losses in the U.S. stock market and the U.S. real estate market private investors, retirees, hedge funds, mutual funds, and pension funds have all frantically entered the U.S. treasury market. Since the stock market crash of 2008 close to 480 billion dollars has fled the stock market and the same amount of money has entered the U.S. treasury market with the idea that their money would be safe.
What many private citizens don’t seem to realize is that the bond market can be subject to the same turmoil that has roiled the stock and real estate markets. While the federal government can print or create new dollars, that expansion of the money supply, will, over time create intense inflationary pressures. In times of crisis the Federal Reserve can print or create new dollars to solve the immediate problem of liquidity, the problem comes when the crisis passes. As the economy recovers those new dollars will, if not withdrawn from the market devalue the value of money itself, or in other words create inflation.
Even if some miracle could occur and through magic the Federal Reserve could keep inflation under control the bottom line is that the rapidly expanding federal debt creates a problem in itself, the mounting cost of the interest on the debt.
Right now the Federal government is financing most of its borrowing needs by selling short term U.S. treasury bills, with terms ranging from one month to two years. At present, the interest rate on these short term loans is low, however if interest rates should rise then when these short term loans are refinanced the new interest rate could be considerably higher.
At the current spending and borrowing rate of the federal government we are adding at least one trillion dollars worth of new debt each year far into the forseeable future. If interest rates should rise that amount of new indebtedness would rise as well, since we are, in effect using the Visa card to pay minimum payments on the American Express.
In the news over the past week the Federal Reserve has begun putting out feelers on ways to try to recapture some of the vast quantity of new dollars it has created, in order to reduce any future inflation in the economy. If the Federal Reserve withdrawals liquidity too soon from the money supply or too rapidly the economy could go into another nose dive. If the Fed waits too long inflation could begin to rapidly accelerate.
Since the gimmicks we are currently using to manipulate the economy are very similar to the gimmicks used by South American countries in the 1970’s to stimulate their economy, and continue to win elections, it might be useful to look at their experience.
The initial reaction of their economies to massive borrowing and a flood of new currency was initially positive. The Latin American economies experienced a surge of economic activity. Business started or expanded, new employees were hired and the surge of new currency created waves of spending and investing. However these artificial stimulations to the economy wore off quickly and inflation quickly began to appear. In Latin America those counties borrowed even more heavily, printed money more rapidly and continued spending quite freely. In response the inflation rate continued to accelerate until it hit inflation rates of over 20%, then 30% then 50% then 100%. Governments continued to print money, float bonds and spend. To do otherwise would have provoked a coup or even a revolution. Inflation rates exploded in some countries reaching over 1,000% a year. Governments defaulted on their loans. International banks refused to continue lending to South and Central American governments. Liquidity dried up and the economies of those countries collapsed.
In reading this you might think, “This can’t happen here”, but it can. Right now the U.S. government has relatively good credit, but our spending habits, funded by high amount of borrowing using short terms Treasury Bills cannot continue for much longer. The U.S. government may be powerful, but the financial markets are bigger and more powerful. Retirees and pension funds that are lending money to the federal government for less then ½ of 1 percent are barely getting any compensation for what could turn out to be a very risky investment. Many are invested in bond mutual funds. With a bond mutual fund there is no expiration date on the bonds. If the bonds decline in value the bond fund declines in value. In a bond fund you cannot hold the bonds to maturity.
Many company retirement programs offer two choices: a stock fund or a long term bond fund. Right now both are lottery tickets, which may or may not pay out.
The Federal Reserve has made it very clear over the last week that interest rates must eventually go higher and the flood of new dollars that it created must be brought back under control, whether that is next week or next year is uncertain, but rates must increase.
The sad part is that those retirees, pension funds and private investors who fled the risky real estate market and dangerous stock market may have accidently stumbled into a market that is equally dangerous.
Monday, June 14, 2010
The Whole Point of Yoga
Yoga is the inhibition of the modifications of the mind.
(or) Yoga is the control of the modifications of the mind.
This is the core definition of yoga from the Yoga Sutras. A number of questions arise from this.
1. Why is it important to inhibit or control the mind?
2. What is meant by modifications?
3. What is the inner experience of a person who has succeeded in controlling the mind?
4. How is this control accomplished?
The mind is a wondrous thing. It can create images, words, feelings, churn up memories, plunge into anxiety about the future, and imagine things that may or may not exist. It can plunge into sleep and dream, and engage in endless self talk, explanations, and musings. According to the sages if we can stop this incessant mental activity we can experience our real nature.
