As the global financial crisis now enters its seventh year, it is time to start asking difficult questions about the right priorities for popular protest if we want to realise a truly united voice of the world’s people. There can be no revolution in a truly moral or global sense until the critical needs of the extreme poor are prioritised and upheld, which will require mass mobilisations in the streets like we have never seen before.
At the onset of 2014, many people are now anticipating the prospect of a ‘global revolution’. The intense revolutionary fervour of 2011 may have dissipated in North America and much of Western Europe in the past couple of years, but a new geography of protest continues to shift and transmute in different countries and world regions – the million people on the streets of Brazil in June last year; the earlier defence of the commons in Istanbul’s Taksim Gezi Park; the indigenous uprising and student protests across Canada; the Ukraine demonstrations that are still under way.
There is no way of predicting where a mass protest movement will kick off next or what form it will take, but analysts expect that an even larger-scale version of an Occupy Wall Street-type movement will emerge in 2014. The conditions for a truly global political awakening are firmly in place, and few can believe in the politician’s rhetoric about the world economy sorting out its problems during the year ahead. Wealth and income inequalities continue to spiral out of control, increasingly to the benefit of the 1% (or indeed the 0.001%). Austerity policies pushed by governments on both sides of the Atlantic continue to threaten the social gains made since the Second World War, which is deepening social divisions and creating a new situation of desperately poor and hungry people in Britain, America and many so-called wealthy countries.
And there is no shortage of analysis about the structural crisis of our political and economic systems, from chronic unemployment and falling real incomes to corporate-captured representative democracies and Orwellian state controls. At the same time, governments remain committed to the paradigm of endless growth for its own sake, and are nearly all beholden to the interests of giant energy corporations that are determined to burn more fossil fuels than the planet can absorb without becoming unliveable. Not to mention the escalation of climate and ecological disasters, dwindling oil reserves, the risk of food shortages and further food price volatility, or even the prospect of global terrorism. Hence the growing understanding among everyday people that we are in the midst of a crisis of civilization, and we cannot rely on our existing government administrations to affect a necessary transformation of the international political and economic order.
The revised meaning of ‘revolution’
As we continue along this chaotic and uncertain road, the very idea of social or political ‘revolution’ is taking on new and different meanings. A common understanding of the term is no longer limited to the revolutionary wave of actions of the 20th century, which were typically led by charismatic leaders and a strong ideology, and often involved the violent overthrow of state power (notwithstanding such heroic examples of non-violent political struggle as Gandhi, Luther King and Vaclav Havel). But now we have the examples of Occupy, the Arab Spring, the Taksim Square demonstrations and other mass protest movements that defy conventional explanation in their spontaneous and largely peaceful mobilisations, their leaderless structures and practice of horizontal democracy, as well as their disavowal of traditional left/right politics and ideologies or ‘isms’, such as socialism and communism.
Since 2011 there is also much serious talk of a revolution of love and a collective awakening to our spiritual potential as human beings, as captured in the now-famous words of Russell Brand who advocates a “total revolution of consciousness and our entire social, political and economic systems”. Others speak of a revolution in our sense of self as ‘global citizens’, in which we equate our own interests with those of people anywhere in the world, and we no longer conform to a financialised vision of society in which we are forced to compete with everyone else as ‘others’. In short, a renewed sense of idealism and hope is everywhere being felt for a new society to be built from within the existing one, and for a revolution in every sense of the word – in our values, our imaginations, our lifestyles and our social relations, as well as in our political and economic structures.
What still isn’t clear is how the growing call for revolutionary change and new economic models can be realised on a truly international basis, and for the common good of all people in all countries – not only for the citizens of individual nations (in particular within the most advanced economies). The new protest movements may draw on a concept of human rights that is necessarily international, and they may be driven by social networks and communications technology that is shared beyond national borders, but their various concerns and demands are still generally of a domestic and country-specific nature.
Following the artful state repression of Occupy Wall Street, the vision of a collectively organised alternative to neoliberal politics is too often lost in a fight for or against individual reforms, while the Occupy movement as a whole has become increasingly atomised and fragmented. The Arab Spring is fast fading in memory, as exemplified by the political chaos and recent crackdown on popular dissent in Egypt. And there is little evidence of a shared agenda for change that can unify citizens of the richest and poorest nations on a common platform, one that recognises the need for global as well as national forms of redistribution as a pathway towards sharing the world rather than keeping it divided.
Blueprints for a new world
This is not to say that realistic proposals for planetary change do not exist, as individuals and groups everywhere are discussing the necessary reforms and objectives for how the economy should be run democratically at all levels, from the local to global. An abundance of enlightened thinking outlines the need for a ‘revolution’ in every aspect of our economic and political systems – a commons revolution, a food sovereignty revolution, a renewable energy revolution, the next American revolution – which altogether articulate an effective blueprint for a new and better world. But great uncertainty remains around how this crucial transformation of our lives can be affected when such immensely powerful forces of economic and political self-interest control the current world direction, combined with political apathy and disengagement among a vast swathe of the population.
With the global financial and economic crisis now entering its seventh year, it is time to start asking some difficult questions about the right priorities for popular protest if we want to realise a truly united voice of the world’s people. It is inevitable that the gap between rich and poor will continue to increase in most countries, and the reality of poverty and hunger will worsen across the world – regardless of the distorted arguments by the World Bank and the Millennium Development Goals (MDGs) coterie at the UN. And as living standards decline for many middle-class families in developed countries, there is a risk that people will remain preoccupied with their own situations and solely national concerns, which is already where all the militant strength is being directed in European and U.S. protest movements.
But there is no escaping the enormous disparities in wealth and income between rich OECD countries and the less developed nations, where millions of people face such extreme deprivation and food insecurity that at least 40,000 people needlessly die each day from poverty-related causes. There can be no genuine revolution in a moral or global sense until the critical needs of these voiceless poor are prioritised and upheld, which will require mass mobilisations in the streets like we have never seen before – not only predicated on redistributing resources from the 1% to the 99% within our own countries, but also centred on a shared demand for a fairer distribution of wealth, power and resources across the entire world. Perhaps that is where the true meaning of ‘global revolution’ begins, and it could be our greatest hope for a sustainable and just future in the coming year and beyond.
Millions of older Americans say they will never be able to retire. They simply don’t have the savings. According to CNN, “Roughly three-quarters of Americans are living paycheck-to-paycheck, with little to no emergency savings…50% have less than a three-month cushion and 27% had no savings at all….” (“76% of Americans are living paycheck-to-paycheck“, CNN Money)
“No savings at all”?
That’s right. So retirement is out of the question. A sizable chunk of the adult population is going to punch a clock until they keel-over in the office parking lot and get hauled off in the company dumpster. And those are the lucky ones, the so called baby boomers. By the time we get to the millennials it’ll be even worse because the economy will have been ravaged by 25 or 30 years of austerity leaving the proles to scrape by on hardtack and gruel. Pensions are already being looted, Social Security is under fire, and any small stipend that supports the poor, the unemployed, or the infirm is going to be terminated. That’s why everyone is so down-in-the-mouth, because their expectations of the future are so bleak. Check this out from Business Insider:
“For millennials, the situation is even more grim. Compared to their parents at their age, the under-30 set is worth only half as much. And while this is a sobering reminder of the scale of the Great Recession’s impact on younger generations, it’s not the whole story. These households were actually falling behind even before the stock market and housing crash, researchers found.
Young people not only saw their wages stagnate or drop but also suffered a rise in fixed costs. They leave college with an average $27,000 debt load and have a harder time finding jobs that pay well, while facing more expensive health care and housing costs.
“If these generations cannot accumulate wealth, they will be less able to support themselves when unexpected emergencies arise or when they eventually retire,” the study authors said. “This financial uncertainty could reverberate throughout the economy, since entrepreneurial activity, saving, and investment tend to build on a base of confidence and growing wealth.”(“AMERICA IN DECLINE: Young People Are Much Worse Off Than Their Parents Were At That Age“, Business Insider)
An entire generation of young people have been raped and discarded by their government and all the author cares about is the impact it will have on personal consumption.
Go figure. And there’s a larger point here too, which is that Americans have always believed that their children would enjoy a higher standard of living than their own. Until now, that is. Now most people think things are going to get worse, much worse. You see it in all the surveys. Expectations have changed, the future looks darker than ever before, and people are scared. Check this out from CNN:
“Things appear to be looking up for the economy.
On Wednesday the Federal Reserve felt confident enough to begin slowly withdrawing the huge economic stimulus the central bank has been pumping into the economy.
Unemployment is the lowest in five years. Economic growth picked up recently. The housing sector — which got us into this mess in the first place — is bouncing back. Home sales, prices and construction are all on the rise.
Auto sales recently had their strongest growth since 2006. Gas prices have fallen dramatically this year, and the stock market has risen sharply.
And there’s some reason to be hopeful for next year too. The Fed announced a slightly improved outlook for unemployment in 2014.
But things aren’t always as good as they seem. For many Americans, all the good news in the larger economy isn’t translating over to everyday life. Only 24% of the public believe economic conditions are improving, while nearly four-in-ten say the nation’s economy is actually getting worse, according to a recent CNN poll.” (“Is the economy as good as it looks?“, CNN Money)
That’s right; no one is buying the “recovery” crappola any more. They all know it’s BS. And a closer look at the CNN survey tells you why.
“Looking specifically at the economy, 39% feel that the economy is still in a downturn, up six points from April. Only 24% believe that an economic recovery is under way. Thirty-six percent are in the middle – they don’t think we’re in a recovery but they believe conditions have stabilized.” (CNN Politics)
So, 3 out of 4 people think we’re either still in a severe slump or running in place.(stagnation) That’s your recovery in a nutshell. And it explains why people hate bankers, Wall Street, and Congress. It also explains why millennials have given up on Obama after finally acknowledging that the man is a bumptious blowhard who’s never lifted a finger to help the people who shoehorned his worthless keister into office. Take a look at this from Policy Mic:
“Debt-weary millennials are disillusioned with Obama’s performance with regard to the economy, the implementation of the Affordable Care Act, his handling of foreign relations”…
A new poll conducted by Harvard University’s Institute of Politics has revealed that young Americans’ support for President Barack Obama has reached the lowest point yet. According to the poll, only 41% of Americans aged 18-29 approve of Obama’s performance in office, an 11% drop since April.” (“Millennials officially hate Obama. Here’s why“, policymic)
Ahhh, so people are finally waking up to what an unprincipled phony this guy is. Good!
Unfortunately, ripping Obama won’t pay the bills, which is why so many people are making painful adjustments in their own lives to make ends meet. Aside from cutting back on trips to the doctor and setting the thermostat on “Off”, America’s plenteous graybeards are staying on the job longer than ever. Here’s a clip from an article in Forbes:
“An alarming 37% of middle class Americans believe they’ll work until they’re too sick or until they die.
Another 34% believes retirement will come at the ripe age of 80…
It’s a grim look at the state of retirement which seems to be getting worse for middle class Americans.
Wells Fargo WFC -0.09% interviewed 1,000 Americans between age 25 and 75 and with household income ranging between $25,000 and $99,000. More than half (59%) said their top day-to-day financial concern is paying the monthly bills; that’s up from 52% who said the same last year.
“We do this survey every year and for the past three years, the struggle to pay bills is a growing concern and the prospect of saving for retirement looks dim, particularly for those in their prime saving years,” Laurie Nordquist, head of Wells Fargo Institutional Retirement and Trust, says in the report.
And here’s something for leaders in Washington DC to consider: One third of those surveyed said their primary source of retirement income will come from social security. That figure gets even bigger for those who make less than $50,000–48% of those earners say social security is going to be their primary retirement income.” (“Work Until You Die? More Middle Class Americans Say They Can Never Retire“, Halah Touryalai, Forbes)
How do you like that, eh? So nearly half the people who make less than $50,000 are counting on Social Security as their “primary retirement income.” At the same time, our old buddy Obama is planning to cut Social Security to keep his criminal friends on Wall Street happy.
That means a whole lot of us are going to be stuck bussing tables at Olive Garden until they carry us out feet first.
Your doing a hechuva job, Barry!
How do you sum up 2013 as a year for the United States and her citizens? What criteria do you use? Good, bad and ugly? As Clint Eastwood said, “A man’s got to know his limitations. Well, do ya’ punk?” The same could be said for our country. Do we understand our limitations?
On the immigration front, 20 million illegal aliens “itched” to get themselves legalized so they could continue their “Aztlan Reconquista” of the four southwestern states. Spanish co-equals English in America because Congress runs from any sense of responsibility to our immigration laws and the English language that built America. As their numbers grow, illegal migrants march toward their goal with the help of President Barack Obama, himself a non-citizen, the ACLU, and 535 Congressional critters that refuse to enforce our Constitutional laws.
