Actually I’ve been thinking about the Fed’s Open Market Committee By Fred Cederholm

Column for on/after June 11th

I’ve been thinking about dilemmas. Actually I’ve been thinking about the Fed’s Open Market Committee (FOMC), Bernanke, inflation/deflation, debt, global cash dependency, and US/us. There is a time value for money and that is called interest. If you accumulated money by spending less than you’ve earned (or taken in), “interest” means extra income to you. If you owe money because you’ve spent more than you’ve taken in, “interest” is an expense.


You see the Open Market Committee of Uncle $ugar’s central bank, the Federal Reserve, meets this coming Wednesday and Thursday and it will re-evaluate/set the benchmark rate of interest that will ripple to all the interest rates paid, (and charged) in the United States. It is expected that there will be another increase – the seventeen consecutive one since the Fed Fund’s rate bottomed out at 1.00% on June 25th, 2003. Will it be a quarter of a percent rise like the previous sixteen, or will that be doubled to a jump of a half of a percent? Interesting!


This will be the third session since Ben Bernanke replaced Alan Greenspan as the Chairman of the Federal Reserve on January 31st, 2006. Controlling the level of inflation is a major priority for him (and for the Board of Governors of the Fed); meaning we could see yet more interest rate increases in the near term. We also know from Bernanke’s earlier writings and speeches that he greatly fears deflation – the situation where the price of goods/services drops because consumers are not buying. They just do not have the funds, and they cannot get them. Rate setting is very important to the functioning of the American/global economy.


To forestall a recession some 5 years ago in the aftermath of 9-11 and the bursting of the dot-com stock bubble, the economy was flooded with liquidity, the Fed’s rates dropped to 1%, and they languished there for years. Cheap money did keep our economy “rolling,” and a recession was deferred. The expanded consumption of goods and services that ensued was not driven by a growth in production, productivity, or a real expansion of the domestic American economy, it came from an exponential growth of debt at the federal, state, local, and household level(s). The short-term “solution,” has now given rise to a bigger long-term “dilemma.”


While a very few households have profited exceedingly well from this so-called (debt driven) “prosperity;” some households have merely treaded water - the majority of them have dug themselves into a deeper abyss of debt. To supplement stagnant (or declining) incomes while maintaining/increasing lifestyles and consumption, “equity” loans have made the family home a veritable cash station. Cheap money may have postponed one recession, but “a T-Rex” of a housing/real estate financing bubble has replaced “the tiger” of the dot-com bubble.


America’s growing debt was not financed from within. Cumulative domestic saving has been at zero - or has been negative. The US is presently “thriving” only because of the largesse of foreigners. The Japanese, the Chinese, the Arab OPEC’s and the EURO zone hold roughly 45% of our outstanding privately held (national) debt. As of June 22nd, our national debt stood at a record $8.340 TRILLION of which $4.787 TRILLION was privately held, and the remaining $3.553 TRILLION was the cumulative trust fund surpluses (mostly Social Security) that have been raided/spent by Uncle $ugar on everything but their legally mandated purposes.


As of April 30 (reported by the US Treasury/Federal Reserve Board on June 15, 2006), the top ten foreign holders of treasury securities were as follows: Japan $ 639.2 BILLION, China $323.2 BILLION, United Kingdom $166.8 BILLION, Oil Exporters $99.1 BILLION, Korea $70.9 BILLION, Taiwan $68.9 BILLION, Caribbean Banking Centers $61.0 BILLION, Hong Kong $ 49.4 BILLION, Germany 46.8 BILLION, and Mexico $41.9 BILLION.


Since the last FOMC meeting, other central banks across the globe have raised their own benchmark rates. While Wall Street and Main Street clearly oppose any further rate increases - because of the devastating impact on their monthly interest costs - the Fed/Treasury cannot afford any exodus of the foreign source funds. That money has to stay invested here and therein is another dilemma. The eyes of the world will literally be on the Fed this Wednesday and Thursday. I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.
Copyright 2006 Questions, Inc. All rights reserved.

