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Time of Changes -- The Changes Are Changing

by Karl Loren

Item 1: This lack of morality will continue to increase in the months and years ahead.

Why?

We are moving into a welfare state, more and more people feel that they "deserve" MONEY, and that rich people should pay poor people -- that is the mental consideration.

Item 2: The Increase in the National Debt is inevitable, and the consequences are certain.

Item 3: The Obama Stock Market Plunge

Item 4: President Obama's First Press Conference

Item 5: Nationalizing Detroit == WSJ, November 10, 2008

Item 6: Karl's Total Remedies

There are TWO central issues of predictability, covered in this Digest #3:

Number one Prediction and most likely to happen: An even faster decline in public morality. Why? Read Below, starting Here.

Will this be a Depression or a Recession? We are into DEEP recession and close to the definition of depression. Number two Prediction and very likely to happen: An even faster increase in the US
"public" debt and some soon-effort to increase government income to pay. Read Below to get the whole story. Along with this is a certain deep recession and talk of even a depression.

I, Karl Loren, predict an increasing rate of decline in public morality, including a decline in corporate morality.

Why?

That answer it here.

Briefly, the public morality has been drifting downwards, you could say it was a rapidly descending spiral. The speed of that descent will now increase for two reasons:

We are into an "entitlement" attitude as evidenced by the large majority of voters who favored the message of "entitlement" from Mr. Obama. The welfare state has increased its hold on our attitudes and economy over many recent years. That hold will now increase. It is like money falling out of heaven.

Welfare, after all, is getting something for nothing. This is the same type of exchange which describes criminal behavior. This was a rapidly growing trend before Mr. Obama came along, but he spoke to crowds that had that mentality and voted that way. They have voted themselves welfare and a whole host of other government services (education, government support of unrestricted stem cell research, child health care, adult health care "like Congress has," retirement and more) and they will get them.

This "public morality" however, is most found, even if not most obvious, at the level of the low and middle class wage earner. There is also a decline in the morality of our HIGH INCOME wage earners -- the CEOs of businesses, large corporations on the dole and top political leaders. There, the decreased levels of morality are better termed corruption. These have been highly publicized by the media for years, as a means of driving a wedge between the voter-victims and the business-villains. (In fact Dark Times Digest #2 covered that subject with thoroughness.) That immorality at the top of the economic ladder will be even more greatly publicized by the media while the crooked poor guy is just not "news." The top businessmen are now running to hide but he will be just as crooked from his hidden location until he is found by the hounds -- the IRS. Now is the time, for them, to consider the IRS as the 800 pound guerilla in the small room, asking for a banana. You give him your banana.

We will see more of both of these types of public immorality, but the business leaders and politicians will be more obvious and get more publicity.

In another edition of the Dark Times Digest I'll give you specific methods of detecting people with low morals and how they affect you -- how to avoid the adverse affects of being connected to them. A hint? Those close to you who, however, do not share YOUR moral code? Staying close to them makes YOU sick, and much sickness is caused by only this. Pills don't help. I'll write about what you can do. In the LAST edition of the Dark Times Digest I gave you many examples of corruption, several years ago, in the business community. There are more now, but they are well hidden. You will feel the affect of them.
Part of the reason for declining morality, also, is the recession and possible depression. You would like to think otherwise, but history teaches that people in poverty typically revert to criminal behavior more often than wealthy people. Large Corporations with business problems petition the government for a bailout, "because they are too important to fail," the successful auto industry plea.

Here are two personal anecdotes. One came from my several years spent in the country of Ghana, on the west West Coast of Africa many years ago -- when the level of morals in that society were far higher than they are now. They are also more in poverty now and have squandered the good condition they had in 1968 when I was there, some forty years ago.

The other personal experience, on November 6, 2008, came from making a reservation for a train trip on Amtrak. This experience is an example of what we now expect in the US with the level of morals having fallen as far as it has.

Ghana Experience

Flag of Ghana -- where Karl Loren lived for three years I lived and worked in the country of Ghana for three years in the 1960's just after the fall of the Communist Dictator there, Nkrumah, and the US eagerly sending me and millions of dollars to that Country to bring it back from the Communist government which had been in power for ten years.