After 11 years replete with $1 trillion wasted, our military men and women remain in the Islamic insane asylum of Afghanistan doing nothing but pouring money and lives down the rat-hole. The military industrial complex works its wonders with Obama and Congress to start a war with Iran. The bankers and moneychangers lick their chops at the thought of endless and meaningless wars overseas. As General Smedley Butler said in his memoirs, “War is a racket for bankers and politicians.”
Psychologists expect anywhere from 100,000 to 200,000 young men will commit suicide from their senseless service in the Islamic nuthouse of the Middle East. Endless forms of PTSD cause broken marriages, fatherless families, alcoholic & drug addicted soldiers and nonstop misfortune for our military veterans.
For a 5th straight year, Barack Obama proves himself an inept, incompetent and totally lackluster president of the United States. Food stamp recipients charged from 36 million at the beginning of his first term to 48.1 million subsisting on food stamps today. He drove the federal deficit from $12 trillion in 2008 to its current $18 trillion in 2013. More blacks suffer unemployment, poverty, incarceration and welfare than under any other president.
While 14 million Americans remained unemployed and 7 million under employed, Obama and Congress imported over 2.0 million legal and illegal immigrants into America in 2013. Obama and Congress failed to create jobs for the 48.1 million Americans living on food stamps, but they increased section 8 housing, “free” school lunches, medical care and ESL courses for illegal foreign children.
Because the U.S. continues as the third largest and fastest growing country because of immigration, we also accelerate global carbon footprint with millions of added car exhausts, chimneys and factories that acidifies our oceans and causes such horrific weather changes that create Hurricane Sandy, Katrina and Typhoon Haiyan. With the expected 100 million additional immigrants in the next 36 years, we can expect Mother Nature to respond commensurately.
On the sociological front, we saw Hispanic George Zimmerman kill one young thug named Trayvon Martin that created national headlines while 1,400 black Americans killed another 1,400 black Americans—but no one at the national level, the Black Caucus or Al Sharpton made a mention of blacks slaughtering blacks. Meanwhile, the mainstream media made not one mention of “Black Flash Mobs” or “Black Knockout Games” where American blacks run around killing whites for the fun of it. Three blacks in Oklahoma killed a white Australian college baseball player, “For the fun of it.”
If you look at the dropout/flunkout rates in our educational systems such as a 76 percent high school dropout rate in Detroit, Michigan to 60 percent flunkout rate in Mexican-dominated Los Angeles, we continue on our downward spiral of a “functionally illiterate” civilization where dumb people outnumber educated people, but enjoy endless welfare, food, cell phones, medical care and housing on the backs of those of us who study, work and contribute.
On the federal level, we see a culture of corruption in the Obama White House and Congress that gave us incompetence, malfeasance and covered up the Benghazi murders, Fast and Furious gun running, NSA spying, 22 Islamic jihad compounds now operating in America and imported tens of thousands of Muslims via legal immigration that will end up undermining our country’s culture, language and laws.
Sharia Law charges into our country as fast as their numbers grow. Obama features eight Islamic staff working full time in the White House. In the next three years, we will see countless tens of thousands of Muslims imported into America to bring “hope and change” for Islam in America. At some point, Muslims will bomb our electrical grid with multiple-coordinated teams, which will make 9/11 look like a garden party. Few of us realize our vulnerability, and remember, when jihad warriors succeed, they enjoy 72 virgins in Islamic heaven.
On the health-care front, Obamacare stumbled, faltered and fell on every level. Ironically, Americans show they don’t care about their health, as over half of our population grows intolerably obese. Fifty millions Americans smoke, 10 million alcoholics abound while diabetes became a national epidemic. Cancer continues as the number one killer, but few connect it to our contaminated air, water and soil via endless chemicals injected into our biosphere.
On the trade front, China owns us. They buy U.S. companies, land and entire office districts here in the USA. By the time they get done, they will dictate what we do, who we are and how we operate.
As we transform and deform into a polyglot, chaotic, multi-lingual and multicultural society, we continue to watch the Middle Class degrade into non-existence. We watch the American flag become the Mexican flag, the Middle Eastern flag and hundreds of other flags from immigrants that could care less about America.
On the international front, no one suspects or reports on the growing radioactive plume originating from Japan’s Fukushima nuclear power plant meltdown. That radio-active water circulates into all the oceans—contaminating every living creature below the waters around the world—and contaminating all the fish and marine life we use for food. That event will prove the greatest ecological debacle for humanity for all of history. Cancers, destroyed eco-systems, degraded oceans and much worse await humanity.
What’s amazing about 2013? Men wasted 29 hours weekly watching the idiot box as to football, baseball, hockey and basketball. For the Americans with jobs, we partied, played and ordered pizza. We drove around without the faintest clue as to what Congress and Obama continue accomplishing: utterly and completely ignoring our sacred Constitution and Bill of Rights.
As we dance into 2014, I can only appreciate that our country faces financial collapse, sociological degradation, environmental deterioration, accelerated immigration numbers to 2.0 million annually, millions of jobless whites, blacks and Hispanics, energy exhaustion, environmental breakdown and resource depletion.
Will 2014 get better? This should foreshadow the answer as Mark Twain said, “Suppose you were an idiot; and suppose you were a member of Congress; ah, but I repeat myself.”
Another Facebook writer said, “Obama is what you get when you allow idiots, illegals and welfare recipients to vote.”
Turkey is a democracy in name only. Prime Minister Recep Tayyip Erdogan is ruling despot.
He’s led Ankara’s Justice and Development Party (AKP) since August 2001. He’s been prime minister since March 2003. Why Turks put up with him they’ll have to explain.
Last spring, anti-government protests rocked Ankara, Istanbul and other Turkish cities. Police violence followed. Brutality is longstanding policy. Corruption is deep-seated.
It’s rife in Turkey’s construction sector. Erdogan established a land sales office. Ostensibly it was to build affordable public housing.
Widespread privatizations followed. Billions of dollars worth of government assets were sold.
Sweetheart deals and bribes accompanied them. Well-connected companies got no-bid contracts. State banks provided generous financing.
Projects developed had nothing to do with public housing. Berat Albayrak heads Calik Holding. He’s well connected. He’s Erdogan’s son-in-law.
He may be linked to the corruption probe. He builds power plants in Turkmenistan. He’s involved in an AKP backed oil pipeline project. He has other government related business.
The current scandal stems from a year ago anonymous letter. It was sent to police. It alleged Ankara and local government authorities illegally facilitated construction projects. Huge profits were involved.
Surveillance, phone tapping, and other investigatory methods followed. They produced considerable evidence of corruption. Government ministers are involved. Million dollar bribes were paid.
State-run Halk Bank head was found with about $4.5 million in cash. It was at home. It was stashed in shoe boxes.
Millions more were seized from other suspects. Over a dozen are accused of bribery and money laundering, as well as gold and antiques smuggling.
On December 17, Turkey’s Financial Crimes and Battle Against Criminal Incomes department detained 47 people.
Sons of Ankara’s Economy, Interior and Environment and Urban Planning ministers are involved.
So is Fatih district municipality major Mustafa Demir and real estate tycoon Ali Agaoglu. Minister of European Union Affairs Minister Egemen Bagis is being investigated.
Whether scandal touches Erdogan remains to be seen. He claims attempts to do so will be “left empty handed.”
On Christmas day, he reshuffled his cabinet. Three ministers resigned. He sack 10 others. He replaced them. Events are fast-moving.
Erdogan Bayraktar was Minister of Environment and Urban Planning. He was a member of parliament. He felt forced to resign both posts.
He said Erdogan should do so. He claimed suspect construction projects under investigation were approved with Erdogan’s full knowledge.
“With your permission, I want to make very short statements in the form of a press statement,” he said.
“It is of course a right and an authority for Mr. Prime Minister to work with whichever minister he wants and to remove whichever minister he wants from office.”
“But I do not accept the pressure being put on me which says, ‘Resign because of an operation in which there are statements of bribery and corruption and release a declaration that will relieve me.’ “
“I do not (accept it) because a big part of the zoning plans that are in the investigation file and were confirmed were made with approval from Mr. Prime Minister.”
“For the sake of the well-being of this nation, I believe the prime minister should resign.”
He accused him of involvement in suspect property deals. He’s linked to profiteering business interests.
Scandal heads closer to directly connecting him. Perhaps it will as investigations continue. Turkish Professor Soli Ozel called Bayraktar’s call for Erdogan’s resignation “extraordinarily dramatic.”
He’s “someone who was very close to the prime minister. This is someone you’d expect to fall on his sword without question.”
Other analysts see things potentially spinning out of control. Whether Erdogan can prevent it remains to be seen.
He may end up victimized by his own transgressions. It depends on how much public anger grows. He weathered previous crises. It’s hard to know if this one is too great to contain.
Investigations targeted over 90 suspects. Over two dozen were arrested. Dozens of police chiefs were sacked. Erdogan is far from squeaky-clean.
On December 21, Ankara’s police department Anti-Smuggling and Organized Crime Unit head Hakan Yuksekdag was found dead in his car. Officially it was pronounced suicide.
Further investigation is being conducted. The incident occurred a day after 14 senior Ankara National Police Department officials were removed from their posts.
Erdogan blamed ongoing events on an international conspiracy. He vowed revenge on figures connected to Muhammed Fethullah Gulen.
He heads the movement bearing his name. He claims a million or more followers. They include judges and senior police officials.
He’s currently in self-imposed exile. He’s in Pennsylvania. He’s a writer, former imam, and Islamic opinion leader. He’s an important figure.
He’s involved with issues relating to Turkey’s future. He and Erdogan haven’t gotten along for years.
Former Minister of Internal Affairs Idris Naim Sahin said Erdogan’s actions fall short of law and justice. He’s trying to defuse public anger, he said. He’s shifting blame to do it.
Thousands of Istanbul, Ankara, and Ismir protesters demanded Erdogan’s resignation. They did so on Christmas. They did it in other cities. They protested last spring.
They’re justifiably outraged. Their longstanding anger hasn’t waned. Erdogan works against their well-being. Clashes with police erupted. Arrests followed.
Protesters chanted; “Three ministers aren’t enough. The whole government should resign. Corruption is everywhere. Resistance is everywhere.”
Opposition party members accused Erdogan of deepening despotic rule. Critics use the term “deep state.” It refers to a shadowy power structure. It lacks checks and balances.
Turkey’s Republican People’s Party (CHP) is Erdogan’s main rival. It’s Turkey’s oldest political party. It’s AKP’s Main Opposition in the Grand National Assembly. Kemal Kilicdaroglu heads it.
“Erdogan has a ‘deep state,’ ” he said. His AKP “has a ‘deep state.’ ” Efkan Ala is new Interior Minister.
He’s an Erdogan crony. He formerly was Diyarbakir Province governor. He’s part of what’s ongoing, said Kilicdaroglu.
He believes Ala’s appointment is part of an Erdogan power grab. He wants greater police control. Outgoing Interior Minister Muammer Guler fired hundreds of police officers. Senior commanders were sacked.
Erdogan’s new ministers were carefully chosen. He appointed officials “that will not show any opposition to him,” said Kilicdaroglu.
Turkey is more police state than democracy. Press freedom is compromised. Censorship is standard practice. Dissent is verboten. Challenging government authority is called terrorism.
No country imprisons more journalists than Turkey. Corruption is deep-seated. Neoliberal harshness writ large is policy. Popular interests are spurned.
Erdogan represents wealth, power and privilege. It’s hard imagining he’s not involved in corruption in some way. He’s gotten his son-in-law business tycoon sweetheart deals.
He prioritizes Turkey’s business model. It reflects capitalism’s dark side. It includes unrestrained profit-making, privatizations, cheap labor, deregulation, corporate-friendly tax cuts, marginalized worker rights, and speculative capital inflows.
Economic conditions are inherently unstable. Turkey suffers rolling recessions, crisis conditions, and fragile largely jobless recoveries. It’s increasingly dependent on imports of resources and capital goods.
Youth unemployment tops 22%. An entire generation is affected. Conditions are socially and economically unstable.
Privation fuels public anger. Eventually it may spiral out-of-control. It may be just a matter of time. Turkey has a long history of rebellion.
Erdogan is increasingly hated. He weathered last spring’s anti-government protests. It remains to be seen what’s next.
Nicolas Spiro heads Spiro Sovereign Strategy. “The dismissal of half an entire cabinet is worrying enough,” he said. “The corruption probe is escalating by the day.”
It’s “causing a further deterioration in market sentiment towards Turkey.” Erdogan’s new cabinet includes four deputy prime ministers.
