Ever since the 2008 financial collapse, banks have reduced their lending while accumulating U.S. Treasuries. On the surface placing capital into the safest depositor may seem prudent. On the other hand, Why Big Banks Are Suddenly Interested in Talking to You Again? According to Inc, “After years of turning away small-business borrowers, the country’s largest banks are now granting one out of five loan applications they receive. The 20 percent benchmark represents a post-recession high for big banks (assets of $10B+). Further, small banks have been approving more than half of the funding requests they receive.”
Such news would normally be welcomed. The Sovereign Man article, Here’s Why US Banks Are Now Extremely Vulnerable, presents a sober warning that the banking industry is at risk from a bond market sell-off.
“In just the last month alone American banks increased their holdings of US treasuries by $54 billion, to a record $1.99 trillion.
Facing $127 trillion in unfunded liabilities – which is nearly double 2012’s total global output – and with no inclination to reduce those numbers at all, at this point disaster for the US is entirely unavoidable.
Under the rather arbitrary Bank of International Settlements Basel capital adequacy rules government debt rated at least AA continues to carry a “zero risk” weighting. Meaning that banks do not need to set aside capital against it.
Beyond that, regulations imposed after the last crash to reduce risk require banks to hold $100 billion in liquid assets, which of course includes bonds. Thus, they are not only encouraged, but actually forced to buy government bonds.”
The fundamental change in the last six years is that the banks were rescued from normal capital requirements under a zero interest rate discount window. The inevitable result starved the small business and personal borrowing market from obtaining loans. With the loosing of funds to finance business and consumers, could the dire warning that the banks understand they need to rotate out of Treasuries, be the reason for the shift in lending?
However, the rush to come into compliance has America’s Banks Pile Up Treasuries as Deposits Overwhelm Lending. This explanation of a change in regulation ordains that U.S. Bonds are still a necessary component in their balance sheet.
“Rules approved Sept. 3 by the Fed, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. leave banks about $100 billion short of the $2.5 trillion in easy-to-sell assets that they need to meet the liquidity standard, according to the Fed. Lenders must reach 80 percent of their liquidity coverage ratios by January and have until the start of 2017 to reach full compliance.”
Illustrating this point, “Bank of America alone may need to purchase as much as $65 billion of government debt to become fully compliant, according to report last month from Marty Mosby, a banking analyst at Memphis, Tennessee-based Vining Sparks.”
Providing additional encouragement is a WSJ report that U.S. Bank Profits Near Record Levels.
“On the heels of the financial crisis, some lawmakers, regulators and consumers complained that banks weren’t lending enough. But steady improvement in credit quality, or borrowers’ ability to repay loans, is prompting banks not only to lend more but also to ease their standards.
The higher loan levels come as banks are easing up on their underwriting standards to borrowers. A Federal Reserve survey of senior loan officers released last week found that lenders were loosening standards and loan terms for commercial and industrial loans and commercial real-estate loans.”
Reconciling the need to keep buying treasuries and originating new loans to satisfy business demand is a challenging objective. By returning to the old fashion business model, of actually making loans to customers, banks are generating significant profits.
While graphs show the downward trend in loans since TARP, the current upturn is ready to be charted. Lending money for productive enterprise has contributed to a rise in GDP. The transition to a consumer based economy is dependent on the flow of transactions. When the pace of the velocity of money increases and confidence strengthens, prosperity usually follows.
The different in this feeble recovery phase is that the debt assumed by the Treasury, monetized within Federal Reserve liabilities, requires servicing no matter the health of the general economy. Near zero or cost free interest rates is approaching an expected crisis of uninterrupted maintenance. The exact trigger that drives up rates, while elusive to forecast, is inevitable in coming.
The Money Show article, Rising Rates? Beware of Big Banks, describes the predicament accordingly.
“The reality is that traditional commercial and consumer lending is no longer the big money maker that it used to be for banks. Since the 2008 financial crisis, households and businesses have been deleveraging—paying down debt—and demand for loans has been limp.
In recent years, the big banks have fattened their profits mainly from capital-markets businesses: Mergers and acquisitions, stock and bond offerings, and other types of trading. Rising interest rates also make the cost of capital go up for businesses, which can result in less deal making, lowering financing fees for the banks.”
Hype that loan demands have returned in earnest is overstated. Coming off such a low level, any modest increase looks bigger than it really is. That revered business cycle, simply is no longer the same.
So what happens in the catch-22 scenario when banks are adjusting to different capital requirements and Treasuries drop in price with a rise in interest rates? That’s the 64 trillion dollar question.
Banking is more about mathematics than business acumen when additional debt created money is needed to pay the service of obligations that come due. The roll over can be staggering. Banksters make up the monetary rules. That $127 trillion nut is bigger than all the bank reserves put together.
For those who argue the economy can grow its way out of this liquidity squeeze must have a time frame longer than the imaginative bag of tricks left in the vaults of banks.
“…that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”
– James Truslow Adams, The Epic of America (1931)
The American Dream has been defined many ways by writers of both poetic and prosaic bent, but its essentials tend to involve life, liberty and the pursuit of happiness (or property, depending on your source).
The Declaration of Independence, upon which an entire nation was radically brought into existence, asserts that not only are all men created equal but that this is a “self-evident” truth. By this “unanimous Declaration of the thirteen united States of America,” a contract was agreed to, that their union would be founded on this principle. Thus, America was endowed with its dream at the moment of its conception: the freedom to succeed.
The United States has promoted a self-congratulating exceptionalism for decades, waving its Declaration and Constitution in the faces of other sovereign nations as if the latter had never considered such concepts. Our capital F “Freedom” sets us apart from the rest of the world, as the political rhetoric has repeated ad nauseam, no matter the freedoms enjoyed by democracies on almost every continent. And yet our basic freedom, the freedom to succeed, America’s contractual promise, has been shrinking for thirty years.
The freedom to succeed transcends economic systems but it is most potently expressed by capitalist gains. The ability to go “from rags to riches” is ingrained in this nation’s ethos and there is nothing intrinsically immoral about that goal. However, the current state of American inequality reveals a very real and expanding gap between the rich and poor that betrays the foundational endowment of this Union. When the freedom to succeed is denied every citizen, their equality is equally denied.
Recently, the Pew Research Center released a poll on what international citizens consider the greatest threat to the planet. Conducted between March 17 and June 5 of this year, the survey received answers from 48,643 respondents in 44 countries. In the U.S. and Europe, the growing gap between the rich and the poor was overwhelmingly considered the greatest danger to world prosperity. Over a quarter of Americans ranked “Inequality” as number one, above Religious & ethnic hatred, Pollution, Nuclear weapons and Infectious diseases.
This is hardly startling news considering that the median net worth of American households fell by 35 percent ($106,591 to $68,839) between 2005 and 2011, according to the U.S. Census Bureau. It is, however, disturbing that inequality remains so prevalent five years after the Great Recession.
Capitalism is not the problem. The problem is that we have let inequality advance in this country so gradually that its obviousness is masked by its familiarity. Below, I outline eight facts about inequality in America that every American should know.
1) 400 Americans have more wealth than half of all Americans combined. This ratio has been verified by Politifact and former Labor Secretary Robert Reich. To put it into context, last year the U.S. Census Bureau estimated that there were over 316 million people living in the United States. That means 400 Americans have more money than over 158 million of their fellow citizens. Their net worth is over$2 trillion, which is approximate to the Gross Domestic Product of Russia.
One explanation for the vast discrepancy in wealth is the definition of “worth,” which includes everything a person or household owns. This means savings and property but also mortgages, bills and debt. Poorer households can owe so much in debt that they possess a negative net worth.
2) America has the second-highest level of income inequality, after Chile. The Organization for Economic Cooperation and Development studies thirty-four developed countries and ranks them both before and after taxes and government transfers take effect (government transfers include Social Security, income tax credit and unemployment insurance). Before taxes and government transfers, America ranks tenth in income inequality. After taxes and transfers, it ranks second. Whereas its developed peers reduce inequality through government programs, the United States’ government exacerbates it.
3) The current state of inequality can be traced back to 1979. After the Stock Market Crash of 1929, the gap between the rich and the poor began to narrow. For fifty years, wages differed between the upper- and working-classes, but a robust middle-class took shape and there remained ample opportunity for working-class individuals to ascend.
In his book, “The Great Divergence,” journalist Timothy Noah traced today’s inequality to the beginning of the 1980s and the widening gap between the middle- and upper-classes. This gap was influenced by the following factors: the failure of American schools to prepare students for new technology; poor immigration policies that favor unskilled workers and drive down the price of already low-income labor; federally-mandated minimum wage that has failed to keep pace with inflation; and the decline of labor unions.
4) Non-union wages are also affected by the decline of unions. The Economic Policy Institute claims that 20 percent of the growth in the wage gap between high-school-educated and college-educated men can be attributed to deunionization.
Between 1978 and 2011, union representation for blue-collar and high-school educated workers declined by more than half. This has also diminished the “union wage effect,” whereby the existence of unions (more than 40 percent of blue-collar workers were union members in 1978) was enough to boost wages in non-union jobs – in high school graduates by as much as 8.2 percent. Not only did unions protect lower- and middle-class workers from unfair wages, they also established norms and practices that were then adopted by non-union employers. Two prime examples are employee pensions and healthcare.
Today, about 13 percent of workers belong to unions, which has reduced their bargaining power and influence.
5) There is less opportunity for intergenerational mobility. In December 2011, President Obama spoke at Osawatomie High School in Kansas. He was very clear about the prospects of the poor in today’s United States:
“[O]ver the last few decades, the rungs on the ladder of opportunity have grown farther and farther apart, and the middle class has shrunk. You know, a few years after World War II, a child who was born into poverty had a slightly better than 50-50 chance of becoming middle class as an adult. By 1980, that chance had fallen to around 40 percent. And if the trend of rising inequality over the last few decades continues, it’s estimated that a child born today will only have a one-in-three chance of making it to the middle class – 33 percent.”
As refreshing as that honesty is, Obama promised no fix beyond $1 trillion in spending cuts and a need to work toward an “innovation economy.”
In a speech one month later, Obama’s Chairman of Economic Advisers, Alan Krueger, elaborated on the dire state of America’s shrinking middle-class. The contraction, he stated, could partially be attributed to “skill-biased technical change”: work activities that have become automated over time, reducing the need for unskilled labor and favoring those with analytical training. He also highlighted the 50 year decline in tax rates for the top 0.1 percent, increased competition from overseas workers, and a lack of educational equality for children. Poor children are denied the private tutors, college prep and business network of family and friends available to their wealthier peers, which locks them into the class they are born into.
6) Tax cuts to the wealthiest have not improved the economy or created more jobs. Krueger also revealed that the tax cuts of the 2000s for top earners did not improve the economy any better than they did in the 1990s (meanwhile, income growth was stronger for lower- and middle-class families in the 1990s than in the last forty years).
Tax rates for the top income earners in America peaked in 1945 at 66.4 percent. Following decades of gradual reductions, they have since been cut in half. During the same time, the payroll tax has increased since the 1950s and individual income tax has bounced between 40-50 percent through the present day. Conversely, corporate tax declined from above 30 percent in the 1950s to under 10 percent in 2011.
All of these tax cuts are made ostensibly to improve the economy and create jobs. However, the National Bureau of Economic Research has concluded that it is young companies, “regardless of their size,” that are the real job creators in America. Tax cuts to the wealthiest do not create jobs.
7) Incomes for the top 1% have increased (but the top 0.01% make even more). Between 1979 and 2007, the average incomes of the 1 percent increased 241 percent. Compare that to 19 percent growth for the middle fifth of America and 11 percent for the bottom fifth. Put another way, in 1980 the average American CEO earned forty-two times as much as his average worker. In 2001, he earned 531 times as much.
Average income across the 1 percent is actually stratified into widely disparate echelons. Compare the $29,840 average income for the bottom 90 percent to the $161,139 of the top 10 percent. Compare the $1 million average income of the top 1 percent to the $2.8 million of the top 0.1 percent. Yet both still pale beside the $23 million average income of the top 0.01 percent.
If those numbers seem a bit overwhelming, Politizane has created a video that illustrates this staggering inequality:
8) The majority of Congress does not feel your pain. Empowered by the Constitution to represent their constituents, United States Congress members are, for the first time in history, mostly millionaires. The 2012 financial disclosure information of the 534 current Congress men and women reveals that over half of them have a net worth of $1 million or more.
After the past seven facts it is difficult to read this last one and believe that these 268 legislators have the best interests of the remaining 99 percent at heart. But if that is too presumptuous a leap, it is not too bold to say that wealthier donors, lobbyists and special interest groups enjoy greater access to these lawmakers than the average American.
In January, Congress failed to extend emergency benefits for unemployment, leaving 1.3 million people without federal aid. Congress then went on a weeklong recess that kept them from debating the issue until the end of the month. The bill was too divisive for Republicans and Democrats to reach an agreement on, though unemployment was then above 7 percent nationally.
Thankfully, the unemployed have their Congress working for them. And at $174,000 annual pay, those representatives are sure to return from their vacations committed to fresh solutions.
“Financial markets are faced with uncertainty that isn’t going away. The slowdown in Europe is probably in the early innings, the Fed hasn’t begun to raise interest rates, and geopolitical crises seem to pop up by the day.” Jeff Cox, Finance editor, CNBC
Six years of zero rates and trillions of dollars of asset purchases couldn’t stop stocks from falling sharply on Wednesday. All three major indices moved deep into the red, with the Dow Jones leading the pack, dropping an eye-watering 460 points before rebounding nearly 300 points by the end of the session. Risk-free assets, particularly US Treasuries, rallied hard on the flight-to-safety move with the benchmark 10-year Treasury yield slipping to a Depression era 1.87 percent before climbing back above the 2 percent mark. US financials were the worst hit sector, taking it on the chin for 9 percent by mid-day, while Brent crude was soundly walloped, falling to a 47-month low on oversupply and deflation fears. Stock market gains for the year had nearly been wiped out before a miraculous about-face turned Armageddon into a so-so day with survivable losses. Even so, analysts have already started paring back their estimates for 4th quarter growth while traders stocked up on antacid for Thursday’s opening bell.
The proximate cause of Wednesday’s bloodbath was weaker than expected economic data from Europe–which is sliding towards its third recession in five years– droopy retail sales in the US, and a report from Department of Labor showing that wholesale prices for producers are edging closer towards deflation, the opposite of what the Fed is trying to achieve via its aggressive monetary policy.
But the real trigger for the selloff was not the dismal data, but the policies that have been in place since the Financial Crisis of 2008. While the Obama administration has steadily decreased demand by shaving the deficits which provide vital fiscal stimulus for the economy, (On Wednesday, the USG announced the budget deficit fell to $483 billion, the lowest since 2008) the Federal Reserve has been providing trillions of dollars of cheap money to the banks and brokerages. The result of this one-two combo has not only been the biggest transfer of wealth in human history, but also “a fundamental breakdown in the functioning of the global capitalist economy.” As the International Monetary Fund (IMF) noted in a recent paper on the global recovery: “a pickup in investment has not yet materialized…reflecting concerns about low medium-term growth potential and subdued private consumption.” Demand shortfalls in the advanced countries “could lead to sustained global economic weakness over a five-year period.” (IMF report records global economic breakdown, Nick Beams, World Socialist Web Site)
Simply put: The Fed’s policies have made investors richer, but they haven’t created opportunities for recycling profits, which is a critical part of capitalism’s so called virtuous circle. Anemic investment, means less hiring, less spending, weaker demand and slower growth, all of which are visible in today’s sluggish, underperforming economy. Pumping money into financial assets (QE) can fatten the bank accounts of rich speculators, but it doesn’t do jack for the economy. It just creates bubbles that burst in a flurry of panic selling. Here’s more from Larry Elliot at the Guardian:
“Six years after the global banking system had its near-death experience, interest rates are still at emergency levels. Even attaining the mediocre levels of activity expected by the IMF in the developed countries requires central banks to continue providing large amounts of stimulus. The hope has been that copious amounts of dirt-cheap money will find its way into productive uses, with private investment leading to stronger and better balanced growth.
It hasn’t happened like that. Instead, as the IMF rightly pointed out, the money has not gone into economic risk-taking but into financial risk-taking. Animal spirits of entrepreneurs have remained weak but asset prices have been strong. Tighter controls on banks have been accompanied by the emergence of a powerful and largely unchecked shadow banking system. Investors have been piling into all sorts of dodgy-looking schemes, just as they did pre-2007. Recovery, such as it is, is once again reliant on rising debt levels. Central bankers know this but also know that jacking up interest rates would push their economies back into recession. They cross their fingers and hope for the best.” (World leaders play war games as the next financial crisis looms, Larry Elliot, Guardian)
The policies implemented by the Obama administration and Fed have achieved precisely what they were designed to achieve; they’ve enriched the voracious plutocrats who run the system but left everyone else scraping by on less and less. An article in the Washington Post explains what’s going on in greater detail. Here’s a short excerpt from the piece titled “Why is the recovery so weak? It’s the austerity, stupid”:
“Welcome to Austerity U.S.A., where the deficit is back below 3 percent of GDP and growth is still disappointing—which aren’t unrelated facts.