Are oligarchs less corrupt? By Joost van Steenis

Dear reader, this is the 74th letter of an Autonomous Thinker.

Three out of four Russians find corrupt civil servants a greater danger for the country than business people who enrich themselves.
President Putin, one of the oligarchs, said also that corrupt civil servants damage the country most. (Elitepeople seldom attack each other, they try to divide the masses).

But there are two questions.
1. Is the indirect damage by the corrupt elite not much more damaging than the relatively small direct corruption far down.
2. Why are lower civil servants corrupt?

1. Though the Gini coefficient, a measure of the income inequality in a country, does not include corruption and black money it gives some insight in the damage to the economy by the highest earners – damage in so far that the highest incomes have the power to reserve a substantial part of the total income of a country for the own group.

Wikipedia (http://en.wikipedia.org/wiki/Gini_coefficient ) states that the inequality in Russia is less than in the USA - corruption in the USA is institutionalised. The USA has a Gini coefficient over 0.4 (and it is rising) about the same as China.

Attention, this concerns only registered incomes, in particular elitepeople can hide their wealth behind legal constructions.

Legalised corruption I have described in my third Letter about "Gatesian corruption " ( http://members.chello./nl/jsteenis/letter3.htm). Illegal corruption includes the so-called scandals of Enron or Ahold, but most of these cases are not prosecuted and the perpetrators remain free with their stolen money.
The corruption of well-placed masspeople is important but the corruption at the top reserves for the elite an important part of the national cake on which we are all feeding.

See also my 51st letter: Corruption is everywhere ( http://members.chello.nl/jsteenis/letter51.htm)

2. Though the salary of Russian civil servants was recently increased from 100 to 500 dollar it is clear that such incomes do not provide the prosperous lives that are propagated in TV-soaps as the utmost goal for all people. Lower civil servants can somewhat increase their income but higher civil servants want to live as oligarchs (I prefer to call them elitepeople) and they can increase their income immensely. In the West they use legal means by taking on different paid jobs, expensive emoluments and options on shares.

Voslensky described in his book "Nomenklatura" that the Russian top uses about the same methods with their datscha's, own warehouses and entrance to the best universities. Since the Soviet Union disappeared the economic system continued to approach the American system. Both systems are corrupt because they allow the powerful to get more money for the group by using their undisputed power.

How do lower masspeople react on the greedy top that is bending the law to get as much money above the surplus they have already? Something has been changing in the last fifty years.

I come from a Middle Class family and fifty years ago there was a code in my class that state taxes should be paid. But then the media more and more reported details of the financial life of the elite and the Middle Class realised that the Upper Class was not so nice and that tax evasion was practised extensively. They changed their habits and also started to evade taxes – a clear example that the elite is the cause of a more corrupt attitude of masspeople. Nowadays everybody tries to evade taxes, triggered by the example of the highest class in the country. That mechanism occurs everywhere. When the top is corrupt, masspeople will also try to get more money by imitating the elite.

The relatively small corruption of Russian civil servants finds its origin in the big corruption of the elite. This can only change when the biggest corruption is attacked, when the corrupt (legal and illegal) way of life of the elite is stopped, including their idea that activities are only praiseworthy when they result in huge payments. From elitist leaders nothing can be expected. Only masspeople can change the world by invading the eliteworld so that elitepeople cannot anymore live the privileged and prosperous life they lived for ages.

Yours truly, Joost van Steenis
http://members.chello.nl/jsteenis
Ways to increase masspower

I’ve been thinking about impact(s) By Fred Cederholm

Column for on/after June 18th

I’ve been thinking about impact(s). Actually I’ve been thinking about growth, “in equity,” our school, taxes, “but-what-abouts,” and King Solomon. A community that does not grow, or change, is doomed to wither and die. But… growth is also a double-edged sword which must be approached thoughtfully - with due consideration given to so many things.