Ayse Islam is the only woman appointed. She’s Family and Social Policy Minister. Others include:
Deputy prime minister: Bulent Arinc
Deputy prime minister: Ali Babacan
Deputy prime minister: Besir Atalay
Deputy prime minister: Emrullah Isler
Justice: Bekir Bozdag
Defense: Ismet Yilmaz
Interior: Efkan Ala
Foreign Affairs: Ahmet Davutoglu
European Union: Mevlut Cavusoglu
Finance: Mehmet Simsek
Economy: Nihat Zeybekci
Energy and Natural Resources: Taner Yildiz
National Education: Nabi Avci
Labour and Social Security: Faruk Celik
Environment and Urban Development: Idris Gulluce
Health: Mehmet Muezzinoglu
Transport: Lutfi Elvan
Food, Agriculture and Husbandry: Mehmet Mehdi Eker
Science, Industry and Technology: Fikri Isik
Culture and Tourism: Omer Celik
Forestry and Water Affairs: Veysel Eroglu
Customs and Trade: Hayati Yazici
Development: Cevdet Yilmaz
Youth and Sports: Akif Cagatay Kilic
Scandal erupted months ahead of next March’s local elections. Parliamentary elections involving Erdogan are scheduled in 2015.
If held today, voters might oust him. It’s way too early to know how they’ll react in 2015. Istanbul-based Global Source Partners analyst Atilla Yesilada said ongoing events suggest Erdogan is losing control.
“Forced to act, (he) tried to get rid of his burdens,” he said. “But this is a political crisis, and it is hard to tell how it will unfold. These investigations may expand in coming months.”
Doing so perhaps may link Erdogan to deep-seated corruption. If so, he may be forced to resign. The fullness of time will tell.
Stephen Lendman lives in Chicago. He can be reached at firstname.lastname@example.org.
His new book is titled “Banker Occupation: Waging Financial War on Humanity.”
Visit his blog site at sjlendman.blogspot.com.
“The powers of financial capitalism had (a) far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland; a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank… sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.” - Carroll Quigley, member of the Council on Foreign Relations
If one wishes to truly understand the actions behind private Federal Reserve policy, one must come to terms with a fundamental reality – everything the Fed does it does for a reason, and the most apparent reasons are not always the primary reasons. If you think that the Fed simply acts on impulsive stupidity or hubris, then you haven’t a clue what is going on. If you think the Fed only does what it does in order to hide the numerous negative aspects of our current economy, then you only know half the story. If you think the Fed does not have a plan, then you are sorely mistaken…
Central Bankers and their political proponents espouse a globalist ideology, meaning, they are internationalists in their orientation and motivations. They do not have loyalties to any particular country. They do not take an oath to any particular constitution. They do not have empathy for any particular culture or social experiment. They have their own subculture, with their own “values”, and their own social hierarchy. They are a kind of “tribe” or “sect”; a cult,if you will, that views itself as superior to all others. This means that when the central bankers that run the Fed act, they only act with the intention to support and promote globalization, not the best interests of America and Americans.
The process of globalization REQUIRES the dissolution of the U.S. economy as it exists today. Period. There is no way around it. America can no longer remain a superpower in the face of what globalists call “harmonization”. The dollar can no longer maintain its petro-currency status or its world reserve status if total centralization under a new global currency is to be achieved. Globalists believe that America must be sacrificed on the altar of “progress”, and diminished into a mere enclave, a feudal colony of a greater global system. The globalists at the Fed are no different.
Once this driving philosophy is understood, the final conclusion is obvious – the Fed exists to destroy the U.S. financial system and the U.S. currency mechanism. That is what they are here for.
This is why the dollar has lost 98% of its value since the Fed was established in 1913. This is why the Fed deliberately engineered the derivatives bubble crisis through the implementation of artificially low interest rates. This is why their response to the crisis was to create yet another massive bubble in stocks and bonds through QE stimulus. This is why the Fed is cutting stimulus today.
How does the taper play into the long running program of dollar destruction and globalization? Let’s take a look…
The Multifaceted Taper Strategy
In my article ‘Is The Fed Ready To Cut America’s Fiat Life Support’, and my article ‘Expect Devastating Global Economic Changes In 2014′, I predicted that a Fed taper was highly likely. Central banks almost always implant policy shift rumors into the mainstream media a few months before they implement them. They did this for TARP, for QE1, QE2, QE3, and the Taper. In fact, the Fed spent the better part of the past quarter conditioning investors to the idea of stimulus cuts, so I was not at all surprised when they followed through.
The Fed has, of course, now announced a $10 billion QE reduction just in time for Christmas and the 100th anniversary of the privately run institution. In the past, I have pointed out the tendency of central banks to enforce detrimental policy changes while the government, the economy and/or the bank itself is in the midst of a major transition. The Fed’s taper announcement comes just in time for the end of Ben Bernanke’s term as chairman, and the expected nomination of Janet Yellen.
This is done, I believe, because it provides an opportunity to divert blame for a crisis event they know is on the horizon. If attention is ever focused on the Fed specifically for a market downturn or bond disaster triggered by the ever present dollar bubble, Yellen can simply blame the QE policies of Bernanke (who will be long gone), while promising that her “new” policies will surely repair the damage. This placates the public and buys the central bankers time to do even MORE damage.
The taper itself is not just a “head fake”, however. It is a far more complex action. Tapering provides a method of psychologically distancing the Federal Reserve from the consequences of market movements. The banksters are essentially proclaiming to the public that their work is done, they have saved the economy, and now they are moving on, be it only $10 billion at a time. Whatever happens from here on is “not their fault”.
Most alternative analysts expected no taper of QE, and for good reason. While the mainstream touts the propaganda of economic recovery, independent financial experts understand that little to nothing was actually accomplished by the bailouts. Virtually no stimulus was absorbed in a localized way by mainstreet business. Real unemployment counting U-6 measurements still stands at around 20%. Real estate markets and home prices have a received a small boost, which at first glance appears positive until one examines who is actually buying; namely big banks and international investment firms snapping up properties only to reissue them on the market as rentals:
U.S. holiday retail sales and annual retail sales have been the weakest since 2009:
The only thing that QE ultimately accomplished was a spectacular rise in stocks through direct manipulation, which Fed agents like Alan Greenspan and Richard Fisher now openly admit to. The problem is, while gamblers in equities proudly boast about the Fed induced bull run in the Dow and how much money they have made, they remain oblivious to the underlying cost of the charade. Market investors have been enriched, yes, but little do they know that stock legitimacy is about to be sacrificed.
The price to earnings ratio of stocks (the market value of stocks versus what they SHOULD be valued according to the actual earnings of the companies listed) in the S&P 500 today stands at around 15, which is the highest it has been since before the 2008 market crash. Mainstream economists attempt to dismiss the issue by using a 15 year average while claiming that the P/E ratio in 2013 is mild compared to the tech bubble of the late 90′s. What they don’t seem to grasp is that the market of the past four to five years is an entirely different animal compared to 15 years ago.
Stocks in general have received considerable support through purchases by Fed bolstered banks and the Fed itself, creating an atmosphere of artificial demand for equities using QE fiat injections. Though no full audit of the bailouts exists (TARP is the only measure audited so far), it is projected that the banking sector alone has garnered tens of trillions in Fed fiat, which they have used to bolster their otherwise debt ridden holdings. It is only logical to expect that this capital tsunami has been used by numerous companies as a way to present false earnings.Goldman Sachs, JP Morgan, and Morgan Stanley all reported substantial profits for 2009 while at the same time reporting massive liabilities caused by the derivatives crash so that they could collect on the bailout bonanza.
So which one is it? Are companies making profits, or are they wallowing in insurmountable debt while presenting government stimulus as a form of profit?
What the Fed and corporate banks have done is create a market in which neither earnings, nor stock values can be trusted. The fact that the P/E ratio is higher than it has been since 2008 despite this manipulation should concern anyone with any sense.
Worst of all, the Fed’s monetization of U.S. Treasury debt has only expanded while foreign investment in long term debt has contracted. With our official national debt growing by at least $1 trillion per year, our country cannot continue to function without an ever increasing amount of foreign investment, or, Federal Reserve printing. The Fed cannot make cuts to QE if our system is to survive (if you want to call it survival), the Fed must expand QE forever, or at least until the dollar implodes due to hyperinflation.
So then, why has the taper been introduced at all? No one wants it. The government shouldn’t want it. Investors certainly don’t want it. Our economy is utterly dependent on the opposite. What purpose does it serve?
The assumption has always been that the Fed wants to keep the system afloat. I submit that things have changed. I submit that the Fed no longer wishes to prop up our fiscal structure, or at least, no longer wishes to be seen as propping it up. I submit that the Fed is not pursuing dollar destruction through standard hyperinflation, but rather, they are preparing the U.S. for default, which also will result in currency implosion.
The Taper Parallels
“It must not be felt that the heads of the world’s chief central banks were themselves substantive powers in world finance. They were not. Rather they were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up, and who were perfectly capable of throwing them down. The substantive financial powers of the world were in the hands of these investment bankers who remained largely behind the scenes in their own unincorporated private banks. These formed a system of international cooperation and national dominance which was more private, more powerful, and more secret than that of their agents in the central banks. “ - Carroll Quigley, Tragedy And Hope
Initial shock over the taper scenario has not sunk into the markets yet (as Zero Hedge points out, the last time a major central bank cut stimulus measures to a dependent country, stocks rallied, then crashed within months). Few people see much difference between $75 billion per month and $85 billion per month, but the size of the cuts is not really the issue. Rather, it is the Fed’s act of fading into the background that should concern us.
The taper announcement parallels perfectly with the accelerating debate over the U.S. debt ceiling, and I do not think this is at all a coincidence. Tapering seems inconceivable to many, but for the Fed it makes perfect sense if the goal of the globalists is to generate a default scenario while diverting blame. I believe that Americans are being prepared psychologically for just such an event. Already, the White House is warning that government funding will essentially disappear by the end of February:
The expectation fostered by the mainstream media is that a debt fight similar to the October theater will not happen again. I agree. I believe the next debate will be much worse. The vast majority will assume that the “can” will be kicked down the road again, and they may be right, but given the Fed’s behavior, and given that they have begun to taper despite what appears logical, many people may be in for a shock when our government also suddenly decides one day soon to buck assumptions and default rather than prolong the pain.
The full spectrum failure of Obamacare only adds excuse and incentive. There is no longer a legislative centerpiece rationale for further spending. Obama’s approval rating is at historic lows for any president. The stage has been set for the most epic of fake political battles.
The Left and Right leadership, at the top of the pyramid, are nothing more than flunkies for the global elite. If globalists have decided that it is time to apply the final death blows to the dollar, default would be the quickest and most efficient way, and political puppetry can easily make it happen. The calamity would be blamed on “partisan bickering” and “government gridlock”, or even the inefficiency of “democracy”. The Fed, with its taper in place and its fake recovery established, would be presented as the only “sane” institution at America’s disposal.
Perhaps at this point even more pervasive QE programs would recommence, perhaps not. At bottom, though, the taper is not a peripheral issue. It is an action at the center of a much more elaborate process, an action that seems to have been undertaken in preparation for a larger event. The next year is shaping up to be the most chaotic since the debt crisis began in 2008, and as the situation progresses, the subtleties of the Federal Reserve and the international banks that back it must not go unnoticed, or in the end, unpunished.
Source: Brandon Smith | Alt-Market
According to a new Washington Post-ABC poll, Barack Obama now ranks among the least popular presidents in the last century. In fact, his approval rating is lower than Bush’s was in his fifth year in office. Obama’s overall approval rating stands at a dismal 43 percent, with a full 55 percent of the public “disapproving of the way he is handling the economy”. The same percentage of people “disapprove of the way he is handling his job as president”. Thus, on the two main issues, leadership and the economy, Obama gets failing grades.
An even higher percentage of people are upset at the way the president is implementing his signature health care system dubbed “Obamacare”. When asked “Do you approve or disapprove of the way Obama is handling “implementation of the new health care law?” A full 62% said they disapprove, although I suspect that the anger has less to do with the plan’s “implementation” than it does with the fact that Obamacare is widely seen as a profit-delivery system for the voracious insurance industry. Notwithstanding the administration’s impressive public relations campaign, a clear majority of people have seen through Obama’s health care ruse and given the program a big thumb’s down.
Of course, Obamacare is just the straw that broke the camel’s back. The list of policy disasters that preceded this latest fiasco is nearly endless, including everything from blanket pardons for the Wall Street big-wigs who took down the global financial system, to re-upping the Bush tax cuts, to appointing a commission of deficit hawks to slash Social Security and Medicare (Bowles-Simpson), to breaking his word on Gitmo, to reneging on his promise to pass Card Check, to expanding to wars in Africa, Asia and the Middle East, to droning 4-times as many civilians as the homicidal maniac he replaced as president in 2008.
Obama’s treatment of undocumented immigrants has been particularly shocking although the details have been kept out of the media, presumably because the news giants don’t want to expose the Dear Leader as a heartless scoundrel who has no problem separating mothers from their children, locking them up in privately-owned concentration camps and booting them out of the country with nothing more than the shirt on their back. Check out this blurb which sums up Obama’s “progressive” immigration policy in one paragraph:
“Obama is on track to deport 3 million immigrants without papers by the end of his second term, more than any other president. George W. Bush deported about 2 million over two terms. Obama will likely hit that mark this month….. The average daily count of immigrants in detention now is about 33,000. In 2001, it was 19,000. In 1994, it was 5,000, according to the Detention Watch Network. Almost all of the detainees and deportees are Latino. True, the population of illegal immigrants has also doubled in that time to more than 11 million. But the detainee and deportee counts have escalated more than twice as fast.