It started when the stimulus ran out. Then state and local governments had to balance their budgets amidst a still-weak economy. And finally, there was the debt ceiling deal with its staggered $2.1 trillion of cuts over the next decade. Add it all up, and there’s been a big fiscal tightening the past few years, something like 4 percent of potential GDP. Indeed, as Paul Krugman points out, real government spending per capita has been falling faster now than any time since the Korean War demobilization. (chart)
Fiscal Impact Measure
Source: Hutchins Center
And, as you can see above, all this austerity has been hurting GDP growth since 2011. It shows the Hutchins Center’s new “fiscal impact measure,” which looks at how much total government tax-and-spending decisions have helped or harmed growth. The dark blue line is what policy has actually done, and the light blue one is what a neutral policy would have done. So, in other words, if the dark blue line is below the light blue one, like it has the last three years, then policy has subtracted from growth.” (Why is the recovery so weak? It’s the austerity, stupid. Washington Post)
By cutting the deficits, Obama reduced the blood flow to the real economy and weakened demand. That’s what torpedoed the recovery. In contrast, stocks and bonds have done remarkably well, mainly because the Fed pumped $4 trillion into financial assets which was a taken as a greenlight by risk takers everywhere to load up on everything from overpriced equities to low-yield junk. Now, after more than three years without as much as a 10 percent correction, the momentum has shifted, volatility has returned, earnings are looking wobbly, and the fear is palpable. Stocks appear to be headed for a major repricing event. Here’s how investment guru John Hussman sums it up in his Weekly Market Comment:
“Our concerns at present mirror those that we expressed at the 2000 and 2007 peaks, as we again observe an overvalued, overbought, overbullish extreme that is now coupled with a clear deterioration in market internals, a widening of credit spreads, and a breakdown in our measures of trend uniformity…
…it has become urgent for investors to carefully examine all risk exposures. When extreme valuations on historically reliable measures, lopsided bullishness, and compressed risk premiums are joined by deteriorating market internals, widening credit spreads, and a breakdown in trend uniformity, it’s advisable to make certain that the long position you have is the long position you want over the remainder of the market cycle. As conditions stand, we currently observe the ingredients of a market crash.” (The Ingredients of a Market Crash, John P. Hussman, Ph.D., Hussman Funds)
Sounds ominous, doesn’t it? And Hussman is not alone either. The bearish mood on Wall Street is gaining pace even among those who focus more on geopolitical issues than fundamentals, like the Bank for International Settlements’ Guy Debelle who said in an interview on CNBC on Tuesday that he was concerned about the possibility of a “violent” market drop, particularly in bonds.
“If I had told you that there were heightened tensions in the Middle East and Eastern Europe, uncertainty about the turning point in U.S. monetary policy, a succession of strong U.S. job numbers, uncertainty about the future direction of policy in Europe and Japan, as well as increased concern about the strength of the Chinese economy, you would not be expecting that to make for a benign time in financial markets,” Guy Debelle of the BIS said. “But that is what we have seen for much of this year.” (CNBC)
But stocks aren’t cratering because of tensions in the Middle East or Eastern Europe. That’s baloney. And they’re not falling because of decelerating global growth, plunging oil prices or Ebola. They’re falling because no one knows what the heck is going to happen when QE stops at the end of October. That’s what has everyone in a lather.
Keep in mind, that 20 percent of the current market cap (more than $4 trillion) is stock buybacks, that is, corporations that have bought their own shares to juice prices. Do you really think that corporate bosses are going to play as fast and loose after the Fed stops its liquidity injections?
Not on your life. They’re going to pull in their horns and see what happens next. And if things go sideways, (which they very well could) they’re going to cash in and call it a day. That’s going to drive down stock prices and send markets reeling.
Stocks have nearly tripled since March 2009 when the Fed started this “credit easing” fiasco. So if stocks rode higher on an ocean of Fed liquidity, then how low are they going to go when the spigot is turned off? There are some, like technical strategist Abigail Doolittle, who think the S and P 500 could suffer a major heart attack, dropping as much as 60 percent before equities touch down. Check it out from CNBC:
“(Abigail) Doolittle, founder of Peak Theories Research, has made headlines lately suggesting a market correction worse than anyone thinks is ahead. The long-term possibility, she has said, is a 60 percent collapse for the S&P 500.
In early August, Doolittle was warning both of a looming “super spike” in the CBOE Volatility Index as well as a “death cross” in the 10-year Treasury note.
And so it’s come to pass at least for the VIX, which has jumped 74 percent over the past three months and crossed the 20 threshold that historically has served as a dividing line between complacency and fear. That’s its highest level in nearly two years. From Doolittle’s perspective, the spike represents a bad-news/bad-news scenario … that the near-term selling action is likely to continue and even accelerate…
…she thinks “violent waves of selling action” could send the VIX all the way to 90—even beyond its peak during the financial crisis.” (CNBC)
Now maybe Doolittle is just exaggerating or paranoid, but her conclusions do seem to square with CNN Money. Here’s a clip from yesterday’s article:
“CNNMoney’s Fear & Greed Index is a good indicator of market momentum. Today it hit zero. That’s a huge red flag and showcases extreme fear in the stock market. The only other time the index ever touched that low point is in August 2011 — shortly after Standard & Poor’s downgraded the U.S. debt.
Volatility — or what some are calling “market whiplash” — is clearly back in the market. The VIX, an index that measures volatility and is one of the factors that goes into the Fear & Greed Index — spiked again today. It’s up a whopping 60% in the past week alone.” (Extreme Fear in stock market, CNN Money)
So fear and volatility are back, but liquidity has suddenly gone missing. That sounds like a prescription for disaster to me. So what can we expect in the weeks to come?
Well, more of the same, at least that’s how Pimco’s former chief executive officer Mohamed El Erian sees it. Here’s how he summed it up on Wednesday in a Bloomberg editorial:
“Though unlikely to be as dramatic as today, market volatility can be expected to continue in the days and weeks to come as two forces compete: first, the forced deleveraging of certain investors, particularly overstretched hedge funds registering big October losses; second, central banks scrambling to say all sorts of reassuring things. All of this will serve to reinforce October’s longstanding reputation as a threatening month for investors around the world.” (October’s Wild Ride Isn’t Over Yet, Mohamed A. El-Erian, Bloomberg)
Did he say “forced deleveraging”?
Uh huh. So, after a 6 year bacchanal, the Fed is finally going to take away the punch bowl and force the revelers to pay down their debts, clean up their balance sheets, and take a few less risks. Is that it?
Yep. It sure looks like it. But, that could change in the blink of an eye, after all, the Fed has its friends to think of. Which means that Ms. Yellen could announce QE4 any day now.
Back when we took biology classes in high school, we all studied the life-cycle of the caterpillar, right? Where it went from being a caterpillar to spinning a cocoon to becoming a butterfly to laying its eggs to hatching back into a caterpillar again, right?
I’m thinking that this life-cycle is rather similar to the life-cycle of Wall Street & War Street’s huge, scary war machine — which started out being mostly financed by American taxpayers, right? But then as the “world’s greatest super-power” began to grow and grow, its insatiable appetite for more and more weaponization began to grow and grow too — and it started to need a whole big bunch of more “lettuce” to pay for these weapons as well.
And so even though the huge amount of taxes paid by our parents and grandparents had clearly been enough to keep the American armies of World War II afloat, the American military-industrial complex of the 21st century really couldn’t just rely on just us lowly taxpayers to keep their huge new American “peace-keeping” forces supplied — especially with so many of us now not even having any more income left to tax!
There was definitely no longer enough “lettuce” left in the United States to keep this big caterpillar fed, right?
So how is Wall Street & War Street going to continue to feed its insatiable appetite? By expanding its reach, right? By conquering other countries and then getting these new vassals to finance their own destruction — and to also finance the American weapons machine as well. Whew! Bad news for the conquered countries — but good news for American taxpayers. We don’t get stuck with the bill at the end of the meal. Maybe.
And so Africa is forced to pay for its own colonization. And the Middle East is forced to pay for its own colonization. And Europe is forced to pay for its own colonization. And so on and so forth. You get the idea, right?
So then the big fat happy American war machine caterpillar finally begins spinning its cocoon. And soon that part of its life-cycle is accomplished, thanks to tanks and guns and NATO and the World Bank and the IMF.
And then what happens next? Out pops a big beautiful butterfly, right? Well, not exactly. The butterfly then dies in the cocoon? Not that either. What actually happens next is that the butterfly goes on to lay even more eggs — but they are eggs of destruction, and soon the whole world will have been eaten up by its infinite number of baby vassals and baby wars, gobbling up everything in sight.
Just look what happened to the American war machine’s babies in Ukraine. That whole country is now toast after it let the Iron Butterfly in. And its baby, Israel? Almost every “gardener” in the world hates Israel now — because it has become yet another caterpillar pest, eating up everything in sight.
And just look at those ISIS “rebels” in Syria that the American war machine has sponsored, supported, encouraged and trained. John McCain even had his photo taken with some of these guys.
According to Rick Sterling, writing in Counterpunch, “The names of James Foley and Steven Sotloff can be added to those of about 200,000 Syrians who have died as a direct consequence of US policy of regime change by proxy war in Syria.”
And according to journalist Thierry Meyssan, “We know from the British news agency Reuters that, in January 2014, a secret session of Congress voted financing and arming the Free Syrian Army, the Islamic Front, and Al-Nosra Front of the Islamic Emirate until September 30, 2014…[and] finally, in mid-February, a two-day seminar at the US National Security Council was attended by heads of allied secret services involved in Syria, definitely to prepare the EIS offensive in Iraq.”
But now America’s war machine is currently bombing the crap out of ISIS, its own baby. Eating it alive too. What’s with that?
Nigeria thought it could cuddle up to this butterfly mother too. Well, Nigeria’s oil is now paying for America’s endless wars. And so is Iraq’s oil. And Syria’s oil. And Libya’s. Libyan “rebel” leaders thought they could kiss up to its mother as well — and now they also have had their heads bitten off by good old Mom.
And Saudi Arabia had better watch out. It is next. That’s all I gotta say about that.
I guess that the only difference between the life-cycle of the caterpillar and the life-cycle of the American war machine is thatcaterpillars turn into butterflies, go on to lay more eggs and so the cycle continues — whereas the American war machine just eats its young.
Calling it treason: When American leaders steal over 11 trillion dollars from US taxpayers
“None dare call it treason,” intoned various Joe McCarthy supporters back in the 1950s. But I’m daring to call it treason now — when the very people that Americans elect and trust set about to deliberately and purposely steal all our money so they can run a serial-killer torture chamber in our basement.
What red-blooded decent patriotic American has ever said, “Gee, I want to spend my tax money on Abu Ghraib and blowing up women and children and ‘full spectrum dominance’ rather than infrastructure and schools!” But yet that is where our money is now going. In my book, that is treason.
People are starving on the mean streets of New York City and Houston and Miami so that others can afford to bomb women and children in Syria, Libya, Iraq, Palestine and Ukraine. Sounds like treason to me.
We Americans have neglected our own country for far too long. And if we ourselves don’t stop the American military-industrial complex’s war machine, then we too should be tried for treason and sent to jail for forsaking the precious values of freedom and equality that this country was founded upon.
Us. Off to jail too — along with the faceless serial-killer treasonous ogres in Washington who hide behind their benevolent Jason-like masks of Patriotism and War.
U.S. Meddling Dims Prospects for Peace…
“It’s Uncle Sam who’s pushing us into this slaughter. And let’s be frank, many politicians in Ukraine are just following his orders.”
– Belarusian President Alexander Lukashenko
The Minsk Ceasefire Protocol has very little chance of succeeding. In fact, the meeting between the warring parties was not convened to stop the violence as much as it was to buy time for the Armed Forces of Ukraine (AFU) to retreat and regroup. In the last two weeks, the junta’s army has suffered “catastrophic” losses leaving President Petro Poroshenko with the choice of either calling for a truce or facing the unpleasant prospect of complete annihilation. Poroshenko wisely chose to withdraw under cover of the ceasefire agreement. But let’s not kid ourselves, Poroshenko only accepted that humiliation because he had no other choice. Once he gathers his forces and rearms, he’ll be back with a vengeance.
A recent survey found that 57 percent of the Ukrainian people oppose Poroshenko’s so-called “antiterror operation”. Even so, the fratricidal campaign will continue for the foreseeable future because it’s all part of Washington’s grand plan for the region. What the Obama administration is trying to do, is draw Russia into a costly and protracted conflagration in Ukraine to prove to its European allies that Russian President Vladimir Putin is a dangerous aggressor and a serious threat to global security. The US needs this justification to move ahead with its plan of establishing NATO forward-bases on Russia’s western border where they’ll pose an existential threat to Moscow’s survival. The puppet Poroshenko’s role in this bloody farce is to exacerbate the humanitarian catastrophe, crush the resistance, and try to provoke Putin into sending in the tanks. So far, the bumbling “Chocolate King” has only made matters worse by destroying his army and sabotaging US plans for NATO intervention. Obama’s frustration was apparent in the speech he gave at the NATO summit in Wales last weekend. Here’s a clip:
“Russia must stop its violations of Ukraine’s sovereignty and territorial integrity.” Russia’s “brazen assault” on Ukraine “challenges the most basic of principles of our international system – that borders cannot be redrawn at the barrel of a gun; that nations have the right to determine their own future. It undermines an international order where the rights of peoples and nations are upheld and can’t simply be taken away by brute force.”
Obama’s fulminations were meant to torpedo the ceasefire by poisoning the atmosphere and inflaming passions. Even while the negotiations were underway, the US and NATO were busy rattling sabers trying to derail the process. The summit in Wales was not so much a conference on regional defense as it was a platform for slinging mud at Russia and denouncing its “evil dictator” Putin. Like we said, Obama and Co. are getting frustrated by the fact that Putin has out maneuvered them at every turn. Here’s a clip from the New York Times with some details about the truce:
“The cease-fire agreement called for amnesty for all those who disarm and who did not commit serious crimes; the release of all hostages; the disbanding of militias; and the establishment of a 10-kilometer buffer zone (about six miles) along the Russian-Ukrainian border, with compliance overseen by international monitors.
It also points the way to a possible political solution to the conflict. Mr. Putin, insistent that Ukraine be tied to Russia instead of the West, has pressed for regional autonomy for the southeastern regions, while the Ukrainian government has so far been open only to the idea of decentralization.” (“A Cease-Fire in Ukraine”, New York Times).
Naturally, one would expect NATO and the US to tone down the rhetoric and postpone further escalation in order to show their support for the fragile ceasefire. But that hasn’t happened.
On Sunday, two NATO warships entered the Black Sea through the Bosporus joining French and US destroyers already located in the area. According to Itar Tass:
“The NATO ships’ crews will conduct the Sea Breeze exercises from September 8 to September 10. It is expected that along with the four abovementioned ships the drills will involve Turkey’s frigate Oruc Reis, Romania’s frigate Regele Ferdinand and Georgia’s patrol boat Sukhumi,” the source added.” (“Two NATO warships enter Black Sea – source“, Itar Tass)
The Sea Breeze exercises will be conducted at the same time as NATO military drills in Latvia that will involve more than “2,000 soldiers from nine different countries…(and which) ” simulate the deployment of NATO soldiers and equipment during a crisis situation.”
“We want to send a clear message to everyone who wants to threaten NATO, that it’s not a thing you should do,” General Hans-Lothar Domrose, commander of the NATO military command in Brunssum, Netherlands, told reporters.” (“NATO stages massive military drills in Latvia.”)
The drills have nothing to do protecting civilians from foreign aggression. They’re a blatant attempt to intimidate Putin and show that the western alliance is willing to risk a Third World War to achieve its objectives in Ukraine. The same could be said about NATO’s new Rapid Reaction Force, which is a 4,000-man combat group that will be deployable to any place in Europe within 48 hours. The new “Spearhead” force creates the dangerous precedent of a NATO standing army which will be used by the same reckless organization that assisted in the destruction of Serbia, Afghanistan and Libya. NATO’s interventions have been nearly as disastrous as those of the United States.
Aside from the additional troop deployments, warships to the Black Sea, and Rapid Reaction Force; we should not forget that the US Air Force deployed two B-2 stealth bombers to be stationed in east Europe earlier in the year. The B-2′s, which are capable of delivering nuclear weapons to their targets, are a clear message to Moscow that Washington will take whatever steps it deems necessary to defend its interests in Eurasia.
Also, Poroshenko announced on Friday that he reached an agreement with a number of western governments on the delivery of lethal weapons. (Officials from the US have since denied that they will send arms to Kiev.)