I worked for the National Investment Bank of Ghana, used my Harvard MBA experience to help train Bank Officers and personally did or supervised the doing of loan analyses.

In my job I had to meet and work with many Ghana Government employees, from "Ministers" to "clerks." I recall learning that the clerks were paid very low wages, certainly far less than the US Minimum Wage now or then.

I also recall hearing a friend explain to me what he had to do to exchange the Ghana currency he had earned in Ghana, for US Dollars, so that he could then have the hard currency to send his children abroad for school.

I then learned that there were "laws" passed by the Ghana Legislature that ADDED necessary approvals on the route for a man to pass, trying to get his Ghana currency changed to US Dollars. In past years, apparently, there were just three persons who had to read his application and approve it. Many of these laws were known as useless, other than to provide busy-work for otherwise unemployed people. When the government wanted to increase help for the poor, rather than give them welfare, they passed more useless laws that allowed them, then, to hire more clerks to do useless work.

Clerks BUSY with Useless Work, needed a bribe to do the real work for you. Useless Clerks Doing Useless Work and being so busy they didn't have time to do the "real" work. If you needed something that was part of their real job? Well, the country did not have taxes to collect and then use to pay welfare, so they invented useless laws, for unemployed, poorly educated clerks, to be so busy that someone who needed their real work had to give them a small bribe to get the work done.

Everyone was happy. The worker got a job. Payment of bribes was expected and accepted. If you were VERY polite you might get the work without paying a bribe, and after all a poorly educated clerk, doing useless work, needed to be appreciated to make him feel proud of his work.

When the government wanted to provide more jobs, they added useless laws, hired poorly educated people and, then might have a total of TEN, all needed to approve his request. He learned quickly enough that the law had been changed to add these seven more people (clerks) so that each of them would have a chance to find some way to ask for a bribe in order to give his approval.

The government had found THIS way to tax the "wealthy" foreigner, and pay "welfare" to the poor. The man I talked to said the bribes were small, perhaps US$10.00, and the clerks were friendly and open about asking for it, and the man gave it without grumble.

After all, without this "method" the unemployment would be higher and taxes higher.

So, he paid to all those people because a law was designed specifically to make it possible for certain government workers to get part of their pay this way. There was an entitlement mentality that made it OK for these workers to ask for bribes to approve a government form.

Yesterday Personal Experience

I have friends visiting my home just now, as I write, and they had never taken the Amtrak Train along the coast of California, to San Francisco from Los Angeles. I got this scheduled and paid for a ticket for them.

My wife and I planned to travel with them as far as Santa Barbara, get off, and return home on the next train in that direction. They were to stay on the train to San Francisco. I got them a sleeper car so they would enjoy that extra comfort, but got a "coach class" ticket for my wife and me. I understood that coach passengers are not allowed to visit the sleeping car, and that sleeping car passengers are not allowed to sit in the coach, but that either type of passenger could go to the lounge and talk together. I understood that we four could all meet in the Lounge Car.

Passenger Gettying On Train, perhaps expecting a porter to help her up those steep steps? YOUR experience with a train probably includes a helpful porter. He would carry your bags and show you to your seat? They abound on government-owned trains. (The same government mentality as I found in Ghana? But in more modern trains they have built a loading dock level with the floor of the train -- makes it easy to get in. But "real" trains still make you climb that first steep step!)

I called to confirm reservations and details, got a Train Agent who amplified on these rules for sitting in various places. He explained it all well, but ended with, "If you will introduce yourself to the Sleeping Car Porter, shake his hand with money in YOUR hand for him, he will welcome you to come to your friend's sleeping car to sit for that short part of the journey.

This was an official Amtrak Train Employee suggesting that a bribe could allow me to avoid the security arrangements that allowed the porter on each separate train car to know where HIS passengers were and that they were obeying the rules.

The government, of course, runs Amtrak and, I'll guess, they think they have to hire porters from the lower income class. Such people don't have to solicit bribes, but it seems to be true that poor people are often willing to ask for a bribe to do their work, or to allow you to break a rule, especially if they feel "entitled" or that they "deserve it."