“He could go down as the worst president in history toward immigrants,” said Arturo Carmona, executive director of the liberal activist group Presente.org.
Hooray for the Deporter in Chief! You’re Numero Uno, buddy. You even beat Bush! Is it any wonder why the man’s ratings are in freefall?
All told, Obama has been bad for the economy, bad for civil liberties, bad for minorities, bad for foreign wars, and bad for health care. He has, however, been a very effective lackey-sock puppet for Wall Street, Big Pharma, the oil magnates, and the other 1% -vermin Kleptocrats who run the country and who will undoubtedly attend his $100,000-per-plate speaking engagements when he finally retires in comfort to some gated community where he’ll work on his memoirs and cash in on his 8 years of faithful service to the racketeer class.
But, let’s face it; no one really gives a rip about “drone attacks in Waziristan” or “hunger strikes in Gitmo”. What they care about is keeping their jobs, paying off their student loans, putting the food on the table or avoiding the fate of next-door-neighbor, Andy, who got his pink slip two months ago and now finds himself living in a cardboard box by the river. That’s what the average working stiff worries about; just scraping by enough to stay out of the homeless shelter. But it’s getting harder all the time, mainly because everything’s gotten worse under Obama. It’s crazy. It’s like the whole middle class is being dismantled in a 10-year period. Wages are flat, jobs are scarce, incomes are dropping like a stone, and everyone’s broke. (Everyone I know, at least.) Did you know that 76% of Americans are living paycheck-to-paycheck. Check it out:
“Roughly three-quarters of Americans are living paycheck-to-paycheck, with little to no emergency savings, according to a survey released by Bankrate.com Monday.
Fewer than one in four Americans have enough money in their savings account to cover at least six months of expenses, enough to help cushion the blow of a job loss, medical emergency or some other unexpected event, according to the survey of 1,000 adults.
Meanwhile, 50% of those surveyed have less than a three-month cushion and 27% had no savings at all….
Last week, online lender CashNetUSA said 22% of the 1,000 people it recently surveyed had less than $100 in savings to cover an emergency, while 46% had less than $800. After paying debts and taking care of housing, car and child care-related expenses, the respondents said there just isn’t enough money left over for saving more.”
Are you kidding me? What’s that? Who do you know that’s able to save money in this economy? Maybe rich uncle Johnny whose lived on canned sardines and Akmak for the last 50 years, but nobody else can live like that. Subtract the rent, the groceries, the doctor bills etc, and there’s barely enough leftover to fill the tank to get to work on Monday. Saving just isn’t an option, not in the Obamaworld, that is.
Now check this out from Business Insider:
“Thousands of Americans aged 55 and older are going back to school and reinventing themselves to get an edge in a difficult labor market, hoping to rebuild retirement nest eggs that were almost destroyed by the recession….
According to the Federal Reserve, household financial assets, which exclude homes, dropped from a peak of $57 trillion in the third quarter of 2007 to just over $49 trillion in the fourth quarter of last year, the latest period for which data is available.
A survey to be released this summer by the Public Policy Institute of AARP, an advocacy group for older Americans, found a quarter of Americans 50 years and older used up all their savings during the 2007-09 recession. About 43 percent of the 5,000 respondents who took part in the survey said their savings had not recovered.” (“Unemployed Baby Boomers Are Getting Hired By Going Back To School”, Business Insider)
Sure they’re going back to work. What do you expect them to do? They’re broke! They got wiped out in Wall Street’s mortgage laundering scam and they’re still behind the eightball five years later. And what’s left of the money they set aside for retirement is yielding a big zilch thanks to the Fed’s zero rate policy which is forcing people back into another decade of penal servitude at minimum wage. That’s why you see so many hunched over graybeards in red vests with “Happy to Serve You” splattered on their chests lugging shopping bags out to the cars for old ladies. Because they’re broke and out of options. Everyone knows someone like this unless, of course, they’re one of the fortunate few who make up the Nobel 1%; aka–The Job Cremators. Then they don’t have to fret about that sort of thing.
Here’s another gem you might not have seen in USA Today a few months back:
“Four out of 5 U.S. adults struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.
Survey data exclusive to The Associated Press points to an increasingly globalized U.S. economy, the widening gap between rich and poor, and the loss of good-paying manufacturing jobs as reasons for the trend….
Hardship is particularly growing among whites, based on several measures. Pessimism among that racial group about their families’ economic futures has climbed to the highest point since at least 1987. In the most recent AP-GfK poll, 63% of whites called the economy “poor.”
“I think it’s going to get worse,” said Irene Salyers, 52, of Buchanan County, Va., a declining coal region in Appalachia. Married and divorced three times, Salyers now helps run a fruit and vegetable stand with her boyfriend, but it doesn’t generate much income….
Nationwide, the count of America’s poor remains stuck at a record number: 46.2 million, or 15% of the population, due in part to lingering high unemployment following the recession. While poverty rates for blacks and Hispanics are nearly three times higher, by absolute numbers the predominant face of the poor is white…
“Poverty is no longer an issue of ‘them’, it’s an issue of ‘us’,” says Mark Rank, a professor at Washington University in St. Louis who calculated the numbers. “Only when poverty is thought of as a mainstream event, rather than a fringe experience that just affects blacks and Hispanics, can we really begin to build broader support for programs that lift people in need.” (“4 in 5 in USA face near-poverty, no work”, USA Today)
Does Obama have any idea of the damage he’s doing with his Rich-First policies? The country is in a terrible state and yet Obama continues to approve bills that throw millions of people off unemployment benefits, sharply cut government spending, or undermine vital safetynet programs that keep the sick and the elderly from dying on the streets. It’s like he’s trying to reduce 300 million Americans to grinding third world poverty in his short eight-year term. Is that the goal?
Did you know that–according to Gallup–20.0% of all Americans did not have enough money to buy food that they or their families needed at some point over the past year? Or that –according to a Feeding America hunger study–more than 37 million people are now using food pantries and soup kitchens? Or that one out of six Americans is now living in poverty which is the highest level since the 1960s? Or that the gap between the rich and poor is greater than any in history?
Everything has gotten worse under Obama. Everything. And, not once, in his five years as president, has this gifted and charismatic leader ever lifted a finger to help the millions of people who supported him, who believed in him, and who voted him into office.
These latest poll results indicate that many of those same people are beginning to wake up and see what Obama is really all about.
Guess who’s investing in America’s future?
Nobody, that’s who.
Just check out this excerpt from an article by Rex Nutting at Marketwatch and you’ll see what I mean. The article is titled “No one is investing in tomorrow’s economy”:
“The U.S. economy simply isn’t investing enough to ensure that there will be enough good paying jobs for our children and our children’s children. Net investment — the amount of capital added to our stock — remains at the lowest levels since the Great Depression. …
Net investment…measures the additional stock of buildings, factories, houses, equipment, software, and research and development — above and beyond the replacement of worn-out capital. In 2012, net fixed investment totaled $485 billion, only about half of the $1.1 trillion invested in 2006…
If businesses, consumers and governments were investing for the future at usual rate, the economy would be at least 3% larger, employing millions more people. That’s a huge hole in the economy that can’t be filled by heavily indebted consumers, especially at a time when government is handcuffed by forces of austerity.” (“No one is investing in tomorrow’s economy”, Rex Nutting, Marketwatch)
Now the author seems to believe that the lack of net investment is just a temporary phenom that will work itself out in the years ahead. But he could be wrong about that. After all, why would a company build up its capital stock for the future when the future is so uncertain? Certainly, there’s nothing in the data that would suggest that the US economy is about to shake off its five year post-recession funk and shift into high-gear again, is there? No, of course not. In fact, it looks like the economy has reset at a lower level of activity that will only get worse as the impact of budget cuts and stagnation are felt. That will further curtail consumer spending which, to this point, had been the primary driver of growth.
Bottom line: Net investment is down because there’s no demand. And there’s no demand because unemployment is high, wages are flat, incomes are falling, and households are still digging out from the Crash of ’08. At the same time, the US Congress and Team Obama continue to slash public spending wherever possible which is further dampening activity and perpetuating the low-growth, weak demand, perma-slump.
So, tell me: Why would a businessman invest in an economy where people are too broke to buy his products? He’d be better off issuing dividends to his shareholders or buying back shares in his own company to push stock prices higher.
And, guess what? That’s exactly what CEOs are doing. Check this out in the Washington Post:
“Battered by months of disappointing sales, networking giant Cisco needed a way to give its shareholders a pick-me-up. So the San Jose-based firm did what has become routine for many big U.S. companies in a slow-growing economy: It announced last month that it was buying back shares of its stock…..
This is what U.S. multinationals do now with their cash. Rather than tout big new investments, raise worker wages or hire more employees, companies are more likely to set aside funds to reward shareholders — a trend that took a dip during the recession but has roared back during the recovery.
The 30 companies listed on the Dow Jones industrial average have authorized $211 billion in buybacks in 2013, according to data from Birinyi Associates, helping to lift the benchmark stock index to heights not seen since the tech boom of the late 1990s. By comparison, the amount is nearly three times what the group spent on research and development last year, according to data from S&P Capital IQ.
Why spend so much on stock repurchasing?
When the number of shares outstanding falls, the value of each one goes up, instantly rewarding shareholders.” (“Companies turning again to stock buybacks to reward shareholders”, Washington Post)
Corporations don’t care about the future. What they care about is maximizing shareholder value, that’s the name of the game; profits. If that means boosting net fixed investment then, okay, that’s what they’ll do. But if the Fed creates incentives to do something else, like gaming the system with stock buybacks, then they can make the adjustment. And that’s what the Fed’s zero rate policy does. It’s incentivizes businesses to use their capital in a way that’s damaging to the real economy. Here’s more from the same article:
“Helping to fuel the stock market’s meteoric rise is the Federal Reserve’s stimulus program designed to lower borrowing costs. Companies are taking advantage, often by borrowing money at low rates to repurchase shares, although it’s unclear how much of the debt is being used to pay for buybacks.
“It somehow feels scarier if they borrowed the money to buy back stock than if they had some investment opportunities,” Inker said. “That somehow seems more sustainable than just levering up to reduce the share count.”
Some analysts say companies are better off repurchasing shares than pouring money into investments promising dubious payoffs, especially in a slow-growing economy.” (“Companies turning again to stock buybacks to reward shareholders”, Washington Post)
There you have it; instead of investing in R&D, factories or new technologies, (all of which produce more high-paying jobs) companies are taking advantage of the Fed’s cheap money, goosing stock prices and raking in hefty profits. That’s just the way the policy works. The only way change the outcome, is to change the incentives. But the Fed doesn’t want to do that, and neither does the Congress because, at present, they have working people right where they want them, under their bootheel.
If you are looking for proof that workers are getting shafted, just look at the condition of the US consumer who is still on the ropes 5 years after the recession ended. Now, according to the latest Fed’s Flow of Funds report, “Household net worth rose by $1.9 trillion in the last quarter” which means that everything should be hunky dory, right? It means the long period of deleveraging should be over and consumers should be ready to go on another madcap spending spree like they did up-until 2007. Unfortunately, the Fed’s report is a bunch of baloney. The $1.9 trillion merely accounts for rising asset prices that have been reflated by Bernanke’s quantitative easing boondoggle. While working people have seen some uptick in housing prices, the bulk of the gains have gone to stock and bond speculators who’ve made out like bandits. As for consumers, well, they’re still stuck in the doldrums as economist Stephen S. Roach points out in this article at Project Syndicate. Here’s a clip:
“In the 22 quarters since early 2008, real personal-consumption expenditure… has grown at an average annual rate of just 1.1%, easily the weakest period of consumer demand in the post-World War II era.” (It’s also a) “massive slowdown from the pre-crisis pace of 3.6% annual real consumption growth from 1996 to 2007.” (“Occupy QE“, Stephen S. Roach, Project Syndicate)
So, personal consumption has dropped from 3.6% to 1.1%?!?
Yep. No wonder there’s no recovery. And, keep in mind, this is no short-term deal either, mainly because Democrats and Republicans are equally committed to future budget cuts which means it will be more difficult for households to get out of the red and resume spending. More austerity means more retrenchment and hard times for consumers, households and workers. Economist William R. Emmons provides a good summary of what’s-in-store for consumers in a recent post titled “Don’t Expect Consumer Spending To Be the Engine of Economic Growth It Once Was”. Here’s a clip from the article:
“Lower wealth: First and foremost, U.S. household wealth took a beating during the Great Recession. …., the loss of significant amounts of wealth and the severe pressure in some households to deleverage their balance sheets (reduce debt) are likely to contribute to restrained consumer spending for some time.