In any event, the pattern is clear: Escalate, escalate, escalate. The United States is determined to establish a NATO beachhead in Ukraine consistent with its plan to pivot to Asia. The alarming buildup of military assets in the Balkans and the Black Sea, as well as the steady drumbeat of anti-Russia propaganda in the media, suggests that Washington is embarking on a major operation that could explode into a full-blown war.
Europeans Oppose Arming Ukraine
Despite the nonstop demonization of Russia in the media, there’s no indication that the European people support the current policy in Ukraine. Check this out:
“The Journal du dimanche reported yesterday that the German Marshall Fund think-tank is preparing to release a poll showing that 81 percent of Frenchmen and 85 percent of Germans oppose arming the Ukrainian regime. The same poll found that in every European country except Poland, a majority of the population opposes the entry of Ukraine into either NATO or the European Union.”…..(“Fighting flares in eastern Ukraine despite ceasefire”, Johannes Stern and Alex Lantier, WSWS)
Finally, after 13 years of continuous warfare, the people have lost their appetite for US-NATO adventurism. Maybe there’s reason for hope, after all.
SANCTIONS: No Proof Needed
On Monday, the EU stepped up its economic war on Moscow by announcing a forth round of sanctions that could go into effect as early as Thursday. (The sanctions have been temporarily delayed so EU members can judge the effectiveness of the ceasefire.) The new measures will be the most painful to date and are aimed primarily at “three major state-run oil companies – Rosneft, Transneft and Gazprom Neft, as well as several companies of the military industrial sector.” The objective is to inflict maximum damage on the Russian economy by cutting off access to the capital markets, pushing the economy into recession, and triggering political instability. (The ultimate goal is regime change.) Not surprisingly, there won’t be any sanctions on the gas sector, particularly, Gazprom, which is Europe’s biggest gas supplier. EU leaders have shown repeatedly that they are only too willing to stand on principal as long as their own interests aren’t effected.
It’s worth noting that the new sanctions will be imposed without any evidence of wrongdoing and without any legal process for Russia to defend itself. The US and EU cannot be bothered with anything as trivial as due process or the presumption of innocence, which are the cornerstones upon which English Law rests dating back 500 years. Simply put: Russia is guilty because, well, because we say so.
There’s only the slimmest chance that the ceasefire in Ukraine will last, mainly because Washington needs a war to achieve its broader strategic objectives. What Obama and his lieutenants really want is “to break up Russia, subjugate its economic space, and establish control over the resources of the giant Eurasian continent. They believe that this is the only way they can maintain their hegemony and beat China.” (Quote: Sergei Glaziev, Putin’s economic advisor) That means, there won’t be peace in Ukraine until Washington’s puppets in Kiev are removed and Ukrainian sovereignty is restored.
In this article, I had first wanted to claim that America’s military-industrial complex has shed more blood in the last 53 years than anyone else in the history of the world, even Attila the Hun! But then I remembered World War I and World War II in all their grisly splendor. At the battle of Verdun alone, approximately 300,000 people died brutal and violent deaths. And at Hiroshima, there were approximately 100,000 dead. However, my point here is still legit — that American taxpayers have been paying for a whole big bunch of bloodshed during the last 53 years.
Approximately seven trillion dollars worth of human blood.
Seven trillion dollars can certainly buy you a whole lot of bloodshed. Rivers and oceans of blood. “Attila the Hun would be so-o-o jealous!” Let’s just look at the record.
It all started way back on January 17, 1961, when President Dwight D. Eisenhower very urgently and emphatically warned all of us — publicly on black-and-white TV — about the extreme dangers of allowing a massive military-industrial complex to keep growing larger and larger in America.
“In the councils of government,” President Eisenhower warned us, ” we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.” https://www.youtube.com/watch?
And nobody in America listened. I repeat. Nobody listened.
Shortly thereafter, Robert McNamara invented the bloody Vietnam war. And Americans happily let McNamara, President Johnson and Congress get away with it. Enough said about that. http://www.smirkingchimp.com/
Next came all those made-in-America mini-slaughters that took place in — I forget where. East Timor? Guatemala? Chile? Grenada? South Africa? Lebanon? Iran? Haiti? Nicaragua? The Philippines? Yeah, right, that was Reagan. And all funded by American taxpayers. All involving a whole big bunch of blood. Red Cross blood banks would have loved to have had that many donors!
Then George H.W. Bush trumped up that stupid Gulf War which killed thousands of Iraqis. Then Clinton tried to out-do Pappy Bush by killing hundreds of thousands more Iraqis with sanctions (400,00 dead children), followed by the Kosovo slaughters (6,000 dead from NATO bombings). “Not my fault!” cried Clinton. “We were only trying to stop more blood from being shed.” You just keep telling yourself that.
Then there was Afghanistan back in 2001. And Afghanistan is still bleeding. A lot. Attila would be uber-jealous!
But then the American military-industrial complex really got down to business in Iraq in 2003. Lots of slaughter. Brutality. Blood running in the streets like water. Think Fallugah. Think Baghdad burning. And you can’t even blame Baby Bush for that one either — he was just an unthinking pawn of Wall Street and War Street (but of course I do blame GWB anyway. Why isn’t that man in jail?).
One million dead on Bush Jr’s watch? That’s a war crime almost in the same league with Stalin and Hitler. Stalin and Hitler too would be jealous.
And wasn’t there a whole big bunch of unnecessary and brutal blood shed in Libya recently too? Benghazi comes to mind. We gotta thank President Obama for that one — just following orders from the military-industrial complex. “We are in a recession. War is good for business.” Especially if there is blood involved. And there was lots of blood involved in Libya when NATO illegally overturned Gaddafi.
And Libya to this day is still bleeding out. http://www.theguardian.com/
By now, America has not only turned Attila the Hun green with envy — but also Count Dracula and the entire cast of “True Blood”.
Red is such a lovely color, don’t you think? You had better. After all, you are paying for it — instead of for schools and hospitals and infrastructure and jobs and whatever. You had better like the color of blood a lot. It’s basically all we have left.
But then on the other hand, we are all such red-blooded Americans that clearly most of us have never even stopped to think for one minute that perhaps all this blood-shed just might be immoral and wrong. “We are Christians! Christians shed blood. It’s what we do,” Americans cry. Jesus wept.
And then America’s military-industrial complex went on to encourage, weaponize and train ISIS to kill a whole big bunch more women and children in Syria — in a stupid, unnecessary invasion of a country that was pretty much minding its own business (140,000 now dead in Syria, 7,000 of them children).
“They may have minded their business over in Syria, but they weren’t minding our business — and our business is war!” screamed Wall Street and War Street. And boy are these guys ever good at the business of war. Eisenhower nailed it!
And we American taxpayers get to pay for this brand new blood supply too. And pay. And pay. And pay.
In Ukraine, the blood also now runs like wine — and this vintage is being paid for by American taxpayers too. Of course. “2014 is a very good year for blood!” And the American military-industrial complex paid five billion of our U.S. dollars to Ukrainian neo-Nazis to get this blood-bath to start brewing last February. “A very good year.” https://www.youtube.com/watch?
In Ukraine, everybody remembers Attila.
And guess what else? “Attila, Dracula and even Eric Northman will be happy to know that we’ve found a whole new blood bank over in Gaza!” And it is costing U.S. taxpayers a whole lot more blood-money too. “Yippee!”
Now Attila’s rotting skull would be practically grinning in its grave — except for one thing. Jealousy. “That blood-sucking Netanyahu is trying to take over my reputation!” screams Attila’s ghost.
“I’ve killed more people on my List,” brags Netanyahu, “than that punk Oskar Schindler ever even thought about saving on his!” And here’s Netanyahu’s List to prove it: http://english.al-akhbar.com/
“What do you think this is, Attila? Some kind of game show where the contestant who spills the most blood wins?” Nope, not at all. You may have slaughtered more civilians back in the day, bossy-pants, but Netanyahu-the-Hun has done it with more flash and charm. Anyone can wield a sword and ride a horse — but it takes real panache to vaporize 373 little kids by just pushing a button.
“But Gaza has a right to defend itself!” some bleeding-heart liberals might say at this point. Talk to the hand.
The American military-industrial complex has the God-given right to shed blood anywhere in the world that it wants to — in any invasion, covert action, “war” or proxy war that it chooses. And to use our money to do it with too. “Brutality Gone Wild!” is the name of this reality show. Get over it, Attila.
PS: During its last 53 seasons of continuous production, the American military-industrial complex’s big hit reality show, “Brutality Gone Wild,” has been out on location, shedding blood everywhere on the planet so far — except for only one place that has been left unbloodied. You guessed it. “America.”
Attila the Hun never really had time to discover the New World, but not to worry. The guys who run Wall Street and War Street now know where we live too. And that we still have a whole big bunch of un-shed blood to tap into here as well. “Soon, very soon, it will be time to bring it all back home!” they cry at night from their crypts deep in the bowels of New York and Washington. “Bottoms up!”
And don’t say that you haven’t been warned — since way back in 1961.
“The unipolar world model has failed. People everywhere have shown their desire to choose their own destiny, preserve their own cultural identity, and oppose the West’s attempts at military, financial, political and ideological domination.”
– Vladimir Putin
“While the human politics of the crisis in Ukraine garner all the headlines, it is the gas politics that in many ways lies at the heart of the conflict.”
– Eric Draitser, Waging war against Russia, one pipeline at a time, RT
What does a pipeline in Afghanistan have to do with the crisis in Ukraine?
Everything. It reveals the commercial interests that drive US policy. Just as the War in Afghanistan was largely fought to facilitate the transfer of natural gas from Turkmenistan to the Arabian Sea, so too, Washington engineered the bloody coup in Kiev to cut off energy supplies from Russia to Europe to facilitate the US pivot to Asia.
This is why policymakers in Washington are reasonably satisfied with the outcome of the war in Afghanistan despite the fact that none of the stated goals were achieved. Afghanistan is not a functioning democracy with a strong central government, drug trafficking has not been eradicated, women haven’t been liberated, and the infrastructure and school systems are worse than they were before the war. By every objective standard the war was a failure. But, of course, the stated goals were just public relations blather anyway. They don’t mean anything. What matters is gas, namely the vast untapped reserves in Turkmenistan that could be extracted by privately-owned US corporations who would use their authority to control the growth of US competitors or would-be rivals like China. That’s what the war was all about. The gas is going to be transported via a pipeline from Turkmenistan, across Afghanistan, Pakistan and India to the Arabian sea, eschewing Russian and Iranian territory. The completion of the so called TAPI pipeline will undermine the development of an Iranian pipeline, thus sabotaging the efforts of a US adversary.
The TAPI pipeline illustrates how Washington is aggressively securing the assets it needs to maintain its dominance for the foreseeable future. Now, check this out from The Express Tribune, July 5:
“Officials of Pakistan, India, Afghanistan and Turkmenistan are set to meet in Ashgabat next week to push ahead with a planned transnational gas pipeline connecting the four countries and reach a settlement on the award of the multi-billion-dollar project to US companies.
“The US is pushing the four countries to grant the lucrative pipeline contract to its energy giants. Two US firms – Chevron and ExxonMobil – are in the race to become consortium leaders, win the project and finance the laying of the pipeline,” a senior government official said while talking to The Express Tribune.
Washington has been lobbying for the gas supply project, called Turkmenistan, Afghanistan, Pakistan and India (Tapi) pipeline, terming it an ideal scheme to tackle energy shortages in Pakistan. On the other side, it pressed Islamabad to shelve the Iran-Pakistan gas pipeline because of a nuclear standoff with Tehran…
According to officials, Petroleum and Natural Resources Minister Shahid Khaqan Abbasi will lead a delegation at the meeting of the TAPI pipeline steering committee on July 8 in Ashgabat.
…At present, bid documents are being prepared in consultation with the Asian Development Bank, which is playing the role of transaction adviser. The documents will be given to the two companies only for taking part in the tender.
Chevron is lobbying in India, Pakistan and Afghanistan to clinch a deal, backed by the US State Department. However, other companies could also become part of the consortium that will be led either by Chevron or ExxonMobil.” (TAPI pipeline: Officials to finalise contract award in Ashgabat next week, The Express Tribune)
So the pipeline plan is finally moving forward and, as the article notes, “The documents will be given to the two companies only for taking part in the tender.”
Nice, eh? So the State Department applies a little muscle and “Voila”, Chevron and Exxon clinch the deal. How’s that for a free market?
And who do you think is going to protect that 1,000 mile stretch of pipeline through hostile Taliban-controlled Afghanistan?
Why US troops, of course, which is why US military bases are conveniently located up an down the pipeline route. Coincidence?
Not on your life. Operation “Enduring Freedom” is a bigger hoax than the threadbare war on terror.
So let’s not kid ourselves. The war had nothing to do with liberating women or bringing democracy to the unwashed masses. It was all about power politics and geostrategic maneuvering; stealing resources, trouncing potential rivals, and beefing up profits for the voracious oil giants. Who doesn’t know that already? Here’s more background from the Wall Street Journal:
“Earlier this month, President Obama sent a letter to (Turkmenistan) President Berdimuhamedow emphasizing a common interest in helping develop Afghanistan and expressing Mr. Obama’s support for TAPI and his desire for a major U.S. firm to construct it.
…Progress on TAPI will also jump-start many of the other trans-Afghan transport projects—including roads and railroads—that are at the heart of America’s “New Silk Road Strategy” for the Afghan economy.
The White House should understand that if TAPI isn’t built, neither U.S. nor U.N. sanctions will prevent Pakistan from building a pipeline from Iran.” (The Pipeline That Could Keep the Peace in Afghanistan, Wall Street Journal)
Can you see what’s going on? Afghanistan, which is central to Washington’s pivot strategy, is going to be used for military bases, resource extraction and transportation. That’s it. There’s not going to be any reconstruction or nation building. The US doesn’t do that anymore. This is the stripped-down, no-frills, 21st century imperialism. “No nation for you, buddy. Just give us your gas and off we’ll go.” That’s how the system works now. It’s alot like Iraq –the biggest hellhole on earth–where “oil production has surged to its highest level in over 30 years”. (according to the Wall Street Journal) And who’s raking in the profits on that oil windfall?
Why the oil giants, of course. (ExxonMobil, BP and Shell) Maybe that’s why you never read about what a terrible mistake the war was. Because for the people who count, it really wasn’t a mistake at all. In fact, it all worked out pretty well.
Of course, the US will support the appearance of democracy in Kabul, but the government won’t have any real power beyond the capital. It never did anyway. (Locals jokingly called Karzai the “mayor of Kabul”) As for the rest of the country; it will be ruled by warlords as it has been since the invasion in 2001. (Remember the Northern Alliance? Hate to break the news, but they’re all bloodthirsty, misogynist warlords who were reinstated by Rumsfeld and Co.)
This is the new anarchic “Mad Max” template Washington is applying wherever it intervenes. The intention is to dissolve the nation-state in order to remove any obstacle to resource extraction, which is why failed states are popping up wherever the US sticks its big nose. It’s all by design. Chaos is the objective. Simply put: It’s easier to steal whatever one wants when there’s no center of power to resist.
This is why political leaders in Europe are so worried, because they don’t like the idea of sharing a border with Somalia, which is exactly what Ukraine is going to look like when the US is done with it.
In Ukraine, the US is using a divide and conquer strategy to pit the EU against trading partner Moscow. The State Department and CIA helped to topple Ukraine’s elected President Viktor Yanukovych and install a US stooge in Kiev who was ordered to cut off the flow of Russian gas to the EU and lure Putin into a protracted guerilla war in Ukraine. The bigwigs in Washington figured that, with some provocation, Putin would react the same way he did when Georgia invaded South Ossetia in 2006. But, so far, Putin has resisted the temptation to get involved which is why new puppet president Petro Poroshenko has gone all “Jackie Chan” and stepped up the provocations by pummeling east Ukraine mercilessly. It’s just a way of goading Putin into sending in the tanks.
But here’s the odd part: Washington doesn’t have a back-up plan. It’s obvious by the way Poroshenko keeps doing the same thing over and over again expecting a different result. That demonstrates that there’s no Plan B. Either Poroshenko lures Putin across the border and into the conflict, or the neocon plan falls apart, which it will if they can’t demonize Putin as a “dangerous aggressor” who can’t be trusted as a business partner.
So all Putin has to do is sit-tight and he wins, mainly because the EU needs Moscow’s gas. If energy supplies are terminated or drastically reduced, prices will rise, the EU will slide back into recession, and Washington will take the blame. So Washington has a very small window to draw Putin into the fray, which is why we should expect another false flag incident on a much larger scale than the fire in Odessa. Washington is going to have to do something really big and make it look like it was Moscow’s doing. Otherwise, their pivot plan is going to hit a brick wall. Here’s a tidbit readers might have missed in the Sofia News Agency’s novinite site:
“Ukraine’s Parliament adopted .. a bill under which up to 49% of the country’s gas pipeline network could be sold to foreign investors. This could pave the way for US or EU companies, which have eyed Ukrainian gas transportation system over the last months.