Increase In The National Debt -- And The Consequences

Huge Debts are causing bankruptcies. The coming increase in the National Debt is easily predicted with this background of just a small part of the present mortgage crisis in the US:

Joe Sixpack, the king of the entitlement community, buys a home on a "no document" mortgage loan. The house is supposedly worth $600,000 and he gets a mortgage for $400,000, or 66% of the value, per the "appraisal" on the property.

He gives the selling home owner a note for $200,000 as his down payment, and the bank accepts that piece of paper as evidence of his having paid cash toward the purchase of the house, even though there is no evidence that any cash changed hands.

You know what is coming.

The speculative boom goes bust. Joe is left with a huge debt on a house now worth $300,000 and going down fast.

People surrounded by debt turn to bankruptcy so they can start over. Foreclosures and bankruptcies are at record high levels -- and going higher, if the President doesn't do something about this evil.

The original paper mortgage MAY be locked away in the bank vault, but . . . . The bank bundles that mortgage up with a thousand others. Each of the mortgages in this bundle is given a quality rating, from risky to great. Then a "bundler" comes into the scene. He gets 100 different banks to let him "bundle the bundles" so that he has one LARGE bundle of mortgages some 100,000 different mortgages, worth, perhaps $600,000,000,000 (that's $600 Billion in the large bundle. They might put some "valuable" original document of that mortgage in a vault, but the electronic blips on a computer screen are then "just as good as" the real thing locked away in the vault.

Fannie Mae receives ONLY electronic blips on a screen, but is very skilled in bundling LARGE bundles of these "virtual mortgages" into something they call "tranches." (Click here to read a more technical definition of tranche.)

A "tranche" is simply a very large bundle made up of very LARGE bunches. We don't spell out the amount of money now. After all, if the figure is $3,000,000,000,000,000 you wouldn't even know how to say it. All you know is that it is large.

So a tranche might be worth $600 Billion, perhaps even one trillion dollars. Now you are starting to get up into real money. Since these tranches often specialize in US mortgages only, a few tranches can look like a good investment to Switzerland, and a large number of tranches might be purchased by China -- using all the trillions of US dollars it has earned exporting its cheap stuff to Walmart for US consumers who demand cheap goods.

Chinese Rural Farmer Harvestiing Sugar Cane for Cheap Export Now we have the unhappy circumstance of CHINA holding US debt -- US debt which they might just want to collect if some sort of collateral on the debt looks weak. Chinese farmers earn the equivalent of $1.00 per day to earn dollars from the sale of Chinese Sugar to the US and other countries. The US farmworker wages are reported by the US Labor Department:

According to a March 2000 report from the Labor Department, the real wages of farmworkers have fallen from $6.89 per hour in 1989 to $6.18 per hour in 1998. (source)

Using that figure as a benchmark, Chinese workers earn less than 2% of the American wage, but, of course, there is no charge of illegal dumping. US and other Countries buy cheap Chinese stuff for dollars and China now holds trillions of dollars of debt owed in dollars to be paid in dollars. There is no supply of that much currency in the world -- it is all virtual assets, blips on a computer screen, but a call on the US to pay can mean national bankruptcy.

If China calls in payment for a batch of these tranches, sighting the reduced credit value because of increasing foreclosures, etc., where does the US get the trillions of dollars to pay? China may demand something more secure than US Dollars, perhaps demanding GOLD if the contract calls for gold and the sellers of the tranch wanted to sell them for a high price -- just guarantee them in gold and get some Insurance Company (like AIG) whose guarantee is as good as gold, to guarantee to pay in gold if necessary. (Uncudentally, the world's largest insurance company, AIG, recently went into bankruptcy, with the Government giving them billions of dollars to protect the "insured investors."

Wall Street Journal, November 10, 2008:

The giant insurer announced on Monday a quarterly loss of $24.5 billion, more than three times the previous record loss it logged earlier this year. AIG absorbed steep losses on its investments and another $7.1 billion in write-downs on its beleaguered portfolio of credit derivatives. The new rescue package, at $150 billion, is the largest government loan to a single company.