Stagnant incomes: The economic recovery under way since mid-2009 has been mediocre, at best. Job growth barely matches population growth, while incomes of the typical worker are barely keeping up with inflation. …, most of the overall gains in income appear to be flowing to high-income workers.
Tight credit: Consumer lenders either have disappeared altogether or are offering credit on a much more restricted basis than before the downturn.. …
Fragile confidence: Major consumer-confidence indexes have rebounded from their lowest levels during 2009 in the immediate aftermath of the recession, but they remain below the levels that prevailed just as the recession began in late 2008 …
Looming reversal of stimulus: The Federal Reserve has explored options to “exit” its extraordinarily accommodative monetary policy, while Congress and the president agree that budget consolidation is necessary in the not-too-distant future. In both cases, a tightening of policy measures represents a withdrawal of support for household incomes and wealth and, therefore, consumer spending.”
Individually, any of the five obstacles noted above might be surmountable. But combined, these contractionary forces make the outlook for broad-based consumer spending growth challenging. To be sure, some households weathered the economic and financial storms well, but we can’t count on these fortunate few to step up their spending sufficiently to offset the lost spending caused by declines in wealth, income, access to credit, confidence and government support.” (“Don’t Expect Consumer Spending To Be the Engine of Economic Growth It Once Was”, William R. Emmons, The Regional Economist |via The Big Picture
Emmons offers a bleak, but realistic assessment of our present predicament. There’s really no way the US economy can rebound without a dramatic reversal in the current fiscal policy. Most Americans appear to grasp this point which is why survey after survey show that the majority think the country is “on the wrong track”. The public’s frustration with Congress -(whose public approval rating is at all-time lows) is reflected in growing pessimism which is affecting their spending habits. This is completely normal, given that most middle income working people do not expect their financial situation to improve in the next year. Lower expectations mean more penny pinching, fewer job openings, skimpy net investment, and sluggish growth. That’s the future in a nutshell.
It’s worth noting that the investor class will also pay a heavy price for the current misguided policy. Stocks have had an impressive 4-year run, but there are signs that the day of reckoning is fast approaching. Get a load of this from USA Today:
“A potential warning to stock investors: the fourth-quarter earnings pre-announcement season is shaping up to be the most negative on record. In what seems like a major disconnect, the number of profit warnings relative to upbeat guidance is the widest it has ever been — at a time when the U.S. stock market is trading near record territory. The Standard & Poor’s 500 index notched a new closing high of 1809 Monday.
For every 10 companies warning of weaker-than-expected earnings for the October-through-December period, only one has said it will top forecasts, says earnings-tracker Thomson Reuters I/B/E/S. The actual 10.4-to-1 negative-to-positive pre-announcement ratio is on track to eclipse the prior record of 6.8 warnings for every positive one back in the first quarter of 2001. The long-term ratio is 2.3 warnings for each positive one.
“This is off the charts, I’ve never seen it this high,” says Gregory Harrison, analyst at Thomson Reuters.” (“As stocks hit record highs, so do profit warnings”, USA Today)
So why is Wall Street taking such dire warnings in their stride, you ask?
It’s because investors no longer pay attention to the fundamentals. Demand doesn’t matter. Earnings don’t matter. What matters is the Fed and the Fed alone. “Is Bernanke going to keep pumping trillions in liquidity into the financial markets or not?” That’s the policy upon which all investment decisions are made.
So when Bernanke announces his plan to “taper” his asset purchases (scale-back QE), equities will adjust accordingly.
Did somebody say “crash”?
Former Treasury Secretary Timothy Geithner, a protege of Treasury Secretaries Rubin and Summers, has received his reward for continuing the Rubin-Summers-Paulson policy of supporting the “banks too big to fail” at the expense of the economy and American people. For his service to the handful of gigantic banks, whose existence attests to the fact that the Anti-Trust Act is a dead-letter law, Geithner has been appointed president and managing director of the private equity firm, Warburg Pincus and is on his way to his fortune.
A Warburg in-law financed Woodrow Wilson’s presidential campaign. Part of the reward was Wilson’s appointment of Paul Warburg to the first Federal Reserve Board. The symbiotic relationship between presidents and bankers has continued ever since. The same small clique continues to wield financial power.
Geithner’s career is illustrative. In the 1980s, Geithner worked for Kissinger Associates. In the mid to late 1990s, Geithner served as a deputy assistant Treasury secretary. Under Rubin and Summers he moved up to undersecretary of the Treasury.
From the Treasury he went to the Council on Foreign Relations and from there to the International Monetary Fund (IMF). From there he was appointed president of the Federal Reserve Bank of New York, where he worked to make banks more profitable by allowing higher ratios of debt to capital, thus contributing to the financial crisis.
Geithner arranged the sale of the failed Wall Street firm of Bear Stearns, helped with the taxpayer bailout of AIG, and rejected saving Lehman Brothers from bankruptcy in order to create the crisis atmosphere needed to more fully subordinate US economic policy to the needs of the few large banks.
Rubin, a 26-year veteran of Goldman Sachs, was rewarded by Citibank for his service to the banks while Treasury Secretary with a $50 million compensation package in 2008 and $126,000,000 between 1999 and 2009.
When a person becomes a Treasury official it is made clear that the choice is between serving the banks and becoming rich or trying to serve the public and becoming poor. Few make the latter choice.
As MIchael Hudson has informed us, the goal of the financial sector has always been to convert all income, from corporate profits to government tax revenues, to the service of debt. From the bankers standpoint, the more debt the richer the bankers. Rubin, Summers, Paulson, Geithner, and now banker Treasury Secretary Jack Lew faithfully serve this goal.
The Federal Reserve describes its policy of Quantitative Easing — the creation of new money with which the Fed purchases Treasury debt and mortgage backed securities — as a low interest rate policy in order to stimulate employment and economic growth. Economists and the financial media have parroted this cover story.
In contrast, I have exposed QE as a scheme for pumping profits into the banks and boosting their balance sheets. The real purpose of QE is to drive up the prices of the debt-related derivatives on the banks’ books, thus keeping the banks with solvent balance sheets.
Writing in the Wall Street Journal (“Confessions of a Quantitative Easer,” November 11, 2013), Andrew Huszar confirms my explanation to be the correct one. Huszar is the Federal Reserve official who implemented the policy of QE. He resigned when he realized that the real purposes of QE was to drive up the prices of the banks’ holdings of debt instruments, to provide the banks with trillions of dollars at zero cost with which to lend and speculate, and to provide the banks with “fat commissions from brokering most of the Fed’s QE transactions.” (See: www.paulcraigroberts.org )
This vast con game remains unrecognized by Congress and the public. At the IMF Research Conference on November 8, 2013, former Treasury Secretary Larry Summers presented a plan to expand the con game.
Summers says that it is not enough merely to give the banks interest free money. More should be done for the banks. Instead of being paid interest on their bank deposits, people should be penalized for keeping their money in banks instead of spending it.
To sell this new rip-off scheme, Summers has conjured up an explanation based on the crude and discredited Keynesianism of the 1940s that explained the Great Depression as a problem caused by too much savings. Instead of spending their money, people hoarded it, thus causing aggregate demand and employment to fall.
Summers says that today the problem of too much saving has reappeared. The centerpiece of his argument is “the natural interest rate,” defined as the interest rate at which full employment is established by the equality of saving with investment. If people save more than investors invest, the saved money will not find its way back into the economy, and output and employment will fall.
Summers notes that despite a zero real rate of interest, there is still substantial unemployment. In other words, not even a zero rate of interest can reduce saving to the level of investment, thus frustrating a full employment recovery. Summers concludes that the natural rate of interest has become negative and is stuck below zero.
How to fix this? The way to fix it, Summers says, is to charge people for saving money. To avoid the charges, people would spend the money, thus reducing savings to the level of investment and restoring full employment.
Summers acknowledges that the problem with his solution is that people would take their money out of banks and hoard it in cash holdings. In other words, the cash form of money provides consumers with a freedom to save that holds down consumption and prevents full employment.
Summers has a fix for this: eliminate the freedom by imposing a cashless society where the only money is electronic. As electronic money cannot be hoarded except in bank deposits, penalties can be imposed that force unproductive savings into consumption.
Summers’ scheme, of course, is a harebrained one. With governments running huge deficits, who would purchase bonds at negative interest rates? How would pension and retirement funds operate? Would they also be subject to an annual percentage confiscation?
We know that the response of consumers to the long term decline in real median family income, to the loss of jobs from labor arbitrage across national borders (jobs offshoring), to rising homelessness, to cuts in the social safety net, to the transformation of their full time jobs to part time jobs (employers’ response to Obamacare), has been to reduce their savings rate. Indeed, few have any savings at all. The US personal saving rate is currently 2 percentage points, about 30%, below the long term average. Retired people, unable to earn any interest on their savings from the Fed’s zero interest rate policy, are being forced to draw down their savings in order to pay their bills.
Moreover, it is unclear whether the savings rate is an accurate measure or merely a residual of other calculations. With so many people having to draw down their savings, I wouldn’t be surprised if an accurate measure showed the personal savings rate to be negative.
But for Summers the plight of the consumer is not the problem. The problem is the profits of the banks. Summers has the solution, and the establishment, including Paul Krugman, is applauding it. Once the economy officially turns down again, watch out.
This column first appeared as a Trend Alert, Trends Research Institute
Source: Paul Craig Roberts
By any reasonable measure, I think it is safe to say that the last quarter of 2013 has been an insane game of economic Russian Roulette. Even more unsettling is the fact that most of the American population still has little to no clue that the U.S. was on the verge of a catastrophic catalyst event at least three times in the past three months alone, and that we face an even greater acceleration next year.
The first near miss was the Federal Reserve’s announcement of a possible “taper” of QE stimulus in early fall, which sent shivers through stock markets and proved what we have been saying all along – that the entire recovery is a facade built on an ever thinning balloon of fiat money. Today, markets function entirely on the expectation that the Fed will continue stimulus forever. If the Fed does cut QE in any way, the frail psychology of the markets will shatter, and the country will come crashing down with it.
The second near miss was the possible unilateral invasion of Syria demanded by the Obama Administration. As we have discussed here at Alt-Market for years, any invasion of Syria or Iran will bring detrimental consequences to the U.S. economy and energy markets, not to mention draw heavy opposition from Russia and China. Though the naïve shrug it off as a minor foreign policy bungle, Syria could have easily become WWIII, and I believe the only reason the establishment has not yet followed through with a strike in the region is because the alternative media has been so effective in warning the masses. The elites need a certain percentage of support from the general public and the military for any war action to be effective, which they did not receive. After all, no one wants to fight and die in support of CIA funded Al Qaeda terrorist cells on the other side of the world. The establishment tried to hide who the rebels were, and failed.
The third near miss was, of course, the debt ceiling debate, which has been extended to next spring. America came within a razor’s edge of debt default, which many people rightly fear. What some do not yet grasp, though, is that debt default of the U.S. was NOT avoided last month, it is INEVITABLE. Debt default will ultimately result in the death of the dollar as the world reserve currency, and the petro-currency. This final gasp will lead to hyperstagflation within our financial system, and third world status for most of the citizenry. It is only a matter of time, and timing.
“Timing” is truly what we are all concerned about. Those of us in the field of alternative media and economics understand well that the U.S. is on a collision course with disaster; it is a mathematical certainty. We no longer think in terms of “if” it happens – we only question “when” it will happen. Our fiscal structure now hangs by the thinnest of threads, a thread which for all we know could be cut at a moments notice. However, economic and political storms appear to be brewing with the year 2014 as a target.
Globalists have been openly seeking the destabilization of U.S. sovereignty, and they have openly admitted that the destruction of the dollar and our economic foundations will aid them in their goal. It is important to never forget that international financiers WANT to absorb America into a new global economic structure, and that the U.S. must be debased before this can be accomplished. Here are a few reasons why I believe 2014 may be the year they make their final move…
Debt Debate On Steroids
Nothing concrete was decided during the highly publicized “battle” between Democrats and the GOP on what would be done to solve the U.S. debt addiction. Some people might assume that the fight will go on indefinitely, and that the “can” will be kicked down the road for years to come. This assumption is a dangerous one. If you thought the last debt debate was hair raising, the next is likely to give you a coronary. Think of 2013 as a practice run, a warm up to the main event in 2014. Why will next year be different? Because the motivations behind a debt ceiling freeze (and thus debt default) are now supported by the obvious failure of Obamacare.
Funding for Obamacare was the underlying issue that gave strength to the push for new debt ceiling extensions. The U.S. government has overreached financially in ever way imaginable. We have long running entitlement programs that have been technically bankrupt for years. But, Obamacare was so pervasive during the debt debate that we heard nothing of these existing liabilities. Ultimately, Obamacare is the primary reason why so many Americans on the “left” want unlimited spending and inflation, and why so many Americans on the “right” are actually seeking debt default.