…Prime Minister Arseniy Yatsenyuk was earlier quoted as saying that the bill would allow Kiev to “attract European and American partners to the exploitation and modernization of Ukraine’s gas transportation,” in a situation on Ukraine’s energy market he described as “super-critical”. Critics of the bill have repeatedly pointed the West has long been interest in Ukraine’s pipelines, with some seeing in the Ukrainian revolution a means to get access to the system. (Ukraine allowed to sell up to 49% of gas pipeline system, novinite.com)
Boy, you got to hand it to the Obama throng. They really know how to pick their coup-leaders, don’t they? These puppets have only been in office for a couple months and they’re already giving away the farm.
And, such a deal! US corporations will be able to buy up nearly half of a pipeline that moves 60 percent of the gas that flows from Russia to Europe. That’s what you call a tollbooth, my friend; and US companies will be in just the right spot to gouge Moscow for every drop of natural gas that transits those pipelines. And gouge they will too, you can bet on it.
Is that why the State Department cooked up this loony putsch, so their fatcat, freeloading friends could rake in more dough?
This also explains why the Obama crowd is trying to torpedo Russia’s other big pipeline project called Southstream. Southstream is a good deal for Europe and Russia. On the one hand, it would greatly enhance the EU’s energy security, and on the other, it will provide needed revenues for Russia so they can continue to modernize, upgrade their dilapidated infrastructure, and improve standards of living. But “the proposed pipeline (which) would snake about 2,400 kilometers, or roughly 1,500 miles, from southern Russia via the Black Sea to Bulgaria, Serbia, Hungary and ultimately Austria. (and) could handle about 60 billion cubic meters of natural gas a year, enough to allow Russian exports to Europe to largely bypass Ukraine” (New York Times) The proposed pipeline further undermines Washington’s pivot strategy, so Obama, the State Department and powerful US senators (Ron Johnson, John McCain, and Chris Murphy) are doing everything in their power to torpedo the project.
“What gives Vladimir Putin his power and control is his oil and gas reserves and West and Eastern Europe’s dependence on them,” Senator Johnson said in an interview. “We need to break up his stranglehold on energy supplies. We need to bust up that monopoly.” (New York Times)
What a bunch of baloney. Putin doesn’t have a monopoly on gas. Russia only provides 30 percent of the gas the EU uses every year. And Putin isn’t blackmailing anyone either. Countries in the EU can either buy Russian gas or not buy it. It’s up to them. No one has a gun to their heads. And Gazprom’s prices are competitive too, sometimes well-below market rates which has been the case for Ukraine for years, until crackpot politicians started sticking their thumb in Putin’s eye at every opportunity; until they decided that that they didn’t have to pay their bills anymore because, well, because Washington told them not to pay their bills. That’s why.
Ukraine is in the mess it’s in today for one reason, because they decided to follow Washington’s advice and shoot themselves in both feet. Their leaders thought that was a good idea. So now the country is broken, penniless and riven by social unrest. Regrettably, there’s no cure for stupidity.
The neocon geniuses apparently believe that if they sabotage Southstream and nail down 49 percent ownership of Ukraine’s pipeline infrastructure, then the vast majority of Russian gas will have to flow through Ukrainian pipelines. They think that this will give them greater control over Moscow. But there’s a glitch to this plan which analyst Jeffrey Mankoff pointed out in an article titled “Can Ukraine Use Its Gas Pipelines to Threaten Russia?”. Here’s what he said:
“The biggest problem with this approach is a cut in gas supplies creates real risks for the European economy… In fact, Kyiv’s efforts to siphon off Russian gas destined to Europe to offset the impact of a Russian cutoff in January 2009 provide a window onto why manipulating gas supplies is a risky strategy for Ukraine. Moscow responded to the siphoning by halting all gas sales through Ukraine for a couple of weeks, leaving much of eastern and southern Europe literally out in the cold. European leaders reacted angrily, blaming both Moscow and Kyiv for the disruption and demanding that they sort out their problems. While the EU response would likely be somewhat more sympathetic to Ukraine today, Kyiv’s very vulnerability and need for outside financial support makes incurring European anger by manipulating gas supplies very risky.” (Can Ukraine Use Its Gas Pipelines to Threaten Russia, two paragraphs)
The funny thing about gas is that, when you stop paying the bills, they turn the heat off. Is that hard to understand?
So, yes, the State Department crystal-gazers and their corporate-racketeer friends might think they have Putin by the shorthairs by buying up Ukraine’s pipelines, but the guy who owns the gas (Gazprom) is still in the drivers seat. And he’s going to do what’s in the best interests of himself and his shareholders. Someone should explain to John Kerry that that’s just how capitalism works.
Washington’s policy in Ukraine is such a mess, it really makes one wonder about the competence of the people who come up with these wacko ideas. Did the brainiacs who concocted this plan really think they’d be able to set up camp between two major trading partners, turn off the gas, reduce a vital transit country into an Iraq-type basketcase, and start calling the shots for everyone in the region?
Europe and Russia are a perfect fit. Europe needs gas to heat its homes and run its machinery. Russia has gas to sell and needs the money to strengthen its economy. It’s a win-win situation. What Europe and Russia don’t need is the United States. In fact, the US is the problem. As long as US meddling persists, there’s going to be social unrest, division, and war. It’s that simple. So the goal should be to undermine Washington’s ability to conduct these destabilizing operations and force US policymakers to mind their own freaking business. That means there should be a concerted effort to abandon the dollar, ditch US Treasuries, jettison the petrodollar system, and force the US to become a responsible citizen that complies with International law.
It won’t happen overnight, but it will happen, mainly because everyone is sick and tired of all the troublemaking.
By every objective standard, Abenomics has been a complete flop. Household spending has plunged, wages have dropped for 23 months in a row, inflation is on the rise, the number of workers who can only find part-time jobs has ballooned to 38 percent, and most economists now expect 2nd quarter GDP to shrink to minus 4 percent or worse. So where’s the silver lining?
There isn’t one. It’s all hype. In fact, the only part of Prime Minister’s Shinzo Abe’s economic strategy that has succeeded has been the public relations campaign, which has bamboozled the Japanese people into believing that pumping trillions of yen into financial assets will lead to widespread prosperity. Good luck with that. We can see how well that worked in the US where stock prices have nearly tripled in the last five years, but the real economy is still flat on its back. So why would quantitative easing (QE) work in Japan when it hasn’t worked in the US?
It hasn’t, and it won’t. The whole thing is a farce. But political leaders like Prime Minister Shinzo Abe and their central bank lackeys continue to promote this absurd flimflam because it boosts profits for their constituents. That’s what this nonsense is all about; trying to find new ways to enrich the parasite class during a “self induced” long-term slump. The only problem is that everyone else is worse off than before, mainly because the silver spoon slackers at the top of the heap are getting a bigger and bigger share of the pie. That just leaves a few crumbs for everyone else, which is why economic activity has slowed to a crawl. It’s because the people who typically spend money and rev up the economy, have no money to spend. It’s that simple. Check out this blurb from the Testosterone Pit:
“The Abe administration is doing everything in the book to bolster the fortunes of Japan Inc.: offering tax cuts, more public works, and stimulus packages, snatching the Olympics by hook or crook, and cranking up inflation. In April, prices for all items soared 3.4% from a year earlier, and goods prices a confiscatory 5.2%. Yet wages were stuck in the mire, and adjusted for inflation, they plunged…
Then came the consumption tax hike, a broad-based tax that impacts consumers and businesses across the economy. The months before the effective date of April 1, consumers and businesses binged to save that extra 3% in taxes on big-ticket items, and businesses rang up sales faster than they could count.” Japan Inc.’s Worst Quarterly Outlook Since The 2011 Earthquake, Testosterone Pit
How do you like that? So, with the economy already on the ropes, class warrior Abe decided to squeeze working people even more by pushing through a regressive sales tax that put household spending into a nosedive. (Get a load of this ski-jump chart of household spending)
But while Abe has been raising taxes on the workerbees, he’s cutting them for his crooked corporate buddies. As part of his dubious “growth strategy” the Japanese PM has promised to slash corporate taxes from 35 percent to 29 percent, a move that will reduce revenues and increase Japan’s humongous public debt even more. (Japan’s debt is already a gargantuan 240 percent of GDP.) Many analysts think that Abe’s move could trigger a panic in the bond market if investors start to think he’s not serious about addressing the debt. Even so, that’s a risk that Abe’s willing to take as long as it saves his cheesy corporate friends a few shekels.
Of course the best way to pay down the debt, is through economic growth. But that can’t be done when wages are either stagnant or dropping as they are in Japan. Check this out from mni market news:
“Base wages, the key to a recovery in cash earnings, fell 0.2% on year, marking the 23rd consecutive decrease…. In real terms, total wages slumped 3.1% in April, showing the annual inflation rate above 1% is hurting household income in the absence of substantial wage growth and in light of the sales tax hike to 8% from 5% on April 1″. (Japan Apr Total Wages Post 2nd Straight Rise; Base Wages Down, MNI Market News)
The economy can’t grow when demand is weak, and demand is perennially weak in Japan because wages and incomes are shriveling. That means less personal consumption, less economic activity, and smaller GDP. Recently, the situation has gotten worse due to the Bank of Japan’s money printing operations which have increased inflation which has reduced worker’s buying power. Check this out form the Japan Times:
“Consumer prices climbed in May at their fastest pace in 32 years, swelled by the hike in the consumption tax and higher utility charges that are squeezing Japanese budgets as wage gains remain limited.
Consumer prices excluding fresh food but not energy, rose 3.4 percent from a year earlier, the Statistics Bureau said Friday…Household spending subsequently sank 8 percent, more than the forecast fall of 2.3 percent, separate data showed…
All 14 major gas and electricity companies raised prices from May to the highest level since the current pricing system began in May 2009, according to the Asahi Shimbun. Tokyo Electric Power Co. announced a price hike of 5.3 percent in May for households, reflecting the higher tax, rising energy costs and other factors.” (Prices climb most in 32 years as wages limp along, Japan Times)
So, with prices rising and wages stagnant, Japan is experiencing what most analysts anticipated when Abe first announced his plan to hike the sales tax, that is, household spending has dropped precipitously increasing the likelihood of another recession. Abe decided that pushing more of the government’s operating costs onto working people was more important than the health of the economy.
Naturally, Abe’s policies have had a catastrophic effect on the working poor. As we noted earlier, the number of part-time workers in Japan has grown dramatically over the last few years. According to Reuters,
“part-time, temporary and other non-regular workers who typically make less than half the average pay has jumped 70 percent from 1997 to 19.7 million today — 38 percent of the labor force.”
Abenomics has made life considerably harder for these people due to the higher taxes, soaring prices, and reduced welfare benefits. The data show that Japan’s poverty rate is “the sixth-worst among the 34 OECD countries” while “child poverty in working, single-parent households is by far the worst at over 50 percent, making Japan the only country where having a job does not reduce the poverty rate for that group.” (Japan’s working poor left behind by Abenomics, Reuters)
Abe’s attack on working people has intensified in the last few weeks as he’s unveiled parts of his “third arrow” of structural reforms. Along with cutting corporate taxes, Abe wants to take the Government Pension Investment Fund (GPIF), “the world’s deepest pot of savings”, and shove it in the stock market. George W. Bush wanted to do the same thing with Social Security but abandoned the idea after Lehman Brothers collapsed and the economy tanked. Now Abe is pushing the same loony plan which will put the long-term security of Japan’s elderly at risk just to boost profits for his voracious plutocrat friends.
Abe also wants to eliminate overtime pay, make it easier for corporate bosses to fire workers, and allow foreign workers to care for children and the elderly in a series of “special economic zones”. All of the so called “reforms” are just ways of extracting more wealth from labor by loosening regulations. None of them have anything to do with increasing productivity, boosting capital investment or sparking more innovation. They’re all about wringing every last dime out of the people who are already so broke they can barley keep their heads above water.
On top of it all, Abe’s easy money policies have ignited the same flurry of “irrational exuberance” they have in the US. As Marketwatch notes, “A greater number of investors are demanding increased dividends and share buybacks than (ever) before.”
Stock buybacks are a particularly execrable activity that pumps up stock prices without adding anything to productivity. It’s pure-unalloyed asset inflation prompted by insanely loose monetary policies. Here’s more from Marketwatch:
“Japanese companies … are sitting on a record amount of cash: about $3 trillion at the end of March …
A number of large Japanese companies, including Toyota, NTT Docomo and Mitsubishi Corp., have announced plans for big stock buybacks, which improve shareholder returns by increasing the value of the remaining shares outstanding.” (In Japan, dividends, buybacks take the stage, Marketwatch)
Yipee! Shareholders are getting richer on Abe’s idiot programs. Too bad they’ll be gone when the bubble bursts and the system plunges back into crisis.
What a screwball system.
Abenomics has nothing to do with prosperity, growth or even deflation. That’s all BS. The policy is designed to do exactly what it does, generate hefty profits for slacker speculators and corporate muck-a-mucks while everyone else faces higher prices, lower wages and a dimmer future.
If that’s not class warfare, then what is it?
“I liken the economy to a car on a flat road that has no momentum. When you take your foot off the gas, the car just stops moving.” — Stephanie Pomboy, Interview Barron’s
If you follow the stock market, you probably think the economy is sizzling. But if bonds are your thing, then you probably think we’re still in recession.
So which is the better gauge of what’s going on in the real economy; stocks or bonds?
The bond market is more accurate. And recently, long-term yields have been dropping like a stone which is not a good sign for the economy. Investors seem to think that slow growth and low inflation are here to stay, and they could be right. According to Bloomberg, “Falling yields on longer-term Treasuries historically reflect periods of lackluster growth. Since 1960, they have predicted seven of the last eight recessions when 10-year yields fell below 3-month bill rates.” As of today, the benchmark 10-year UST is a dismal 2.44 percent.
The reason investors have been piling back into Treasuries is because is the labor market is weak and there’s no sign of inflation anywhere. When wages stagnate and incomes drop–as they have since the slump ended– then there’s no upward pressure on prices because everyone is making less dough, so there’s less demand, less growth and, hence, less inflation. Of course, Obama could have fixed the situation by holding off on slashing the deficits or by increasing the amount of stimulus in his fiscal package. That would have circulated more money into the economy boosting employment and revving up growth. But that would have put the economy back on its feet again which was not what he wanted. What he wanted was to grind working people into the ground by keeping the economy on life-support while his chiseling Wall Street buddies made out like bandits on the latest stock market bubble. The Wall Street Journal explains what’s going on:
“Bond yields are – once again – plunging worldwide. The reason for this revived buying among fixed-income investors is that central banks are – once again – signaling their intent to ease monetary conditions in yet another bid to kick-start sluggish economies and forestall a downward spiral in prices, or deflation. The prospect that central banks will continue to inject money into the world’s bond markets…has acted as a green light for the world’s bond buyers.”
So investors think the Fed will have to taper the “Taper” and start buying more government paper. But why?
Because they have no choice. Many of the usual buyers of US Treasuries have cut back on their monthly purchases or stopped buying altogether. That means that rates will have to rise to attract more buyers unless the Fed makes up the difference. Check out this blurb from Barron’s interview with Stephanie Pomboy:
“Foreigners are buying about $10 billion a month of Treasuries. This compares with deficit financing needs for the U.S. government of roughly $40 billion a month, based on this year’s deficit. So the Fed needs to pick up roughly $30 billion a month in slack. When the Fed slashed its buying to $25 billion, effective this month, it for the first time opened up a demand deficit for Treasuries. If they continue to taper, that gap will expand, and things could get bumpy in the Treasury market. Rates won’t go up five basis points before the Fed would start talking about more QE.” (Barrons Interview Posits Weak US Economy, Barron’s)
It’ll get bumpy alright, real bumpy. Higher rates will send housing and stocks into freefall. The Fed will have no choice but to step in to stop the bleeding.
The economy is already suffering from chronic lack of demand. Add higher rates to the mix, and cost-conscious consumers are going to cut back on everything from auto loans to nights-on-the-town. Yellen’s not going to let that happen. She’s going to come up with some cockamamie excuse for buying more USTs and hope-like-hell that wages and incomes rebound so she can start tapering again.
This illustrates the conceptual flaw in Central Bank policy. QE and zero rates are supposed to reduce the price of money, thereby enticing consumers to take out loans and spend like crazy. That, in turn, is supposed to generate more activity and stronger growth. But there’s a slight glitch to this theory, that is, consumers aren’t the brain-dead lab rats the Fed thinks they are. Most people don’t base their spending decisions on price alone. Sometimes, for example, it doesn’t make sense to borrow money no matter how cheap it is. The average working stiff doesn’t give a rip if he can get a loan at 3.5 percent when his credit card is already maxed out and the only job he can find is working graveyard at Jack in the Box. That guy doesn’t need more debt, he needs a decent paying job. Here’s how the managing partner of MBMG Group, Paul Gambles explained the phenom in an interview on CNBC:
“People and businesses are not inclined to borrow money during a downturn purely because it is made cheaper to do so. Consumers also need a feeling of job security and confidence in the economy before taking on additional borrowing commitments.” (Washington’s blog via Zero Hedge)
Bingo. Of course, the members of the Fed know that this whole “cheap money” thing is bogus, but they keep reiterating the same blather so they can keep the wampum flowing to their crooked friends on Wall Street. It’s worth noting that: since the end of the recession, “one-third of all income increases in this country went to just 16,000 households, 95 percent of it went to the top 1 percent, and the bottom 90 percent’s incomes fell, and they fell by 15 percent.”
