A Flimsy Piece of Worn Out Script…
“If the dollar does indeed lose its role as leading international currency, the cost to the United States would probably extend beyond the simple loss of seigniorage, narrowly defined. We would lose the privilege of playing banker to the world, accepting short-term deposits at low interest rates in return for long-term investments at high average rates of return. When combined with other political developments, it might even spell the end of economic and political hegemony.”
– Economist Menzie Chinn, “Will the Dollar Remain the World’s Reserve Currency in Five Years?”, CounterPunch 2009
Barack Obama’s economic recovery has been a complete bust. Unemployment is high, the economy is barely growing, and inequality is greater than anytime on record. On top of that, inflation has dropped to 1.2 percent, private sector hiring continues to disappoint and, according to Gallup’s “Economic Confidence” survey, households and consumers remain “deeply negative”. More tellingly, the Federal Reserve’s emergency program dubbed QE– which was designed to mitigate the fallout from the 2008 stock market crash and subsequent recession–is still operating at full-throttle five years after Lehman Brothers defaulted. This is inexcusable. It’s an admission that US policymakers have no idea what they’re doing.
Why is it so hard to get the economy up and running? Everyone knows that spending generates growth, so if the private sector (consumers and businesses) can’t spend the public sector (the government) must spend. That’s how sluggish economies shake off recession, through growth.
Spend, spend, spend and spend some more. That’s how you grow your way out of a slump. There’s nothing new or original about this. This isn’t some cutting-edge, state-of-the-art theory. It’s settled science. Economics 101.
So is it any wonder why the rest of the world is losing confidence in the US? Is it any wonder why China and Japan have slashed their purchases of US debt? Get a load of this from Reuters:
“China and Japan led an exodus from U.S. Treasuries in June after the first signals the U.S. central bank was preparing to wind back its stimulus, with data showing they accounted for almost all of a record $40.8 billion of net foreign selling of Treasuries….
China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, and Japan trimmed its holdings for a third straight month to $1.0834 trillion. Combined, they accounted for about $40 billion in net Treasury outflows.” (“China, Japan lead record outflow from Treasuries in June”, Reuters)
While things have improved since August, the selloff is both ominous and revealing. Foreign trading partners are losing confidence in US stewardship because of policymakers erratic behavior. Here’s how former Fed chairman Paul Volcker summed it up:
“We have lost a coherent successful governing model to be emulated by the rest of the world. Instead, we’re faced with broken financial markets, underperformance of our economy and a fractious political climate.”
Naturally, this loss of confidence is going to hurt the dollar vis a vis its position as the world’s reserve currency. But don’t kid yourself, China and Japan want to be the top-dog either. They’re fine with the way things are right now. The problem is, it’s looking more and more like the US is not up-to-the-task anymore given the irresponsible way it conducts its business. And we’re not talking about the government shutdown either, although that circus sideshow certainly lifted a few eyebrows in capitals around the world. Foreign leaders have come to expect these tedious outbursts from the lunatic fringe in Congress. But, the fact is, the government shutdown fiasco had very little effect on the bond market. The benchmark 10-year US Treasury shrugged off congress’s screwball antics with a wave of the hand. No big deal. Not so the talk of “tapering” by the Fed, which sent 10-year yields soaring more than 100 basis points to 3 percent in less that a month. Tapering put the fear of god in everyone. The sudden jolt to mortgage rates was enough to put the kibosh on new and existing homes sales putting a swift end to Bernanke’s dream of reflating the housing bubble. The rising long-term rates threatened to push the economy back into recession and wipe out five years of zero rates and pump priming in the blink of an eye. That’s why China and Co. started to jettison USTs. They figured if the Fed was going to scale back its asset purchases, rates would rise, and they’d be left with a whole shedload of US paper that would be worth less than what they paid for it. So they got out while the gettin’ was good.
So don’t believe the media’s fairytale that Bernanke postponed tapering because the economy still looked weak. That’s nonsense. It was the selloff in USTs that slammed on the brakes. The Fed actually wants to reduce its purchases because there are humongous bubbles emerging in financial assets everywhere. But how to do it without triggering another crash, that’s the question. The Fed has distorted prices across the board, which is why the main stock indices are climbing to new highs every day on the back of an economy that has less people in the workforce than it did 10 years ago. What a joke. And people wonder why foreign lenders are getting nervous?
What China wants from the United States is simple. They want proof that the US hasn’t lost its mind. That’s all. “Just show us that you still know how to fix the economy and run the system.” Is that too much to ask?
Unfortunately, Washington doesn’t think it needs to answer to anyone. We’re Numero Uno, le grand fromage. “What we say goes!”
Okay. But the only thing that’s going is the US’s reputation, it’s economic dominance, it’s behemoth debt market, and its reserve currency status. Not because the world is rebelling, but because the US is imploding. “Stupid” is a disease that has spread to every part of the body politic. The country is run by crackpots who implement counterproductive policies that weaken demand, boost unemployment, shrink growth leave the rest of the world scratching their heads in bewilderment. This is from Bloomberg:
“While government debt was a haven as the U.S. endured the worst recession in seven decades, primary dealers such as Barclays Plc (BARC) and Goldman Sachs Group Inc. say the gains this month show the Fed’s $85 billion of monthly bond purchases are masking the risk of owning fixed-income securities as the recovery in America takes hold.
“Treasuries are just not worth the risk,” Thomas Higgins, the Boston-based global macro strategist at Standish Mellon Asset Management Co., which oversees $167 billion of fixed-income investments, said in a telephone interview on Oct. 23.” (Bloomberg)
Not worth the risk, indeed, which is why the dollar is getting pummeled mercilessly at the same time. This is from Reuters:
“The dollar fell towards a nine-month low against a basket of currencies on Monday, with more investors selling on growing confidence the Federal Reserve will keep policy accommodative….
Most expect the central bank to delay withdrawing stimulus until March 2014…. The longer the Fed keeps policy accommodative, the more U.S. yields stay anchored, making the dollar less attractive to hold.” (Reuters)
So the dollar isn’t looking too hot either, is it, which is why China and Japan have started to reconsider their holdings. This is from Businessweek:
“U.S. government debt has already lost some of its appeal among foreign investors. They were net sellers of Treasuries for five-straight months ended August, disposing of $133 billion in that span, last week’s Treasury data showed.
The streak is the longest since 2001 as China, the largest overseas U.S. creditor, reduced its holdings to $1.268 trillion, the least since February….With the economy recovering from the depths of that recession, Treasuries may be more vulnerable to a selloff this time.” (“Treasuries Risk Shown as Fed Distorts Correlation to Stocks”, Businessweek)
Of course, there’s going to be a selloff. Why wouldn’t there be? And probably a panic too to boot.
Look, it’s simple: If the biggest buyer of US Treasuries (The Fed) signals that its either going to scale back its purchases or reduce its stockpile of USTs, then what’s going to happen?
Well, the supply of USTs will increase which will lower prices on US debt and push up rates. Supply and demand, right?
So, if the other participants in the market (aka China and Japan) think the Fed is about to taper, they’re going to try to sell before other investors race for the exits.
The question is: What’s that going to do to the dollar?
And the answer is: The dollar going to get hammered.
The US gov going to have to borrow at higher rates which could tip the economy back into recession. Also, the US could lose the ”exorbitant privilege” of exchanging colored pieces of paper for valuable goods and services produced by human sweat and toil. Isn’t that what’s really at stake?
Of course, it is. The entire imperial system is balanced on a flimsy piece of worn scrip with a dead president’s face on it. All that could change in the blink of an eye if people lose faith in US stewardship of the system.
But, what exactly would the US have to do for foreign countries to ditch the dollar? Here’s how economist and author Menzie Chinn answered that question in an interview in CounterPunch in 2009:
“If the US administration were to pursue highly irresponsible policies, such as massive deficit spending for many years so as to push output above full employment levels, or if the Fed were to delay too long an ending to quantitative easing, then the dollar could lose its position.” (“Will the Dollar Remain the World’s Reserve Currency in Five Years?” An Interview With Economist Menzie Chinn, Counterpunch)
Funny how Chinn anticipated the problems with winding down QE way back in 2009, isn’t it? His comments sound downright prophetic given Wall Street’s strong reaction.
But we keep hearing that China is stuck with the US and has to keep buying Treasuries or its currency will rise and kill its exports. Is that true or will China eventually split with the dollar?
Menzie Chinn again:
“It is true that each Asian central bank stands to lose considerably, in the value of its current holdings, if dollar sales precipitate a dollar crash. But we agree with Barry Eichengreen that each individual participant will realize that it stands to lose more if it holds pat than if it joins the run, when it comes to that. Thus if the United States is relying on the economic interests of other countries, it cannot count on being bailed out indefinitely.” (Counterpunch)
Well, that sounds a bit worrisome. But maybe China won’t notice that we’re governed by morons who’ve forgotten how to fix the economy or generate demand for their products. Any chance of that?
No chance at all, in fact, China already has already started its transition away from the dollar. Here’s the scoop from former chief economist for Morgan Stanley Asia, Stephen S. Roach:
“China has made a conscious strategic decision to alter its growth strategy. Its 12th Five-Year Plan, enacted in March 2011, lays out a broad framework for a more balanced growth model that relies increasingly on domestic private consumption. These plans are about to be put into action….
Rebalancing is China’s only option…..With rebalancing will come a decline in China’s surplus saving, much slower accumulation of foreign-exchange reserves, and a concomitant reduction in its seemingly voracious demand for dollar-denominated assets. Curtailing purchases of US Treasuries is a perfectly logical outgrowth of this process…..
For China, this is not a power race. It should be seen as more of a conscious strategy to do what is right for China as it confronts its own daunting growth and development imperatives in the coming years.” (“China gets a wake-up call from US”, Stephen S. Roach, Project Syndicate via bangkokpost.com)
In other words, “No hard feelings, Uncle Sam. We just don’t need your fishwrap currency anymore.”
No matter how you cut it, the dollar is going to be facing stiff headwinds in the days ahead. If Roach’s analysis is correct, we can expect a gradual move away from the buck leading to a persistent erosion of US economic and political power.
The end of dollar hegemony means America’s “unipolar moment” may be drawing to a close.
“4,594,000 Mortgages Going Unpaid in the United States.”
Buying a house is a lot like buying a car. If you don’t look under the hood, you could wind up with a lemon. Only with housing, it’s not as simple as checking the dipstick or looking for oil under the rear axle. No, smart home buyers check the data to see what’s really going on. That’s the best way to cut through the hype and separate the fact from the fiction.
Lately, interest rates have been inching higher while prices have been rising. The combination of the two has put the kibosh on sales leading to a more generalized slowdown. But sluggish sales and higher rates don’t tell the whole story. For that, we need to take a peak under the hood and see what the cheerleaders in the media have been hiding from view. And what they’ve been hiding is nearly 5 million homeowners who’ve stopped paying their mortgages altogether. That’s no small matter. Here’s the story from DS News:
“Lender Processing Services provided the media with a “first look” at the company’s mortgage performance statistics for the month of September….LPS counts a total of 3,266,000 mortgages nationwide that are 30 or more days past due but not yet in foreclosure. That tally represents 6.46 percent of all outstanding mortgages…..
Of the more than 3 million delinquent loans, LPS says 1,331,000 have missed at least three payments but haven’t started the foreclosure process. Another 1,328,000 mortgages are currently winding their way through foreclosure pipelines, according to LPS’ data….
Yikes. Now, that doesn’t necessarily mean that it’s a bad time to buy a house, but one should at least be aware of the fact that there’s a gargantuan stockpile of backlogged homes just waiting to flood the market once the banks get their act together. Of course, maybe that day will never come, right? After all, we’re already 5 years into this thing and the banks are actually dragging the process out longer today than ever before. Maybe you don’t believe that. Maybe you think that there’s actually a shortage of supply which is why prices have been going up for the last year or so. Okay, but why not withhold judgment until you check this out. This is from an article at Housingwire titled “Prolonged liquidation timelines shake up home prices”:
“Timelines on distressed inventory continue to drag on, while elevated mortgage loss severities continue to offset positive gains on home prices…..
Liquidations increased 32.2 months for the third quarter, up from 31.1 months for the second quarter, and also up from 28.3 months a year ago. In aggregate, timelines have increased every quarter since the fourth quarter of 2008 and remain at historical highs…
Nonetheless, the most seasoned inventory continues to prove difficult to liquidate, skewing aggregate timelines higher.
“The percentage of distressed mortgages that are five or more years delinquent has tripled just in the last year,” Nelson said.” (“Prolonged liquidation timelines shake up home prices”, Housingwire)
Read that last line over a couple times and let it sink in: “The percentage of distressed mortgages that are five or more years delinquent has tripled just in the last year.”
That doesn’t sound like the “Happy days are here again” refrain we’ve been hearing in the media, does it? It sounds like the banks still haven’t even dumped the subprimes they’ve had on their books for 5-long years. In fact, the article alludes to that very fact. Here’s the money-quote: “Subprime loss severities have remained flat with timelines in excess of 34 months and home price gains lower than the national average.”
The banks are still writing down the losses on subprime mortgages? What a farce.
Now, I know the article was written in opaque business-journal-type gibberish that makes it hard to understand, but just consider what the author is saying: “Liquidations increased 32.2 months for the third quarter… up from 28.3 months a year ago.” So the banks are actually taking LONGER to process the gunk on their books than even last year. Why would they do that? Why would they drag out the process longer than they had to?
1– Because they don’t have the money to cover the losses.
2–Because they don’t want to dump more homes on the market and push down prices.
3–Because the Fed is lending them money at zero rates so they can roll over their prodigious debtpile at no cost to themselves.
So, you see, the whole system has been rejiggered to accommodate a handful of underwater, zombie institutions who wouldn’t know how to make an honest buck in a normal business transaction if it was staring them in the face.
Back to housing: So there’s a humongous shadow inventory of distressed homes that have yet to reach the market. And the banks are dragging their feet to keep prices artificially high. Everyone knows this now, in fact, even CNN ran a story on the topic last week. Here’s a clip:
“Foreclosure sounds like the end of the line, but actual eviction can take months or years — even after the bank has repossessed a home. RealtyTrac estimates that 47% of the nation’s foreclosed homes are currently occupied. The percentage actually tops 60% in some hot housing markets, like Miami and Los Angeles.