We all know that at the top of the pyramid the debt debate itself is false left/right theater, but it is still theater with a purpose.
In my articles ‘The Socialization Of America Is Economically Impossible’ and ‘Obamacare: Is It A Divide And Conquer Distraction’, I discussed why universal healthcare could not be implemented in America, and I predicted in advance that Obamacare was actually a farce that was designed to fail. The program’s only purpose is to provide a vehicle by which divisions between the fake left and the fake right could be solidified in the minds of the common populace. A lot of cynicism was directed at the notion that the government might create a socialized healthcare initiative and then allow it to fail. Of course, we now know that is exactly what they had in mind.
During the last debt debate, Obamacare was just a policy waiting to be implemented; next debate, that policy will be rightly labeled a train wreck. Obamacare is falling apart at it’s very inception, and evidence makes clear that the White House KNEW in advance that this would occur. In the days before it’s launch, performance tests on the Obamacare website showed conclusively that the system could not handle more than 500 users.
Obama promised that preexisting healthcare plans would be retained by Americans and that the Affordable Care Act would not do damage to established insurance models. He made this promise knowing full well that he could not or would not keep it. This dishonesty has resulted in rebellion by Democrats who have sided with Republicans to pass a bill which obstructs the erasure of existing health coverage.
States once disturbingly loyal to the White House are now moving to limit the application of the Obamacare structure.
The White House had foreknowledge that the program was nowhere near ready, yet, they moved forward anyway. Why wouldn’t they stall? Why would Obama knowingly unleash his “opus” before it was finished? He had it in the bag, right? He won, right? All he had to do was build a functioning website and keep his promises at least long enough to sucker the majority of Americans into the system. Instead, he throws the fight and hits the canvas before he’s even punched? Why?
It all sounds rather insane if you aren’t aware of the bigger picture, and I’m sure the average Democrat out there is wide-eyed and bewildered. Some might blame it on “ego”, or “hubris”, but this makes little sense. Obamacare is an American socialist’s dream. With a simple working public interaction model, Obama would be worshiped by leftists for decades to come as the next Franklin Delano Roosevelt. Hubris should have ENSURED that the White House launch of Obamacare would be flawless.
Once you realize that this is not about Obama, and that Obama is nothing but a middle-man for the globalists, and that the actual implementation of Obamacare never mattered to the establishment, the fog begins to clear.
With Obamacare in shambles, the dynamic of the debt debate theater changes completely. Some Democrats may well show support for a hold on the debt ceiling, for, what reason do they have to champion more spending? Obama has already made fools of them all, and the Obamacare motivator is essentially out of the picture. The GOP will be energized and more unified than the last debate, giving more momentum to a debt ceiling lock. The argument will be made that a resulting debt default will not be harmful, and that the U.S. can carry the weight of existing liabilities until the budget is balanced.
This is certainly a lie, but it is a fashionable lie that Americans will want to hear.
Americans do not want to hear that our economy is too far gone and that any motion, to spend, or to cut, will have the same result – currency collapse and fiscal implosion. They do not want to hear that pain must be suffered before a realistic solution can be applied. They do not want to hear the the system will have to be brought down before it can be rebuilt. And, they definitely do not want to hear that the system will be deliberately brought down and replaced with something even worse.
Will the next debt debate in Spring 2014 end in debt default and the collapse that globalists desire so much? It’s hard to say, but many insiders appear to be preparing for just such a scenario…
The Fed’s Buzz Kill
No one, and I mean no one, believes the private Federal Reserve will ever commit to a taper of fiat stimulus. Hell, I barely believe it’s possible, and I’m open to just about any scenario. That said, I have to ask a question which few analysts seem to be asking – why does the Fed keep pre-injecting the concept of taper into the mainstream if they never intend to implement it? When has the Fed ever pre-injected a plan into the MSM which it did not eventually implement?
The banksters have the markets in the palm of their hand, or at least they seem to. Stocks now rise and fall according to whatever meaningless press release the central bank happens to put out on any given morning. What do they have to gain by consistently shaking the confidence of investors around the world by suggesting that the fiat party they created will abruptly end?
The impending approval by the Senate of Janet Yellen, a champion of the printing press, would suggest to many that QE-infinity is assured. We know that the black hole generated by the derivatives implosion cannot be filled (debts still exist in the quadrillions of dollars), and that the Fed will have to print endlessly in order to slow the deterioration of the the banking sector. We know that none of the currency flows created by the Fed are trickling down to main street, which is why credit remains mostly frozen, real unemployment counting U-6 measurements remains at around 25%, food stamp recipients have risen to around 50 million, and the only sales boosts to property markets are those caused by big banks buying bankrupt houses and then reissuing them as rentals.
We know that it makes sense for the central bank to continue QE, if only to continue pumping up banks and the stock market and hide the truly dismal state of the overall system. But let’s forget about what we think “makes sense” for just a moment…
What if the Fed no longer WANTS to hide the true state of the system anymore? What if QE is now giving back diminishing returns, and will soon be no longer effective at hiding economic weakness?Central bankers surely don’t want to take the blame for a collapse, but what if the perfect patsy is already lined up? A patsy so hated and despised that no one would think twice about their guilt? I am, of course, talking about the Federal Government itself.
Think about it; the failure of Obamacare promises a debt debate in the Spring of 2014 that will rock the very foundations of the global economy. Both sides, Democrat and Republican, are ready to blame the other fully for any disastrous outcome, though “Tea Party” conservatives have been painted by the mainstream media as the lead culprits behind a financial catastrophe that began before the Tea Party was born. The idea of “gridlock” leading to impasse and calamity is already built into the country’s consciousness. The general public’s opinion of all areas of government has recently hit all time lows. In fact, our opinion of government could scarcely go any lower than it already has. Everyone HATES what government is, or what they think it is. Most Americans would be happy to place the brunt of the blame for an economic disaster on the shoulders of Washington DC.
The genius of it is, they deserve a large part of the blame. They helped to make possible all of the horrors the citizenry will face in the coming years. The problem is, the public may become so blinded with rage over the failure of the political system, that they may completely forget about the role of international and central banks and turn on each other instead.
Why is the Fed now discussing, just before the possible confirmation of Janet Yellen, a stimulus dove, the need for taper measures by 2014?
Is it just coincidence that the taper discussion is taking place parallel to the debt ceiling battle, or are these two things related? What if the Fed plans to apply QE cuts during or after the renewed debt debate in order to make the market effects even more negative? What if the Fed is timing the taper to give energy to a debt default? What if the Fed wants to reduce support, so that later, when all hell breaks loose, we’ll come begging them for support?
Whether you believe a debt default will be deliberately induced or not, certain foreign investors have been preparing for such a U.S. breakdown for years, and once again, the apex investor, China, has made plans for dramatic economic policy changes to take place in 2014…
China Is Ready To File For Divorce
The economic marriage between China and the U.S. has been touted Ad nauseum as an invincible relationship chained in eternity by unassailable interdependency. I’ve just never bought this fanciful tale. For years I’ve written about the likelihood that China will decouple from the American dollar apparatus, and so far, most of my warnings have come to pass.
China has pushed forward with massive physical gold purchases despite all arguments by skeptics that gold is no longer necessary or prudent as a safe haven investment. Apparently, the Chinese know something they do not. China is on pace to become the largest holder of gold in the world as early as 2014.
China has now issued Yuan denominated bonds and other assets around the globe, and its central bank has expanded its total balance sheet to at least $24 Trillion, outmatching the reported increased balance sheets of all other central banks:
Now, some feel that this Chinese liquidity should be considered a massive bubble on the verge of exploding, and that it will be Chinese instability, not U.S. instability, that triggers renewed crisis. I would like to offer an alternative view…
I am not shocked at all by this incredible spike in Yuan circulation. In fact, I expected it. The fall back argument against China dumping the dollar as the world reserve has always been that there is no alternative currency that boasts as much liquidity as the dollar. Well, as we now know, China has been raining Yuan down on every continent. International banks like JP Morgan have been HELPING them do it.
China is not desperately attempting to prop up its own markets like we are in the U.S. China is DELIBERATELY generating massive liquidity because they seek to aid the IMF in its longtime plan to replace the greenback as the world reserve currency. These are not the activities of an investor that wants to stick with the U.S. or the dollar. These are not the activities of a nation that wishes to continue its limited role as a source of cheap industrial labor.
China, being the largest importer of petroleum surpassing the U.S., is now planning to price its crude oil futures in Yuan, instead of the dollar.
And, the Chinese central bank has announced that it now plans to stop all purchases of U.S. dollars for its reserves.
These decisions are part of a precision strategy, a formula which was finalized during a little discussed and very secretive economic policy meeting which took place in China this past month.
While much of the media was focused on China’s call for softer restrictions on its one-child policy, they ignored the thrust of the meeting, which was to establish Chinese consumption over exports, and internationalize the Yuan. All that is left is for China to “float” the Yuan’s value on the open market, which is an action the head of the PBOC, Zhou Xiaochuan, says he plans to expedite.
All of the reforms discussed at China’s Third Plenum meeting are supposed to begin taking shape in…that’s right…2014.
A Storm Of Septic Proportions
As I have always pointed out, economic collapse is not necessarily an event, it is a process. The most frightening elements of this process usually do not become visible until it is too late for common people to react in a productive way. All of the dangers covered in this article could very well set fires tomorrow, that is how close our nation is to the edge. However, the culmination of events so far seems to be setting the stage for something, an important something, in 2014. If the worst is possible, assume the worst is probable. The next leg down, or the next economic carpet bombing. Maybe slightly painful, maybe mortal. Sadly, as long as Americans continue to remain dependent on the existing corrupt system, global bankers can pull the plug at their leisure, and determine the depth of the wound with scientific precision.
Source: Brandon Smith | Alt-Market
A Flimsy Piece of Worn Out Script…
“If the dollar does indeed lose its role as leading international currency, the cost to the United States would probably extend beyond the simple loss of seigniorage, narrowly defined. We would lose the privilege of playing banker to the world, accepting short-term deposits at low interest rates in return for long-term investments at high average rates of return. When combined with other political developments, it might even spell the end of economic and political hegemony.”
– Economist Menzie Chinn, “Will the Dollar Remain the World’s Reserve Currency in Five Years?”, CounterPunch 2009
Barack Obama’s economic recovery has been a complete bust. Unemployment is high, the economy is barely growing, and inequality is greater than anytime on record. On top of that, inflation has dropped to 1.2 percent, private sector hiring continues to disappoint and, according to Gallup’s “Economic Confidence” survey, households and consumers remain “deeply negative”. More tellingly, the Federal Reserve’s emergency program dubbed QE– which was designed to mitigate the fallout from the 2008 stock market crash and subsequent recession–is still operating at full-throttle five years after Lehman Brothers defaulted. This is inexcusable. It’s an admission that US policymakers have no idea what they’re doing.
Why is it so hard to get the economy up and running? Everyone knows that spending generates growth, so if the private sector (consumers and businesses) can’t spend the public sector (the government) must spend. That’s how sluggish economies shake off recession, through growth.
Spend, spend, spend and spend some more. That’s how you grow your way out of a slump. There’s nothing new or original about this. This isn’t some cutting-edge, state-of-the-art theory. It’s settled science. Economics 101.
So is it any wonder why the rest of the world is losing confidence in the US? Is it any wonder why China and Japan have slashed their purchases of US debt? Get a load of this from Reuters:
“China and Japan led an exodus from U.S. Treasuries in June after the first signals the U.S. central bank was preparing to wind back its stimulus, with data showing they accounted for almost all of a record $40.8 billion of net foreign selling of Treasuries….
China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, and Japan trimmed its holdings for a third straight month to $1.0834 trillion. Combined, they accounted for about $40 billion in net Treasury outflows.” (“China, Japan lead record outflow from Treasuries in June”, Reuters)
While things have improved since August, the selloff is both ominous and revealing. Foreign trading partners are losing confidence in US stewardship because of policymakers erratic behavior. Here’s how former Fed chairman Paul Volcker summed it up:
“We have lost a coherent successful governing model to be emulated by the rest of the world. Instead, we’re faced with broken financial markets, underperformance of our economy and a fractious political climate.”
Naturally, this loss of confidence is going to hurt the dollar vis a vis its position as the world’s reserve currency. But don’t kid yourself, China and Japan want to be the top-dog either. They’re fine with the way things are right now. The problem is, it’s looking more and more like the US is not up-to-the-task anymore given the irresponsible way it conducts its business. And we’re not talking about the government shutdown either, although that circus sideshow certainly lifted a few eyebrows in capitals around the world. Foreign leaders have come to expect these tedious outbursts from the lunatic fringe in Congress. But, the fact is, the government shutdown fiasco had very little effect on the bond market. The benchmark 10-year US Treasury shrugged off congress’s screwball antics with a wave of the hand. No big deal. Not so the talk of “tapering” by the Fed, which sent 10-year yields soaring more than 100 basis points to 3 percent in less that a month. Tapering put the fear of god in everyone. The sudden jolt to mortgage rates was enough to put the kibosh on new and existing homes sales putting a swift end to Bernanke’s dream of reflating the housing bubble. The rising long-term rates threatened to push the economy back into recession and wipe out five years of zero rates and pump priming in the blink of an eye. That’s why China and Co. started to jettison USTs. They figured if the Fed was going to scale back its asset purchases, rates would rise, and they’d be left with a whole shedload of US paper that would be worth less than what they paid for it. So they got out while the gettin’ was good.