In other words, the Fed knows exactly how QE works, (and who benefits) and it has nothing to do with extending credit to working people. That’s malarkey. It’s all about providing limitless liquidity for financial speculators so they can send stocks into the stratosphere and rake in record profits. Here’s a blurb from a piece by Zero Hedge that helps to illustrate what’s going on:
“According to the most recent CapitalIQ data, the single biggest buyer of stocks in the first quarter were none other than the companies of the S&P500 itself, which cumulatively repurchased a whopping $160 billion of their own stock in the first quarter!
Should the Q1 pace of buybacks persist into Q2 which has just one month left before it too enters the history books, the LTM period as of June 30, 2014 will be the greatest annual buyback tally in market history.” (Here Is The Mystery, And Completely Indiscriminate, Buyer Of Stocks In The First Quarter, Zero Hedge)
Why are companies buying shares of their own stock, you ask, when buybacks add no productive value to a company at all?
It’s because it gooses stock prices which makes shareholders happy. It’s a complete scam. And it’s a huge scam, too. Currently, total stock buybacks represent a whopping $4 trillion or 20 percent of the total stock market value. Just think of the walloping prices are going to take when these same shareholders decide it’s time to bail out? Look out below!
Now get a load of this clip from Action Forex:
“Disappointment over the pace of economic growth explains at least some of the downturn in yields. The U.S. economy very likely contracted in the first quarter of the year, perhaps by as much as 1.0% annualized … Even with a strong bounce back in the second quarter … – the average pace of growth in the first half of the year will be a tepid 2.0%, about the pace it’s been since the end of the recession…
The retrenchment in yields also reflects events abroad … However, there is perhaps another reason for the decline in yields that is more pernicious. There is the realization that even after the recovery has run its course, economic growth is likely to be slower than it has been in the past. Slower growth means that as the fed funds rate eventually moves off the floor, it will not go back to the 5.25% it was prior to the Great Recession or even the 4.0% it averaged over the quarter of a decade prior. Expectations of “lower forever”…increasingly appear to be built into longer-term interest rates.” (A year in the bond market, Action Forex)
Did you catch that part about “lower forever”?
What the author means is that the economy has reset at a lower level of activity and will not return to normal. This is an admission that the managers of the system have no intention of fixing what’s wrong; cleaning up the banks, writing down the debts, regulating the system, increasing workers buying power (boosting demand) or providing sustained fiscal stimulus until unemployment and growth are back where they should be. Instead, basic macro has been replaced with public relations, that is, a swindle that’s spearheaded by faux-liberal icons Krugman and Summers who are pushing the “secular stagnation” folderol which is just a lame excuse for maintaining the status quo plus a few anemic add-ons, like infrastructure projects. Big whoop. It’s all a fig leaf for maintaining the same wealth shifting monetary policies that are in place today.
So this is it? Are we really doomed to a future of high unemployment and slow growth?
The IMF seems to think so. Here’s an excerpt from an article by Nick Beams which gives a rundown on a recent IMF report that was ignored by the media. The article is titled “No end to economic breakdown”:
“Almost six years after the eruption of the global financial crisis, the International Monetary Fund has effectively ruled out any return to the economic growth rates that preceded September 2008.
Two major chapters of the IMF’s World Economic Outlook … provide a gloomy assessment of the state of the world economy. In the advanced economies, investment is falling as a proportion of gross domestic product (GDP), while in the “emerging markets,” there is no prospect for growth rates to return to pre-2007 levels.
The IMF notes that real interest rates have been declining since the 1980s and are “now in slightly negative territory.” But this has failed to boost productive investment. On the contrary, what it calls “scars” from the global financial crisis “have resulted in a sharp and persistent decline in investment in advanced economies.” Between 2008 and 2013, there was a two-and-a-half percentage point decline in the investment to GDP ratio in these countries. The report adds that ratios “in many advanced economies are unlikely to recover to pre-crisis levels in the next five years.”
This conclusion is of immense significance given the critical role of investment in the functioning of the capitalist economy … Investment…is the key driving force of capitalist economic growth … But if investment stagnates or declines, the circle turns vicious. This is what is now taking place.” IMF report: No end to economic breakdown (april), wsws
So no return to normal, after all. The American people are now facing a long period of high unemployment and slow growth that will shrink the middle class and change the country in ways we can hardly imagine. It’s unavoidable. It’s the policy.
NOTE: As this piece was going to press, the Wall Street Journal announced that “revised” First Quarter GDP contracted at a 0.6% annual rate. So while stocks have been setting records almost daily due to the massive injections of money from the Fed, the economy is steadily sliding towards recession.
Quite a stir occurred with the academic presentation, How Technology Is Destroying Jobs, by Brynjolfsson, a professor at the MIT Sloan School of Management, and his collaborator and coauthor Andrew McAfee. Both “have been arguing for the last year and a half that impressive advances in computer technology—from improved industrial robotics to automated translation services—are largely behind the sluggish employment growth of the last 10 to 15 years. Even more ominous for workers, the MIT academics foresee dismal prospects for many types of jobs as these powerful new technologies are increasingly adopted not only in manufacturing, clerical, and retail work but in professions such as law, financial services, education, and medicine.”
“Perhaps the most damning piece of evidence, according to Brynjolfsson, is a chart that only an economist could love. In economics, productivity—the amount of economic value created for a given unit of input, such as an hour of labor—is a crucial indicator of growth and wealth creation. It is a measure of progress. On the chart Brynjolfsson likes to show, separate lines represent productivity and total employment in the United States. For years after World War II, the two lines closely tracked each other, with increases in jobs corresponding to increases in productivity. The pattern is clear: as businesses generated more value from their workers, the country as a whole became richer, which fueled more economic activity and created even more jobs. Then, beginning in 2000, the lines diverge; productivity continues to rise robustly, but employment suddenly wilts. By 2011, a significant gap appears between the two lines, showing economic growth with no parallel increase in job creation. Brynjolfsson and McAfee call it the “great decoupling.” And Brynjolfsson says he is confident that technology is behind both the healthy growth in productivity and the weak growth in jobs.”
Building upon this study, MSM provides a three part series on, Loss of middle-class jobs compounded by tech advances. The following admission by the technological behemoth should give pause for future generations.
“Most of the jobs will never return, and millions more are likely to vanish as well, say experts who study the labor market. What’s more, these jobs aren’t just being lost to China and other developing countries, and they aren’t just factory work. Increasingly, jobs are disappearing in the service sector, home to two-thirds of all workers.
The global economy is being reshaped by machines that generate and analyze vast amounts of data; by devices such as smartphones and tablet computers that let people work just about anywhere, even when they’re on the move; by smarter, nimbler robots; and by services that let businesses rent computing power when they need it, instead of installing expensive equipment and hiring IT staffs to run it.”
This reality is all around us, but the full impact yet appreciated, is that the cloud of computing is not increasing business employment for the main street economy. For more bad news look at the results from the Associated Press analysis of employment data from 20 countries in, Can smart machines take your job? Middle class jobs increasingly being replaced by technology, which found that “almost all the jobs disappearing are in industries that pay middle-class wages, ranging from $38,000 to $68,000. Jobs that form the backbone of the middle class in developed countries in Europe, North America and Asia.”
“In the United States, half of the 7.5 million jobs lost during the Great Recession paid middle-class wages, and the numbers are even more grim in the 17 European countries that use the euro as their currency. A total of 7.6 million midpay jobs disappeared in those countries from January 2008 through last June.”
The article then goes on to cite that more information now crosses the Internet every second than the entire Internet stored 20 years ago. Other examples note that:
- The British-Australian mining giant Rio Tinto announced plans last year to invest $518 million in the world’s first long-haul, heavy-duty driverless train system at its Pilbara iron ore mines in Western Australia.
- Dirk Vander Kooij’s furniture-making company in the Netherlands needs only a skeleton crew — four people. The hard work at the Eindhoven-based company is carried out by an old industrial robot that Vander Kooij fashioned into a 3D printer.
Soon to come are pilotless airliners joining the several Japanese rail lines already run by themselves. Add the smart utility meter deployment and soon the employee reader, banished to a wax museum, becomes just another sign of “so called” progress.
Missing in all this corporate excitement for slashing payroll is the indisputable fact that the general standard of living is dropping like a rock for the average family. Couple this deadly trend with the unnerving prospects forecasted by Bob Lord in, Our First Trillionaire: Only a Matter of Time.
“The unavoidable result: Wealth at the top is growing at a faster rate than aggregate wealth. That’s where the arithmetic comes in to play. If the wealth of one group within a nation grows at a faster rate than the nation’s aggregate wealth, that group’s share of the aggregate wealth must increase over time. That’s a mathematical certainty. And the level of subsequent wealth concentration has no limit.”
Technological development coupled with favorable political treatment is regularly the formula for massive accumulation of fortune. However, the horrendous social distortions that inexorably follows such distortions in income, much less the fact that the disappearance in living wage employment of the masses cannot be ignored without fundamental political upheaval.
Once innovated technology of a Henry Ford raised the living standards and was a benefit for society. Today’s objective is to remove or eliminate the middle class as the gap in meaningful employment widens. Added leisure time has no significance if spent on playing games on an IPAD, while living off welfare government programs.
Brynjolfsson and McAfee’s breakdown is a chilling look at a bleak future and the goodbye kiss to a populist beneficial economy.
As the US and EU apply sanctions on Russia over its annexation’ of Crimea, JP Sottile reveals the corporate annexation of Ukraine. For Cargill, Chevron, Monsanto, there’s a gold mine of profits to be made from agri-business and energy exploitation.
On 12th January 2014, a reported 50,000 “pro-Western” Ukrainiansdescended upon Kiev’s Independence Square to protest against the government of President Viktor Yanukovych.
Stoked in part by an attack on opposition leader Yuriy Lutsenko, the protest marked the beginning of the end of Yanukovych’s four year-long government.
That same day, the Financial Timesreported a major deal for US agribusiness titan Cargill.
Business confidence never faltered
Despite the turmoil within Ukrainian politics after Yanukovych rejected a major trade deal with the European Union just seven weeks earlier, Cargill was confident enough about the future to fork over $200 million to buy a stake in Ukraine’s UkrLandFarming.
According to the Financial Times, UkrLandFarming is the world’s eighth-largest land cultivator and second biggest egg producer. And those aren’t the only eggs in Cargill’s increasingly ample basket.
On 13th December 2013, Cargill announced the purchase of a stake in a Black Sea grain terminal at Novorossiysk on Russia’s Black Sea coast.
The port — to the east of Russia’s strategically and historically important Crimean naval base — gives them a major entry-point to Russian markets and adds them to the list of Big Ag companies investing in ports around the Black Sea, both in Russia and Ukraine.
Cargill has been in Ukraine for over two decades, investing in grain elevators and acquiring a major Ukrainian animal feed company in 2011. And, based on its investment in UkrLandFarming, Cargill was decidedly confident amidst the post-EU deal chaos.
It’s a stark juxtaposition to the alarm bells ringing out from the US media, bellicose politicians on Capitol Hill and perplexed policymakers in the White House.
Instability?… What Instablility?
It’s even starker when compared to the anxiety expressed by Morgan Williams, President and CEO of the US-Ukraine Business Council — which, according to its website, has been“promoting US-Ukraine business relations since 1995.”
Williams was interviewed by the International Business Times on March 13 and, despite Cargill’s demonstrated willingness to spend, he said, “The instability has forced businesses to just go about their daily business and not make future plans for investment, expansion and hiring more employees.”
In fact, Williams, who does double-duty as Director of Government Affairs at the private equity firm SigmaBleyzer, claimed, “Business plans have been at a standstill.”
Apparently, he wasn’t aware of Cargill’s investment, which is odd given the fact that he could’ve simply called Van A. Yeutter, Vice President for Corporate Affairs at Cargill, and asked him about his company’s quite active business plan.
There is little doubt Williams has the phone number because Mr. Yuetter serves on the Executive Committee of the selfsame US-Ukraine Business Council. It’s quite a cozy investment club, too.
According to his SigmaBleyzer profile, Williams “started his work regarding Ukraine in 1992″ and has since advised American agribusinesses “investing in the former Soviet Union.” As an experienced fixer for Big Ag, he must be fairly friendly with the folks on the Executive Committee.
Big Ag Luminaries — Monsanto, Eli Lilly, Dupont, John Deere…
And what a committee it is — it’s a veritable who’s who of Big Ag. Among the luminaries working tirelessly and no doubt selflessly for a better, freer Ukraine are:
- Melissa Agustin, Director, International Government Affairs & Trade for Monsanto;
- Brigitte Dias Ferreira, Counsel, International Affairs for John Deere;
- Steven Nadherny, Director, Institutional Relations for agriculture equipment-makerCNH Industrial;
- Jeff Rowe, Regional Director for DuPont Pioneer;
- John F. Steele, Director, International Affairs for Eli Lilly & Company.
And, of course, Cargill’s Van A. Yeutter. But Cargill isn’t alone in their warm feelings toward Ukraine. As Reuters reported in May 2013, Monsanto — the largest seed company in the world — plans to build a $140 million “non-GM (genetically modified) corn seed plant in Ukraine.”
And right after the decision on the EU trade deal, Jesus Madrazo, Monsanto’s Vice President for Corporate Engagement, reaffirmed his company’s “commitment to Ukraine”and “the importance of creating a favorable environment that encourages innovation and fosters the continued development of agriculture.”
Monsanto’s strategy includes a little “hearts and minds” public relations, too. On the heels of Mr. Madrazo’s reaffirmation, Monsanto announced “a social development program titled ‘Grain Basket of the Future’ to help rural villagers in the country improve their quality of life.”
The initiative will dole out grants of up to $25,000 to develop programs providing“educational opportunities, community empowerment, or small business development.”
Immense Economic Importance
The well-crafted moniker ‘Grain Basket of the Future’ is telling because, once upon a time, Ukraine was known as ‘the breadbasket’ of the Soviet Union. The CIA ranks Soviet-era Ukraine second only to Mother Russia as the “most economically important component of the former Soviet Union.”
In many ways, the farmland of Ukraine was the backbone of the USSR. Its fertile black soil generated over a quarter of the USSR’s agriculture. It exported substantial quantities of food to other republics and its farms generated four times the output of the next-ranking republic.
Although Ukraine’s agricultural output plummeted in the first decade after the break-up of the Soviet Union, the farming sector has been growing spectacularly in recent years.
While Europe struggled to shake-off the Great Recession, Ukraine’s agriculture sector grew 13.7% in 2013.
According to the Centre for Eastern Studies, Ukraine’s agricultural exports rose from $4.3 billion in 2005 to $17.9 billion in 2012 and, harkening the heyday of the USSR, farming currently accounts for 25% of its total exports. Ukraine is also the world’s third-largest exporter of wheat and of corn. And corn is not just food. It is also ethanol.
But people gotta eat — particularly in Europe. As Frank Holmes of US Global Investorsassessed in 2011, Ukraine is poised to become Europe’s butcher. Meat is difficult to ship, but Ukraine is perfectly located to satiate Europe’s hunger.
Just two days after Cargill bought into UkrLandFarming, Global Meat News reported a huge forecasted spike in “all kinds” of Ukrainian meat exports, with an increase of 8.1% overall and staggering 71.4% spike in pork exports.
No wonder Eli Lilly is represented on the US-Ukraine Business Council’s Executive Committee. Its Elanco Animal Health unit is a major manufacturer of feed supplements.
And it is also notable that Monsanto’s planned seed plant is non-GMO, perhaps anticipating an emerging GMO-unfriendly European market and Europe’s growing appetite for organic foods. When it comes to Big Ag’s profitable future in Europe, the stakes couldn’t be higher.
A Long String of Russian Losses
For Russia and its hampered farming economy, it’s another in a long string of losses to US encroachment — from NATO expansion into Eastern Europe to US military presence to its south and onto a major shale gas development deal recently signed by Chevron in Ukraine.
So, why was Big Ag so bullish on Ukraine, even in the face of so much uncertainty and the predictable reaction by Russia?
The answer is that the seeds of Ukraine’s turn from Russia have been sown for the last two decades by the persistent Cold War alliance between corporations and foreign policy. It’s a version of the ‘Deep State‘ that is usually associated with the oil and defense industries, but also exists in America’s other heavily subsidized industry — agriculture.
