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DrYB/C
03-27-08, 12:32 AM
“Forget lower interest rates. For the Federal Reserve to keep the financial markets from imploding it needs to buy troubled mortgage bonds from banks and securities firms, say the world's biggest Treasury investors….
The only tool left may be for the Fed to help facilitate a Resolution Trust Corp.-type agency that would buy bonds backed by home loans, said Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co. While purchasing some of the $6 trillion mortgage securities outstanding would take problem debt off the balance sheets of banks and alleviate the cause of the credit crunch, it would put taxpayers at risk.”

http://www.bloomberg.com/apps/news?pid=20601103&sid=aLBZXQGhAaAg&refer=us

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One is hard pressed to find a more perfect example of the concept of “free markets.”

Humans are designed and genetically programmed to seek a “free existence;” that is, to reduce the costs of existing—eating, clothing oneself, procuring cost-reducing resources, etceteras—to zero.

It’s quite obvious that a “free existence” is impossible, as all economic activity results in some cost to the individual undertaking it: even if I live in a garden-of-eden-like-utopia, complete with servants who wait on me hand and foot, I still must incur the energy costs of consuming my abundant resources, and, in the end, even those minute costs play a part in my destruction, as my body becomes decrepit and dies, as a result of the cyclical energy costs of my daily resource consumption, which increase at the margin as I undergo the natural cycle of aging.

Since no “free existence” is possible, the concept of libertarianism, at its most fundamental level, is reduced to an absurdity, and, in my opinion, isn’t a valid political construct, as we are all governed by costs, the laws of physics, and other physical laws.

However, for the entirety of human history, governments have been instituted, among the minority who have gained ownership and control of most of the economic resources in a particular geographic area, to effectively transfer the major costs and risks associated with various forms of potentially profitable behavior from themselves to the majority of non-resource owners, who must subject themselves to the rules of the minority in order to obtain a small portion of the resources the minority owns or controls (additionally, the minority seeks to control the behavior of non-resources owners via government, so it may, at a minimum, retain control of the resources it owns/controls, and, at a maximum, gain control/ownership of more resources, i.e. governance by the minority equals less costly action for the minority—that is, more “free” action—as it competes for resources with the majority).

Each cost and risk that is transferred from the minority to the majority places the minority one step closer to a “free existence,” as it can engage in profitable existential behavior without significant cost to itself. The political market in which this minority behaves and interacts with the majority is the only form of a “free market” that has ever and will ever exist: one man’s freedom from cost and risk, via governing, is another man’s slavery to cost and risk, via being governed (For explicit examples, see: “Small Retailers pushed into Bankruptcy. US Government Subsidies to Chain Companies by Dr. Sherwood Ross, [http://globalresearch.ca/index.php?context=va&aid=8431 ]”).

In the Bloomberg example, we are made aware of the high probability of a minority-to-majority cost transfer event taking place in the near future.

(Here are 2 articles that I believe strengthen my cost transfer case:
a. “Private National Mortgage Acceptance Co. LLC, also known as PennyMac, intends to help borrowers restructure loans so they can avoid foreclosure and maintain payments.
"We'll look to restructure mortgages, and as soon as the loans are reperforming, and if there's the capability and the market liquidity, we'll look to sell," Kurland told The Associated Press. "Other properties that may take longer, we're prepared to hold five to seven years."”
http://biz.yahoo.com/ap/080324/pennymac_mortgages.html

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b. “New York-based BlackRock made the announcement on the same day it was tapped by the Federal Reserve Bank of New York to manage a roughly $30 billion portfolio of assets once owned by Bear Stearns. Both pieces of news helped send BlackRock's share price up as much as 12 percent. In early afternoon trading the share price was up 9.63 percent at $225.95 on the New York Stock Exchange.”

http://www.reuters.com/article/bankingFinancial/idUSN2433664220080324 )


If the transfer event takes place, it will reduce the minority’s ability to govern in the not-so-distant future; I expect greatly strengthened governing measures to be instituted sometime after the transfer, if said transfer takes place, in order for the minority to retain control of its ability to cost-transfer and behavior-control in the future. It is logical to assume that the minority’s intelligence apparatus will take part in fomenting some kind of event that will make strengthened governing measures more acceptable to the majority.

p.s.

Modern finance is the most sublime form of resource control and ownership ever created by the human, for it allows a small, select group of individuals to engage in the debtization of real-world, non-paper economic value, place that value in flux as currency, and then manipulate that value, or the real-world value of any other chosen economic resource, at its margin, in order to transfer real-world, non-paper economic value from the majority to the small, select group (or to whatever group the small, select group chooses). The debt structures that encase said real-world economic value, as a result of the debtization that real-world economic value, remain in place, but the liquefied economic value ends up in the hands of the minority (or the group it chooses) in the form of the currency that is moved around information-asymmetric speculation markets--e.g. stock markets--that are controlled by said minority. The true genius of modern finance: economic value that doesn’t exist can be debtized, via asset inflations, leveraged borrowing, etceteras, to effectively debt-enslave a particular demographic, such as the American public.

A rather roundabout example of modern finance in action:

1. “At the CBOT, expanded daily trading limits and sharply higher margin charges to trade wheat have added to the volatility.
Yet CBOT floor traders said the market's latest violent gyrations reflect the increasing influence of hedge funds which have been pouring money into CBOT grains.
The price action Wednesday, they said, had more to do with fund maneuvers than with bullish fundamental factors.”
http://www.forbes.com/reuters/feeds/reuters/2008/02/27/2008-02-28T021054Z_01_N27500045_RTRIDST_0_MARKETS-WHEAT-VOLATILITY.html
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2. “[B]read is up 35 percent…the government recently proposed ending food subsidies and replacing them with cash payouts to the needy. But the plan was put on hold after it sparked public uproar….
In decades past, farm subsidies and support programs allowed major grain exporting countries to hold large surpluses, which could be tapped during food shortages to keep prices down. But new trade policies have made agricultural production much more responsive to market demands — putting global food reserves at their lowest in a quarter century.”
http://news.yahoo.com/s/ap/20080324/ap_on_re_la_am_ca/fighting_for_food
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3. the continuation of this:
“House prices fell 8.2 per cent - the biggest one-month drop since the NAR began keeping records in 1968 - to a median price of $195,900 (€127,000, £98,700).”
http://www.ft.com/cms/s/0/ccb9f0ee-fa0c-11dc-9b7c-000077b07658.html
which allows “Private National Mortgage Acceptance Co. LLC, also known as PennyMac,” and its investors to take ownership of more liquefied economic value, which can be turned into real-world economic value via extremely depressed-price purchases of American real-world economic goods and/or services, at the expense of the American public.