So don’t believe the media’s fairytale that Bernanke postponed tapering because the economy still looked weak. That’s nonsense. It was the selloff in USTs that slammed on the brakes. The Fed actually wants to reduce its purchases because there are humongous bubbles emerging in financial assets everywhere. But how to do it without triggering another crash, that’s the question. The Fed has distorted prices across the board, which is why the main stock indices are climbing to new highs every day on the back of an economy that has less people in the workforce than it did 10 years ago. What a joke. And people wonder why foreign lenders are getting nervous?
What China wants from the United States is simple. They want proof that the US hasn’t lost its mind. That’s all. “Just show us that you still know how to fix the economy and run the system.” Is that too much to ask?
Unfortunately, Washington doesn’t think it needs to answer to anyone. We’re Numero Uno, le grand fromage. “What we say goes!”
Okay. But the only thing that’s going is the US’s reputation, it’s economic dominance, it’s behemoth debt market, and its reserve currency status. Not because the world is rebelling, but because the US is imploding. “Stupid” is a disease that has spread to every part of the body politic. The country is run by crackpots who implement counterproductive policies that weaken demand, boost unemployment, shrink growth leave the rest of the world scratching their heads in bewilderment. This is from Bloomberg:
“While government debt was a haven as the U.S. endured the worst recession in seven decades, primary dealers such as Barclays Plc (BARC) and Goldman Sachs Group Inc. say the gains this month show the Fed’s $85 billion of monthly bond purchases are masking the risk of owning fixed-income securities as the recovery in America takes hold.
“Treasuries are just not worth the risk,” Thomas Higgins, the Boston-based global macro strategist at Standish Mellon Asset Management Co., which oversees $167 billion of fixed-income investments, said in a telephone interview on Oct. 23.” (Bloomberg)
Not worth the risk, indeed, which is why the dollar is getting pummeled mercilessly at the same time. This is from Reuters:
“The dollar fell towards a nine-month low against a basket of currencies on Monday, with more investors selling on growing confidence the Federal Reserve will keep policy accommodative….
Most expect the central bank to delay withdrawing stimulus until March 2014…. The longer the Fed keeps policy accommodative, the more U.S. yields stay anchored, making the dollar less attractive to hold.” (Reuters)
So the dollar isn’t looking too hot either, is it, which is why China and Japan have started to reconsider their holdings. This is from Businessweek:
“U.S. government debt has already lost some of its appeal among foreign investors. They were net sellers of Treasuries for five-straight months ended August, disposing of $133 billion in that span, last week’s Treasury data showed.
The streak is the longest since 2001 as China, the largest overseas U.S. creditor, reduced its holdings to $1.268 trillion, the least since February….With the economy recovering from the depths of that recession, Treasuries may be more vulnerable to a selloff this time.” (“Treasuries Risk Shown as Fed Distorts Correlation to Stocks”, Businessweek)
Of course, there’s going to be a selloff. Why wouldn’t there be? And probably a panic too to boot.
Look, it’s simple: If the biggest buyer of US Treasuries (The Fed) signals that its either going to scale back its purchases or reduce its stockpile of USTs, then what’s going to happen?
Well, the supply of USTs will increase which will lower prices on US debt and push up rates. Supply and demand, right?
So, if the other participants in the market (aka China and Japan) think the Fed is about to taper, they’re going to try to sell before other investors race for the exits.
The question is: What’s that going to do to the dollar?
And the answer is: The dollar going to get hammered.
The US gov going to have to borrow at higher rates which could tip the economy back into recession. Also, the US could lose the ”exorbitant privilege” of exchanging colored pieces of paper for valuable goods and services produced by human sweat and toil. Isn’t that what’s really at stake?
Of course, it is. The entire imperial system is balanced on a flimsy piece of worn scrip with a dead president’s face on it. All that could change in the blink of an eye if people lose faith in US stewardship of the system.
But, what exactly would the US have to do for foreign countries to ditch the dollar? Here’s how economist and author Menzie Chinn answered that question in an interview in CounterPunch in 2009:
“If the US administration were to pursue highly irresponsible policies, such as massive deficit spending for many years so as to push output above full employment levels, or if the Fed were to delay too long an ending to quantitative easing, then the dollar could lose its position.” (“Will the Dollar Remain the World’s Reserve Currency in Five Years?” An Interview With Economist Menzie Chinn, Counterpunch)
Funny how Chinn anticipated the problems with winding down QE way back in 2009, isn’t it? His comments sound downright prophetic given Wall Street’s strong reaction.
But we keep hearing that China is stuck with the US and has to keep buying Treasuries or its currency will rise and kill its exports. Is that true or will China eventually split with the dollar?
Menzie Chinn again:
“It is true that each Asian central bank stands to lose considerably, in the value of its current holdings, if dollar sales precipitate a dollar crash. But we agree with Barry Eichengreen that each individual participant will realize that it stands to lose more if it holds pat than if it joins the run, when it comes to that. Thus if the United States is relying on the economic interests of other countries, it cannot count on being bailed out indefinitely.” (Counterpunch)
Well, that sounds a bit worrisome. But maybe China won’t notice that we’re governed by morons who’ve forgotten how to fix the economy or generate demand for their products. Any chance of that?
No chance at all, in fact, China already has already started its transition away from the dollar. Here’s the scoop from former chief economist for Morgan Stanley Asia, Stephen S. Roach:
“China has made a conscious strategic decision to alter its growth strategy. Its 12th Five-Year Plan, enacted in March 2011, lays out a broad framework for a more balanced growth model that relies increasingly on domestic private consumption. These plans are about to be put into action….
Rebalancing is China’s only option…..With rebalancing will come a decline in China’s surplus saving, much slower accumulation of foreign-exchange reserves, and a concomitant reduction in its seemingly voracious demand for dollar-denominated assets. Curtailing purchases of US Treasuries is a perfectly logical outgrowth of this process…..
For China, this is not a power race. It should be seen as more of a conscious strategy to do what is right for China as it confronts its own daunting growth and development imperatives in the coming years.” (“China gets a wake-up call from US”, Stephen S. Roach, Project Syndicate via bangkokpost.com)
In other words, “No hard feelings, Uncle Sam. We just don’t need your fishwrap currency anymore.”
No matter how you cut it, the dollar is going to be facing stiff headwinds in the days ahead. If Roach’s analysis is correct, we can expect a gradual move away from the buck leading to a persistent erosion of US economic and political power.
The end of dollar hegemony means America’s “unipolar moment” may be drawing to a close.
Obama has no one to blame but himself:
He was the one who campaigned, in 2008, on Hope and Change. He was the one who deployed high-flying rhetoric to promise a new day in Washington politics.
He was the one who said he was going elevate the level of discourse and make government transparent. He positioned himself as a new kind of leader. He was the one who turned his candidacy into a religious experience.
He was the one who convinced voters he stood above the fray, as a man and as a symbol, and on that basis they boarded his train and rode it all the way.
He was the one who, inheriting a desperate economy, made his signature move upon gaining office:
Not jobs. Not prosecutions of corporate and banking criminals.
He made devastating choices for all Americans.
He was and is the one who has presided over a sinking economic ship.
Given his proclivity for big and bigger government, he could have launched a serious public program, one which really put people back to work, repairing the infrastructure of the nation. But even this was beyond him.
And getting out of the way and letting Americans expand their small businesses, and supporting them with the same intensity of rhetoric he used to win his election? Out of the question. Not in the playbook. Not for a second.
His big play out of the gate, Obamacare, shocked his closest advisers. They assumed jobs would be his number-one priority. They were dead wrong.
And what about “post-racial” America? That was not only a dud, it was a disaster. Division and polarization are the order of the day.
How about dependence, and government as the solver of all problems, as the beneficent giver? How has that worked out? How can it possibly work out? America is going to become one big Sweden? Really?
It’s one thing for a Clinton or a Bush to lie and skate and divert and play the usual horrific games. But Obama set himself up as a man who was fundamentally different. That was his ace. That was how he won the Presidency. That was what people bought into.
So he falls further, even as his media supporters keep launching blizzards of lies to prop him up.
Many of his loyal followers believe “powerful forces” have fenced Obama in and sabotaged his efforts to work positive transformations. If so, then as a transcendent figure, he should step forward and use his oratorical powers to expose the criminal enterprise that surrounds the Presidency. He should speak directly to the American people and lay it on the line.
Or else he confesses that he is, in fact, another Clinton, another Bush.
The public loves fairy tales and myths, but considering the shape this country is in, that fascination is wearing very thin. It isn’t going to sustain the next three years of Obama in the White House.
The Matrix Revealed
90 million people are out of the work force. 50 million are on food stamps. Recovery? Is the President really going to keep pushing that narrative?
Admitting the truth might, as a long shot, create a platform from which Obama could launch a real campaign to restore jobs…but faking the unemployment crisis has been his chosen path.
The government Obamacare website is a shambles. It doesn’t appear that a simple fix is possible, which means chaos will continue for many months, perhaps longer. Private insurance companies are canceling hundreds of thousands of policies.
The last seven years of American political life have added up to a disaster. Blaming it all on Congressional gridlock, on delaying the ability of the White House to invent trillions more in debt at the drop of a hat, isn’t working.
So many actions and omissions of madness…it leaves us with the reasonable conclusion that Obama’s Presidency was designed from the outset to flame out and fail.
And the principal target was the economy.
The President, fresh off an election victory in 2008, and in that glow, could have used his monumental leverage to put people back to work. He could have hammered on it day and night. He could have rallied support and energized the country.
But now…what do we have? Welfare America to the nth degree. Beyond what anyone thought was possible. And media traitors are backing it.
For decades, for more than a hundred years, power has been in the wrong place.
It belongs with you and with me.
Source: Jon Rappoport
They’re more powerful than standing armies. What they say goes. They decide policy. They rule the world. They do it by controlling money, credit and debt.
They manipulate markets for self-enrichment. Grand theft is official Wall Street policy. Government officials wink, nod, and permit the grandest of grand larceny to persist.
Financial giants recycle their executives in and out of Washington. They strip-mine economies for profit. They buy politicians like toothpaste. Whatever they want they get.
They do it at the expense of government of, by and for everyone equitably and just.
On October 2, 15 financial lords met with Obama. They did so at the White House. They gave him their marching orders.
They came to assert their demands. They’re uncompromising. They’re ruthless. They want business as usual continued. They want more than ever.
They want more bailouts. They want bail-ins. They want personal bank accounts, pensions and other assets looted.
They want more crushing neoliberal harshness. They want America thirdworldized. They want it looking like Greece.
Budget and debt ceiling debates conceal their ugly agenda. What’s ongoing is a longstanding orchestrated swindle. Bipartisan complicity supports it.
Social America is on the chopping block for elimination. Another grand bargain plans it. Expect it once current theatrics end.
The worst of what’s coming could begin in weeks. Harder than ever hard times will follow.
Obama expressed support for deeper Medicare and Social Security cuts. He’s on board for weakened social protections overall.
Partisan warfare is more subterfuge than real. Both parties fundamentally agree. They want New Deal/Great Society policies entirely ended.
Wall Street bosses demand it. They want to feed more aggressively at the public trough than already. They want money gotten used to make more of it.
They want it stolen from ordinary people to make doing so easier. Obama and congressional leaders are their hired hands.
They’re complicit. They’re on board to eliminate “unnecessary” social programs. He want them entirely eliminated. They’re dismantling them incrementally.
Social Security, Medicare, Medicaid and public pensions are prime targets. Planned death is by a thousand cuts. It’s the new normal. It’s by letting Wall Street profiteers control these programs.
So-called “creeping normalcy” is defined as a way to make major changes seem normal and ordinary.
Class war in America has been ongoing for decades. It’s worse now than ever. It benefits business and rich elites. It does so at the expense of most others.
Middle class America is targeted for elimination. Bipartisan complicity plans it. Obama capitulated to Republicans on preserving tax cuts and other benefits for rich elites.
He gave trillions of dollars to Wall Street crooks and other corporate favorites. Profiteers benefit hugely from ongoing imperial wars.
Main Street Depression conditions persist. Bipartisan complicity plans much worse ahead. Militarism, favoritism, waste, fraud and other rewards benefit Wall Street and other special interests.
They do so at the public’s expense. Let ‘em eat cakes defines official policy. Ordinary people are increasingly on their own sink or swim.
