Pity the Saucer-Men

The Sovereign Society Offshore A-Letter
Wednesday, March 11, 2009 - Vol. 11, No. 64

Pity the Saucer-Men:

For They Know Not Where They’ve Come

Dear A-Letter Reader,

Uncover the Mystery and Discover the Truth! (or so the website says)

This year’s week-long UFO convention is slated for Vegas in July. And some of the regular attendees are hoping for some… “extremely foreign” guests.

As for the existence of intelligent life outside of this little Blue Planet, we can’t say. But if aliens do exist…and they chose to visit us right around now…

Well, we’d feel pretty sorry for them.

A Day in Bizarro World

Confusion and Dismay are the reactions we’d imagine.

For they’ve come to a planet where rules and regulation mean mayhem…where “laws” mean off-the-hip decisions…where competition is subsidy…and the world’s largest insurer is also the world’s largest gambler.

They’ve come to a world whose people would all admit we face a state of global crisis, and yet “our” governments frantically engage in massive, untested remedies at the risk of making it all terribly worse.

They’ve come to a place where the businesses of a single street– where the wall once stood – can pay a relatively trivial sum of American currency to the government (in the form of noble contribution), and in turn foist their tremendous debts upon generations of the nation’s public.

Perhaps our visitors would rule out “coincidence” there. They might even say we got a raw deal.

If nothing else, our world would fascinate them. Maybe even make good material for their schools…

“Alright now children…what did we learn from the FDIC’s insurance rate hike in the early months of 2009? Yes, Bobby.”

“We learned that small regional banks would be punished for the weak balance sheets of the country’s superbanks. The superbanks were much worse off, and the FDIC raised its rates because of their solvency issues. But the raise in rates would raise operating costs for all banks…even the well-off regional outfits. It’s a perfect example of unintended consequences. When the government intervenes to aid one company, it often does so at the risk of harming others.”

“That’s correct.”

Sharing a Coffee with E.T.

And if you manage to convince a “visitor” to share a coffee, it probably wouldn’t be a good idea to take them to Starbucks. You’d already have enough to explain without four-dollar-coffee.

“I mean, what it comes down to is healthy businesses doing healthy business,” they’d tell you over an Orange Mocha Frappucino, “that’s what you need to recover. And trust me…we even struggled with varying degrees of government intervention during crises. As long as there are greedy people, it’s likely to remain a necessary evil.”

“But it takes a master’s touch…because you’re always playing with an unexpected set of possible consequences. Help one company because you believe they pose a catastrophic risk, and you’re likely to hurt their competition. The worst part? Their competition is the healthy companies…the responsible companies. So it’s always a double-edged sword.”

“Like that report you showed me…that AIG was offering more competitive rates on life insurance than their healthy un-subsidized competition. Or the other one…where Warren Buffet’s company – one of only seven remaining AAA credits in the country – is paying more for credit than questionable, government-backed competition. In both cases, the healthy suffer…maybe even as much as the sick benefit.”

“And you simply can’t have these types of things happening without a major loss of confidence across the broad economy. Be mindful of your confidence in times like these…it’s the thread holding you over the void.”

Maybe you personally muster the confidence to ask them how they deal with crises like this one.

“We don’t have them.”

“What?! Why not?”

“We don’t let our companies get big enough to pose catastrophic risk in the first place. That’s just bad management. Either you regulate them all the way or not at all. And you actually have to enforce those rules too. The whole idea that banks can trade in unregulated instruments – like Credit Default Swaps – and still enjoy the protection of FDIC insurance…that’s just doesn’t work.”

They’d likely go on to tell you that despite the mayhem and uncertainty, there are still a few serious opportunities out there. You’d have to look harder…and find some specialized help.

“But you can still find immense profits from picking up business that the incapacitated superbanks are leaving behind…simply lending capital to productive and capable parties. It’s that easy. Funding is in short supply, and people are paying handsomely for it.”

Or, they might go on, “You could also trade in ‘coin-of-the-realm.’ The fundamentals might be ‘on-hold’ at the moment, but some powerful trends are making for huge profits in foreign exchange markets. There’s always a bull market somewhere in currencies.”

Maybe they’d have better advice than we can dream up…we certainly hope they do.

Because in these new times – where up is down, left is right, and you wouldn’t know your government from a hole in your pocket – …well, let’s just say it’s gotten a lot harder to see what’s around the bend.

a big fat lie...