Those still living in repossessed homes include both former owners and renters. Either way, their time in the homes is mortgage and rent free….
And banks may be in no rush to kick people out. They will take their time in markets with a lot of homes for sale and depressed prices. Plus, letting homeowners stick around can help protect homes from abuse.” (“Half of nation’s foreclosed homes still occupied”, CNN Money)
What’s funny about this article is that the banks have been fighting tooth-n-nail for the last year for the Consumer Financial Protection Bureau (CFPB) to ease lending standards on their Qualified Mortgage (QM) rule so they can blow up the system again and leave us all with another 5 or 6 million foreclosures. What’s that saying about “old dogs and new tricks”?
There’s no point in going over the same material over and over again. People who follow the market already know that mortgage applications are down, rates are up, sales are down, prices are up, etc, etc, etc. But potential homebuyers should at least know that this is the weirdest housing market of all time. The extent of the manipulation is simply mindboggling. It’s a stretch to call it a market at all since the fundamentals have been tossed out and replaced with fake rates, fake inventory, fake mortgage modification programs, and fake demand. For example, get a load of this from RealtyTrac:
1—”All-cash purchases nationwide represented 49 percent of all residential sales in September…..
2–September had the highest percentage of institutional investor purchases of any month since RealtyTrac began tracking in January 2011. ….
3–“The housing market continues to skew in favor of investors, particularly deep-pocketed institutional investors, and other buyers paying with cash,” said Daren Blomquist, vice president at RealtyTrac. (“Institutional Investor Purchases Reach New High in September with 14 Percent of all U.S. Residential Sales”, RealtyTrac)
Does that sound like a normal market to you?
Whatever happened to firsttime homebuyers who used to make up the bulk of housing sales?
You know what happened to them, don’t you? They’re either buried under a mountain of student debt from which they will never emerge or stuck in crappy part-time jobs that don’t pay enough to even meet the monthly rent, right? These people will probably never own a home; it’s just not in the cards, which is why firsttime homebuyers are following the Dodo into extinction.
And the same rule applies to “move up” buyers, too. Move up buyers are the folks who use the equity in their first home to buy a nicer home in a better neighborhood. Move up buyers used to be the second biggest buyer of homes in the US, but not any more. They’re struggling too, mainly because housing prices are still below their 2006 peak (which means many of these people are either still underwater on their mortgages) or because they have zero equity in the homes.
So, who’s buying all the houses?
Speculators. People who have no intention of moving into the homes they buy. That’s what keeps the recovery going. And that’s what low interest rates and QE-pump priming achieves; it transforms markets that are a critical part of a thriving economy into an annex of the Wall Street Casino where houses are flipped in a frenzy of speculation like credit default swaps or some equally dodgy debt instrument. This is the world Bernanke has created, a topsy-turvy world of lightening-fast trades that blows up every 5 or 6 years.
I mean, think of it: 49 percent of all residential sales in September were all-cash purchases.
And where are all these deep-pocket buyers coming from?
Wall Street, of course. The big boys have switched from junk bonds and farmland to housing, which should be expected given the ocean of liquidity the Fed has pumped into the financial markets. Naturally, there’s been some spillover into housing which is creating a new regime of credit bubbles. Booyah, Bernanke, you’ve done it again!
Are you surprised? Are you surprised that institutional investors are snapping up these foreclosures like hotcakes even though there are 4.5 million more in the pipeline? That must mean that the banks made some kind of deal with the PE guys that they wouldn’t dump their houses on the market without giving them a heads up first, right? (wink, wink)
Of course, it’s right. It’s all rigged. You know it, I know it, everyone knows it. The whole bloody country is owned by a credit monopoly that never gets tired of fleecing us.
That’s just what they do.
Torture, or what our government calls “enhanced interrogation”, is not a tactic so much as a darkly artistic process. The subject of this process has something that the torturer wants; it might be information, or a forced confession to a crime the subject did not commit, but most often, torture is designed to gain nothing more than psychological compliance.
The goal is to manipulate the subject into believing that submission is the only possible future, and that such submission is inevitable regardless of the will of the victim. The torturer often builds himself up as a kind of parent figure for the subject – becoming the only entity that can supply shelter, water, food, and comfort. The torturer is taskmaster and abuser, but also caregiver in the twisted relationship dynamic. A schizophrenic balance is struck in which the subject longs for the outside world and a return to the pleasures of the past (making him desperate and malleable), but he also partially accepts his prison walls as home (giving him a false faith that compliance will lead to a safer and more predictable tomorrow).
Until this compliance is achieved, the subject is exposed to endless and erratic crisis events in which his body is damaged, his mind is deprived of sense, perception, and sleep, and his life is overtly threatened. He may receive brief moments of rest, but these are designed only to make the next torture session even more raw and painful. If the subject does not understand how the process works, or if he doesn’t have a strong sense of his own identity, then he will quickly lose track of reality. Every moment becomes a waking nightmare, a warped and gruesome carnival, and life becomes nothing more than an absurd and obscure experiment barely worth living.
It is my belief based on substantial evidence that America, as a nation and a culture, is now being held hostage and tortured into submission on a grand scale using economic terror by the elitist establishment which dominates BOTH major political parties. The goal? To push our society to conform completely with the concepts of globalization, bureaucratic micro-management, and greatly reduced living standards. We are being conditioned to accept defeat and failure, and like children, to cry out for a parental authority to save us in our state of helplessness and fear, even if that authority was the cause of our fear from the very beginning.
The Thin Thread Of The American Economic Fantasy
In the past three months the U.S. has flirted with total fiscal collapse three times. The first event came in August with market rumors that the Federal Reserve was nearing a “consensus” on plans to cut QE stimulus measures, causing panic amongst investors who now realize that the ONLY pillar still holding our fiscal edifice together is endless fiat currency creation by the Fed. Markets began a paradigm which is now the “new normal”; plummeting whenever good economic news hits the mainstream on the fear that the central bank will tighten policy, and skyrocketing when bad economic news hits the mainstream on the assumption that the Fed will continue printing. It is official – lackluster employment reports are something to cheer, and overall systemic crisis is good for stocks:
The possibility of a Fed taper has shown us clearly that any action by the private bank to reduce or remove quantitative easing will result in a market panic and implosion. If the globalists within the Fed apparatus decide one day soon that they want to bring the U.S. to its knees, destroy the dollar, and introduce a new world reserve currency, they can do it with little more than a word proclaiming QE over, or unsuccessful. So far, they keep the life support machine running…
The second event came with the drive by the Obama Administration to turn their covert war in Syria into a full blown invasion. Despite presumptions by many naysayers that Russia and China wouldn’t lift a finger to aid the Assad regime, both nations staunchly opposed action by the U.S. in the region and tensions neared critical mass. Make no mistake, a WWIII level event could have easily erupted, and some Americans seem to remain oblivious to the danger.
China and Russia maintain vast influence in global markets. The EU, for instance, is utterly dependent on Russian natural gas exports for their energy needs. The U.S. economy could be annihilated within weeks by an announcement by China to dump their treasury holdings or the dollar as the world reserve currency. This is just a taste of the financial risks associated with a new war in the Middle East, and military risks add even more potential calamity. Anyone who believes that Chinese or Russian views on American political or military behavior “do not matter” is living in a deluded cartoon-land.
The third event came with the recent debt ceiling debate and government shutdown. One-third of the U.S. population is disturbingly dependent on scraps from the government’s table, and any mention of cuts to entitlement programs (or social security, which government treats exactly like an entitlement program) causes immediate and militant finger pointing. Democrats have been especially vicious in their accusations and rhetoric, consistently referring to Constitutional conservatives and “Tea Party” legislators as “extremists”, “traitors”, and even “domestic enemies”:
I happen to take a slightly different view to a majority of independent analysts in that I believe the establishment is just as likely to push America into deliberate default as it is to push America into infinite debt and inflationary collapse. The end result will be exactly the same regardless of the path taken, and we have yet another opportunity to dance on the edge of oblivion coming in three to four months when the debt debate starts all over again.
The point is, our financial system has become so unbalanced and internally diseased that if ANY event follows through to culmination, whether political, economic, or international, the economy WILL shatter. The past three month are a resounding testament to this fact.
The “De-Americanization’ Of The Global Economy
In my article ‘How The Dollar Will Be Replaced’, published in 2012, I summarized the Catch-22 nature of America’s debt problem which I have been warning about since 2006, and how this will eventually end in the abandonment of the dollar as the world reserve currency. To this day, and in the face of overwhelming evidence that the dollar is doomed, some people still refuse to grasp reality.
In the midst of the latest debt debate China has made clear it’s intentions through state run media to end its relationship with the greenback, not just to form a Chinese-centric reserve currency system, but a global currency system centered on a “new world order”:
Last year China surpassed the U.S. as the world’s largest importer and exporter, making its currency, the Yuan, more desirable than the greenback as a reserve in the long term. Since 2010, China has been quietly but quickly establishing multiple bilateral trade agreements with numerous countries dropping the dollar as the primary purchasing mechanism. China has accumulated massive gold stores and is set to become the world’s largest holder of gold in the next two years. In the past year, China has also surpassed the U.S. as the number one importer of oil, making it a more valued market for the Middle East and causing many to question the dollar’s relevance as the petro-currency:
Saudi Arabia, America’s primary ally and foothold in the global oil market, is now openly calling for an end to traditional agreements and a separation from the U.S. because of the lack of military action in Syria. This too does not bode well for the dollar’s petro-status. Like a chess maneuver, it would seem we have been cornered by the globalists on oil. If we invade Syria or Iran we risk losing petro-status. If we do not invade Syria or Iran, we still risk losing petro-status:
In response to the dismal debt ceiling extension and the uncertainty underlying the new debate coming in the next few months, China’s ratings agency, Dagong, has downgraded U.S. treasury bonds yet again:
Three near-crisis events in only three months have signaled a severe acceleration in what the Chinese call the “de-Americanization” of the global economy. All of the financial shifts taking place since the derivatives implosion of 2008, as well as those rushing like white-water rapids through the global system in the wake of the debt ceiling debate, are gravitating towards ONE outcome – the destruction of the dollar, and the introduction of a new global currency (the SDR) controlled the the IMF.
Russia’s Vladimir Putin has called for a global currency run by the IMF to replace the dollar:
China has called for a global currency run by the IMF to replace the dollar:
Elitists within the U.S. have called for a global currency run by the IMF to replace the Dollar:
Hell, even the Vatican has called for a global currency run by a “global public authority” to replace the dollar:
There is a world-wide strategy in motion to end the dollar, and with it, America as we know it today. The only question is, how many more near-disasters will we have to experience before the trigger event takes place?
The Torture Continues
With so many near misses culminating so close together, it may be wise to consider what could happen in the the next three months while we wait for debt debate theater part duex. Like a prisoner in Abu Ghraib, America is trapped, waiting for the next humiliation, the next degradation, or the next session of pain. Are we merely being acclimated to the idea of incessant crisis? Are we learning to become apathetic at the edge of the chasm? Or, are we being driven to madness, mass-madness, by a concert of elitist interrogators seeking our acquiescence?
Again, the central purpose of torture is to acquire consent. Not just extorted consent, but voluntary consent. It is not enough for the torturer to force the subject to obey, he wants the subject to EMBRACE his servitude. To gladly abandon all hope. To see his captor as his only salvation.
The globalist establishment wants us to beg them to save us from the tortures they create. If we never give them this, they will never win.
Source: Brandon Smith | Alt-Market
A controversial report released this month by the International Monetary Fund outlines schemes to have big-spending governments with out-of-control debts plunder humanity’s wealth using a mix of much higher taxes and outright confiscation. The goal: Prop up Big Government. Because people and their assets are generally mobile, the radical IMF document, dubbed “Taxing Times,” also proposes measures to prevent them from escaping before they can be fleeced. Of course, the real problems — debt-based fiat currency, lawless bank bailouts, and a cartel-run monetary system — are virtually ignored.
Pointing to absurd and rising levels of government debt, as well as increasing income inequality, the IMF document suggests there are few remaining options for desperate policymakers to explore. Two that are mentioned include “repudiating public debt” — in other words, defaulting on government bonds — or “inflating it away” by having privately owned central banks conjure even more gargantuan amounts of fiat currency into existence at interest. Both of those plots, of course, would still represent a massive transfer of wealth.
However, even though it hides behind the passive voice, the IMF preference for dealing with the debt problems appears to be simply confiscating the wealth more directly. “The sharp deterioration of the public finances in many countries has revived interest in a capital levy, a one-off tax on private wealth, as an exceptional measure to restore debt sustainability,” the report claims. “The appeal is that such a tax, if it is implemented before avoidance is possible, and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair).”
Reducing government debt ratios to “pre-crisis levels” seen at the end of 2007 — before the multi-trillion-dollar banker bailouts and ramping up of the lawless currency printing at central banks — will require “sizeable” tax rates, the IMF continues. Citing a sample of 15 euro-area nations, the report claims that all households with positive net wealth — anyone with more assets than debt, in essence — would have to surrender about 10 percent of it. Because many people who lived responsibly and saved would try to avoid the looting of their wealth, drastic measures must be considered to stop them.
“There is a surprisingly large amount of experience to draw on, as such levies were widely adopted in Europe after World War I and in Germany and Japan after World War II,” the IMF report notes. “This experience suggests that more notable than any loss of credibility was a simple failure to achieve debt reduction, largely because the delay in introduction gave space for extensive avoidance and capital flight, in turn spurring inflation [sic].”
By proposing the outright confiscation of middle-class wealth, analysts say the IMF is essentially acknowledging that simply looting “the rich” will not be enough to even restore government debt to “sustainable” levels. Still, the non-establishment “rich” would face by far the most ferocious assaults on their assets under the schemes outlined in the radical IMF report, which was promptly celebrated by Big Government-supporting politicians.
Noting that financial wealth and people are mobile, the document suggests that there “may be a case” for confiscating varying amounts of wealth using various means — all depending on how easy it would be for people to protect the assets in question from legalized looting. “Substantial progress likely requires enhanced international cooperation to make it harder for the very well-off to evade taxation by placing funds elsewhere,” the report says matter-of-factly.