The US does not have this much gold. The Chinese get reasonable and say they will take General Motors (after all. the government will probably own it by then?) and 200 square miles of Government-owned National Parks and throw in a government building permit for construction of 1,000,000 homes, along with guarantees that Chinese Construction Companies get the $3 trillion tranch job but to agree, in order to get the contract, to hire at least 10% of their total employees who are US Citizens. (This will be promoted as "new jobs" for 10,000 US construction workers. The non-English speaking Chinees workers will live in tents and "go back home" after they complete the contract.)

THIS government, like the past one, feels it is their moral obligation to relieve the sufferings of the victims who made these immoral choices to borrow when they could not repay, or when the unemployment rate rises well above 6% for the first time in many years.

Foreclosures are increasing and property values are diving:

The City of Angels' property market is looking more earthbound, as the global financial crisis is beginning to play itself out in the region's real estate.

Of course, real estate in and around the nation's entertainment capital already has taken some hits this year as the region's Countrywide Financial Corp. and IndyMac Bancorp Inc. were among the highest-profile casualties of the crisis. In addition, slumping imports into Los Angeles-area ports have hurt warehouse demand and housing prices have fallen.

Now brokers say the property market in and around the city is bracing for even tougher times as budget-conscious companies are looking to trim real-estate costs. Already-declining demand for office space in the Los Angeles region, one of the country's largest office markets, is expected to accelerate, says Whitley Collins, senior managing director of the Los Angeles region brokerage for Jones Lang LaSalle Americas Inc.

He sees a worst-case scenario in which metropolitan area companies over the next 12 months could put as much as 10 million square feet of office space back on the market and rents could decline by as much as 25%. "We're seeing a softening, but we're not nearly seeing the softening we'll see," Mr. Collins says. (Source: Wall Street Journal, November 5, 2008)

What does the architect of the Obama victory say? Here is his quote from just a few days ago:

In Rahm Emanuel's telling, the Democratic victories on Tuesday were a continuum of what began in the 2006 midterm elections, when his party won majorities in the House and the Senate for the first time in 12 years. "After 2006, I said it was George Bush and the desire for change," the congressman from Chicago's North Side tells me. "And the same cocktail contributed to this turnout. You had Barack Obama's message of change and Bush and the Republicans' record of incompetence."

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Emanuel would know. As chairman of the Democratic Congressional Campaign Committee, he helped engineer that GOP thumpin' two years ago. And as Mr. Obama's incoming White House chief of staff -- a position he accepted on Thursday -- he's certain to have an outsized say in how the Dems use their political monopoly come January.

Recently, I spoke with Mr. Emanuel during a short layover at the Detroit airport. Officially, he hadn't yet been offered the new post, and when queried about the prospect of serving in the Obama White House he demurred. But Mr. Emanuel, who turns 49 later this month, was eager to discuss Congress's agenda going forward. He explained how Democrats can avoid the mistakes that felled the Republican majority, and he reflected on the lessons learned as a high-ranking member of President Clinton's brain trust in the 1990s.

Asked what Barack Obama was elected to do, and what legislation he's likely to find on his Oval Office desk soonest, Mr. Emanuel didn't hesitate. "Bucket one would have children's health care, Schip," he said. "It has bipartisan agreement in the House and Senate. It's something President-elect Obama expects to see. Second would be [ending current restrictions on federally funded] stem-cell research. And third would be an economic recovery package focused on the two principles of job creation and tax relief for middle-class families."

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The last time a Democratic president's party also ran Congress was 1992. Just two years later, however, voters changed their mind about that arrangement and gave the GOP control of the House and Senate. Mr. Emanuel said he's not at all concerned that the party will overplay its hand this time. He insisted that his caucus is mindful of what happened to Democrats in 1994 and the Republican Congress in 2006.

Not surprisingly, Mr. Emanuel defended President Clinton's decision to push through a tax increase in 1993 -- "a tough call" -- after having campaigned on a middle-class tax cut. He also denied that it had much impact in the midterm elections a year later. Instead, he cited issues like "gays in the military" as more damaging politically. "It's not what we campaigned on," said Mr. Emanuel. And as an example of Republicans losing their way, he cited the Terri Schiavo episode in 2005, where President Bush and the Republican-controlled congress intervened in a case involving a brain-damaged woman's feeding tube.