You see, I sit with four other local personages on Creston’s planning commission at the pleasure of our village president - with the concurrence of the village trustees. As a forensic accountant, I look at things differently than most people. During my career in public accounting I found myself specializing in failure – divorces, troubled debt restructurings, bankruptcies, debtors-in-possession, and professional malpractice and damage computations. In my three years with the FDIC/RTC, I did detailed case write-ups on hundreds of ventures, developments, and projects. My task was to determine when a reasonably prudent person – be they lender, director, auditor – should have seen an impending failure and walked away. IT was intense.

Last Tuesday, I received a “meeting package” from our staff representative/consultant regarding a concept plan for a proposed 269 house development. Creston presently has about 190 single family homes and another 50 or so duplexes, townhouses, and apartments. While I was expecting such a package for “a” development later this summer, or fall; it wasn’t for this one and it certainly wasn’t for our blessing on Wednesday, June 21st. Priorities had shifted.

Creston is way ahead of other communities in the area as far as having a completed comprehensive plan, a completed subdivision ordinance, and current codification of the mandatory village ordinances and building codes. We know what we want for our community; and more importantly, we know what we do not want. In recent past, we have paid a great deal for professional advice, counsel, and work-product - and it was well worth it! We knew growth and development was coming and we were going to be ready with “i”s dotted and “t”s crossed.

The planning commission’s part in the process is easy – relatively speaking thank God. We square the proposal against the nuts and bolts and “sacred cows” of the comprehensive plan and subdivision ordinance and vote yea or nay in “recommending” the project to the village trustees. The devil lies in the (monetary) details. Resolution of the project’s financial impact (who will pay for what improvements) comes in the body/text of the land annexation agreement - which the village trustees approve. There is only one chance to get it right. THAT is intense.

In law there is the legal fiction of “in equity.” If the parties “stand in the same shoes” after an event, they have not been damaged, or incurred a loss or additional costs. In this context, “in equity” means that the newcomers should not be made to pay all the costs of improvements made for benefit of the whole community; likewise the people who have been here should not be dinged to subsidize the incremental costs of the growth or expansion. That is why God created attorneys, consultants, and negotiators.

In numerous prior months, there have been countless meetings between the village reps and the developers which focused on impact(s) and who would be liable for what costs. First and foremost is the impact on our local school. Creston is proud of its little school, and with good reason; it consistently ranks in the top fraction of a percent statewide as far as student performance in basic skills evaluations. While there is some available capacity, in no way can it handle this anticipated growth. I mean, the “new” part was built in 1959! Taxes for our grade school, Rochelle High School, and Kishwaukee College (and mandated pensions) make up roughly 75% of each year’s property tax bills. That isn’t currently covering operating expenses.

When the details of the annexation agreement are made public, there will be a flood of “but-what-about” questions regarding the library, the park district, water and sewer capacity, fire protection, security, streets, other maintenance costs, etc. The night of that vote our village hall will be filled to capacity and the trustees will need the focused thoughts and wisdom of a King Solomon. I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

Copyright 2006 Questions, Inc. All rights reserved.
asklet@rochelle.net

Should I hire an attorney?

That is a question that each must answer for themselves. However, before making that decision, you might wish to consider the following questions and answers:

1. To what or whom is an attorney's first duty? We consult the latest Corpus Juris Secundum (C.J.S.) legal encyclopedia, volume 7, section 4 for the answer below:

2. What is the legal relationship between an attorney and his/her client?
3. What is a ward of the court?

(Are you an infant or person of unsound mind?)

4. Do you need to challenge jurisdiction? Better read the following, particularly "...because if pleaded by an attorney....."