Taxes on the “rich” of around 60 percent to 70 percent, according to the IMF, would likely be the rate at which the most plunder could be extracted for desperate governments. “A revenue-maximizing approach to taxing the rich effectively puts a weight of zero on their well-being,” the report explains, calling that notion “contentious.” “If one attaches less weight to those with the highest incomes, the vote would be to increase the top marginal rate.”
Private companies that try to reduce their already-crushing tax burdens using “tax planning schemes,” as the report calls them, are also in the IMF crosshairs for increased wealth confiscation. In a section headlined “Tricks of the Trade,” for example, the document blasts business efforts to provide services directly from “low-tax jurisdictions” as “abusive.”
In essence, the IMF and other taxpayer-funded international institutions hope to see a stronger global regulatory regime to ensure maximum wealth extraction via corporate taxation, too. “The chance to review international tax architecture seems to come about once a century; the fundamental issues should not be ducked,” the report argues.
The devastating consequences of squandering ever-greater amounts of productive capital on government programs, of course, are largely overlooked. Meanwhile, the unspoken assumption underpinning the radical ideas is essentially that companies exist to produce wealth for governments to spend — rather than value for shareholders and consumers as has traditionally been the case.
Looking past the bureaucratic language, the IMF caveats, its effort to hide behind the passive voice, and the thinly disguised attempt to make the heist sound palatable to the public because not everyone would be fleeced just yet, the message becomes clear. What the IMF is really saying is that the proposed massive confiscation of wealth must be adopted quickly and quietly — before people have a chance escape it.
Among other schemes discussed in the report is “harmonizing” taxes across jurisdictions, a longtime globalist goal pushed by more than a few establishment-run international institutions. To ensure that governments can extract as much wealth as possible from the productive sector of the economy, more cooperation between them is supposedly needed to eliminate tax competitionamong jurisdictions. After all, if one government sets lower tax rates to attract businesses and capital, other regimes are being deprived of what the IMF appears to believe is rightfully theirs to seize.
While the report has largely escaped the attention of the establishment media, analysts who dug into it were shocked. “It may all sound far-fetched to you now, and most people will still cling on to the idea that ‘they wouldn’t do such a thing’,” noted Raul Meijer in an analysis posted on Market Oracle, suggesting that the Cyprus heist would likely serve as a “blueprint” for future looting — as EU officials promised. “But that the IMF proposes it at all, and so openly, suggests that they might, if only they can figure out how.”
Writing in Forbes, meanwhile, Competitive Enterprise Institute Fellow Bill Frezza highlighted three major takeaways from the report. The first point is that IMF economists understand that even if 100 percent of assets belonging to the “1 percent” were expropriated, there would not be enough to fund today’s governments. “That means that all households with positive net wealth — everyone with retirement savings or home equity — would have their assets plundered under the IMF’s formulation,” Frezza explained.
The second major takeaway, he continued, is that such a “repudiation of private property” would still not be enough to pay off the debts of Western governments or to fund their budgets going forward. Instead, it would merely “restore debt sustainability,” as the IMF put it, allowing governments to keep borrowing until the next crisis strikes — “for which stronger measures will be required, of course.”
Lastly, Frezza explained, if the political class fails to “muster the courage to engage in this kind of wholesale robbery,” the only alternatives offered by the IMF were debt repudiation or hyperinflation. “Structural reform proposals for the Ponzi-scheme entitlement programs that are bankrupting us are nowhere to be seen,” he added.
Concluding, Frezza painted a dire picture of what the future may hold if the would-be looters are not restrained. “Yes, this is where the bankruptcy of the modern entitlement state is taking us — capital controls and exit restrictions so the proverbial four wolves and a lamb can vote on what’s for dinner,” he wrote. “That’s the only way to keep citizens worried about ending up on the menu from voting with their feet.”
In another devastating analysis of the latest IMF report, which was released in mid-October, Ryan Bourne, head of economic research at the Centre for Policy Studies, blasted it for being filled with “left wing” ideas. “The IMF is playing with fire by giving intellectual backing to punitive taxation,” he said. “Underlying these policies is an ideological assumption that wealth is a collective resource, with governments the benevolent seekers of the common good, whose ability to provide services is undermined by an eroding tax base…. These policies should be anathema to anyone valuing individual freedom, growth and long-term fiscal responsibility.”
For IMF boss Christine Lagarde, however, what the would-be global wealth confiscators are demanding is simply part of formulating a “just” fiscal policy. “It’s clearly something finance ministers are interested in, it’s something that is necessary for the right balance of public finances,” the former French finance boss was quoted as saying during a panel discussion this month. “There are lot[s] of wasted opportunities.”
Of course, the IMF report glosses over the fact that the overwhelming majority of policy changes among advanced economies in recent years went in the direction of tax increases. It also ignored the screaming gorilla in the room: the flawed monetary system and the ludicrous government spending spree at the root of the financial crisis and the ongoing economic problems plaguing the world.
There may be good explanations for that. Despite receiving generous taxpayer-funded salaries and perks, for example, IMF bureaucrats do not pay the exorbitant income taxes they are demanding for everyone else. Meanwhile, the controversial global institution has already been playing a key role in recent heists — with the confiscation of people’s savings in Cyprus among the most stunning examples.
Even more important, perhaps, is the fact that the IMF is being openly groomed to serve as a global central bank in charge of aplanetary currency. It already issues the proto-global currency known as Special Drawing Rights, but the establishment has much bigger plans in mind, as The New American magazine has documented extensively. If liberty, prosperity, and national sovereignty are to be preserved, the radical looting schemes advanced by the IMF and other planetary institutions must be resisted in favor of real reforms.
Alex Newman is a correspondent for The New American, covering economics, politics, and more. He can be reached email@example.com.
Source: The New American
“Repo has a flaw: It is vulnerable to panic, that is, ‘depositors’ may ‘withdraw’ their money at any time, forcing the system into massive deleveraging. We saw this over and over again with demand deposits in all of U.S. history prior to deposit insurance. This problem has not been addressed by the Dodd-Frank legislation. So, it could happen again.” – Gary B. Gorton, Professor of Management and Finance, Yale School of Management (lifted from Repowatch)
Subprime mortgages did not cause the financial crisis, nor did the housing bubble or Lehman Brothers. The financial crisis originated in a corner of the shadow banking system called the repo market. That’s where the bank run occurred that froze the secondary market, sent prices on mortgage-backed assets plunging, and pushed the financial system into a death spiral. In the Great Crash of 2008, repo was ground zero, the epicenter of the global catastrophe. As analyst David Weidner noted in the Wall Street Journal, “The repo market wasn’t just a part of the meltdown. It was the meltdown.”
Regrettably, the Federal Reserve’s nontraditional monetary policies (ZIRP and QE) have succeeded in restoring the repo market to it’s precrisis level of activity, but without implementing any of the changes that would have made the system safer. Repo is as vulnerable and crisis-prone today as it was when the French bank PNB Paribas stopped redemptions in its off-balance sheet operations in 2007 kicking off the tumultuous bank run that would eventually implode the entire system and push the economy into the deepest slump since the Great Depression. By failing to rein in repo, the Fed has ensured that financial crises will be a regular feature in the future occurring every 15 or 20 years as was the case before banks were more strictly regulated and government backstops were put in place. Repo returns us to Wild West “anything goes” banking.
Why would the Fed be so reckless and pave the way for another disaster? We’ll get to that in a minute, but first, let’s give a brief explanation of repo and how the system works.
Repo is short for repurchase agreement. The repo market is where primary dealers sell securities with an agreement for the seller to buy back the securities at a later date. This sounds more complicated than it is. What’s really going on is the seller (primary dealers) are getting short-term loans from money market funds, securities firms, banks etc in order to maintain a position in securities in which they’re suppose to make markets. So, repo is like a loan that’s secured with collateral. (ie–the securities) It is a “funding mechanism”.
What touched off the Crash of 2008, was the discovery that the collateral that was being used for repo funding was “toxic”, that is, the securities were not Triple A after all, but subprime mortgage-backed gunk that would only fetch pennies on the dollar. So, when PNB Paribas stopped redemptions in its off-balance sheet operations on August 9, 2007, the rout began. Cash-heavy investors (like money markets) turned off the lending spigot, which reduced trillions of dollars of MBS to junk-status, precipitated massive fire sales of distressed assets that were dumped on the market pushing prices further and further down wiping out trillions in equity and reducing the financial system to a smoldering pile of rubble. That’s why the Fed stepped in, backstopped the system with explicit guarantees for both regulated and unregulated financial institutions and set about to reflate financial asset prices to their precrisis highs.
Newly appointed Fed chairman Janet Yellen summarized what happened in the panic in a speech she gave earlier this year. She said:
“The trigger for the acute phase of the financial crisis was the rapid unwinding of large amounts of short-term wholesale funding that had been made available to highly leveraged and/or maturity-transforming financial firms.”
In other words, the crisis began in repo. Unfortunately, Wall Street has fended off all attempts to fix the system, because repo is a particularly lucrative area of activity. And we are talking serious money here, too. Tri-party repo alone–which is a small subset of the larger repo market–represents “about $1.6 trillion in outstanding repos daily.” That means that the prospect of a big dealer dumping his portfolio of securities on the market at a moment’s notice igniting another panic, is never far away.
Why do banks borrow in the unregulated, shadow system instead of conducting their business in the light of day where regulators can check the quality of the underlying collateral, oversee the various transactions on public trading platforms, and make sure that capital requirements are maintained?
It’s because the banks want to deploy all their capital, leverage up to their eyeballs and play fast-and-loose with the rules. Here’s what the New York Fed has to say on the topic:
“One clear motivation for intermediation outside of the traditional banking system is for private actors to evade regulation and taxes. The academic literature documents that motivation explains part of the growth and collapse of shadow banking over the past decade…
Regulation typically forces private actors to do something which they would otherwise not do: pay taxes to the official sector, disclose additional information to investors, or hold more capital against financial exposures. Financial activity which has been re-structured to avoid taxes, disclosure, and/or capital requirements, is referred to as arbitrage activity.” (“Shadow Bank Monitoring“, Federal Reserve Bank of New York Staff Reports, September, 2013)
In other words, the banks are conducting their operations in the shadows because it’s cheaper. That’s what this is all about. Here’s more from the same report:
“While the fundamental reason for commercial bank runs is the sequential servicing constraint, for shadow banks the effective constraint is the presence of fire sale externalities. In a run, shadow banking entities have to sell assets at a discount, which depresses market pricing. This provides incentives to withdraw funding—before other shadow banking depositors arrive.”
Okay, so when there’s a run on the local bank, the bank may have to offload some of its illiquid assets (real estate, commercial property, etc) to meet the increased demand of depositors who want their money, but they can also rely on government backing. (deposit insurance). But with shadow banking–like repo– it’s a bit different; the problem is fire sales. For example, when repo lenders–like the big money markets–demanded more collateral from the banks in exchange for short-term funding; the banks were forced to dump more of their assets en masse pushing prices lower, eroding their equity and leaving many of the banks deep in the red. This is how the panic wiped out Wall Street and cleared the way for the $700 TARP bailout. It all started in repo.
The point is, had the system been adequately regulated with the appropriate safeguards in place, there would have been no fire sales, no panic, and no crisis. Regulators would have made sure that the underlying collateral was legit, that is, they would have made sure that the subprime borrowers were creditworthy and able to repay their loans. They would have made sure that repo borrowers (the banks) had sufficient capital to meet redemptions if problems arose. And regulators would have limited excessive leveraging of the securitized assets.
Regulation works. It provides safety, stability, and security as opposed to panic, bankruptcy and severe recession which is the scenario that Wall Street’s profiteers seem to prefer. Now check this out from the NY Fed:
“While leveraged lending collapsed in 2008 from a peak of $680 billion in 2007, it has rebounded very quickly, and is now at record levels of volume, projected to be larger than $1 trillion in 2013…” (NY Fed)
How’s that for progress, eh? So, Bernanke’s reflation efforts have effectively restored the same shabby, poorly designed system to its former glory putting all of us at risk again. Here’s more:
“One area of concern, however, is the significant increase in the fraction of covenant lite loans, which have increased dramatically from 0 percent in 2010 to 60 percent in 2013. This deterioration in loan underwriting has come hand-in-hand with an increased presence of retail investors in the leveraged loan market, through both CLOs and prime funds, as relatively sophisticated investors, like banks and hedge funds, are exiting the asset class.” (New York Fed)
Great. So now we are seeing the same problems that emerged in 2004 and 2005 with subprime mortgages, that is, there’s so much liquidity in the system–thanks to the Fed’s zero rates and QE– that investors are dabbling in all-types of risky garbage that you wouldn’t normally touch with a 10 foot dungpole. Check this out from Testosterone Pit:
“Shadow banking loans are estimated to have reached $15 trillion in the US. And among them is a particularly hot category: lending to highly leveraged companies with junk credit ratings. … the NY Fed found that these loans are increasingly issued in a loosey-goosey manner, with low underwriting standards. And issuance has soared…
Layered into these crappy and risky loans are the crappiest and riskiest of all loans, namely “covenant-lite” loans. Their covenants are so watered down and so full of holes that investors have few if any protections in case of default. If the Fed ever allows reality to set, and these companies stumble under their load of debt or can’t refinance it at ridiculously low rates, investors can kiss their money goodbye.” …
these desperate small investors…have unknowingly made a quantum leap in risk – allowing the smart money, which hears the hot air hissing from the credit bubble, to bail out. This must be one of the proudest moments in Chairman Bernanke’s glorious tenure.” (“Fed: Hedge Funds, Banks Sell Crappiest Debt To Small Investors (Before Credit Bubble Blows Up) ” Testosterone Pit)
Nice, eh? So the big boys are planning to vamoose before the whole house of cards comes tumbling down. Meanwhile, Mom and Pop are about to get reamed for the umpteenth time when the Fed “tapers” and these covenant lite IEDs blow up in their face taking another sizable chunk out of their retirement savings. Way to go, Bernanke. Here’s more from the NY Fed report:
“Shadow credit transformation increased from only 5 percent of total credit transformation in 1945 to a peak amount of 60 percent in 2008 before declining to 55 percent in 2011.”
So now the shadow players are generating more than half of all the nation’s credit via their dodgy, unregulated operations. Why? So a handful of ravenous banks can make bigger profits.