In both instances, "the lesson is to do what you got elected to do," said Mr. Emanuel. "Do what you talked about on the campaign. If you got elected, that's what people expect. Don't go off on tangents where part of your party is demanding an ideological litmus test. Neither of those things was part of the campaign." (WSJ Source)

Yes, pay them unemployment benefits until the recession is over or other government bailout programs "kick in" to save the victims.

I do not much expect welfare people to read my Dark Times Digest.

FAIR USE NOTICE: This may contain copyrighted (© ) material the use of which has not always been specifically authorized by the copyright owner. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. It is believed that this constitutes a 'fair use' of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. This material is distributed without profit.

Karl Loren

The Obama Stock Market Plunge

Wall Street Journal, November 7, 2008, Source

Unable to fight off the gloom about the economy, stock prices slid for a second straight day, producing the biggest two-day percentage drop since Oct. 19-20, 1987.

The Dow Jones Industrial Average tumbled 443.48 points, or 4.9%, to 8695.79. The two-day loss since the rally on Election Day is 929.49 points, equal to 9.7% -- which is the biggest in point terms in the 112-year history of the Dow.

The Dow has given back roughly two-thirds of its gains since hitting a 5½-year low on Oct. 27, when it closed at 8175.77. The blue chips are now just 520 points above that level, and off 34.4% for the year.

Traders said the selloff may have been driven in part by expectations that the October employment report due out Friday morning will come in much worse than expected. Economists have been predicting job losses would total about 200,000 for the month and the unemployment rate would rise to 6.3% from 6.1%.

The Labor Department reported Thursday morning that weekly unemployment claims rose to their highest level in 25 years.

Meanwhile, retailers reported worse-than-expected sales for October.

Reflecting that negative economic picture and the probability of reduced demand for energy, oil prices slid 6.9% to their lowest level since March 2007, a 14% decline in two days.

General Motors, which along with Ford Motor is expected to report grim quarterly results Friday, was the biggest decliner among the Dow's 30 components, down nearly 14%.

FAIR USE NOTICE: This may contain copyrighted (© ) material the use of which has not always been specifically authorized by the copyright owner. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. It is believed that this constitutes a 'fair use' of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. This material is distributed without profit.

President Obama's First Press Conference

Source: Wall Street Journal, November 8, 2008

Barack Obama held his first press conference as President-elect yesterday [November 7, 2008], projecting an aura of authority and reassurance on the economy but without giving a clear sense of policy direction. Financial markets are likely to remain volatile and frightened until we see how and if the recession is tempering Mr. Obama's campaign agenda.

[Review & Outlook]

AP

All the more so after Friday's miserable report on October jobs. These reports don't get much worse than a loss of 240,000 jobs in a single month, with downward revisions for August and September combined of minus 179,000 more. The unemployment rate rose to 6.5% from 6.1%, and the rate has now climbed by 1.5 percentage points in the last six months. That's the fastest climb over a comparable period since the recession of 1982, when the jobless rate hit 10.8%.

The losses reflect the wall that the economy slammed into when the financial panic accelerated in mid-September. The credit seizure essentially knocked the economy out. Banks across the country have tightened credit standards, when they are lending at all, and capital is sitting on the sidelines waiting for a sense that the worst is over.

The global nature of the panic is also clear in the jobless figures, as manufacturing payrolls fell 90,000. For much of this year exports had been a bright spot, including for manufactured goods, but now Europe, Japan and much of the rest of the world are also heading into recession. So much for those economists -- at the Federal Reserve and at Harvard -- who thought that by debasing the dollar the U.S. could steal demand from the rest of the world.

The stock market selloff that greeted Mr. Obama's election this week is another sign of these gloomy realities. On Wednesday and Thursday combined, the Dow fell 9.7% before rallying some on Friday. Hedge funds are still deleveraging, as investors seek redemptions in order to return to cash, forcing the funds to sell stocks to meet those redemptions. Cash is king when no one can see the bottom.