Morgan Williams is at the nexus of Big Ag’s alliance with US foreign policy. To wit,SigmaBleyzer touts Mr. Williams’ work with “various agencies of the US government, members of Congress, congressional committees, the Embassy of Ukraine to the US, international financial institutions, think tanks and other organizations on US-Ukraine business, trade, investment and economic development issues.”
Freedom — For US Business
As President of the US-Ukraine Business Council, Williams has access to Council cohort — David Kramer, President of Freedom House. Officially a non-governmental organization, it has been linked with overt and covert ‘democracy’ efforts in places where the door isn’t open to American interests — aka US corporations.
Freedom House, the National Endowment for Democracy and National Democratic Institute helped fund and support the Ukrainian ‘Orange Revolution’ in 2004. Freedom House is funded directly by the US Government, the National Endowment for Democracy and the US Department of State.
David Kramer is a former Deputy Assistant Secretary of State for European and Eurasian Affairs and, according to his Freedom House bio page, formerly a Senior Fellow at the Project for the New American Century.
Nuland’s $5 Billion For Ukrainian ‘Democracy’
That puts Kramer and, by one degree of separation, Big Ag fixer Morgan Williams in the company of PNAC co-founder Robert Kagan who, as coincidence would have it, is married to Victoria “F*ck the EU” Nuland, the current Assistant Secretary of State for European and Eurasian Affairs.
Interestingly enough, Ms. Nuland spoke to the US-Ukrainian Foundation last 13th December, extolling the virtues of the Euromaidan movement as the embodiment of “the principles and values that are the cornerstones for all free democracies.”
Nuland also told the group that the United States had invested more than $5 billion in support of Ukraine’s “European aspirations” — meaning pulling Ukraine away from Russia. She made her remarks on a dais featuring a backdrop emblazoned with a Chevron logo.
Also, her colleague and phone call buddy US Ambassador to Ukraine Geoffrey Pyatt helped Chevron cook up their 50-year shale gas deal right in Russia’s kitchen.
Coca-Cola, Exxon-Mobil, Raytheon
Although Chevron sponsored that event, it is not listed as a supporter of the Foundation. But the Foundation does list the Coca-Cola Company, ExxonMobil and Raytheon as major sponsors. And, to close the circle of influence, the US-Ukraine Business Council is also listed as a supporter.
Which brings the story back to Big Ag’s fixer — Morgan Williams.
Although he was glum about the current state of investment in Ukraine, he’s gotta wear shades when he looks into the future. He told the International Business Times:
“The potential here for agriculture / agribusiness is amazing … Production here could double. The world needs the food Ukraine could produce in the future. Ukraine’s agriculture could be a real gold mine.”
Of course, his priority is to ensure that the bread of well-connected businesses gets lavishly buttered in Russia’s former breadbasket. And there is no better connected group of Ukraine-interested corporations than American agribusiness.
Given the extent of US official involvement in Ukrainian politics — including the interesting fact that Ambassador Pyatt pledged US assistance to the new government in investigating and rooting-out corruption — Cargill’s seemingly risky investment strategy probably wasn’t that risky, after all.
J P Sottile is a freelance journalist, radio co-host, documentary filmmaker and former broadcast news producer in Washington, D.C. His weekly show, Inside the Headlines w/ The Newsvandal, co-hosted by James Moore, airs every Friday on KRUU-FM in Fairfield, Iowa. He blogs at Newsvandal.com.
Source: JP Sottile | Ecologist
Abenomics has been great for stock speculators and corporate bigwigs, but for everyone else, not so much. The fact is–despite all the media hype and monetary fireworks–Prime Minister Shinzo Abe’s three-pronged strategy to end 20 years of deflation has been a total bust. But don’t take my word for it, check out this clip from Reuters and see for yourself:
“In the fourth quarter of last year, Japan’s economy grew at an annual rate of just 0.7 percent, revised figures show, slower than the initial estimate of 1.0 percent on weaker business investment and consumption….” (Japan fourth-quarter growth, external balance suffer blow in test for Abenomics, Reuters)
See? Japan’s economy is dead as a doornail. No sign of life at all. What more proof do you need than that?
And Abenomics won’t end deflation either. That’s another fiction. The weaker yen is just going to force working people and retirees on fixed income to reduce their consumption which will intensify the slump. Heck, even the IMF has figured that one out. Take a look at this clip from one of their recent pieces:
“The average Japanese worker has been dipping into his savings to finance consumption growth. But there’s a limit to how far he can do this. The savings rate as a percent of disposable income has declined from around 5 percent a decade ago to close to zero today, leaving little further room for spending from savings….Looking forward, real wages are set to come under even greater pressure this year and next with higher underlying inflation and successive increases in the consumption-tax rate.” (Abenomics—Time for a Push from Higher Wages, IMF-direct)
It sounds to me like the IMF is telling old Shinzo that his plan sucks, doesn’t it?
Whoever thought that dumping trillions of dollars into the financial system would end deflation had a couple screws loose. That’s not how it works. The Fed loaded up on $4 trillion in financial assets and inflation is still hovering at a measly 1 percent. So if the theory doesn’t work in the US, why would it work in Japan?
It won’t. The way to generate inflation is by circulating money in the economy and increasing the velocity. That means full employment and higher wages. That means fiscal stimulus and redistributive taxation. That means fixing the damn economy. But Abe’s not going to do that because it doesn’t jibe with his class war strategy which is what drives the current policy. Now check this out from Roger Arnold at The Street:
“The essential policy tools of Abenomics are massive monetary and fiscal stimulus aimed at forcing the yen lower, which should cause exports to rise and domestic production to increase, leading to increased domestic job production and consumption: the virtuous cycle. In the process, Japan also increased sovereign debt, which must be serviced by the government. The servicing of that debt is supposed to come from an increase in tax receipts to be made available by the increased domestic production and consumption.
But it isn’t working.
The failure of Abenomics to stimulate economic activity and raise tax receipts enough to pay for the stimulus is now causing the government to double back on these programs with a counter-cyclical consumer tax increase of about 3%, which will be implemented in April. In other words, Abenomics is making the real economic and fiscal situations in Japan worse, not better. They are digging a bigger sovereign debt hole and accelerating the trajectory toward insolvency…Investors would be wise to avoid Japan altogether now, and probably permanently.” (Arnold: Abenomics’ Failure Is the Global Canary, The Street)
That’s probably good advice, although I think Japan’s implosion will take much longer than Arnold seems to believe. But that’s beside the point. What matters is the that policy doesn’t work. The economy isn’t growing, personal consumption is weak, the trade deficit, the current account deficit and the national debt are all ballooning at the same time, and the Japanese people are growing more pessimistic. And on top of it all, a 3 percent sales tax is set to kick in at the beginning of April which is going to send the economy stumbling back into recession. (Abe pushed through the tax hike to placate his right-wing constituents even though the risks to the economy were obvious.)
So, it’s all bad, unless you’re high-flying stock trader or a money-grubbing corporate CEO, that is. Then things have never been better. Get a load of this in the Wall Street Journal:
“While Japan Inc. may be whistling a happy tune on the back of robust profit growth and a weaker yen thanks to the pro-business agenda of Prime Minister Shinzo Abe, a key survey released Wednesday shows that consumers aren’t in a similar Abenomics-induced state of rapture.
The Cabinet Office’s monthly Consumer Confidence Index contracted for the third straight month in February to 38.2. That’s the worst reading since Mr. Abe entered office in January 2013 and the lowest since September 2011. Respondents were even more pessimistic than during Mr. Abe’s year-long term as prime minister between September 2006 and September 2007…
Even though recent data showed the basic earnings of workers in the world’s third-largest economy rose for the first time in almost two years in January, respondents in the February survey were less optimistic about their income growth, the value of their assets, and their overall livelihood than they were a month earlier.
The downbeat reading prompted the government to downgrade its assessment, saying it is “on a weak note.” (Japanese Consumer Pessimism Hits New High Under Abe, WSJ)
To say the Japanese are depressed, would be an understatement. Your average Joe is “even more pessimistic” than he was when Abe stepped down in 2007 and the economy was on the brink of rigor mortis. Does that sound like the “Happy Days are here again” blabber you’ve been reading in the media or hearing from liberal pundits like the madcap Dr. Krugman?
Also, according to a Cabinet Office survey that appeared in the Japan Times on Saturday, only 22 percent of respondents “think the economy is headed in the right direction”, while 76 percent are worried about the impact the consumption tax will have on the economy.
How’s that for a ringing endorsement of Abe’s Kamikazenomics? The only people who still believe in Abe’s song and dance are the ivory tower set at Princeton and Yale. Everyone else has thrown in the towel.
Abenomics is a public relations scam designed to shift more payola to voracious stock speculators and their thieving corporate counterparts. It’s a fraud wrapped in a lie. That’s all there is to it. But there are victims, that’s for dang-sure. Just check out this article in Bloomberg and you’ll see what I mean:
“Japanese Prime Minister Shinzo Abe looks set to drive an indicator of economic hardship to a 33-year high by increasing taxes and prices amid stagnant wages. The misery index, which adds the jobless rate to the level of inflation, will climb to 7 percentage points in the three months starting April 1 when Japan raises its sales levy to 8 percent from 5 percent, based on the median estimates of economists in Bloomberg News surveys of unemployment and consumer prices. That would be the highest level for the measure since June 1981 when Japan was emerging out of depression after the oil shocks in the 1970s.
Bank of Japan monetary stimulus designed to spur economic growth and achieve 2 percent inflation has weakened the yen by 6.8 percent in the past 12 months, eroding the value of wages to a record low. Abe, the son of an ex-foreign minister who grew up in a house with servants, is under fire from the opposition party after the cost of living surged to a five-year high.
“Inflation is really tough,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees more than $77 billion. “Those who speak favorably about inflation might have been born in wealthy families and never experienced the hardship that inflation brought.” (Misery Index Rising to 33-Year High on Abenomics: Japan Credit, Bloomberg)
The Misery Index is peaking and all you hear in the US is a bunch of baloney about glorious Abenomics and the miraculous effect of money printing. What a joke. People are hurting big-time in Japan, and shifty Shinzo is only adding to their pain with his monetary Hara-kiri. It’s madness. Wages dropped for 19 months in a row before they got a “one-off” bump-up last month of 0.1 percent, which is a big nothingburger. The overall trend is down, down, down. On top of that, roughly 35 percent of Japan’s workforce is part-time employment; no pension, no bennies, no job security, no nothing. Things slow down, and you get booted down the stairwell with not as much as a “Goodbye, Charlie!” They probably don’t even bother with the perfunctory pink slip. Just grab your lunchbox, and “out you go.”
So how does Abe figure he’s going to generate inflation when workers are flat on their backs and don’t have enough scratch to buy the widgets that Japan Inc produces?
The whole thing is a non starter, which is why I think this “fighting deflation” trope is a big freaking smokescreen to hide what’s really going on, which is a massive transfer of wealth to the investor class via asset inflation. That’s what’s really happening, right? Abenomics is just a way to produce fat returns during extended periods of slow growth and deepening stagnation. The big boys figured out how to overcome the very conditions that they created with their unbounded avarice. I guess they figure that, just because everyone else has to suffer through a goddamn Depression, doesn’t mean they have to too.
You got to hand it to these guys, they think of everything.
“The crimes of the United States have been systematic, constant, vicious, remorseless, but very few people have actually talked about them. You have to hand it to America. It has exercised a quite clinical manipulation of power worldwide while masquerading as a force for universal good.” – Harold Pinter, Nobel Acceptance Speech
“Obama is just a willing executioner. From the ruling class’s point of view, he’s the perfect figurehead because his mere appearance confuses and disarms so many. He seems to have spent his whole life trying to get chosen to play Judas. And that’s all there is in his resume.” -bevin, Comments line, Moon of Alabama
According to a newly-released Wall Street Journal/NBC News poll, Barack Obama’s job-approval ratings have dipped to a new low of 41 percent with a full 54 percent of respondents saying they “disapproved” of the job he’s doing. Obama’s handling of the economy, health care and foreign policy were particular areas of concern for most respondents. On health care, Obama is seen as having strengthened the for-profit insurance industry with little benefit for ordinary working people. The survey also showed “the lowest-ever approval” for the president’s handling of foreign policy. And, on the economy, the results were even more shocking; a full 57% of the people polled “believe the U.S. is still in a recession” while “65 percent think the country is on the wrong track”. Widespread disappointment in Obama’s performance has weakened his support among blacks, Hispanics and women, traditionally, the most loyal groups in the Party’s base.
There’s no doubt that Obama has been hurt by the anemic recovery or by focusing on deficit reduction instead of job creation. High unemployment, flat wages and shrinking incomes have weighed heavily on expectations, which has put a damper on consumption and growth. Gallup’s Economic Confidence index now shows a “sharp decline in the outlook for the future” …”with some 57 percent of the respondents saying things are getting worse, not better.”
Indeed, things have gotten worse under Obama, much worse, which is why many of his most ardent supporters are falling off the bandwagon. And the disappointment is not limited to economic policy either. Recent surveys confirm what most people already know, that the public is tired of the interventions, the provocations, the meddling and the endless wars. The American people are increasingly isolationist and want the government to disengage from foreign conflicts. Here’s an excerpt from a recent survey by PEW that sums up the mood of the country:
“For the first time since 1964, more than half (52%) agree that the U.S. should “mind its own business internationally and let other countries get along the best they can on their own;” 38% disagree, according to a survey conducted Oct.-Nov. 2013. Similarly, 80% agree with the statement, “We should not think so much in international terms but concentrate more on our own national problems and building up our strength and prosperity here at home.” (U.S. Foreign Policy: Key Data Points from Pew Research, PEW Research Center)
The PEW poll merely expands on the findings in other surveys like this from the LA Times:
“Two thirds of Americans questioned in a recent poll said the 12-year war fought in Afghanistan…hasn’t been worth the price paid in lives and dollars…
The survey conducted for the media by Langer Research Associates of New York found that disillusionment with the U.S.-led war was expressed by a majority of all political leanings. Overall, 66% of respondents said the war hasn’t been worth it. Those who identified themselves as liberals were most unhappy with the military investment: 78% said the war was a mistake.” (Poll: Two thirds of Americans say Afghan war not worth fighting, LA Times)
The same is true of Iraq. The war wasn’t worth fighting. Check this out on ABC News:
“Ten years after U.S. airstrikes on Baghdad punctuated the start of the Iraq war, nearly six in 10 Americans say the war was not worth fighting – a judgment shared by majorities steadily since initial success gave way to years of continued conflict.
Nearly as many in the latest ABC News/Washington Post poll say the same about the war in Afghanistan. And while criticisms of both wars are down from their peaks, the intensity of sentiment remains high, with strong critics far outweighing strong supporters.” (A Decade on, Most are Critical of the U.S.-Led War in Iraq, ABC News)
And that brings us to today and the looming prospect of a war with Russia over developments in the Crimea. Here’s what people are thinking according to a survey in the Washington Post:
“A new poll suggests Americans have very little appetite for any real involvement in the crisis in Ukraine. Only 29 percent of Americans would like for the Obama administration to take a ‘firm stand’ against Russia’s incursion into its neighbor, according to the Pew Research Center poll, while nearly twice as many — 56 percent — prefer the United States not to get too involved in Ukraine.
The poll reflects a war-weary American public that is still very reticent to get involved in international conflicts. The American people were similarly opposed to military intervention in Syria last year, despite President Obama calling for the use of force and seeking congressional approval for action.” (Few Americans want ‘firm stand’ against Russia in Ukraine, Washington Post)
Of course, Obama doesn’t care the American people want. He’s going to do what he signed-on to do; crack down on civil liberties, strangle the economy, and spread war across the planet. As far as the warmongering goes–he’s doing an even better job than Bush. Don’t believe me? Just check out this clip from the International Business Times:
“In their annual End of Year poll, researchers for WIN and Gallup International surveyed more than 66,000 people across 65 nations and found that 24 percent of all respondents answered that the United States “is the greatest threat to peace in the world today.” Pakistan and China fell significantly behind the United States on the poll, with 8 and 6 percent, respectively.” (In Gallup Poll, The Biggest Threat To World Peace Is… America?, IBT)
There you have it, the Obama presidency in a nutshell: “The United States is the greatest threat to peace in the world today.” Keep in mind, this survey wasn’t taken during the Bush years. Oh no. This is all Obama’s doing, every bit of it.
Let’s summarize: The majority of Americans think Obama is doing a lousy job. They think the economy stinks, and they think their financial situation is getting worse. They also think the country is on the wrong track, that America is a threat to world peace, and that they don’t want anymore goddamned wars.
Check, check, check, check and check.
So, what do you think the Obama administration’s reaction to this public outpouring has been?
I’ll tell you what it’s been. They’re happy. That’s right, they’re happy. Despite the plunging poll numbers and dwindling public support, the Obama team feels vindicated by the fact that they’re not as widely reviled as the Bush administration. That’s their benchmark: Bush. And they could be on to something too, after all, who would have thought that a president could repeal habeas corpus, destroy the economy, launch wars and coups like they’re going out of style, vaporize hundreds of innocent people in drone attacks, intensify surveillance on every man, woman and child in the United States, and claim the right to assassinate US citizens without due process, without inciting millions of enraged Americans to grab their pitchforks and head to Washington?