Conclusions of law:

(to be continued)
http://www.moneyfiles.org/attorney.doc

Will Demise of Dollar Usher in Free Money? By Sepp Hasslberger

The imminent demise of the US dollar as the kingpin of economic transactions world wide is predicted by several commentators. Johnny 'Silver Bear' comments that the Federal Reserve has kept the printing presses rolling too liberally for too long and he continues:
"The Fed has lost control of the dollar. Their mindless creation of credit has insured a mind-boggling meltdown of the entire financial system. This is not a good thing for anyone, anywhere. The dollar is the world's reserve currency. Seventy-five percent of all dollars in existence are in foreign hands. Whatever their value was when those foreigners got them, that value is evaporating right before their eyes. It's like buying ice by the pound and watching it melt away before you have time to use it."

Like Silver Bear, others say the dollar is doomed and they advocate a return to the time before 1971, when Nixon was forced by the French, who insisted on being paid in gold for dollars, to end the direct convertibility of the dollar at a fixed price. The advocates of precious metal as currency say that a return to the old gold standard would prevent the Fed from creating "funny money", the cause of runaway inflation. What they overlook is that their cure might be worse than the disease.

To be continued at: http://blog.hasslberger.com/2006/06/will_demise_of_dollar_usher_in.html#more

There are two worlds By Joost van Steenis

The 73rd Letter of an Autonomous Thinker

Dear reader,

I always hammer on the gap between elite- and massworld. It is the most important factor in human power relations. To make it clearer where to look for the eliteworld I will say something about other places on our world where the majority of masspeople are at best present as servants.
Some masspeople (mostly living in the rich Western World) profit from this partition but most masspeople have no access to many services that are human and normal.

Education: They say that India is economically booming but about half of the population is illiterate.

Food: Millions of masspeople do not have access to enough food to have a chance to become eighty years old as is normal in rich countries
Health care: Only one in five HIV-patients has access to the medicinal treatment that is normal for Western HIV patients.

I could go on but everyone knows examples of the great differences in the world.

Just as the eliteworld is not a geographical entity, special places in the massworld are reserved for richer masspeople.

About the intertwining of mass- and eliteworld I gave some examples in my Letter "Where is the eliteworld?" ( http://members.chello.nl/jsteenis/letter71.htm ). You hardly find masspeople in first class compartments in planes or in luxurious beds in five stars hotels.
I wonder why masspeople accept that some humans reserve part of our beautiful world for themselves. In our world many people find that elitepeople have the right on apart places. But I see not much difference with the South-African Apartheid (a Dutch word by the way) where many places were reserved for white people. .

One of the means to get reserved places is the advancing privatisation. Money is the leading reason to make an excellent hospital and not the need of all people for adequate medical services.

Some masspeople seem to have a higher status and get therefore better medical attention. In a relatively poor country as Thailand the Bumrungrad Hospital is leading a growing list of private hospitals in Bangkok. In 2005 it attracted 400.000 international patients. You may guess how many poor Thais were treated. This medical enclave in a Third World country is reserved for the well-to-do of other countries . Not only Westerns but also rich Arabs. These people went in the past to the USA for medical treatment but after 9-11 the attendance in Bangkok grew from 5000 prior of this incident to 70.000 in 2005.

For Arabs it is fairly difficult to enter the USA. The USA advocates freedom and democracy but is building a system to control even the smallest details of the life of common people (and foreigners are treated different than nationals).
The system to control people that existed in the Soviet-Union is being refined in the USA . It has become a super Soviet State with more people in prison than in the Russian Gulag (see my Sixth Letter: " Too many prisoners", http://members.chello.nl/jsteenis/letter6.htm).

The rich live in a different world. They have possibilities to avoid the controls. It is always the common citizen that is targeted. The richer people have sanctuaries where they can live their prosperous, safe and uncontrolled life.
Those areas should be invaded by masspeople.


http://members.chello.nl/jsteenis
Ways to increase masspeople

I've Been Thinking Of Privacy By Fred Cederholm

Column for on/after June 4th

I’ve been thinking about privacy. Actually I’ve been thinking about George Orwell’s “Big Brother,” the Constitution, Homeland Security, investigations, Congress, the separation of powers, and Animal Farm. So much of what we do in our daily lives is being monitored - with or without our knowledge, or our permission. Just what is still “private” in our private lives?