Thursday, February 19, 2009 - Vol. 11, No. 47

Bought & Paid For

Geithner as an Example of Obama’s Brand of “Change”

Dear A-Letter Reader,

Some of us actually bought it.

“Hope,” “Change,” and “Yes we can.” The spirited mottos of newly-elected President Obama.

These days it’s sounding much more like “Yes, we can change hope,” as Barack’s zealous inexperience collides with one of the steepest learning curves ever faced by an American President.

But despite a handful of alarming early mistakes – like appointing several tax-dodgers to what will no doubt be the “spendiest” administration in U.S. history – surely Obama can bring some kind of change to the White House. It won’t be politics as usual, right? And it especially won’t be some deplorable Chicago brand of pay-for-play politics, right?

Despite the “truthiness” of Barack’s promises…the cold, hard facts would suggest otherwise.

Ladies & Gentlemen of the Jury, I Give You Tim Geithner

You know, George W. Bush left a vacuum in the White House when he left. There wasn’t anyone left who could kill the markets with a single speech. Well…we’re happy to report that Tim Geithner stepped up to that challenge and met it head-on, tanking the Dow by about 400 points in his first speech.

Tim Geithner. You may recall that he was one of the few Federal Reserve representatives who could explain the Bear Stearns deal in layman’s terms. He’s a young and uneasy looking go-getter with a silver spoon lodged down his throat. He’s not a big bank alumnus like Paulson. And he was picked by the demagogue of “change,”…so we all agreed to overlook his shady, tax-dodging ways.

But he's got other talents as well.

And no, we don't mean making funny faces and embarrassing poses for the camera (which we're convinced to be his true purpose).

No, he's a master of seeming like he's in two pockets at the same time. Incredible really. All at once, this "rich kid" has for his whole career seemed to be a champion of the people and a friend of the banks. Nevermind the fact that this perception is now falling apart on a daily basis.

But in the words of history's bestselling book, "No man can serve two masters." So we've got to ask ourselves...who's little Timmy really working for?

The Proof...

A quick scan of the Internet will give you the table listed at the right. These are the top contributors to Barack Obama's Presidential campaign. This isn't a "secret" or a "conspiracy," it's a matter of public record.

On a tangent, it's remarkable to see that all these banks could still muster campaign money...despite needing taxpayer relief to the tune of tens - and even hundreds - of billions of dollars. Then again, it's probably good business...campaign contributions will keep the gravy train from getting derailed.

But we circled these three names in particular for a reason.

You see, something strange happened on the way to the Treasury. After months of Obama railing against the wicked ways of corporate lobbyists, Geithner appointed the former chief lobbyist of Goldman Sachs to serve as his head of staff.

Just wait...it gets better.

Geithner's new deputy secretary is a former CEO of Citigroup. Another CFO from Citigroup is now assistant to the President...and one of his assistants also came from Citigroup. To finish out the roster, a member of Obama's Economic Recovery Advisory Board...yeah, he used to work at UBS.

But wait; there's more.

Geithner's "Brain Trust" of unofficial advisors includes John Thain - who formerly worked with both Goldman and Merrill Lynch - Gerald Corrigan (another former Goldman exec) and Hank Paulson (yet another former Goldman Exec). The icing on the cake here is Alan Greenspan, who exploited his own disastrous mismanagement of the Federal Reserve in a brief stint with Pimco last year, who's also got Geithner's ear.

Which leads us to ask...

Is there Any Question as to WHO is Steering Our Ship of State?

To which the prompt answer is; no.

And to be honest; it would be hard to argue that this is anything other than a perfect example of "Blagojevich-style" pay-for-play Chicago politics. This isn't a conspiracy theory...it's perfectly spelled out in plain sight. "You help me get elected, I'll help you fleece my taxpayers," "Deal!"

But let's pull back and take our anger out of the situation.

Yes, banks are good for the economy. That much is obvious. And when the banks get their "just deserts" (as in the 1930s or the Panic of 1873) the people suffer for decades. Sounds pretty simple.

But this isn't the 1930s, my friend.

And we've got to remember that Paulson, Geithner, Thain and Greenspan...it was their leadership that got us here in the first place. Their institutions...their organizations that killed the golden goose and the financial system, bringing the economy down with it.

It's almost like getting into a cab with Evel Knievel behind the wheel. Thanks...but no thanks.

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