According to the Financial Stability Board (FSB) “credit intermediation that takes place in an environment where prudential regulatory standards and supervisory oversight are either not applied or are applied to a materially lesser or different degree than is the case for regular banks engaged in similar activities.” (FSB, 2011).
Read that over again. What they’re saying is that it’s a completely ridiculous, insane system. We’ve given the banks this outrageous privilege of creating private money out of thin air, (credit) and they spit in our face. They won’t even follow a few simple rules that would make the process safer for everyone. Keep in mind, that Dodd Frank does nothing to remedy the problems in repo.
One last thing (from the NY Fed):
“Intermediaries create liquidity in the shadow banking system by levering up the collateral value of their assets. However, the liquidity creation comes at the cost of financial fragility as fluctuations in uncertainty cause a flight to quality from shadow liabilities to safe assets. The collapse of shadow banking liquidity has real effects via the pricing of credit and generates prolonged slumps after adverse shocks.”
Repeat: “liquidity creation comes at the cost of financial fragility as fluctuations in uncertainty cause a flight to quality from shadow liabilities to safe assets.”
Can you believe it? The Fed doesn’t even try to deny what’s going on. They admit that letting the banks ratchet up their leverage increases “financial fragility ” which could precipitate another crash. (“flight to quality from shadow liabilities to safe assets.”) In other words, the Fed KNOWS the system is nuts, just like they know that it’s only a matter of time before the whole bloody thing blows up again and the economy goes off the cliff. Still, they’re not going to lift a finger to change the system.
You know why.
Because a few fatcats at the top like the way things are now, that’s why.
If that doesn’t make your blood boil, I don’t know what will.
Obama has no one to blame but himself:
He was the one who campaigned, in 2008, on Hope and Change. He was the one who deployed high-flying rhetoric to promise a new day in Washington politics.
He was the one who said he was going elevate the level of discourse and make government transparent. He positioned himself as a new kind of leader. He was the one who turned his candidacy into a religious experience.
He was the one who convinced voters he stood above the fray, as a man and as a symbol, and on that basis they boarded his train and rode it all the way.
He was the one who, inheriting a desperate economy, made his signature move upon gaining office:
Not jobs. Not prosecutions of corporate and banking criminals.
He made devastating choices for all Americans.
He was and is the one who has presided over a sinking economic ship.
Given his proclivity for big and bigger government, he could have launched a serious public program, one which really put people back to work, repairing the infrastructure of the nation. But even this was beyond him.
And getting out of the way and letting Americans expand their small businesses, and supporting them with the same intensity of rhetoric he used to win his election? Out of the question. Not in the playbook. Not for a second.
His big play out of the gate, Obamacare, shocked his closest advisers. They assumed jobs would be his number-one priority. They were dead wrong.
And what about “post-racial” America? That was not only a dud, it was a disaster. Division and polarization are the order of the day.
How about dependence, and government as the solver of all problems, as the beneficent giver? How has that worked out? How can it possibly work out? America is going to become one big Sweden? Really?
It’s one thing for a Clinton or a Bush to lie and skate and divert and play the usual horrific games. But Obama set himself up as a man who was fundamentally different. That was his ace. That was how he won the Presidency. That was what people bought into.
So he falls further, even as his media supporters keep launching blizzards of lies to prop him up.
Many of his loyal followers believe “powerful forces” have fenced Obama in and sabotaged his efforts to work positive transformations. If so, then as a transcendent figure, he should step forward and use his oratorical powers to expose the criminal enterprise that surrounds the Presidency. He should speak directly to the American people and lay it on the line.
Or else he confesses that he is, in fact, another Clinton, another Bush.
The public loves fairy tales and myths, but considering the shape this country is in, that fascination is wearing very thin. It isn’t going to sustain the next three years of Obama in the White House.
The Matrix Revealed
90 million people are out of the work force. 50 million are on food stamps. Recovery? Is the President really going to keep pushing that narrative?
Admitting the truth might, as a long shot, create a platform from which Obama could launch a real campaign to restore jobs…but faking the unemployment crisis has been his chosen path.
The government Obamacare website is a shambles. It doesn’t appear that a simple fix is possible, which means chaos will continue for many months, perhaps longer. Private insurance companies are canceling hundreds of thousands of policies.
The last seven years of American political life have added up to a disaster. Blaming it all on Congressional gridlock, on delaying the ability of the White House to invent trillions more in debt at the drop of a hat, isn’t working.
So many actions and omissions of madness…it leaves us with the reasonable conclusion that Obama’s Presidency was designed from the outset to flame out and fail.
And the principal target was the economy.
The President, fresh off an election victory in 2008, and in that glow, could have used his monumental leverage to put people back to work. He could have hammered on it day and night. He could have rallied support and energized the country.
But now…what do we have? Welfare America to the nth degree. Beyond what anyone thought was possible. And media traitors are backing it.
For decades, for more than a hundred years, power has been in the wrong place.
It belongs with you and with me.
Source: Jon Rappoport
When is a debt ceiling not a ceiling? When it has been removed. That is the solution that was enacted on Wednesday night to fund the government for the next 90 days. This will last from Oct. 17, 2013 until Feb. 7, 2014. This has some very dangerous implications for Americans. It means as of right now there is no debt ceiling and the federals can spend as much as they like. With all of the previous spending by DHS, and the impending economic crash that we face in the near future, it is terrifying to think what the federals might buy in the next 90 days that they can use against American citizens.
With this scenario in place the writing is on the wall and foreigners can read it well even if Americans cannot. The dumping of treasuries will likely increase substantially over the next few months as the collapse becomes evident to everyone but Americans. This is the end game and most people don’t even know they are in it.
With the debt ceiling removed even temporarily, the government has the ability to overspend and when the ceiling is reinstated in 90 days any new debt over the current limit will not be debatable. The limit will automatically have to be raised to that amount. That is why President Obama answered “no” when asked if there would be a renewed debt debate next year. He knows he can bypass it. When the time comes for the House to raise the debt limit they will either have to raise it to encompass the additional spending or not raise it and possibly trigger a default. Either way the Democrats can blame the Republicans for the additional debt increase or a default.
It could go something like this. The government decides how much extra money they will need until after the elections next year and borrow it now. The money is dispersed into the usual slush funds until needed to avoid any new debt debates before the election. The Republicans will lose the ability to stop uncontrolled government growth next year and the Democrats will deprive them of any debt debates before Nov. This will give the Democrats a big edge in the elections and could allow them to take some seats in the house. Not that changing from one party to the other will change anything, it will just determine how fast we collapse.
By this time next year I suspect the Petrodollar will be on life support if not completely dead and high inflation will be rearing its’ ugly head. The governments answer to this will be price controls which will lead to shortages. Then things go downhill fast from there. That’s if we actually make it to next fall without a serious incident in the U.S. before then.
These are truly perilous times for the U.S. and everyone should prepare as they deem appropriate. The west line has shifted and we are now on the trailing edge of history. If we are to survive as a nation and prosper again we must learn to operate with a smaller more efficient economy as others before us have done. This will entail a smaller more localized economy with more small producers and a stable medium of exchange. The only alternative is to become a failed third world nation with no future.
When you ask someone why they climbed the mountain some will say, because it’s there. I wanted to know if I could do it. It is the same drive that makes people want to win at sports.
Why do preppers prep? What is the point? If something so catastrophic happens that the world is drastically changed or destroyed, why would we want to survive to live anymore?
Dieing is easy. All you have to do is give up and quit. It’s living that is so hard. One of the hardest things a person can do is to wake up in the morning and get out of bed when they know the world is stacked against them. So why do it?
There are three types of people in the world. Those that can do, those that are afraid to do, and those that don’t know what they should do.
I’m the kind of person that will take the time to hammer out a bent piece of metal even if I don’t need it and could easily go buy another one. I like a challenge and I like the feeling of accomplishment when I succeed.
Last year I was working on one of my vehicles when it bent some of the pushrods almost into an S. I could have run down to the parts store and bought new ones but being the cheapskate that I am and loving a challenge, I decided to try to straighten them out. I managed to straighten out 3 but had to buy one new one that was too far gone. They were not expensive but I saw it as a challenge.
About 20 years ago we had a bad winter storm that left several inches of ice on the road. I had to drive 15 miles on these icy roads to get home. About 2 miles from home I rounded a turn and the truck began to slide. My small Chevy 4×4 slid sideways and the front end dropped into a deep ditch until the chassis was touching the ground. I could push up the opposite side of the ditchbank a few inches but could not get enough traction to back out.
A short time later a neighbor came by and a couple of guys tried to help push it out with no success. They said I would need to call a tow truck and offered me a ride. I declined and said I would keep trying. A few minutes after they left I finally stopped and analyzed my situation a little more. I knew I needed to get the front end up and get some traction, but how. I then went into the woods and found a few small logs and threw them behind the wheels. I pushed up the opposite bank a few inches allowing the logs to roll into the bottom of the ditch. When I rolled back the truck pulled itself out of the ditch with little effort.
The point of this story is that I decided I would get it out and would not stop until I had exhausted every possible idea. You don’t know what you are capable of unless you try.
I think preppers are willing to go to extremes and prepare not because they fear death or hardship but because they are willing to explore their absolute limits. They want to know if they are capable of overcoming the obstacle just because it’s there and they have more fear of walking away not knowing than of trying and failing. Some in business might call it the drive to succeed and others might call it the drive to win.
Everyone has their limits and some will prevail when others fail but in the end, the act of trying and not giving up is what’s important. That is what prepping is about to me. If I see a potential obstacle in my future I will try to prepare to overcome it then move on but if I fail and the worst happens I will have a clear conscience. That is what prepping is. Being prepared to face a challenge and giving yourself every chance to overcome it.
When people ridicule those that see potential danger and prepare to overcome it, it is like someone looking at Mt. Everest and saying, oh it’s just a little hill no different than all the others we have crossed, and then they proceed to walk up it with no supplies or equipment. Experience is a virtue that preppers relish and others simply scoff at, at their own peril. To a prepper, the future is a Mt. Everest with no visible top that they are prepared to climb.
Why do people prep for catastrophic situations? Because it’s there.
Source: Project Chesapeake
This month, thousands of McDonald’s and other fast food workers in Chicago demonstrated for a minimum, livable wage of $15.00 an hour. It makes sense when you think about the enormous costs of poorly paid workers who live on food stamps, ADC, WIC, Section 8 housing and free breakfasts and lunches for their children.
In the meantime, CEOs of McDonald’s, Marriott Hotels, Holiday Inns, Tyson Chicken, Hormel Foods, Chipotles, Burger King, roofing firms, painting contractors and a slew of other corporations—enjoy $10 million annual salaries and $10 million annual bonuses for doing such a fine job for the stockholders. The rich grow richer while the poor work for pathetic wages as our 21st century slave labor force.
But there’s a hitch. Guess what? You and I pay $956 billion annually, nearly $1 trillion of our tax dollars, year in and year out, to subsidize minimum wage laws that employ all those uneducated, limited intellectual horsepower, high school dropouts and endless mothers with babies. You also pay $346 billion annually across 15 federal agencies for illegal alien workers who milk the system. (Source: Edwin Rubenstein, economist,www.thesocialcontract.com )
On a recent radio interview, one of the callers said, “You can’t pay more than minimum wage because those burger flipping jobs are stepping-stone jobs to higher paying jobs. It’s not economically feasible.”
The problem: millions of Americans cannot and do not graduate from high school for lack of intellectual horsepower, emotional duress of the ghetto and lack of parental guidance. They command few options. You can scream “they had a choice” all you want, but the fact remains: they face a life of financial lockdown. Fact: 42 million Americans cannot read, write or perform simple math. Another 50 million cannot read or write past the 4th grade level. That’s a lot of illiterate people who cannot command higher paying jobs.
“There are over 42 million American adults, 20 percent of whom hold high school diplomas, who cannot read, as well as the 50 million who read at a fourth- or fifth-grade level. Nearly a third of the nation’s population is illiterate or barely literate. And their numbers are growing by an estimated 2 million a year. But even those who are supposedly literate retreat in huge numbers into this image-based existence. A third of high school graduates, along with 42 percent of college graduates, never read a book after they finish school. Eighty percent of the families in the United States last year did not buy a book.” Source: www.prisonplanet.com
But they espouse the same dreams as you enjoy. They see the same ads about houses and cars you watch. They want the same things you desire.
Instead of paying for their food stamps, medical bills, children’s breakfasts and lunches, housing and other welfare bills—we need to change our minimum wage to a minimum livable wage: $15.00 an hour.
Adam Smith and his Wealth of Nations must evolve. We live in the 21st century where conditions changed.
First, our economic engine transformed. Robber Barons of the 21st century cheat like thieves to milk the system. Our U.S. government cheats citizens. Our representatives cheat us in Washington DC. In 2013, Senators like John McCain, Charles Schumer, Carl Levin, Barbara Boxer, Harry Reid, Mark Udall, Michael Bennet, Marco Rubio and the rest of them cheat American taxpayers as a matter of routine business. If they didn’t, we wouldn’t suffer $16.5 trillion in national debt. We wouldn’t watch helplessly at two 10-year wars that cost $12 billion a month. We wouldn’t watch our borders overrun if they enforced the laws. We wouldn’t see 400,000 pregnant illegal migrants force us to pay for their babies annually.
If Congress showed ethics, common sense and personal accountability—none of the corruption so rampant in Congress would continue. But it accelerates!
Try a new economic path for the good of all
What’s the difference in a low wage burger flipping job at $8.00 an hour, to a truck driver $14.00 to $15.00 per hour, janitor at $15.00 an hour, roofer at $15.00 an hour, and hotel maid at $ 8.00 an hour? It takes no education, special skills or talents to command any of those jobs. Why shouldn’t the fast food and maid worker enjoy $15.00 an hour?
They support kids, apartment, car and other expenses. A living wage would get them off food stamps, Section 8 housing, ADC, WIC, free lunches for their children and much more.
A livable wage commands economic respect, pays into our tax system rather than sucks off it. A decent wage offers our inner city minority dwellers self-respect and personal accountability.
Instead of $10 million annual bonuses for the CEOs of all those corporations, they could still live on their $10 million salaries—and allow a decent standard of living for America’s poor and uneducated.