While the mind is a marvel to behold we usually find ourselves lost in it’s meandering thought process. We lose our objective ability to observe the mind and plunge into the carnival of thoughts. The mind constantly agitates for our attention and wastes vast quantities of our time worrying about some future event or regretting a past event spending very little, if any time in the present. The mind is the origin of our suffering. Those who have ventured beyond the thinking process have reported a place of bliss and joy, a peace that passes all understanding and a much altered perspective where worry and regret fall away and beauty of the present moment is revealed.
According to the classical text of yoga, the Yoga Sutras, this state beyond thought is obtained through practice and dispassion. According to the Sutras practice is the endeavor towards stillness and stability. Dispassion occurs when the cravings for experience or enjoyment is lost.
As long as we identify ourselves with our body and mind we are lost in an illusionary world where our thoughts and fantasies become our reality. Lost in the fun house of the mind we forget our essential nature. In our normal, everyday mind we no longer see or experience the world as it really is but through a distorted lens.
It is no coincidence that the term for coming out of this state is called an awakening. Because that is exactly how it feels. In that awakened state the world is not different. It is the same that it always was and always will be. What is different is that the lens falls away. When the world is experienced without the frantic cravings of the ego, when the mind is still and quiet, the world is experienced just as it is…..a place of bliss and beauty.
The sages, out of compassion for our suffering, pass on their message that this suffering is unnecessary, that there is a way out. We can slumber or awaken.
(or) Yoga is the control of the modifications of the mind.
This is the core definition of yoga from the Yoga Sutras. A number of questions arise from this.
1. Why is it important to inhibit or control the mind?
2. What is meant by modifications?
3. What is the inner experience of a person who has succeeded in controlling the mind?
4. How is this control accomplished?
The mind is a wondrous thing. It can create images, words, feelings, churn up memories, plunge into anxiety about the future, and imagine things that may or may not exist. It can plunge into sleep and dream, and engage in endless self talk, explanations, and musings. According to the sages if we can stop this incessant mental activity we can experience our real nature.
While the mind is a marvel to behold we usually find ourselves lost in it’s meandering thought process. We lose our objective ability to observe the mind and plunge into the carnival of thoughts. The mind constantly agitates for our attention and wastes vast quantities of our time worrying about some future event or regretting a past event spending very little, if any time in the present. The mind is the origin of our suffering. Those who have ventured beyond the thinking process have reported a place of bliss and joy, a peace that passes all understanding and a much altered perspective where worry and regret fall away and beauty of the present moment is revealed.
According to the classical text of yoga, the Yoga Sutras, this state beyond thought is obtained through practice and dispassion. According to the Sutras practice is the endeavor towards stillness and stability. Dispassion occurs when the cravings for experience or enjoyment is lost.
As long as we identify ourselves with our body and mind we are lost in an illusionary world where our thoughts and fantasies become our reality. Lost in the fun house of the mind we forget our essential nature. In our normal, everyday mind we no longer see or experience the world as it really is but through a distorted lens.
It is no coincidence that the term for coming out of this state is called an awakening. Because that is exactly how it feels. In that awakened state the world is not different. It is the same that it always was and always will be. What is different is that the lens falls away. When the world is experienced without the frantic cravings of the ego, when the mind is still and quiet, the world is experienced just as it is…..a place of bliss and beauty.
The sages, out of compassion for our suffering, pass on their message that this suffering is unnecessary, that there is a way out. We can slumber or awaken.
Wednesday, June 9, 2010
When I arrived
When I arrived at the house a woman greeted me at the door then burst into tears. I followed her into the spacious kitchen where all the adult children had gathered.
They were cordial and polite but their faces were strained. We sat and talked for awhile.
A hospice nurse and social worker soon joined us. I asked the family to tell me about their dad and soon the kitchen was full of laugher as stories spilled out. The three of us sat and listened for some time. The family asked if I would talk with their dad. There was something he wanted to get off his chest, something that was holding him back from dying.
Alone with him in the semi darkness, this former soldier was skin and bones, but there was a look of intensity in his eyes. He grabbed my hands and began to talk. There was a look of terror in his eyes.
He had become deaf so he could not hear me so I simply held his hands and gazed kindly in his eyes. After his long confession he said “Thank you Father” although I was not a priest I did not correct him and he sank back into his bed.
After I left he passed away. The family never asked me what dark crimes he may have committed in combat or what acts he may have confessed.