That’s what would have happened if Bush was still in office, right? But Obama gets a “pass”. Why? Because he’s an articulate, charismatic black man who the vast majority of Dems still admire. Can you believe it?
Obama represents everything these people profess to hate–war, drone attacks, Gitmo, austerity, Wall Street (no prosecutions), indefinite detention, executive privilege (to assassinate) etc–and yet they still put the man on a pedestal. Which is why we think that Obama is the greatest public relations invention of all-time; a beaming, exuberant, galvanic paragon who embodies all the laudatory characteristics of leadership and who–at the same time– is able to carry out the most despicable, inhuman acts without the slightest hesitation or remorse. He is man who feels nothing towards his fellow human beings, neither empathy, compassion, or mercy. What matters to Obama is that he faithfully follow the script that’s been written for him by his miscreant handlers, that odious amalgam of cutthroat corporatists, bank mandarins and loafing ivy league silver-spooners who make up America’s iniquitous Kleptocracy. The best description of Obama I’ve ever read was in the comments section of a foreign policy blogsite called Moon of Alabama by a blogger named “bevin”. Here’s what he said:
“I think that Obama is completely empty of scruples…just a willing executioner. From the ruling class’s point of view he is the perfect figurehead because his mere appearance confuses and disarms so many. He seems to have spent his whole life trying to get chosen to play Judas. And that is all there is in his resume…
They present him as negligent, never responsible, never intentionally connected to an evil act, never drawn into the acts of duplicity by a conscious intent. This is the false image, the disinformation projected about who he is…
It strikes me that Obama is all those things. And that this is the core of the evil in him- that he is without conscience or principle, just an ordinary butcher going about his business, fulfilling the terms of his employment, doing what he was asked to do…
You see him as focused and intentional.
I see him as someone who will sign a stack of death warrants without reading them, or thinking about them again. Remember just after November 2008, waiting to take office, how the Israelis attacked Gaza, obviously to show him who is boss? Didn’t you sense that even they were surprised at the insouciance with which he watched those extraordinary massacres pass before his eyes?
He didn’t care. And he was, at last, relieved of the chore of pretending that he did care about such things.
That’s really what he likes about being President: he can relax while the killing goes on, he doesn’t need to pretend it bothers him, he doesn’t need to pass any kind of moral judgment.
Remember when he asked his step-father “Have you ever killed men?”
The reply he got was “Only men who were weak.”
He has adhered to that moral standard ever since.” (bevin, Moon of Alabama)
That perfectly summarizes the man; an empty gourd who never had any intention of fulfilling his promises, who has utter disdain for the fools that voted for him, and who finds it as easy to kill a man, his family and his kids, as to swat a fly on his forearm. As bevin notes Obama “is a pure confidence man and a sociopath.”
And now the sociopath has focused his attention on Ukraine where he’s determined to draw Russia into a conflict over the Crimea even though Moscow has assisted the US in the War on Terror, removed its heavy weapons from the Western part of Russia, reduced its conventional military by 300,000 troops, and fulfilled all its obligations under the Adapted Conventional Armed Forces Treaty in Europe (ACAF).
Moscow has done everything that was asked of it. And what has Washington done in return. Here’s how Valentin Mândrăşescu, Editor of The Voice of Russia’s Reality Check, sums it up on the Testosterone Pit website:
“Washington has defaulted on all of its key agreements made with USSR/Russia during the last 30 years. Gorbachev was promised that Eastern Europe would not be taken into NATO. Country by country became part of NATO and Yugoslavia was dismantled despite Russia’s objections. The US acted as the winner of the Cold War and guided its policies by the famous principle of “Vae victis!” Woe to the vanquished!” (Valentin Mândrăşescu, Editor of The Voice of Russia’s Reality Check, From now on, No compromises are possible with Russia, Testosterone Pit)
Since the breakup of the Soviet Union, the US has surrounded Russia with military bases, trained troops in Georgia that were eventually used to fight Russia in South Ossetia, instigated numerous color-coded revolutions in former Soviet states, and started to deploy a missile defense system in Eastern Europe that will give Washington first-strike nuclear weapons capability that will destroy “the strategic equilibrium in the world” and force Putin to resume the arms race.
That’s how Washington makes friends; by stomping their face into the pavement every chance it gets. Sound familiar?
On Wednesday, Obama met with Ukraine’s imposter prime minister, Arseniy Yatsenyuk, at the White House in a attempt to lend credibility to the coup leader’s Nazi-strew government. Obama used the White House event to applaud the putsch and to promise support for the aggressively anti-Kremlin government. Shortly after Obama finished his statement, blogsites released copies of a resolution that was issued by the European Parliament just 15 months earlier condemning the groups which are now part of the US-backed Ukrainian government. Here’s a blurb from the text of that resolution:
“The European Parliament…Is concerned about the rising nationalistic sentiment in Ukraine, expressed in support for the Svoboda Party, which, as a result, is one of the two new parties to enter the Verkhovna Rada; recalls that racist, anti-Semitic and xenophobic views go against the EU’s fundamental values and principles and therefore appeals to pro-democratic parties in the Verkhovna Rada not to associate with, endorse or form coalitions with this party.” (Moon of Alabama)
How do you like that? So the European Parliament saw the danger of these groups and denounced them before they had a change of heart and realized that these died-in-the-wool, neo-Nazi, jackboot-thugs might be able to help them advance their foreign policy objectives. Now the EU nations are lining up behind Obama who’s doing his level-best to provoke Putin so he can push NATO to Russia’s borders, take control of critical pipeline corridors and vital resources, and install weapons systems on Russia’s perimeter. These are the administration’s goals despite the threat they pose to democracy, security, and regional stability, not to mention the possibility of a third world war.
Bottom line: You don’t get to be “the greatest threat to world peace” without really applying yourself.
Obama wants to prove he’s up to the task. Regrettably, we think he is.
There’s good propaganda and bad propaganda. Bad propaganda is generally crude, amateurish Judy Miller “mobile weapons lab-type” nonsense that figures that people are so stupid they’ll believe anything that appears in “the paper of record.” Good propaganda, on the other hand, uses factual, sometimes documented material in a coordinated campaign with the other major media to cobble-together a narrative that is credible, but false.
The so called Fed’s transcripts, which were released last week, fall into the latter category. The transcripts (1,865 pages) reveal the details of 14 emergency meetings of the Federal Open Market Committee (FOMC) in 2008, when the financial crisis was at its peak and the Fed braintrust was deliberating on how best to prevent a full-blown meltdown. But while the conversations between the members are accurately recorded, they don’t tell the gist of the story or provide the context that’s needed to grasp the bigger picture. Instead, they’re used to portray the members of the Fed as affable, well-meaning bunglers who did the best they could in ‘very trying circumstances’. While this is effective propaganda, it’s basically a lie, mainly because it diverts attention from the Fed’s role in crashing the financial system, preventing the remedies that were needed from being implemented (nationalizing the giant Wall Street banks), and coercing Congress into approving gigantic, economy-killing bailouts which shifted trillions of dollars to insolvent financial institutions that should have been euthanized.
What I’m saying is that the Fed’s transcripts are, perhaps, the greatest propaganda coup of our time. They take advantage of the fact that people simply forget a lot of what happened during the crisis and, as a result, absolve the Fed of any accountability for what is likely the crime of the century. It’s an accomplishment that PR-pioneer Edward Bernays would have applauded. After all, it was Bernays who argued that the sheeple need to be constantly bamboozled to keep them in line. Here’s a clip from his magnum opus “Propaganda”:
“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country.”
Sound familiar? My guess is that Bernays’ maxim probably features prominently in editors offices across the country where “manufacturing consent” is Job 1 and where no story so trivial that it can’t be spun in a way that serves the financial interests of the MSM’s constituents. (Should I say “clients”?) The Fed’s transcripts are just a particularly egregious example. Just look at the coverage in the New York Times and judge for yourself. Here’s an excerpt from an article titled “Fed Misread Crisis in 2008, Records Show”:
“The hundreds of pages of transcripts, based on recordings made at the time, reveal the ignorance of Fed officials about economic conditions during the climactic months of the financial crisis. Officials repeatedly fretted about overstimulating the economy, only to realize time and again that they needed to redouble efforts to contain the crisis.” (“Fed Misread Crisis in 2008, Records Show”, New York Times)
This quote is so misleading on so many levels it’s hard to know where to begin.
First of all, the New York Times is the ideological wellspring of elite propaganda in the US. They set the tone and the others follow. That’s the way the system works. So it always pays to go to the source and try to figure out what really lies behind the words, that is, the motive behind the smokescreen of half-truths, distortions, and lies. How is the Times trying to bend perceptions and steer the public in their corporate-friendly direction, that’s the question. In this case, the Times wants its readers to believe that the Fed members “misread the crisis”; that they were ‘behind the curve’ and stressed-out, but–dad-gum-it–they were trying their level-best to make things work out for everybody.
How believable is that? Not very believable at all.
Keep in mind, the crisis had been going on for a full year before the discussions in these transcripts took place, so it’s not like the members were plopped in a room the day before Lehman blew up and had to decide what to do. No. They had plenty of time to figure out the lay of the land, get their bearings and do what was in the best interests of the country. Here’s more from the Times:
”My initial takeaway from these voluminous transcripts is that they paint a disturbing picture of a central bank that was in the dark about each looming disaster throughout 2008. That meant that the nation’s top bank regulators were unprepared to deal with the consequences of each new event.”
Have you ever read such nonsense in your life? Of course, the Fed knew what was going on. How could they NOT know? Their buddies on Wall Street were taking it in the stern sheets every time their dingy asset pile was downgraded which was every damn day. It was costing them a bundle which means they were probably on the phone 24-7 to (Treasury Secretary) Henry Paulson whining for help. “You gotta give us a hand here, Hank. The whole Street is going toes-up. Please.”
Here’s more from the NYT:
“Some Fed officials have argued that the Fed was blind in 2008 because it relied, like everyone else, on a standard set of economic indicators. As late as August 2008, “there were no clear signs that many financial firms were about to fail catastrophically,” Mr. Bullard said in a November presentation in Arkansas that the St. Louis Fed recirculated on Friday. “There was a reasonable case that the U.S. could continue to ‘muddle through.’ (“Fed Misread Crisis in 2008, Records Show”, New York Times)
There’s that same refrain again, “Blind”, “In the dark”, “Behind the curve”, “Misread the crisis”.
Notice how the Times only invokes terminology that implies the Fed is blameless. But it’s all baloney. Everyone knew what was going on. Check out this excerpt from a post by Nouriel Roubini that was written nearly a full year before Lehman failed:
“The United States has now effectively entered into a serious and painful recession. The debate is not anymore on whether the economy will experience a soft landing or a hard landing; it is rather on how hard the hard landing recession will be. The factors that make the recession inevitable include the nation’s worst-ever housing recession, which is still getting worse; a severe liquidity and credit crunch in financial markets that is getting worse than when it started last summer; high oil and gasoline prices; falling capital spending by the corporate sector; a slackening labor market where few jobs are being created and the unemployment rate is sharply up; and shopped-out, savings-less and debt-burdened American consumers who — thanks to falling home prices — can no longer use their homes as ATM machines to allow them to spend more than their income. As private consumption in the US is over 70% of GDP the US consumer now retrenching and cutting spending ensures that a recession is now underway.
On top of this recession there are now serious risks of a systemic financial crisis in the US as the financial losses are spreading from subprime to near prime and prime mortgages, consumer debt (credit cards, auto loans, student loans), commercial real estate loans, leveraged loans and postponed/restructured/canceled LBO and, soon enough, sharply rising default rates on corporate bonds that will lead to a second round of large losses in credit default swaps. The total of all of these financial losses could be above $1 trillion thus triggering a massive credit crunch and a systemic financial sector crisis.” ( Nouriel Roubini Global EconoMonitor)
Roubini didn’t have some secret source for data that wasn’t available to the Fed. The financial system was collapsing and it had been collapsing for a full year. Everyone who followed the markets knew it. Hell, the Fed had already opened its Discount Window and the Term Auction Facility (TAF) in 2007 to prop up the ailing banks–something they’d never done before– so they certainly knew the system was cratering. So, why’s the Times prattling this silly fairytale that “the Fed was in the dark” in 2008?
I’ll tell you why: It’s because this whole transcript business is a big, freaking whitewash to absolve the shysters at the Fed of any legal accountability, that’s why. That’s why they’re stitching together this comical fable that the Fed was simply an innocent victim of circumstances beyond its control. And that’s why they want to focus attention on the members of the FOMC quibbling over meaningless technicalities –like non-existent inflation or interest rates–so people think they’re just kind-hearted buffoons who bumbled-along as best as they could. It’s all designed to deflect blame.
Don’t get me wrong; I’m not saying these conversations didn’t happen. They did, at least I think they did. I just think that the revisionist media is being employed to spin the facts in a way that minimizes the culpability of the central bank in its dodgy, collaborationist engineering of the bailouts. (You don’t hear the Times talking about Hank Paulson’s 50 or 60 phone calls to G-Sax headquarters in the week before Lehman kicked the bucket, do you? But, that’s where a real reporter would look for the truth.)
The purpose of the NYT article is to create plausible deniability for the perpetrators of the biggest ripoff in world history, a ripoff which continues to this very day since the same policies are in place, the same thieving fraudsters are being protected from prosecution, and the same boundless chasm of private debt is being concealed through accounting flim-flam to prevent losses to the insatiable bondholders who have the country by the balls and who set policy on everything from capital requirements on complex derivatives to toppling democratically-elected governments in Ukraine. These are the big money guys behind the vacillating-hologram poseurs like Obama and Bernanke, who are nothing more than kowtowing sock puppets who jump whenever they’re told. Here’s more bunkum from the Gray Lady:
”By early March, the Fed was moving to replace investors as a source of funding for Wall Street.
Financial firms, particularly in the mortgage business, were beginning to fail because they could not borrow money. Investors had lost confidence in their ability to predict which loans would be repaid. Countrywide Financial, the nation’s largest mortgage lender, sold itself for a relative pittance to Bank of America. Bear Stearns, one of the largest packagers and sellers of mortgage-backed securities, was teetering toward collapse.
On March 7, the Fed offered companies up to $200 billion in funding. Three days later, Mr. Bernanke secured the Fed policy-making committee’s approval to double that amount to $400 billion, telling his colleagues, “We live in a very special time.”
Finally, on March 16, the Fed effectively removed any limit on Wall Street funding even as it arranged the Bear Stearns rescue.” (“Fed Misread Crisis in 2008, Records Show”, New York Times)
This part deserves a little more explanation. The author says “the Fed was moving to replace investors as a source of funding for Wall Street.” Uh, yeah; because the whole flimsy house of cards came crashing down when investors figured out Wall Street was peddling toxic assets. So the money dried up. No one buys crap assets after they find out they’re crap; it’s a simple fact of life. The Times makes this sound like this was some kind of unavoidable natural disaster, like an earthquake or a tornado. It wasn’t. It was a crime, a crime for which no one has been indicted or sent to prison. That might have been worth mentioning, don’t you think?
More from the NYT: “…on March 16, the Fed effectively removed any limit on Wall Street funding even as it arranged the Bear Stearns rescue.”
Yipee! Free money for all the crooks who blew up the financial system and plunged the economy into recession. The Fed assumed blatantly-illegal powers it was never provided under its charter and used them to reward the people who were responsible for the crash, namely, the Fed’s moneybags constituents on Wall Street. It was a straightforward transfer of wealth to the Bank Mafia. Don’t you think the author should have mentioned something about that, just for the sake of context, maybe?
Again, the Times wants us to believe that the men who made these extraordinary decisions were just ordinary guys like you and me trying to muddle through a rough patch doing the best they could.
Right. I mean, c’mon, this is some pretty impressive propaganda, don’t you think? It takes a real talent to come up with this stuff, which is why most of these NYT guys probably got their sheepskin at Harvard or Yale, the establishment’s petri-dish for serial liars.
By September 2008, Bernanke and Paulson knew the game was over. The crisis had been raging for more than a year and the nation’s biggest banks were broke. (Bernanke even admitted as much in testimony before the Financial Crisis Inquiry Commission in 2011 when he said “only one ….out of maybe the 13 of the most important financial institutions in the United States…was not at serious risk of failure within a period of a week or two.” He knew the banks were busted, and so did Paulson.) Their only chance to save their buddies was a Hail Mary pass in the form of Lehman Brothers. In other words, they had to create a “Financial 9-11″, a big enough crisis to blackmail congress into $700 no-strings-attached bailout called the TARP. And it worked too. They pushed Lehman to its death, scared the bejesus out of congress, and walked away with 700 billion smackers for their shifty gangster friends on Wall Street. Chalk up one for Hank and Bennie.