Those poor would become tax-paying members of our society and be able to participate.
Yes, your hamburger may cost .25 cents more, French-fries .15 cents more and your hotel room a few dollars more. But you wouldn’t be paying $956 billion annually to support all those poverty-stricken burger flippers.
You wouldn’t be paying for all the crime, shoplifting, food stamps, welfare workers, drug addiction, lost lives, wasted lives and hopelessly growing poverty class.
One way or the other, you pay. By bringing a $15.00 minimum livable wage into the American way of life, all citizens may enjoy self-respect, a home or apartment, car, kids off to school and shot at living a positive life in America.
US and world political and economic leaders are faced with what they describe as a ‘systemic catastrophe’: the inability to pay global creditors, including domestic and foreign banks, investors and governments, who hold $16.7 trillion in US Treasury notes. There is a related crisis: the government cannot secure passage of a budget to finance its military and civilian agencies and activities, including large-scale payments to military contractors, the financing of business, agriculture and banking operations and social programs.
The raising of the debt-ceiling is central to the functioning of the financial ruling class as it extracts hundreds of billions of tax dollars in interest payments from the US Treasury. Raising the debt ceiling allows the State to keep borrowing and pay its billionaire creditors. In turn, as long as the US Treasury has liquidity, it remains a ‘safe haven’ for investors thus providing guaranteed profits. In addition, as long as the dollar remains the principle currency for global transactions, it allows the US Treasury to print money at will and to borrow at a lower cost – at the expense of its competitors and adversaries.
Financing the budget deficit requires borrowing, which involves the sale hundreds of billions of dollars worth of US government bonds through Wall Street – but at a cost to the taxpayer. The common denominator is that the entire edifice of finance capital and all of its support structures depend on debt financing by the State. By borrowing and then taxing its citizens the Treasury extracts wealth from the vast majority of Americans.
To understand the fight to raise the debt ceiling and to pass a deficit budget it is necessary to analyze the long-term, large-scale sources of State debt.
Imperial Wars, the Ascendancy of Finance Capital and the Debt Crisis
The ever-increasing debt and the constant raising of the debt ceiling is a result of long-term, large-scale military spending to build the US Empire. The imperial enterprise has generated a huge deficit: the cost/benefit ratio has been overwhelmingly negative. Contrary to militarist propaganda, the empire has not been ‘self-financing’: Wars and occupation in Iraq, Afghanistan and elsewhere have cost the US taxpayers trillions of dollars, not off-set by incoming imperial plunder or domestic economic expansion.
Parallel to the cost of wars and occupations, the rise of finance capital has largely resulted from the pillage of the US Treasury. Huge bailouts, low interest loans, large-scale interest payments on bonds, subsidies and tax exemptions have created a financial ruling class based on maintaining a debt-laden, interest-paying State, which meets its obligations to the creditors while it privatizes (and eliminates) social programs. The result is a ‘poor indebted State’ and a rich and prosperous Wall Street. Wall Street stands to gain trillions with the privatization of the multi-billion dollar health (Medicare) and retirement plans (Social Security): this will form an integral component of the “Grand Bargain” to raise the debt ceiling.
Who are the Beneficiaries of Raising the Debt Ceiling?
The principle and immediate beneficiaries of increasing the debt ceiling are the wealthy, bond-holders and the medium and long-term beneficiaries are the military-intelligence-empire-builders who can continue to secure over $700 billion in annual budget allocations. The principle strategic losers from raising the debt ceiling will be the hundreds of millions of beneficiaries of social programs like Social Security, Medicare and Medicaid and their family members. As part of the ‘Grand Bargain’ struck by the Democratic President and Republican Congress between $1.3 trillion and $1.4 trillion in social cuts will take effect over the next ten years, according to the Congressional Budget Office. The cuts in Social Security will occur by raising the age of eligibility for full benefits to 70 years, resulting in a loss of $120 billion, as many older retired workers would be expected to die before drawing a single payment while millions of Americans will be forced to delay retirement and work an extra five years.
Secondly, the earliest age of eligibility for partial benefits will increase from 62 to 64 years resulting in an additional loss of $144 billion dollars from workers.
Thirdly, the cost of living index would be reduced – a ten- year loss of $112 billion dollars.
Fourthly, the calculation for initial benefits would discard the wage-based method for a so-called “price-index”, resulting in American workers losing another $137 billion dollars over 10 years. In sum, workers’ social security benefits would be reduced by more than half a trillion dollars an enormous transfer of wealth to the billionaire creditors, investors and empire builders all in the name of ‘debt reduction’.
The cuts in MEDICARE and MEDICAID would result in an even more retrograde class polarization. The ‘Grand Bargain’ could lead to additional losses of over $419 billion dollars.
The biggest cost to the workers will come in the form of an increase in their monthly premium for physician services (MEDICARE Part B) from the current 25% to 35%, resulting in a loss of $241 billion dollars. The second biggest loss to workers will result from raising the age of eligibility for MEDICARE from 65 to 67 years costing workers an additional S125 billion dollars. The third loss for workers will be a $53 billion hit from restricting the use of MEDIGAP insurance – supplementary policies that cover MEDICARE cost sharing requirements.
Further cuts of $187 billion in MEDICAID– the medical plan for the poor and disabled– would result when the federal government shifts its direct funding to block grants to the states that would severely cut services for the poor – a plan first proposed during the Clinton Administration with regard to welfare funding.
Once these reactionary cuts in basic social programs are in place, the beneficiaries, who are able, will be forced to buy alternative supplementary private medical insurance and private retirement plans, while the poor will go without. The running down of public social services by Wall Street has been a deliberate, cynical strategy to cause popular discontent paving the way for the gradual privatization of services: adding costs, eliminating options and limiting medical treatment, surgery and procedures, especially for the elderly. The privatization of Social Security, MEDICARE and MEDICAID, will maximize insecurity while minimizing services and lead to untreated and under-treated illness, greater suffering and economic distress. Bi-partisan Congressional White House agreements via the “Great Bargain” to raise the debt ceiling will widen and deepen inequalities in the United States.
In sum, “the Grand Bargain” will cause American workers to lose over $1.119 trillion dollars over the next 10 years, leading to a sharp decline in life expectancy, access to health care, living standards and quality of life.
The Samson Solution
Given the harsh terms, which accompany the “Grand Bargain” to raise the debt ceiling, it would be better if no agreement were reached. The financial elite is counting on the ‘Grand Bargain’ to leverage their debt collection over the lives and welfare of hundreds of millions of Americans. It would be better to shake the pillars and pull down this Temple of Mammon (the ‘Samson Solution’) making them pay a price!
The ‘shock and awe’ induced by default would shake the very foundations of the financial pillage of the US Treasury and the taxpayers; default would seriously undermine the financial basis for imperial wars, spying, torture and death squads. The entire empire building project would crumble.
True, in the short-run, the workers and middle class would also suffer from a default. But the discredit of the ruling political parties, the political elite and Wall Street, could lead to a new political alignment, which would fund social programs by, in David Stockman’s phrase, “soaking the rich” raising corporate taxes by 50%, imposing a financial transaction tax of 5%, uncapping the social security tax and collecting taxes on overseas US multi-nationals’ profits. Additional billions would be saved by ending imperial wars, closing bases and canceling military contracts. Tax reform, imperial dismantlement and increased domestic investment in productive activity would generate domestic growth leading to a budget surplus, extending MEDICARE to all Americans, reducing the age of retirement to 62 and providing a living wage for all workers!
Source: James Petras
“Hi! We’re the news…manufacturing witnesses, creating dupes, and using true believers. Just like an intelligence agency. Come join us!”
Focus on the network evening news. This is where the staging is done well.
First, we have the image itself, the colors in foreground and background, the blend of restful and charged hues. The anchor and his/her smooth style.
Then we have the shifting of venue from the studio to reporters in the field, demonstrating the reach of coverage: the planet. As if this equals authenticity.
The managing editor, usually the elite anchor, chooses the stories to cover and their sequence.
The anchor goes on the air: “Our top story tonight, more signs of gridlock today on Capitol Hill, as legislators walked out of a session on federal budget negotiations…”
The viewer fills in the context for the story: “Oh yes, the government. We want the government to get something done, but they’re not. We want to government to avoid a shutdown. These people are always arguing with each other. They don’t agree. They’re in conflict. Yes, conflict, just like on the cop shows.”
The anchor: “The Chinese government reports the new flu epidemic has spread to three provinces. Forty-two people have already died, and nearly a thousand are hospitalized…”
The viewer again supplies context, such as it is: “Flu. Dangerous. Epidemic. Could it arrive here? Get my flu shot. Do the Chinese doctors know what they’re doing? Crowded cities. Maybe more cases all of a sudden. Ten thousand, a hundred thousand.”
The anchor: “A new university study states that gun owners often stock up on weapons and ammunition, and this trend has jumped quickly since the Newtown, Connecticut, school-shooting tragedy…”
The viewer: “People with guns. Why do they need a dozen weapons? People in small towns. I don’t need a gun. The police have guns. Could I kill somebody if he broke into the house?”
The anchor: “Doctors at Yale University have made a discovery that could lead to new treatments in the battle against Autism…”
Viewer: “That would be good. More research. Laboratory. Germs. The brain.”
If, at the end of the newscast, the viewer bothered to review the stories and his own reactions to them, he would realize he’d learned almost nothing. But reflection is not the game.
In fact, the flow of the news stories has washed over him and created very little except a sense of continuity.
It would never occur to him to wonder: are the squabbling political legislators really two branches of the same Party? Does government have the Constitutional right to incur this much debt? Where is all that money coming from? Taxes? Other sources? Who invents money?
Is the flu dangerous for most people? If not, why not? Do governments overstate case numbers? How do they actually test patients for the flu? Are the tests accurate? Are they just trying to convince us to get vaccines?
What happens when the government has overwhelming force and citizens have no guns?
When the researchers keep saying “may” and “could,” does that mean they’ve actually discovered something useful about Autism, or are they just hyping their own work and trying to get funding for their next project?
These are only a few of the many questions the typical viewer never considers.
Therefore, every story on the news broadcast achieves the goal of keeping the context small and narrow—night after night, year after year. The overall effect of this, yes, staging, is small viewer, small viewer’s mind, small viewer’s understanding.
Billions of dollars are spent by the networks to build a reality the size of a room in a cheap motel.
Next we come to words over pictures. More and more, news broadcasts are using the rudimentary film technique of a voice narrating what the viewer is seeing on the screen.
People are shouting and running and falling in a street. The anchor or a field reporter says: “The country is in turmoil. Parliament has suspended sessions for the third day in a row, as the government decides what to do about uprisings aimed at forcing democratic elections…”
Well, the voice must be right, because we’re seeing the pictures. If the voice said the riots were due to garbage-pickup cancellations, the viewer would believe that, too.
How about this: two-day-old footage of runners approaching the finish line of the Boston Marathon. A puff of smoke rises at the right of the screen. A runner falls down in the street. The anchor is saying: “The FBI has announced a bomb made in a pressure cooker caused the injuries and deaths.”
Must be so. We saw the pictures and heard the voice explain.
We see Building #7 of the WTC collapse. Must have been the result of a fire. The anchor tells us so. Words over pictures.
We see footage of Lee Harvey Oswald inside the Dallas police station. The anchor tells he’s about to be transferred, under heavy guard, to another location. Oswald must be guilty, because we’re seeing him in a police station, and the anchor just said “under heavy guard.”
Staged news. It works. Why?
Because it mirrors what the human mind, in an infantile state, is always doing: looking at the world and seeking a brief summary to explain what the world is, at any given moment.
Since the dawn of time, untold billions of people have been urging a “television anchor” to “explain the pictures.”
The news gives them that precise thing, that precise solution, every night.
“Well, Mr. Jones,” the doctor says, as he pins X-rays to a screen in his office. “See this? Right here? We’ll need to start chemo immediately, and then we may have to remove most of your brain, and as a followup, take out one eye.”
Sure, why not? The patient saw the pictures and the anchor explained them.
After watching and listening to the last year of news, the population is ready to see the president or one of his minions step up to a microphone and say, “Quantitative easing…sequester…”
Reaction? “Don’t know what it is, but it must be okay.”
Eventually, people get the idea and do it for themselves. They see things, they invent one-liners to explain them. They’re their own anchors. They short-cut and undermine their own experience with vapid summaries of what it all means.
“Here are the photos. Just look at these photos. Don’t look at any other photos. These are the killers. Here’s what it means: we’re going to send in SWAT teams and rout you out of your homes at gunpoint, we’ll search your homes, no warrants, and you’re going to comply, and when it’s over and we’ve caught them, you’ll cheer.”
“Sure. Okay. We will.”
Pictures, explanation, obedience.
The staging of reality, the staging of news; they’re the same thing.
At some point in time, the television audience begins to experience an itch. “If reality is the news, then maybe I could become a visible piece of reality. Maybe I could get on the news. What would I have to do? How can I stand out? What outlandish thing could I cook up?”
Anyone’s face could appear on the screen and flicker there and be driven into the minds of millions of people as something hypnotic.
If not fortune, then at least fame.
Whereas an honest television news anchor, if one existed, would say:
“The battle over the government shutdown and its funding continue as a piece of planned chaos. Events like this are shaped well in advance by men who manipulate the One Political Party With Two Heads, and you, the viewer, are reacting predictably. You’re choosing sides. You’re angry. And I’m sitting here on most nights adding fuel to the fire. The fix is in, and I’m going along with it. Here in the studio, I’m staging the news about staged reality.”
The news is a movie of a movie.
And then, of course, when the news cuts to commercial, the fake reality of products takes over:
“Well, every night they’re showing the same brand names, so those brands must be better than the unnamed alternatives.”
Which devolves into: “I like this commercial better than that commercial. This is a great commercial.”
Which devolves into: reality is an advertisement for itself.