Which brings us to Mr. Obama's comments, which didn't reveal all that much after he had met with his economic advisory team. The lineup of advisers behind the President-elect also required a little Kremlinology to read. On the reassuring side was Paul Volcker, the former Fed Chairman, and Richard Parsons, former CEO and now chairman of Time Warner.

On the not so reassuring: Michigan Governor Jennifer Granholm, whose tax and spend policies have only worsened her state's economic plight; David Bonior, the former Congressman who helped turn John Edwards into a class warrior; and William Donaldson, whose tenure as SEC Chairman under President Bush is a case study in heavier but feckless regulation. Let's hope they were on hand for political show.

Mr. Obama himself stayed on familiar campaign territory, calling for an early "stimulus" but without saying what such a bill should include beyond more federal spending for jobless benefits, for states and cities, and for the auto industry. He wasn't asked about House Speaker Nancy Pelosi's intriguing suggestion this week that any stimulus early next year should include a "permanent" tax cut. This is intellectual progress, after the failure of this year's bipartisan temporary tax rebates, though the nature of any tax cut will count for a great deal.

The President-elect dodged a question about whether he might abandon his plans to raise taxes on upper-incomes. The bad news is that he replied that he thinks his campaign agenda (which includes a huge tax increase on "the rich") is still the best policy blueprint. The good news is he didn't expressly say he'd insist on tax increases, leaving himself some running room.

FAIR USE NOTICE: This may contain copyrighted (© ) material the use of which has not always been specifically authorized by the copyright owner. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. It is believed that this constitutes a 'fair use' of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. This material is distributed without profit.

Wall Street Journal, November 10, 2008:

Nationalizing Detroit

Luxury Car Soon To Get a Government Bailout of your 30 billion dollars In the Washington mind, there are two kinds of private companies. There are successful if "greedy" corporations, which can always afford to pay more taxes and tolerate more regulation. And then there are the corporate supplicants that need a handout. As the Detroit auto makers are proving, you can go from being the first to the second in the blink of an election.

For decades, Congress has never had a second thought as it imposed tighter emissions standards on GM, Ford and Chrysler, denouncing them for making evil SUVs. Yet now that the companies are bleeding cash, and may be heading for bankruptcy, suddenly the shrinking Big Three are the latest candidates for a taxpayer bailout. One $25 billion loan facility has already been signed into law, and Senator Debbie Stabenow (D., Mich.) wants another $25 billion, this time with no strings attached.

Nancy Pelosi, Speaker of the House of Representatives Speaker Nancy Pelosi and Senate Majority Leader Harry Reid met last week with company and union officials, and they later sent a letter urging Treasury Secretary Henry Paulson to bestow cash from the Troubled Asset Relief Program (Tarp) on the companies. Barack Obama implied at his Friday press conference that he too favors some kind of taxpayer rescue of Detroit, though no doubt he'd like to have President Bush's signature on the check so he won't have to take full political responsibility.

FAIR USE NOTICE: This may contain copyrighted (© ) material the use of which has not always been specifically authorized by the copyright owner. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. It is believed that this constitutes a 'fair use' of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. This material is distributed without profit.

Karl's Total Remedies

I, Karl Loren, have often written dire warnings in the field of health -- for more than 20 years.

However, I have always included a reference, even a very full explanation, of the remedy that would completely solve whatever danger I had warned about.

The same is true here. This crisis, economic turmoil, increasing public debt and increasing public immorality call for two different levels of remedy. I know about both of them. I will soon be offering a service my self, for the very few people who learn about it and show interest. Keep on reading these Dark Times Digests to keep up with THIS part of my message.

The NEXT edition of the Dark Times Digest will have a bit of this remedy described.

On THESE pages, this web site, eventually the entire personal business remedy will be described. Ultimately there will be a "service" here (with more and more details revealed from week to week) that will cost a fee, and be of interest to individual investors and small to medium sized business organizations.

A full version of this service is now in use, being "beta tested" for probably another year before the service will be offered to the public.

The remedy for all of mankind (having to do with the world-wide decline in morality) will also be revealed -- it being a service by a group, not Karl Loren as an individual.

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