The only good thing to emerge from the Fed’s transcripts is that it proves that the people who’ve been saying all along that Lehman was deliberately snuffed-out in order to swindle money out of congress were right. Here’s how economist Dean Baker summed it up the other day on his blog:
“Gretchen Morgensen (NYT financial reporter) picks up an important point in the Fed transcripts from 2008. The discussion around the decision to allow Lehman to go bankrupt makes it very clear that it was a decision. In other words the Fed did not rescue Lehman because it chose not to.
This is important because the key regulators involved in this decision, Ben Bernanke, Hank Paulson, and Timothy Geithner, have been allowed to rewrite history and claim that they didn’t rescue Lehman because they lacked the legal authority to rescue it. This is transparent tripe, which should be evident to any knowledgeable observer.” (“The Decision to Let Lehman Fail”, Dean Baker, CEPR)
Here’s the quote from Morgenson’s piece to which Baker is alluding:
“In public statements since that time, the Fed has maintained that the government didn’t have the tools to save Lehman. These documents appear to tell a different story. Some comments made at the Sept. 16 meeting, directly after Lehman filed for bankruptcy, indicate that letting Lehman fail was more of a policy decision than a passive one.” (“A New Light on Regulators in the Dark”, Gretchen Morgenson, New York Times)
Ah ha! So it was a planned demolition after all. At least that’s settled.
Here’s something else you’ll want to know: It was always within Bernanke’s power to stop the bank run and end to the panic, but if he relieved the pressure in the markets too soon (he figured), then Congress wouldn’t cave in to his demands and approve the TARP. Because, at the time, a solid majority of Republicans and Democrats in congress were adamantly opposed to the TARP and even voted it down on the first ballot. Here’s a clip from a speech by, Rep Dennis Kucinich (D-Ohio) in September 2008 which sums up the grassroots opposition to the bailouts:
“The $700 bailout bill is being driven by fear not fact. This is too much money, in too short of time, going to too few people, while too many questions remain unanswered. Why aren’t we having hearings…Why aren’t we considering any other alternatives other than giving $700 billion to Wall Street? Why aren’t we passing new laws to stop the speculation which triggered this? Why aren’t we putting up new regulatory structures to protect the investors? Why aren’t we directly helping homeowners with their debt burdens? Why aren’t we helping American families faced with bankruptcy? Isn’t time for fundamental change to our debt-based monetary system so we can free ourselves from the manipulation of the Federal Reserve and the banks? Is this the US Congress or the Board of Directors of Goldman Sachs?”
But despite overwhelming public resistance, the TARP was pushed through and Wall Street prevailed. mainly by sabotaging the democratic process the way they always do when it doesn’t suit their objectives.)
Of course, as we said earlier, Bernanke never really needed the money from TARP to stop the panic anyway. (Not one penny of the $700 bil was used to shore up the money markets or commercial paper markets where the bank run took place.) All Bernanke needed to do was to provide backstops for those two markets and, Voila, the problem was solved. Here’s Dean Baker with the details:
“Bernanke deliberately misled Congress to help pass the Troubled Asset Relief Program (TARP). He told them that the commercial paper market was shutting down, raising the prospect that most of corporate America would be unable to get the short-term credit needed to meet its payroll and pay other bills. Bernanke neglected to mention that he could singlehandedly keep the commercial paper market operating by setting up a special Fed lending facility for this purpose. He announced the establishment of a lending facility to buy commercial paper the weekend after Congress approved TARP.” (“Ben Bernanke; Wall Street’s Servant”, Dean Baker, Guardian)
So, there you have it. The American people were fleeced in broad daylight by the same dissembling cutthroats the NYT is now trying to characterize as well-meaning bunglers who were just trying to save the country from another Great Depression.
I could be wrong, but I think we’ve reached Peak Propaganda on this one.
(Note: By “good” propaganda, I mean “effective” propaganda. From an ethical point of view, propaganda can never be good because its objective is to intentionally mislead people…..which is bad.)
Newly appointed Prime Minister of Ukraine and former central banker Arseniy Yatsenyuk
A reshuffled Ukrainian Parliament installed following a coup last week has voted to appoint Arseniy Yatsenyuk as the new prime minister of the country. Yats, as Victoria Nuland, the Assistant Secretary of State for European and Eurasian Affairs at the U.S. State Department, called him, is a natural choice. He is a millionaire former banker who served as economy minister, foreign minister and parliamentary speaker before Yanukovych took office in 2010. He is a member of Yulie Tymoshenko’s Fatherland Party. Prior to the revolution cooked up by the State Department and executed by ultra-nationalist street thugs, Tymoshenko was incarcerated for embezzlement and other crimes against the people of Ukraine. Now she will be part of the installed government, same as she was after the last orchestrated coup, the Orange Revolution.
Yats will deliver Ukraine to the international bankers. “Ukraine is on the brink of bankruptcy and needs to be saved from collapse — Yatsenyuk has a strong economic background,” Ariel Cohen, senior fellow at the Washington-based Heritage Foundation, told Bloomberg on Wednesday. “Ukraine faces difficult reforms but without them there won’t be a successful future.”
Discussion with the IMF is crucial, US Treasury Secretary Jacob Lew said earlier this week. In order to cinch the deal, the U.S. government will sweeten the pot. Lew talked with the IMF boss, Christine Lagarde, about Ukraine as he headed back from a globalist confab, the G-20 meeting in Sydney, Australia.
“Secretary Lew informed Managing Director Lagarde that he had spoken earlier in the day with Ukrainian leader Arseniy Yatsenyuk and advised him of the broad support for an international assistance package centered on the IMF, as soon as the transitional Ukrainian government is fully established by the Parliament,” MNI News reported on Monday. “Secretary Lew also noted that he had communicated to Mr. Yatsenyuk the need to quickly begin implementing economic reforms and enter discussions with the IMF following the establishment of the transitional government.”
Ukraine’s story is right out of the IMF playbook. The nation’s corrupt leaders past and present – most notably Tymoshenko, who went to prison for corruption and wholesale thievery – have enriched themselves at the expensive of ordinary Ukrainians.
“Ukraine at the dawn of independence was among the ten most developed countries, and now it drags out a miserable existence,” Communist Party leader Petro Symonenko said last year. The nation’s leaders “signed a memorandum with the International Monetary Fund to meet the requirements of the oligarchs, but on the other hand — to timely pay the interest on the IMF loans and to raise the prices for gas and electricity,” Symonenko said.
The Orange Revolution – initiated by NED, IRI, Soros and the CIA – installed a rogue’s gallery of self-seeking sociopaths who further bankrupted a country already seriously debilitated by corruption.
For the IMF and the financial elite, Ukraine is nothing less than a tantalizing bounty. “Its fertile black soil generated more than one-fourth of Soviet agricultural output, and its farms provided substantial quantities of meat, milk, grain, and vegetables to other republics,” notes ABO, a website covering energy resources. “Likewise, its diversified heavy industry supplied the unique equipment (for example, large diameter pipes) and raw materials to industrial and mining sites (vertical drilling apparatus) in other regions of the former USSR.”
After breaking away from the Soviet Union and declaring independence, it was thought the country would “liberalize” its industry and resources, in other words open them up for privatization by transnational corporations and international banks, but this did not happen quickly enough for the financiers and the corporatists.
“The drop in steel prices and Ukraine’s exposure to the global financial crisis due to aggressive foreign borrowing lowered growth in 2008 and the economy contracted more than 15 percent in 2009, among the worst economic performances in the world,” ABO explains. “In August 2010, Ukraine, under the Yanukovych Administration, reached a new agreement with the IMF for a $15.1 billion Stand-By Agreement. Economic growth resumed in 2010 and 2011, buoyed by exports. After initial disbursements, the IMF program stalled in early 2011 due to the Ukrainian Government’s lack of progress in implementing key gas sector reforms, namely gas tariff increases. Economic growth slowed in the second half of 2012 with Ukraine finishing the year in technical recession following two consecutive quarters of negative growth.”
Now that Yanukovych is out of the picture, the banker minion Yats is lording over the Parliament, and thuggish fascists control the streets and guard against a counter revolution that my threaten Wall Street’s coup, the coast is clear for the IMF to pick up where it left off. Ukraine, now one of the poorest countries in Europe thanks to a kleptocracy supported by Washington and Wall Street, is wide open for further looting.
“Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.” – John Maynard Keynes, The General Theory of Employment, Interest and Money
It’s too bad Keynes isn’t around today to see how the toxic combo of financial engineering, central bank liquidity and fraud have transformed the world’s biggest economy into a hobbled, crisis-prone invalid that’s unable to grow without giant doses of zero-rate heroin and mega-leverage crack-cocaine. This is exactly what the British economist warned about more than half a century ago in his magnum opus, “The General Theory…”, that you can’t build a vital, prosperous economy on the ripoff, Ponzi scams of Wall Street charlatans, mountebanks and swindlers. It can’t be done. And, yet– here we are again– in the middle of another historic asset-price bubble conceived and engineered by the bubbleheaded crackpots at the Federal Reserve. Go figure?
Just take a look at housing, which is at the end of an astonishing 18-month run that was entirely precipitated by what?
Consumer confidence, bigger incomes, credit expansion, growing revenues, pent-up demand?
No, no, no, no and no. Economic fundamentals played no part in the so called housing rebound. In fact–as everyone knows–the economy stinks as bad today as it did 4 years ago when the government number-crunchers announced the end of the recession. The reason prices have been rising is because of the Fed’s loosy-goosey monetary policy (fake rates and QE), inventory suppression, bogus gov mortgage modification programs, and unprecedented speculation. (mainly Private Equity and investors groups) Those are the four legs of the stool propping up housing. Only now it looks like a couple of those legs are in the process of being sawed off which is going to put downward pressure on sales and prices. Take a look at this from DS News:
“A majority of experts surveyed by Zillow and Pulsenomics expect large-scale investors will pull out of the housing market in the next few years…
Out of 110 economists, real estate experts, and investment strategists surveyed in Zillow’s latest Home Value Index, 57 percent said they think institutional investors will work to sell the majority of homes in their portfolios “in the next three to five years.” These investors are largely credited with propping up housing during its recession, helping to keep sales volumes from plummeting too far.
While their withdrawal will most certainly affect today’s still-fragile market—79 percent of those surveyed said the impact would be “significant or somewhat significant” should investor activity curtail this year.”
Experts Predict Level Playing Field as Investors Withdraw, DS News
This is what we were afraid of from the very beginning, that the big PE firms would pack-it-in and move on once they’d made a killing, which they have, since prices soared 12 percent in one year. Now they want to get out while they getting is good, which means that–in some of the hotter markets where investors represented upwards of 50 percent of all purchases–there will have to be a new source of demand. Unfortunately, the demand for housing has never been weaker.
Sales are down, purchase applications are down, and the country’s homeownership rate has slipped to levels not seen since 1995, 18 years ago. The Fed’s $1 trillion purchase of mortgage backed securities (MBS) and zero rates have done nothing to stimulate “organic” consumer demand. Zilch. No “trickle down” at all. All the policy has done is generate a temporary surge of speculation that’s distorted prices and created conditions for another big bust. Get a load of this article from Housing Perspectives:
“Although household growth is the major driver of housing demand, getting an accurate picture of recent trends in this measure is difficult…In its recent release, the HVS reported annual household growth of just 448,800 in 2013. This represents a 48 percent drop in household growth relative to that from 2012 and marked the lowest annual household growth measure since 2008, in the depths of the Great Recession (Figure 1).
Source: US Census Bureau, Housing Vacancy Survey
Repeat: “…a 48 percent drop in household growth relative to that from 2012 and marked the lowest annual household growth measure since 2008, in the depths of the Great Recession.”
Do you really think there are enough firsttime homebuyers in out there in Mortgageland to fill that gap?
In your dreams! Keep in mind, that a lot of firsttime homebuyers are collage grads who want to start a family and put down roots. Regrettably, nearly half of those potential buyers have been scrubbed from the list due to their burgeoning student loans which now exceed $1 trillion. These kids will probably never own a home, let-alone have a positive impact on sales in 2014. Ain’t gonna happen.
Maybe this is why the banks are suddenly speeding up their foreclosure filings, because they want to offload more of their distressed inventory before prices fall. Is that it? Check out this article on Housingwire:
“Monthly foreclosure filings — including default notices, scheduled auctions and bank repossessions — reversed course and increased 8% to 124,419 in January from December, according to the latest report from RealtyTrac.
This marks the 40th consecutive month where foreclosure activity declined on an annual basis, with filings down 18% from January…
As a whole, 57,259 U.S. properties started the foreclosure process for the first time in January, rising 10% from December…
…this month’s foreclosure starts increased from a year ago in 22 states, including Maryland (up 126%), Connecticut (up 82%), New Jersey (up 79%), California (up 57%), and Pennsylvania (up 39%).
Scheduled foreclosure auctions jumped 13% in January compared to the previous month.”RealtyTrac: Monthly foreclosure filings reverse course, rise 8%, Housingwire
Like most articles on housing, you have to sift through the bullshit to figure out what’s really going on, but it’s worth the effort. The banks have been dragging their feet for 40 months now, slowing down the foreclosure process (and adding to the shadow supply of distressed homes.) in order to push up prices hoping to ignite another boom. Now–after 3 and a half years of blatant collusion–they’ve done a 180 and started speeding up foreclosures. Why?
It’s because they agree with the above-mentioned “110 economists, real estate experts, and investment strategists” who think that “institutional investors” are going to call-it-quits and move on to greener pastures. That’s going to push down prices, which means they’re going to lose money. So they want to get ahead of the curve and dump more houses on the market before the stampede. That way, they lose less money.
Keep in mind, the banks are up-to-their-eyeballs in distressed inventory. Even conservative estimates of shadow backlog puts the figure of 90-day delinquent or worse, above 3 million homes. But if you review the gloomier prognostications, the sum could easily exceed 6 million homes, enough to suck the entire bleeding banking system into a black hole of insolvency. There was an interesting article on the topic in Bloomberg last week. It seems that, “bond king” Jeffrey Gundlach has been warning mortgage-backed security purchasers that they should to pay more attention to underlying collateral in MBSs (vacant homes, that is) which have been “rotting away” for “six years” or more. Here’s a clip from the article:
“The housing market is softer than people think,” Mr. Gundlach said, pointing to a slowdown in mortgage refinancing, shares of homebuilders that have dropped 13% since reaching a high in May, and the time it’s taking to liquidate defaulted loans…
About 32% of seriously delinquent borrowers, those at least 90 days late, haven’t made a payment in more than four years, up 7% from the beginning of 2012, according to Fitch analyst Sean Nelson.
“These timelines could still increase for another year or so,” Mr. Nelson said, leading to even higher losses because of added legal and tax costs, and a greater potential for properties to deteriorate.”
Gundlach Counting Rotting Homes Makes Subprime Bear, Bloomberg
Let me get this straight: The number of “seriously delinquent borrowers” has actually gone up in the last year? Not only that, but many of these people “haven’t made a payment in more than four years”?
That’s a mighty fine recovery you got there, Mr. Bernanke. Sheesh.
Keep in mind, the backlog of unwanted homes could be a lot bigger than most people think. Way bigger. I was reading an article by Keith Jurow the other day, (“The Coming Mortgage Delinquency Disaster”, Keith Jurow, dshort.com) that paints a pretty grim picture of what is really going on behind the faux inventory numbers. Jurow–who has done extensive research on pre-foreclosure notice filings in New York state– says: “The number of monthly foreclosure filings in Suffolk County on Long Island …(were) more than 180,000 (while) fewer than 1,000 foreclosure filings had been served each month in (the last 4 years). By this calculation, Jurow figures that there should have been 1,192,000 foreclosures in New York state while the actual percentage of homes that have been repossessed remains in the single digits. (Read the whole article here.)
Chew on that for a minute. So, that’s a total of 180,000 homeowners who would have faced foreclosure under normal conditions, while less than 48,000 have actually been foreclosed. That’s 132,000 fewer foreclosures than there should have been IN JUST ONE COUNTY IN ONE STATE ALONE.”
The reason the prodigious shadow stockpile continues to balloon is quite simple, as Jurow points out in his piece: “Servicers do not foreclose on seriously delinquent borrowers throughout the entire NYC metro area. Completed foreclosures have actually declined rather dramatically throughout the nation in the past two years. The difference is that in the NYC metro, the servicers have not been foreclosing since the spring of 2009.”
So, there you have it; the banks haven’t been foreclosing because it hasn’t been in their interest to foreclose. Foreclosure sales push down prices which batters balance sheets and scares shareholders. Who wants that? So the game goes on. Only now, the dynamic is changing. Skittish investors are eyeing the exits, QE is winding down, and housing prices have peaked. The recovery has reached its zenith, which is why the bankers want get off on the top floor before the elevator begins its bumpy descent.
People who are thinking about buying a house in the near future, should watch developments in the market closely and proceed with extreme caution. No one wants to get burned in another bank swindle.