Source: Jon Rappoport | No More Fake News
President Barack Obama is determined to prevail in his battle with GOP congressional leaders on the debt ceiling issue, but not for the reasons stated in the media. Obama is less concerned with the prospect of higher interest rates and frustrated bondholders than he is with the big Wall Street banks who would be thrust back into crisis if there is no resolution before October 17. Absent a debt ceiling deal, the repurchase market–known as repo–would undergo another deep-freeze as it did in 2008 when Lehman Brothers defaulted triggering a run on the Reserve Primary Fund which had been exposed to Lehman’s short-term debt. The frenzied selloff sparked a widespread panic across global financial markets pushing the system to the brink of collapse and forcing the Federal Reserve to backstop regulated and unregulated financial institutions with more than $11 trillion in loans and other obligations. The same tragedy will play out again, if congress fails lift the ceiling and reinforce the present value of US debt.
Repo is at the heart of the shadow banking system, that opaque off-balance sheet underworld where maturity transformation and other risky banking activities take place beyond the watchful eye of government regulators. It is where banks exchange collateralized securities for short-term loans from investors, mainly large financial institutions. The banks use these loans to fund their other investments boosting their leverage many times over to maximize their profits. The so called congressional reforms, like Dodd Frank, which were ratified after the crisis, have done nothing to change the basic structure of the market or to reign in excessive risk-taking by undercapitalized speculators. The system is as wobbly and crisis-prone ever, as the debt ceiling fiasco suggests. The situation speaks to the impressive power of the bank cartel and their army of lawyers and lobbyists. They own Capital Hill, the White House, and most of the judges in the country. The system remains the same, because that’s the way the like it.
US Treasuries provide the bulk of collateral the banks use in acquiring their short-term funding. If the US defaults on its debt, the value that collateral would fall precipitously leaving much of the banking system either underwater or dangerously undercapitalized. The wholesale funding market would grind to a halt, and interbank lending would slow to a crawl. The financial system would suffer its second major heart attack in less than a decade. This is from American Banker:
As banking policy analyst Karen Shaw Petrou describes it, Treasury obligations are the “water” in the financial system’s plumbing.
“They’re the global reserve currency and they are perceived to be the most secure thing you can own,” said Petrou, managing partner of Federal Financial Analytics. “That is why it is pledged as collateral. … The very biggest banks fear that a debt ceiling breach breaks the pipes.”….
Rob Toomey, managing director and associate general counsel at the Securities Industry and Financial Markets Association, said institutions are concerned about whether Treasury bonds that default are no longer transferable between market participants.
“Essentially, whatever the size is of the obligation that Treasury is unable to pay, that kind of liquidity would just disappear from the market for whatever time the payment is not made,” Toomey said.”
By some estimates, the amount of liquidity that would be drained from the system immediately following a default would be roughly $600 billion, enough to require emergency action by either the Fed or the US Treasury. Despite post-crisis legislation that forbids future bailouts, the government would surely ride to rescue committing taxpayer revenues once again to save Wall Street.
Keep in mind, the US government does not have to default on its debt to trigger a panic in the credit markets. Changing expectations can easily produce the same result. If the holders of US Treasuries (USTs) begin to doubt that the debt ceiling issue will be resolved, then they’ll sell their bonds prematurely to avoid greater losses. That, in turn, will push up interest rates which will strangle the recovery, slow growth, and throw a wrench in the repo market credit engine. We saw an example of how this works in late May when the Fed announced its decision to scale-back its asset purchase. The fact that the Fed continued to buy the same amount of USTs and mortgage-backed securities (MBS) didn’t stem the selloff. Long-term rates went up anyway. Why? Because expectations changed and the market reset prices. That same phenom could happen now, in fact, it is happening now. The Financial Times reported on Wednesday that “Fidelity Investments, the largest manager of money market funds… had sold all of its holdings of US Treasury bills due to mature towards the end of October as a “precautionary measure.”
This is what happens when people start to doubt that US Treasuries will be liquid cash equivalents in the future. They ditch them. And when they ditch them, rates go up and the economy slips into low gear. (Note: “China and Japan together hold more than $2.4 trillion in U.S. Treasuries” Bloomberg)
Now the media has been trying to soft-peddle the implications of the debt ceiling standoff by saying, “No one thinks that holders of USTs won’t get repaid.”
While this is true, it’s also irrelevant. The reason that USTs are the gold standard of financial assets, is because they are considered risk-free and liquid. That’s it. If you have to wait to get your money, then the asset you purchased is not completely liquid, right?
And if there is some doubt, however small, that you will not be repaid in full, then the asset is not really risk free, right?
This is what the Fidelity flap is all about. It’s about the erosion of confidence in US debt. It’s about that sliver of doubt that has entered the minds of investors and changed their behavior. This is a significant development because it means that people in positions of power are now questioning the stewardship of the present system. And that trend is going to intensify when the Fed begins to reduce its asset purchases later in the year, because winding down QE will precipitate more capital flight, more currency volatility and more emerging market runaway inflation. That’s going to lead to more chin scratching, more grousing and more resistance to US stewardship of the system. None of this bodes well for Washington’s imperial aspirations or for the world’s reserve currency, both of which appear to be living on borrowed time.
The media has done a poor job of explaining what’s really at stake. While, it’s true that higher interest rates would make consumer loans more expensive and put the kibosh on the housing recovery, that’s not what the media cares about. Not really. What they care about is the looming massacre in shadow banking where USTs are used as collateral to secure short-term loans by the banks so they can increase their leverage by many orders of magnitude. In other words, the banks are using USTs to borrow gobs of money from money markets and financial institutions so they can finance their other dodgy investments, derivatives contracts and ancillary casino-type operations. If there’s a default, the banks will have to come up with more capital for their scams that are leveraged at 40 or 50 to 1. This systemwide margin call would trigger a deflationary spiral that would domino through the entire system unless the Fed stepped in and, once again, provided a giant backstop in the form of blank check support. Here’s how Tim Fernholz sums it up over atDaily Finance:
“…Many informed people are worried” (about) “A freeze in the tri-party repo market, akin to the cascade of troubles that followed the Lehman Brothers bankruptcy in 2008.”….
In 2008, more than a third of that collateral was mortgage-backed securities. When Lehman went bankrupt, its lenders began a “fire sale” of the securities it used as collateral, which drove down the value of other mortgage-backed securities, which led to more fire sales. This dynamic would eventually lead to a freeze in the repo markets, which, at the time, provided $2.6 trillion in funding to the banks each day…..
Today, most of the collateral in use is U.S. Treasuries and “agency securities” — mortgage-backed securities guaranteed by the U.S. government:
… if the ugly day of a default comes, lenders may simply stop accepting U.S. debt as collateral. That will have the effect of sucking some $600 billion in liquidity out of the banking system. Unable to get funding for Treasurys, securities dealers would be pressured to sell them-or other assets-to find new funding, creating a fire sale dynamic…..
And, of course, this scenario is only about how the Treasurys work in the repo markets. U.S. debt is used as collateral for derivatives swaps and numerous other transactions; if they are suddenly worth less than expected, lenders can be expected to demand more collateral up front, putting even more pressure on the financial system. That’s why pressure is building to raise the ceiling before the world’s largest economy enters a scenario with so much uncertainty.”
Repeat: “That’s why pressure is building to raise the ceiling before the world’s largest economy enters a scenario with so much uncertainty”.
So the Obama team isn’t worried that Joe Homeowner won’t be able to refi his mortgage or that the economy might slip back into recession. They just don’t want to see Wall Street take it in the shorts again. That’s what this is all about, the banks. Because the banks are still up-to-their-eyeballs in red ink. Because they still don’t have enough capital to stay solvent if the wind shifts. Because all the Dodd Frank reforms are pure, unalloyed bullsh** that haven’t fixed a bloody thing. Because the risks of another panic are as great as ever because the system is the same teetering, unregulated cesspit it was before. Because the banks are still financing their sketchy Ponzi operations with OPM (other people’s money), only now, the Fed’s over-bloated balance sheet is being used to prop up this broken, crooked system instead of the trillions of dollars that was extracted from credulous investors on subprime mortgages, liars loans and other, equally-fraudulent debt instruments.
Can you see that?
This is why the media is pushing so hard to end the debt ceiling standoff; to preserve this mountainous stinkpile of larceny, greed and corruption run by a criminal bank Mafia and their political lackeys on Capital Hill. That’s what this is all about.
In 1899 the great libertarian scholar William Graham Scholar of Yale University delivered a speech in which he warned that the Spanish-American War was a crossing-the-Rubicon event in the nation’s history that had finally transformed the nation from a constitutional republic to an empire. Empire was what the Pilgrims escaped from, and the American Revolution was fought against, for in an empire the average citizen is viewed by his rulers as nothing more than a tax slave and cannon fodder. Americans would soon become, he warned, exactly what their country was founded to oppose.
The speech was entitled “The Conquest of the United States by Spain” to denote the fact that the Spanish-American war, an imperialistic war of conquest, was no different from the types of aggressive wars that the old empires of Europe had been waging for centuries. Having devoted his adult life to scholarly pursuits in the field of political economy (among others), William Graham Sumner was prescient in his predictions about what America would become once it embarked on the road to empire. Among his observations were the following:
The Spanish-American War, like future American wars of imperialism, was “justified” by a string of “sensational assertions” that are easily proven to be untrue. Spain never threatened any American “interests,” and would have been the last to have an incentive to sabotage the Battleship Maine, the calamity that stoked war fever and got the masses (“Boobus Americanus” in H.L. Mencken’s words) behind the short “war.” Scholars like Sumner may have easily seen through the government’s lies, but not the rationally-ignorant masses.
“Where is the statesmanship” in lying and manipulating the public into an aggressive war, Sumner asked rhetorically. This of course had become the new definition of “statesmanship” ever since Lincoln manipulated the Northern-state-public into acquiescing in his waging of total war on their fellow American citizens in the Southern states so that the “duties and imposts” could be collected there, as he promised in his first inaugural address. To this day, Republican Party propaganda mills like the Claremont Institute and Hillsdale College pretend to offer courses of study in “statesmanship” of the sort that was mocked and ridiculed by Sumner.
If “self-government” for people of the Spanish empire was the ostensible purpose of the war, why was the American public not involved in any way in instigating the war?, asked Sumner. There was not even an opinion poll taken, he pointed out. This point echoes the words of Randolph Bourne in his famous essay, “War is the Health of the State,” in which he pointed out that the public never has anything to do with the preparations for war. It is always a dozen or so connivers and schemers in the executive branch of government, hidden even from elected members of congresses and parliaments, who plot and plan forwars.
Was the war merely a public school civics class writ large? Sumner also mocked the idea promoted by the war party that Americans are merely interested in teaching Filipinos about democracy and self-government, and then we will leave. Sumner did not believe that “we” would ever leave the Philippines. We are still there today.
The struggle for world domination (imperialism) is destructive of democracy. Although American military interventionism was being sold to Boobus Americanus as a means of spreading democracy, Sumner pointed out that such tactics had led Spain into monarchy and bankruptcy, but such facts were simply ignored by the American war party.
Why do Americans believe they have a “civilizing mission,” Sumner asked. The answer to this rhetorical question lies in the deification of Abe Lincoln by the Republican Party, which in effect was the entire federal government, in the previous thirty-five years. Lincoln’s deification led to the deification of the presidency in general, and to the federal government as well. As Robert Penn Warren wrote in his outstanding book, The Legacy of the Civil War, the Republican Party in the post-war years claimed to possess a “treasury of virtue” that supposedly justified anything and everything the government did anywhere on earth by virtue of the fact that it was the American government that was doing it. This is what “justified” American entry into World War I, for instance, wrote Robert Penn Warren. It was given the obnoxious name “American exceptionalism.” Sumner noted the absurdity of employing Lincoln’s “all men are created equal” rhetoric from the Gettysburg Address to argue that it is somehow “liberating” for people of other countries to be governed by us.
William Graham Sumner warned that “a matter of mind” that views other peoples as “less human” than you would lead to “cruelty and tyranny” by the American government, as was the case with all other governments in history that ruled over empires. This of course was always the way of empires. Southerners were demonized to “justify” the mass murder of tens of thousands of civilian women, children, and old men, and the bombing and burning of entire cities like Atlanta and Richmond during the “Civil War.” The Plains Indians were dehumanized as “savages” while the brave men of the U.S. Army murdered tens of thousands of Indian women and children from 1865 to 1890. Now it was the Filipinos’ turn. At least 200,000 Filipinos were eventually murdered by the U.S. government for resisting becoming a part of the American empire. According to historian Joseph Stromberg, only about 15,000 of them were actual combatants.
“We must devise a government” for other peoples is another piece of war propaganda that Sumner found to be intolerably arrogant and hypocritical. This argument has been used over and over again by generations of American warmongering and imperialistic politicians. A recent example would be Obama’s September 25, 2012 speech before the United Nations in which he praised the dead CIA operative Chris Stevens, who was killed in the attack on the American “embassy” in Benghazi, Libya, after being sent there as Obama’s “representative.” He was sent there, said Obama, to “craft a vision for a future” for Libya and Libyans.
The next time you witness a large American flag covering the entire football field before an NFL game; or the flyover of fighter jets before a sporting event; or people wearing American flag shirts and pants while watching the “President’s Cup” golf tournament (which this year featured a naked female streaker carrying a large American flag); or listen to drunks at a bar cheering and shouting “USA! USA!” while watching American bombs dropped on someone in a foreign country on the bar’s boob tube; or attend a church service decorated with flags and listen to a sermon that thanks “our heroes” for murdering people in foreign countries, think of this comment by William Graham Sumner: “The thirst for glory is an epidemic which robs people of their judgment, seduces their vanity, cheats them of their interests, and corrupts their consciences.”
The “essence of militarism,” Sumner observed, is to despise constitutions, to sneer at parliaments, and to look with contempt at civilians. All the neocon talking heads, from Limbaugh to Hannity and Levin and others, adopted the slogan, “9/11 changed everything” every time someone like Judge Andrew Napolitano would argue that the government was acting in contempt of the Constitution with its warrantless wiretaps, internet and cellphone spying, the PATRIOT Act, etc. All American presidents have simply ignored Congress, for the most part, in instigating wars; and of course all politicians at all times (with one or two exceptions) look with absolute contempt at the average citizen.
Sumner wrote of how the war party of his day was making the “the times have changed” argument for war. This was reminiscent of Lincoln’s similar argument that “we must think anew and act anew,” by which he also meant “to hell with the Constitution.”