It is probably for the best...... I wasn’t able to hear him.
They were cordial and polite but their faces were strained. We sat and talked for awhile.
A hospice nurse and social worker soon joined us. I asked the family to tell me about their dad and soon the kitchen was full of laugher as stories spilled out. The three of us sat and listened for some time. The family asked if I would talk with their dad. There was something he wanted to get off his chest, something that was holding him back from dying.
Alone with him in the semi darkness, this former soldier was skin and bones, but there was a look of intensity in his eyes. He grabbed my hands and began to talk. There was a look of terror in his eyes.
He had become deaf so he could not hear me so I simply held his hands and gazed kindly in his eyes. After his long confession he said “Thank you Father” although I was not a priest I did not correct him and he sank back into his bed.
After I left he passed away. The family never asked me what dark crimes he may have committed in combat or what acts he may have confessed.
It is probably for the best...... I wasn’t able to hear him.
Elevator Music
Called to the hospital, no family present I was alone with the dying patient, a women in her eighties. I pulled out my silver flute and in rhythm with her breathing played melodies and sometimes just tones of sound. Although she was only barely conscious her forehead moved in reaction.
Allison stopped by and the patient stirred enough to greet her then lapsed back into dreamland.
I played for an hour, hospital staff, doctors, nurses and health aides stood at the door watching.
She passed quietly a few hours later
Departing here
Arriving there
Elevator music
Allison stopped by and the patient stirred enough to greet her then lapsed back into dreamland.
I played for an hour, hospital staff, doctors, nurses and health aides stood at the door watching.
She passed quietly a few hours later
Departing here
Arriving there
Elevator music
Country Directions
Lost in this unfamiliar town in New Mexico, a local gave us typical country directions, lacking street names, or route numbers just landmarks and long meandering descriptions of what we will see on the way. Despite the directions, or perhaps because of them, we are now quite late. The snow fall is becoming urgent. At the next light a pedestrian with long black hair, dark red skin and wearing a rainbow vest walks by. I roll down the window. A clump of fresh snow falls in from the roof and soaks into my pants. “Excuse us. How do we get back to the Interstate?”
She gives directions;
Where the church used to be
Make a left turn
*********************************************
Stephen
(Published by Red Moon Press)
She gives directions;
Where the church used to be
Make a left turn
*********************************************
Stephen
(Published by Red Moon Press)
Red Tailed Hawk
On the way to work I noticed a large bird by the side of Rt 66. On a sudden impulse I pulled over. It was a large red tailed hawk decked in a gorgeous mane of white and brown feathers. One inch claws clenched, his yellow eyes closed, his body crumpled ….face down in the asphalt. Eighteen wheelers roared by, their backwash ruffling his feathers. Wearing work gloves I placed the hawk on the car floor, as I leave a young female red tailed hawk, glided by low, as if saying goodbye to her mate. Two more young hawks watched from the trees.
For the rest of the day I drove around with his body. The only scent was the smell of fall leaves. Perhaps it was my imagination but I felt I heard the ever so faint whisper of my Native ancestors as I drove. Arriving home I gently placed his body in the shed, to keep the wandering dogs away.
Sunday night, when it was dark I lit a bundle of desert sage and approached the hole I had earlier dug. I laid him in that shallow grave, chanting a sacred mantra….. as the nearly full moon rose directly overhead in the clear starlit sky. As faint wisps of sage smoke lingered, I played the wooden flute softly, then with my bare hands buried this beautiful creature.
Although I would have liked one of his tail feathers, I refrained, not wanting to desecrate his body.
My ancestors agreed…..
Swooping and gliding
Now buried near my garden
One day….my turn too
**************************************************
Stephen
Published by Red Moon Press
For the rest of the day I drove around with his body. The only scent was the smell of fall leaves. Perhaps it was my imagination but I felt I heard the ever so faint whisper of my Native ancestors as I drove. Arriving home I gently placed his body in the shed, to keep the wandering dogs away.
Sunday night, when it was dark I lit a bundle of desert sage and approached the hole I had earlier dug. I laid him in that shallow grave, chanting a sacred mantra….. as the nearly full moon rose directly overhead in the clear starlit sky. As faint wisps of sage smoke lingered, I played the wooden flute softly, then with my bare hands buried this beautiful creature.
Although I would have liked one of his tail feathers, I refrained, not wanting to desecrate his body.
My ancestors agreed…..
Swooping and gliding
Now buried near my garden
One day….my turn too
**************************************************
Stephen
Published by Red Moon Press
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