You see the explosion of technologies and databases which has occurred in recent decades documents the minute details of who we call, who we email, what websites we visit, where we travel/drive, and what we purchase via credit/debit cards or checks. These data are ever so accessible both legally and illegally/covertly. The ever-present eye of the fictional “Big Brother” of George Orwell’s book, 1984, is alive and with us in the twenty-first century.

I have mixed feelings about this development. On one hand, there is the argument if you are doing nothing illegal (or in the wider sense - doing nothing “wrong” - by your own personal standards), should you even care? After all, one definition of “integrity” is that which one does in private when no one is watching. On the other hand, there is the side which questions why your routine business/affairs/actions should be available for the scrutiny/analysis of anyone else for whatever reason? Here the clandestine “eye” could be a challenge to your very integrity.

It may come as major surprise, but the US Constitution does not specifically mention rights to privacy. The legal fiction of privacy rights has “sort of” evolved via rulings of the US Supreme Court over the years – both by the cases they have heard as well as those lower court decisions whose rulings they chose to let stand. There may be the appearance of such “inherent rights” under the Fourth Amendment’s search and seizure limitations as well as the Fifth Amendment’s limits on self incrimination. The Ninth Amendment further muddies the waters: “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.” (Huh?) Other than THAT, it’s just not there folks.

Under the guise of Homeland Security in the post 9-11 era, we the people have learned of government access to phone records, credit/debt card statements, global positioning satellite (GPS) trackings, web searching histories, and surveillance videos – all gathered by Uncle $ugar without benefit of either subpoenas or search warrants. We have been told such data is merely generic and is necessitated in the interest of security. The legal justification came from nothing more than the “I need it, I want it, it’s mine” of a gaggle of executive orders from the President.While there has been a tempest in a teapot on the web, there have been no court challenges, yet.

From my experiences as a forensic accountant investigator for the FDIC/RTC working on cases for failed banks and savings and loans, I know how the seemingly harmless “generic” data (that fell into my lap during the interventions at those institutions) could be leveraged into killer questions at subsequent depositions - and later into specific warrants and subpoenas. This is spinning straw into gold – pure and simple. When dealing with reputations, the appearance of impropriety is as lethal as any actual impropriety itself. Or, as in an underlying theme from the 1970 Oscar winning movie, Investigation of a Citizen Above Suspicion: “in every criminal a subversive may be hiding, and in every subversive a criminal may be hiding.”

Other than an occasional partisan “burp” from Capitol Hill, our elected members of Congress have been deafeningly silent on the assaults made on the privacy rights of mere citizens - until an ongoing bribery investigation of a US Congressman led to a search of his congressional office, that is... Now judging from the brouhaha coming from both sides of the aisle, the right to privacy has “roots” in the separation of powers guaranteed by the US Constitution. To fully appreciate/understand this blatant hypocrisy of selective outrage, one need only look to George Orwell’s other book, Animal Farm, which states that “all animals are created equal, but some are more equal than others.” Orwell’s choice for “the first among equals” species is just too metaphorically on point to be politically incorrect. I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

Copyright 2006 Questions, Inc. All rights reserved.

To “audit” this column and to learn more about the subjects discussed, please check out:

Things that are not in the U.S. Constitution
http://www.usconstitution.net/constnot.html#privacy

U.S. Constitution: Ninth Amendment
http://caselaw.lp.findlaw.com/data/constitution/amendment09/

'Investigation of a Citizen Above Suspicion' (1970)
http://www.calendarlive.com/movies/reviews/cl-et-citizen26sep26,2,2184670.story