Militarism destroys capitalist prosperity, Sumner also warned. He observed that all during the late nineteenth century most Europeans were busy working, investing, starting businesses, and improving their standards of living peacefully under a growing capitalist system with little attention being paid to militarism. Such behavior is absolute poison to the state, however, which considers it to be a mortal enemy. So when European war parties began to militarize, Sumner wrote of how government military spending was crowding out private sector growth so much that European capitalism was being “arrested, diverted, and crippled.” This is always the effect of the growth of militarism in particular and of government in general, and in Sumner’s time America was about to embark on the very same economically-destructive path as the Europeans had so foolishly done.
How will we know when we have become like the Old European empires?, Sumner asked. His answer was that America would become awash in “war, debt, taxation, diplomacy, a grand-government system, pomp, glory, a big army and navy, lavish expenditures, and political jobbery – in a word, imperialism.” This has been a textbook definition of American society for quite a long time now, and becoming more and more so by the day.
“The great foe of democracy is plutocracy,” Sumner declared, and militarism always fuels plutocracy. It does so trough “jobbery” (i.e., crony capitalism), diverting the public’s attention from their real economic problems, large government expenditures that benefit a few well-connected defense contracting corporations, and large government expenditures and debt that make the strong stronger and the weak weaker.” This of course is a precise definition of how the American warfare/welfare state, funded by the Fed, has so greatly enriched the “one percenters” at the expense of almost everyone else, as documented in great detail by David Stockman in his book, The Great Deformation: The Corruption of Capitalism in America, and by Hunter Lewis’s Crony Capitalism in America. This is also a major theme of my books, The Real Lincoln; Lincoln Unmasked; Hamilton’s Curse; and How Capitalism Saved America.
In light of all this, it is understandable why an acquaintance of mine who is a Yale graduate recently remarked that of all the paintings and photographs of famous Yale professors and alumni that adorn the Yale libraries and other buildings on campus, the image of William Graham Sumner cannot be found.
Thomas J. DiLorenzo is professor of economics at Loyola College in Maryland and the author of The Real Lincoln, Lincoln Unmasked, How Capitalism Saved America,Hamilton’s Curse: How Jefferson’s Archenemy Betrayed the American Revolution – And What It Means for America Today. His latest book is Organized Crime: The Unvarnished Truth About Government.
Source: Thomas DiLorenzo | LewRockwell.com
The infamous Trilateral Commission still exists. Many people think the TC, created in 1973 by David Rockefeller, is a relic of an older time. Think again.
Patrick Wood, author of Trilaterals Over Washington, points out there are only 87 members of the Trilateral Commission who live in America. Obama appointed elevenof them to posts in his administration.
Keep in mind that the original stated goal of the TC was to create “a new international economic order.” Knowing that you have to break eggs to make an omelette, consider how the following TC members, in key Obama posts, can help engender further national chaos; erase our sovereign national borders; and install binding international agreements that will envelop our economy and money in a deeper global collective: a new world order:
- Tim Geithner, Treasury Secretary;
- James Jones, National Security Advisor;
- Paul Volker, Chairman, Economic Recovery Committee;
- Dennis Blair, Director of National Intelligence.
In the run-up to his inauguration after the 2008 presidential election, Obama was tutored by the co-founder of the Trilateral Commission, Zbigniew Brzezinski.
In Europe, the financially embattled nations of Greece and Italy brought in Lucas Papademos and Mario Monti as prime ministers. Both men are Trilateral members, and Monti is the former European chairman of the Trilateral Commission.
In the US, since 1973, author Wood counts eight out of 10 US Trade Representative appointments, and six out of eight World Bank presidencies, as American Trilateral members.
Zbigniew Brzezinski wrote, four years before birthing the TC with his godfather, David Rockefeller:
“[The] nation state as a fundamental unit of man’s organized life has ceased to be the principal creative force. International banks and multinational corporations are acting and planning in terms that are far in advance of the political concepts of the nation state.”
Several other noteworthy Trilateral members: George HW Bush, Bill Clinton, Dick Cheney, Al Gore. The first three men helped sink the US further into debt by fomenting wars abroad; and Gore’s cap and trade blueprint would destroy industrial economies, while vastly increasing the numbers of people in Third World countries who have no access to modern sources of energy.
Does all this offer a clue as to why the US economy has failed to recover from the Wall Street debacle of 2008, why the federal bailout was a handout to super-rich criminals, and why Obama took actions which prevented a recovery?
A closer look at Tim Geithner’s circle of economic advisers reveals the chilling Trilateral effect: Paul Volker; Alan Greenspan; E. Gerald Corrigan (director, Goldman Sachs); and Peter G Peterson (former CEO, Lehman Brothers, former chairman of the Council on Foreign Relations). These men are all Trilateral members.
How many foxes in the hen house do we need, before we realize their Trilateral agenda is controlling the direction of our economy?
The TC has no interest in building up the American economy. They want to torpedo it, as part of the end-game of creating a new international currency, ushering in a de facto Globalist management system for the whole planet.
Any doubt on the question of TC goals is answered by David Rockefeller himself, the founder of the TC, in his Memoirs (2003):
“Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure—one world, if you will. If that is the charge, I stand guilty, and I am proud of it.”
Even in what many people mistakenly think of as the TC’s heyday, the 1970s, there were few who realized its overarching power.
Here is a close-up snap shot of a remarkable moment from out of the past. It’s a through-the-looking-glass secret—in the form of a conversation between a reporter, Jeremiah Novak, and two Trilateral Commission members, Karl Kaiser and Richard Cooper. The interview took place in 1978. It concerned the issue of who exactly, during President Carter’s administration, was formulating US economic and political policy.
The careless and off-hand attitude of Trilateralists Kaiser and Cooper is astonishing. It’s as if they’re saying, “What we’re revealing is already out in the open, it’s too late to do anything about it, why are you so worked up, we’ve already won…”
NOVAK (the reporter): Is it true that a private [Trilateral committee] led by Henry Owen of the US and made up of [Trilateral] representatives of the US, UK, West Germany, Japan, France and the EEC is coordinating the economic and political policies of the Trilateral countries [which would include the US]?
COOPER: Yes, they have met three times.
NOVAK: Yet, in your recent paper you state that this committee should remain informal because to formalize ‘this function might well prove offensive to some of the Trilateral and other countries which do not take part.’ Who are you afraid of?
KAISER: Many countries in Europe would resent the dominant role that West Germany plays at these [Trilateral] meetings.
COOPER: Many people still live in a world of separate nations, and they would resent such coordination [of policy].
NOVAK: But this [Trilateral] committee is essential to your whole policy. How can you keep it a secret or fail to try to get popular support [for its decisions on how Trilateral member nations will conduct their economic and political policies]?
COOPER: Well, I guess it’s the press’ job to publicize it.
NOVAK: Yes, but why doesn’t President Carter come out with it and tell the American people that [US] economic and political power is being coordinated by a [Trilateral] committee made up of Henry Owen and six others?After all, if [US] policy is being made on a multinational level, the people should know.
COOPER: President Carter and Secretary of State Vance have constantly alluded to this in their speeches.
KAISER: It just hasn’t become an issue.
Source: Trilateralism: The Trilateral Commission and Elite Planning for World Management, ed. by Holly Sklar, 1980. South End Press, Boston. Pages 192-3.
Of course, although Kaiser and Cooper claimed everything being manipulated by the Trilateral Commission committee was already out in the open, it wasn’t.
Their interview slipped under the mainstream media radar, which is to say, it was ignored and buried. It didn’t become a scandal on the level of, say, Watergate, although its essence was far larger than Watergate.
US economic and political policy run by a committee of the Trilateral Commission—the Commission had been been created in 1973 as an “informal discussion group” by David Rockefeller and his sidekick, Zbigniew Brzezinski, who would become Jimmy Carter’s National Security Advisor.
When Carter won the presidential election, his aide, Hamilton Jordan, said that if after the inauguration, Cy Vance and Brzezinski came on board as secretary of state and national security adviser, “We’ve lost. And I’ll quit.” Lost — because both men were powerful members of the Trilateral Commission and their appointment to key positions would signal a surrender of White House control to the Commission.
Vance and Brzezinski were appointed secretary of state and national security adviser, as Jordan feared. But he didn’t quit. He became Carter’s chief of staff.
Now consider the vast propaganda efforts of the past 40 years, on so many levels, to install the idea that all nations and peoples of the world are a single Collective.
From a very high level of political and economic power, this propaganda op has had the objective of grooming the population for a planet that is one coagulated mass, run and managed by one force. A central engine of that force is the Trilateral Commission.
In a speech to the Commonwealth Club, San Francisco, November 23, 2010, Peter Dale Scott gave a history of the various directives concerned with government continuity during a state of emergency. He showed that these directives could be used to supersede the Constitution.
The ease with which both the Bush and Obama regimes were able to set aside the due process protections of the Constitution that prohibit indefinite detention and execution without conviction in a trial indicate that Professor Scott’s concern is justified that these directives could result in executive branch rule.
Scott describes how the executive branch efforts to provide government continuity in the aftermath of a nuclear attack dating from the Eisenhower administration were gradually converted into executive or national security (later Homeland Security) orders that confer secret powers to the White House for any event that the executive branch considers to be an emergency.
Generally these various executive orders and directives refer to “national emergencies,” or “national disasters.” However, President Bush’s National Security Presidential Directive/NSPD 51 and Homeland Security Presidential Directive/HSPD-20 issued on May 9, 2007 use the term “Catastrophic Emergency.”
The directives speak of “enduring constitutional government” which the president maintains by coordinating “as a matter of comity with respect to the legislative and judicial branches,” but it is up to the president and his advisor, the National Continuity Coordinator, to decide what constitutes constitutional government during a catastrophic emergency.
What comprises a catastrophic emergency? It is reasonable for a president to regard a government shutdown, which can threaten everything from national security to default and economic collapse, as a catastrophic emergency, and to take such steps as are necessary to prevent it, such as raising the debt ceiling, on his own authority.
The Federal Reserve also has the power to prevent a government shutdown. If banks are too big to fail, so is the federal government. If the Federal Reserve on its own authority can issue more than $16 trillion in loans to US and European banks in order to prevent their failure, the Federal Reserve can issue a loan to the US government.
I don’t expect either of these two possibilities to come into play. A shutdown and default of US debt obligations would terminate the US as a superpower and dethrone the dollar as world reserve currency. Neither Congress nor President Obama desire such an outcome. Also, Congress would not want a presidential directive to be implemented that subordinates their position and possibly eliminates their meaningful participation in governance. Therefore, I expect a resolution of the current standoff prior to the Treasury running out of money.
I did interviews on this subject with King World News and with Greg Hunter. The interviews are played to the sensational side, but I do not expect it to go that far. However, it could.
My interview with King World News is relatively short, but Eric King knows how to bring it to the most controversial point. What everyone should wonder is, “How did we, a free people protected by the US Constitution, become one step away from rule by Caesar?
My interview with Greg Hunter of USA Watchdog is, in my opinion, one of my best.
The interview covers a broad range of issues or possibilities and makes it unnecessary for me to write a column about the government shutdown and its implications and possible consequences.
Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available.
Source: Paul Craig Roberts
Only a week ago, the consensus among most mainstream economic analysts and even some alternative analysts was that a government shutdown was not going to happen. The Republicans would fold in the shadow of President Barack Obama’s overwhelming drive for socialization, spending would continue to grow unabated, and the debt ceiling would be vaulted yet again to feed the bureaucratic machine with more fiat. Today, there is no consensus, very few people continue to be so blithely self-assured and even the mainstream is beginning to wonder if a much bigger game is afoot here.
As I discussed before the shutdown in a recent article, it is important to take all facets of this situation seriously, or risk being bitten by hidden dangers while entranced in one’s own arrogant cynicism.
One rule I try to follow whenever possible is to always be open to possibilities beyond the expected and never assume that today’s dynamic will be the same as tomorrow’s dynamic. Even the Liberty Movement can at times be susceptible to group think. In a world of staggering political and economic manipulation, one has to grasp hold of certain fundamental truths in order to survive. In my time working within the liberty movement and outside of the mainstream, these are a few of the cold, hard truths that have served me well.
It’s Always About Globalization
Every action the elites within our government take pushes the U.S. closer to globalism and away from sovereignty. We may not always see the bigger picture in the heat of the moment, but a look back tells us much. Seemingly simple changes in financial legislation render devastating fiscal shifts a decade later (as with the progressive erasure of Glass-Steagall). Shocking disaster events that appear random suddenly open doors for totalitarian legislation that had been prepared years in advance. Wars end with further calls for world “unification.” Nothing, and I mean nothing, happens within government that does not revolve around the desire of establishment oligarchy to achieve total global economic, political and social control.
The Bankers Did It
Central banks and international banks are the bedrock of globalization, and all greater political decisions eventually stand on this bedrock. One need only examine the cabinets of the past four U.S. Presidents; there you will find a regular carnival freak show of banking elites who would go on to revolve in and out of government and back into the international financial sector. Private central banks like the Federal Reserve dominate the very currency (and thus the economy) of most nations on the planet. Most wars and man-made disasters of the past several centuries have served only to further enrich and empower the merchant class, and the same holds true today. If you want to understand why a certain calamity has occurred, first look to who benefited most. Invariably, you will find the banker class smiling when all is said and done.
America’s Two-Party System Is Actually A One-Party System
If you do not yet understand that the elite of the Republican Party and the Democratic Party share the same foundational philosophy of globalism, then you will NEVER understand why our government does what it does. Public battles of words and legislation are nothing but rhetorical cinema. Ultimately, the goals of neocons and neolibs revolve around the centralization of power. All legislation is used either to further centralization or as a smokescreen to confuse the public while centralization is taking place. When has the leadership of either party, for instance, ever demanded a full audit of the Federal Reserve? When has the leadership of either party ever attempted to dismantle the Patriot Act or the despotic provisions of the National Defense Authorization Act or the President’s openly admitted assassination list? They may seem to disagree violently at times, but do not be fooled. The disagreement is likely just another means to gain more dominance.
The Goal Is To Destroy The American Economy
What you believe to be political blunders are often actually calculated and engineered events. What you believe to be chaotic disasters of coincidence are often actually deliberate acts of attrition warfare against the common people disguised as random catastrophe. Those you believe to be heroes are actually villains in friendly masks. Those you are told to be villains are actually good men and women who refused to be enslaved by the system. That which you see and hear is never exactly as it appears.
Nearly every concrete action our government and central bank have taken in the past several decades has led to the further erosion of the American economy. If this is all just the consequence of “stupidity” or “childish greed,” you would think our so-called leadership would have at least made a few good decisions by mistake; but they are incredibly adept at choosing all the wrong paths.
The reality is that collapses on the scale we are now witnessing in America rarely happen by accident.
The destruction of Glass-Steagall was a carefully crafted coup. The Federal Reserve deliberately and artificially lowered interest rates in order to allow banks to generate massive toxic debt through the derivatives markets. The Securities and Exchange Commission did little to nothing to stop the spread of cancerous mortgage instruments and ignored numerous calls for investigation. Ratings agencies like Moody’s and Fitch examined all of these toxic assets, knowing exactly what they were, and rated them AAA anyway. And banks like Goldman Sachs, knowing that the market was a sham, sold these bad assets around the world and then secretly bet AGAINST them later. Either this is economic warfare implemented with precision, or it’s all a string of coincidental blunders. I don’t believe in such coincidences.
America is being destroyed by design to make way for a new global system administered by the International Monetary Fund and the World Bank, as well as a new global currency tied to the IMF’s Special Drawing Rights.
If you are able to accept this, the confusion surrounding events like the government shutdown and debt ceiling debate withers, and everything becomes clear. With that clarity in mind, we can now examine the possible outcomes of the shutdown theater.
Republicans Surrender At The Last Minute
Of course, since both parties are essentially one party, the idea of “brinksmanship” on the part of either is absurd. The GOP will surrender, or “stand fast,” because its serves the interests of the globalist establishment. There is no political battle here, only the empty chest-beating of a staged wrestling match.
Bets on a last-minute Republican reversal were in the majority for the past week of the shutdown, but that is slowly changing — and for good reason. Obama has stated that the Affordable Care Act is off the table in negotiations, while Republicans like Ted Cruz and John Boehner are now stating with surprising candor that debt default is on the table if Obama refuses to compromise.
Gee, it would seem we are at an impasse.
In the meantime, the GOP is also moving to wrap the debt ceiling debate into the shutdown fight, making a “diplomatic compromise” even less likely to make sense to the public. (Those who argued that the shutdown and the debt ceiling were two entirely separate issued should accept this reality and move on.)
If I were writing this bit of fiction, I would say I was writing myself into a corner and that a last-minute Republican white flag would be illogical to my audience. That said, not all stories are well-written stories, so a Republican rollover remains an option for the time being. The primary reason I can see for the establishment to instruct the GOP to retreat would be to set the stage for a new stimulus event, like a war, which still leaves the U.S. dollar on track to lose its world reserve status — just not as fast a track.
Default Occurs By Winter
This plot twist makes far more sense to me given the way our story has progressed so far. Why? Because it provides perfect cover for an economic collapse that was going to occur anyway, except in this version the banking elite avoid all blame.
Just look at all the angry rhetoric being thrown around in the mainstream media; red team versus blue team has returned as the pervasive American sitcom.
Conservatives blame liberals and Obama. Liberals blame conservatives and the Tea Party. We’re all too happy to blame each other. Certainly, both elements of our government share responsibility for any debt default or subsequent collapse. But who started this avalanche to begin with? What about the Federal Reserve? What about Goldman Sachs, JPMorgan, Citigroup, etc.? What about the globalists?
Debt default is no small matter. Such a disaster would indeed fuel a flight from U.S. Treasuries by foreign investors and eventually lead to the complete abandonment of the greenback as the world reserve standard. Austerity measures would be implemented at break-neck speed. Cuts to entitlement programs, pensions, State funding, etc. will hit the American people like a freight train.
The way in which the MSM is already painting “Tea Party” conservative as saboteurs should a default occur is actually a very practical strategy. Not only do the elites get their economic collapse, but they manipulate the general public to believe that Constitutional conservatives, their mortal enemies, were the CAUSE of the pain, rather than the banks.
Order From Chaos
Should the establishment decide this is the moment to pull the plug on our financial structure, expect some rather insane-sounding solutions to be presented as rational alternatives. When Obama was asked by reporters if he considered the 14th Amendment as an option to end the debt ceiling debate, Obama did not rule out the idea.
This should raise some eyebrows. By the 14th Amendment I can only surmise that they mean Section 4, which states:
The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
Some people, including CNBC’s Jim Cramer, think that this gives the President the power to raise the debt ceiling regardless of what Congress decides.
And Obama doesn’t appear to be dismissing the notion either. However, Section 5 of the 14thAmendment says:
The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.
Nowhere in Section 5 does it say that the President has the power to enforce the provisions of the 14th Amendment, but this may not stop the White House from twisting the law to insinuate more expansive controls.
Beyond the 14th Amendment, there are numerous executive orders and continuity of government programs that the White House could cite as authority to implement national emergency standards. This would probably start as a kind of “soft” martial law, and then grow from there. Each action will be rationalized as necessary for the greater good of the country, but will serve only the interests of the establishment oligarchy.
On the Republican side, there is another disturbing development that may be presented as a solution in the face of crisis — namely, the idea of instituting a Constitutional convention.
A Constitutional convention is essentially a complete rewriting of the document (which they call “amending”) in the name of rebooting a government that has strayed too far from the wishes of the people. The concept is being promoted avidly by certain neocon talking heads and scholars, even on the FOX News circuit.
It sounds very noble on the surface, and neocons use very pretty language to candy coat the idea for legitimate Constitutionalists; but it is truly the most foolish action our country could take, opening the door to a complete erasure of Bill of Rights protections while offering no assurances that any meaningful provisions will be respected or afforded by the Federal government. The people are given the illusion of potential redress when in reality a Con-Con produces only more centralized theater for the masses. If the liberty movement is suckered into a Constitutional convention, we will have been lured into writing our own destruction.
Another scenario could involve the Federal Reserve moving to take what they often call “extraordinary measures”. The Fed, being a private bank, may use the shutdown as an opportunity to paint itself as an economic “hero” (as unbelievable as that may sound), by instituting stimulus measures to the Federal Government regardless of Congressional or presidential impasse. Given enough public desperation in the midst of default, the Fed may attempt to assert unprecedented financial authority in the name of “saving the country from it’s own government”. The bankers then establish their role as the wise saviors and high priests of the fiscal universe, and cement private dominance over American political decisions as “acceptable” in the minds of the citizenry.
The most dangerous solution that will inevitably be paraded for the public will be a petition for aid from the IMF. The IMF has a long history of loansharking to indebted nations and then subsuming them and their natural resources in the process. The ignorant illusion that the United States is the sole power behind the IMF will be exposed all too late when a defaulting American Treasury is told to collateralize infrastructure to pay off creditors, while the dollar is bled completely dry and absorbed by the IMF’s Special Drawing Rights basket currency.
Whether default occurs or is avoided, watch vigilantly over the next few weeks. Do not blink. Do not be conned, and do not let fear or bias blind you to the bigger picture. The shutdown could amount to nothing immediate, or it could amount to everything we have warned about for the past five years. I personally believe the month of October may be a major turning point in America’s history. Whether it be for good or ill depends on how mentally and physically prepared we are.
Source: Brandon Smith | Alt-Market
They’re more powerful than standing armies. What they say goes. They decide policy. They rule the world. They do it by controlling money, credit and debt.
They manipulate markets for self-enrichment. Grand theft is official Wall Street policy. Government officials wink, nod, and permit the grandest of grand larceny to persist.
Financial giants recycle their executives in and out of Washington. They strip-mine economies for profit. They buy politicians like toothpaste. Whatever they want they get.
They do it at the expense of government of, by and for everyone equitably and just.
On October 2, 15 financial lords met with Obama. They did so at the White House. They gave him their marching orders.
They came to assert their demands. They’re uncompromising. They’re ruthless. They want business as usual continued. They want more than ever.
They want more bailouts. They want bail-ins. They want personal bank accounts, pensions and other assets looted.
They want more crushing neoliberal harshness. They want America thirdworldized. They want it looking like Greece.
Budget and debt ceiling debates conceal their ugly agenda. What’s ongoing is a longstanding orchestrated swindle. Bipartisan complicity supports it.
Social America is on the chopping block for elimination. Another grand bargain plans it. Expect it once current theatrics end.
The worst of what’s coming could begin in weeks. Harder than ever hard times will follow.
Obama expressed support for deeper Medicare and Social Security cuts. He’s on board for weakened social protections overall.
Partisan warfare is more subterfuge than real. Both parties fundamentally agree. They want New Deal/Great Society policies entirely ended.
Wall Street bosses demand it. They want to feed more aggressively at the public trough than already. They want money gotten used to make more of it.
They want it stolen from ordinary people to make doing so easier. Obama and congressional leaders are their hired hands.
They’re complicit. They’re on board to eliminate “unnecessary” social programs. He want them entirely eliminated. They’re dismantling them incrementally.
Social Security, Medicare, Medicaid and public pensions are prime targets. Planned death is by a thousand cuts. It’s the new normal. It’s by letting Wall Street profiteers control these programs.
So-called “creeping normalcy” is defined as a way to make major changes seem normal and ordinary.
Class war in America has been ongoing for decades. It’s worse now than ever. It benefits business and rich elites. It does so at the expense of most others.
Middle class America is targeted for elimination. Bipartisan complicity plans it. Obama capitulated to Republicans on preserving tax cuts and other benefits for rich elites.
He gave trillions of dollars to Wall Street crooks and other corporate favorites. Profiteers benefit hugely from ongoing imperial wars.
Main Street Depression conditions persist. Bipartisan complicity plans much worse ahead. Militarism, favoritism, waste, fraud and other rewards benefit Wall Street and other special interests.
They do so at the public’s expense. Let ‘em eat cakes defines official policy. Ordinary people are increasingly on their own sink or swim.
Wages no longer keep up with inflation. Benefits steadily erode. High-paying manufacturing and service jobs offshored to low wage countries. Automated production claimed more.
So-called free markets aren’t fair. They work best for those who control them. Growing numbers of others lose out entirely.
Technology driven productivity increasingly pressures workers to toil longer for less pay and fewer benefits.
Marx was right explaining capitalism’s contradictions. They reflect an anarchic, ungovernable system. Today’s monster is far worse than he imagined.
Powerful monopolies and oligopolies control production, commerce and finance. Wall Street and other corporate bosses demand increasing amounts of surplus from pressured workers.
They’re looting America. They’re wrecking it. They’re sucking it dry for profit. Predatory capitalism is too corrupted, malignant and broken to fix.
Institutionalized inequality reflects it. America is more hypocrisy than democracy. It’s a kleptocracy. Criminal gangs pose as political parties. They’re complicit with corporate crooks.
They’re war criminals. They’re serial liars. They’re scoundrels of the worst kind. America’s real crisis isn’t government shutdown, said Paul Craig Roberts.
It’s not the debt ceiling. It’s looting America. It’s wrecking the economy. It’s offshoring good paying jobs. It’s lowering the tax base in the process.
It did so by transferring America’s wealth and overall well-being to China and other low wage countries.
It did it by permanent imperial wars. They inflate annual spending. Larger deficits followed. They’re “too large to be closed,” says Roberts.
Money printing madness sustains things as long a possible. What can’t go on forever, won’t. Dollar debasing doesn’t work. Gold and silver prices reflect it.
Wall Street and Washington rig markets to keep them from going higher. Illegal naked short selling is done to do so.
It constrains prices even when physical demand is increasing. It bears repeating. What can’t go on forever, won’t.
Given irresponsible financial/economic policies, expect eventual gold and silver prices to explode.
Another crisis, says Roberts, “is the absence of intelligence among economists and policymakers.”
Don’t worry, they said. Offshoring jobs doesn’t matter, they claimed. A “New Economy” with better jobs is coming.
Monthly payroll data explain otherwise. High paying/good benefit jobs are disappearing. Low paying/poor or no benefit jobs replace them.
America is being hollowed out in the process. It’s being strip-mined of its material wealth and resources.
It’s being suffocated. It’s being thirdworldized. It’s headed toward dystopian backwater status.
Plans are to force feed greater austerity. It’s to replicate Greece harshness. It’s to make America a ruler – serf society.
It’s to crush trade unionism. It’s to crack down hard on nonbelievers. It’s to make America more than ever unfit to live in.
It’s to create more severe crisis conditions than now. It’s to do so for greater profits and control.
Ending what’s ongoing requires replacing duopoly power with responsible governance. It requires rebuilding the nation’s industrial base.
It’s ending imperial wars. It’s disbanding America’s empire of bases. It’s strengthening social protections too vital to lose.
It’s putting money power back in public hands where it belongs. It’s making the privately owned and controlled Fed really federal. It’s prohibiting banks too big to fail from existing.
It’s ending corporate personhood. It’s replacing kleptocracy with real democracy. It’s running free, fair and open elections. It’s getting money entirely out of politics.
It’s curbing corporate power once and for all. It’s empowering people over money. It’s making crime no longer pay. It’s prosecuting crooks in the suites. It’s protecting human and civil rights.
It’s mandating universal healthcare and public education. It’s reinvigorating organized labor.
It’s reinstating progressive taxes. It’s making everyone pay their fair share. It’s guaranteeing a minimum life sustaining income.
It’s abolishing poverty, unemployment, hunger, homelessness and inequality. It’s ending favoritism. It’s getting rogues, rascals and other miscreants out of government.
It’s substituting truth and full disclosure for managed news misinformation. It’s replacing media scoundrels with responsible ones to do so.
It’s consigning Wall Street and other corporate crooks to the dustbin of history.
It’s establishing government of, by and for everyone. It’s making America what it never was before.
It better happen soon or else. Roberts calls today’s situation dire and “discouraging.”
“At this time,” he says, “collapse seems the most likely forecast.”
Perhaps rebuilding from ruins will change things, he hopes. Perhaps intelligent life exists elsewhere. Perhaps it’s on other planets.
Perhaps it’ll replace what doesn’t exist on earth. Perhaps it’s the only hope for survival. There may be no other way.
Stephen Lendman lives in Chicago. He can be reached at firstname.lastname@example.org.
His new book is titled “Banker Occupation: Waging Financial War on Humanity.”
Visit his blog site at sjlendman.blogspot.com.