Wages no longer keep up with inflation. Benefits steadily erode. High-paying manufacturing and service jobs offshored to low wage countries. Automated production claimed more.
So-called free markets aren’t fair. They work best for those who control them. Growing numbers of others lose out entirely.
Technology driven productivity increasingly pressures workers to toil longer for less pay and fewer benefits.
Marx was right explaining capitalism’s contradictions. They reflect an anarchic, ungovernable system. Today’s monster is far worse than he imagined.
Powerful monopolies and oligopolies control production, commerce and finance. Wall Street and other corporate bosses demand increasing amounts of surplus from pressured workers.
They’re looting America. They’re wrecking it. They’re sucking it dry for profit. Predatory capitalism is too corrupted, malignant and broken to fix.
Institutionalized inequality reflects it. America is more hypocrisy than democracy. It’s a kleptocracy. Criminal gangs pose as political parties. They’re complicit with corporate crooks.
They’re war criminals. They’re serial liars. They’re scoundrels of the worst kind. America’s real crisis isn’t government shutdown, said Paul Craig Roberts.
It’s not the debt ceiling. It’s looting America. It’s wrecking the economy. It’s offshoring good paying jobs. It’s lowering the tax base in the process.
It did so by transferring America’s wealth and overall well-being to China and other low wage countries.
It did it by permanent imperial wars. They inflate annual spending. Larger deficits followed. They’re “too large to be closed,” says Roberts.
Money printing madness sustains things as long a possible. What can’t go on forever, won’t. Dollar debasing doesn’t work. Gold and silver prices reflect it.
Wall Street and Washington rig markets to keep them from going higher. Illegal naked short selling is done to do so.
It constrains prices even when physical demand is increasing. It bears repeating. What can’t go on forever, won’t.
Given irresponsible financial/economic policies, expect eventual gold and silver prices to explode.
Another crisis, says Roberts, “is the absence of intelligence among economists and policymakers.”
Don’t worry, they said. Offshoring jobs doesn’t matter, they claimed. A “New Economy” with better jobs is coming.
Monthly payroll data explain otherwise. High paying/good benefit jobs are disappearing. Low paying/poor or no benefit jobs replace them.
America is being hollowed out in the process. It’s being strip-mined of its material wealth and resources.
It’s being suffocated. It’s being thirdworldized. It’s headed toward dystopian backwater status.
Plans are to force feed greater austerity. It’s to replicate Greece harshness. It’s to make America a ruler – serf society.
It’s to crush trade unionism. It’s to crack down hard on nonbelievers. It’s to make America more than ever unfit to live in.
It’s to create more severe crisis conditions than now. It’s to do so for greater profits and control.
Ending what’s ongoing requires replacing duopoly power with responsible governance. It requires rebuilding the nation’s industrial base.
It’s ending imperial wars. It’s disbanding America’s empire of bases. It’s strengthening social protections too vital to lose.
It’s putting money power back in public hands where it belongs. It’s making the privately owned and controlled Fed really federal. It’s prohibiting banks too big to fail from existing.
It’s ending corporate personhood. It’s replacing kleptocracy with real democracy. It’s running free, fair and open elections. It’s getting money entirely out of politics.
It’s curbing corporate power once and for all. It’s empowering people over money. It’s making crime no longer pay. It’s prosecuting crooks in the suites. It’s protecting human and civil rights.
It’s mandating universal healthcare and public education. It’s reinvigorating organized labor.
It’s reinstating progressive taxes. It’s making everyone pay their fair share. It’s guaranteeing a minimum life sustaining income.
It’s abolishing poverty, unemployment, hunger, homelessness and inequality. It’s ending favoritism. It’s getting rogues, rascals and other miscreants out of government.
It’s substituting truth and full disclosure for managed news misinformation. It’s replacing media scoundrels with responsible ones to do so.
It’s consigning Wall Street and other corporate crooks to the dustbin of history.
It’s establishing government of, by and for everyone. It’s making America what it never was before.
It better happen soon or else. Roberts calls today’s situation dire and “discouraging.”
“At this time,” he says, “collapse seems the most likely forecast.”
Perhaps rebuilding from ruins will change things, he hopes. Perhaps intelligent life exists elsewhere. Perhaps it’s on other planets.
Perhaps it’ll replace what doesn’t exist on earth. Perhaps it’s the only hope for survival. There may be no other way.
Stephen Lendman lives in Chicago. He can be reached at email@example.com.
His new book is titled “Banker Occupation: Waging Financial War on Humanity.”
Visit his blog site at sjlendman.blogspot.com.
For the past several years, America finds itself fragmenting at the seams. We suffer a gridlocked Congress that watches problems grow and grow—but it fails to take action to solve anything. It continues endless wars abroad. It watches our educational systems disintegrate, but does nothing. Endless millions of minorities and the Middle Class cannot secure jobs, but Congress continues to import 100,000 green card holding immigrants every 30 days.
A mind-blowing 47 million Americans subsist on food stamps, but our U.S. Congress continues to offshore jobs, insource jobs and outsource jobs. Those 535 congressional critters do everything in their power to subvert the Middle Class of America.
Across America, illiteracy grows as 7,000 kids quit high school every day of the nine-month school cycle. CBS anchor Scott Pelley said, “Our educational results cannot sustain America.”
In other words, we cannot keep kicking illiterate kids into the job market and hope they can read, write and perform simple math—when they can’t.
We suffer Black-America revolting with marches over Latino-American Zimmerman killing African-American Martin with calls of racism, when, at the same time, 1,300 blacks killed 1,300 blacks from the Martin killing to the trial date. Black on black crime killed 1,299 black kids while blacks protested over one shooting of a Latino killing a black. It never occurs to them that black on black and black on white crime runs 1,000 to 1.
The Main Stream Media censors the phenomenon known as “Black Flash Mobs” where young blacks in cities like Philadelphia, Detroit, Chicago and Minneapolis—run wild in streets beating up white people and looting stores.
Why? Those kids don’t enjoy fathers to mentor them toward responsible adulthood as 68 percent of all black kids in America are raised by single mothers. About 99 percent of them live on welfare and in poverty. (Source: Denver Post, Dottie Lamm) Yet, the Congress sits and knits, picks its nose and yawns and scratches its rear-end, but won’t get off its collective butt to solve the problems.
Our nation faces $16.5 trillion debt, entrenched poverty class, growing illiteracy, accelerating killings, intractable crime, drugs and unemployment.
Yet, it imports 100,000 legal Third World immigrants every 30 days. In 2013, we feature over 40 million people not born in this country. As they continue to bring in their families and birth their babies, whole communities in cities like Chicago, Miami, Houston and LA do not resemble America or speak our language.
Every American sees the mess exploding, but most remain clueless as to its origins.
On a recent radio show where I interview weekly, www.KGAB.com with Dave Chaffin on the “Morning Zone,” a caller asked a poignant question: “Will we ever get back to the America that I knew growing up as a kid?”
First of all, the America of 50 years ago with Norman Rockwell paintings of paper boys throwing papers onto the steps of nicely painted houses with picket fences—will not be seen again. Instead, we see violent mega-cities exploding beyond the sky line with air pollution and gridlock.
Since 1965, we imported 100 million third world immigrants because of Teddy Kennedy’s Immigration Reform Act. That bill continues today as it adds 1.2 million third world people annually.
We contorted America from three major ethnic tribal groups with the same Christian religion to over a dozen tribal groups with aggressive religions like Islam. If the current amnesty bill passes, it will import 1.5 million third world immigrants annually, or, about 125,000 new comers each month. Total: 100 million by 2050.
Where are they coming from? This two-minute video on Bangladesh will stun you, but this will be our end result: http://safeshare.tv/w/vwncRciSFb
That video probably shocked the daylights out of you, but that’s what all of China, India, Bangladesh, Indochina and many other parts of the world face with their population loads. I’ve witnessed it first hand on my world bicycle travels. Worse, they come to America for a better life, but they continue propagating beyond reason.
Back to the question: Can we return America back to the way it was before this mass immigration juggernaut?
If we don’t reduce all immigration to less than 100,000 annually, instead of 100,000 monthly—we will never, ever return to what it meant to be an unhyphenated American. We will never enjoy religious civility as the Muslims grow their numbers and aggressively push for Sharia Law within America. We will never again enjoy a flourishing Middle Class. We will never again enjoy clean air and plenty of water.
We will not enjoy a single language or culture. We will never again enjoy unlimited freedom as we compact ourselves into cities and begin to resemble China, India and even Bangladesh before this century expires.
What to do? How to take action?
1. Do everything in your power to stop S744 amnesty bill. Call, write, visit your Senators and House reps. Write letters to the editor, call your radio shows and push the issue to stop mass immigration.
2. Join every organization you see on my website: www.frostywooldridge.com in order to make collective impact to stop passage of S744.
3. Vote out any senator or congressman that thinks importing the entire third world or the projected 100 million new immigrants to this country within 37 years.
4. Call or email Charlie Rose CharlieRose@pbs.org and ask him to interview top environmental/population experts as to our future if we allow another 100 million people to be imported via mass immigration. Write Matt Lauer, Katie Couric, Diane Sawyer, 60 Minutes, Dateline, Primetime, and ask them to interview top speakers as to our survival prospects of an America that grew from 316 million to 625 million people within this century.
5. Join www.CapsWeb.org, www.NumbersUSA.org, www.FairUS.org, www.alipacus.com in order to join over 1.5 million Americans of all persuasions who collectively possess the power to stop mass immigration into America and work toward a viable and sustainable future for our civilization. It’s free and powerful because you can send in pre-written faxes to your reps to enlighten them as to the consequences of a mass amnesty and jumping legal immigration to two million annually. You will become part of an armada of parents, grandparents, citizens and more to change course toward a positive future.
6. Send me your thoughts on more ideas I can share with Americans in order to regain or at least not lose any more of America than we have already.
Angela Merkel is not a charismatic leader. She lacks Margaret Thatcher’s zeal, Benazir Bhutto’s looks (Berlusconi once commented on her lack of feminine charms in his inimitably discourteous manner), or Indira Gandhi’s carefully cultivated caring touch. She wears one of her dull jackets with dark trousers every day. When asked about her biggest youthful mistake, she recalled the day she climbed a tree and ruined a new tracksuit. She is buzz-free and speaks like a Gymnasium chemistry teacher. She looks like a Hausfrau next door and seems comfortable about it.
The Germans like her just the way she is: matter-of-fact, pragmatic and reliable, promoting consensus over conflict. The ruling center-right Christian Democratic Union, CDU (together with its Bavarian partner, CSU) took 42 percent of the vote at the general election last Sunday, the party’s best showing since Konrad Adenauer’s heyday in 1957. Such strong showing was largely due to Merkel’s personal appeal to the voters. That is good news for the Federal Republic and for her neighbors: the Chancellor’s popularity indicates that Germans are permanently weary of charismatic leaders with a talent for public speaking. Former Chancellor Helmut Schmidt once said that any politician who says he has a “vision” should see a doctor.
The irony of Merkel’s success is that she has fallen just short of the simple majority, and the likely new coalition will be far less to her liking than the old one. The FDP, her pro-business, socially liberal coalition partners, have suffered a debacle, dropping from 14 percent of the vote in 2009 to under 5 percent now. This means the party will not be represented in the Bundestag for the first time since its founding shortly after World War II, and therefore it will not be able to play its traditional role of the ruling party’s junior partner. Its destiny was sealed by Merkel’s failure to call on CDU/CSU supporters to “donate” their second vote to the FDP (Germans get one vote for an individual parliamentary seat and a second that goes to the national list)—which she probably regrets now.
Theoretically three parties of the left will have a majority, but neither the SPD nor the environmentalist Greens want to join forces with the smallest of the four parties represented in the new Bundestag, the Left (Die Linke); the successors to the East German ruling SED have also ruled out that possibility.
The Social Democrats (SPD) have also done poorly—at just over 27 percent they have barely improved their dismal 2009 score—but they will exact a steep price for agreeing to join another grand coalition led by Merkel. They did so in 2005, and were punished for that by their voters four years later. A party spokesperson said that “the SPD is not waiting in line or competing for this, after Frau Merkel ruined her previous coalition partner.” The SPD will insist on raising tax rates on incomes above 100,000 euros to 49 from 42 percent and on introducing a nationwide minimum wage of 8.50 euros per hour, a key plank of their campaign platform. It is an even bet that the SPD will get at least two key ministries, finance and foreign affairs, when the negotiations are over.
The FDP’s undoing was partly due to the rise of the Euroskeptic Alternative for Germany (AfD), which came one-tenth of one percent short of the 5% parliamentary threshold. Founded only seven months ago, the party advocates dumping the euro, reinstating the Deutschmark, and leaving the Club Med to the tender mercies of the global marketplace. The new party attracted a disproportionate share of FDP votes.
That the AfD did not do even better is due to the fact that most Germans understand (although few will say so openly) that the euro experiment has been very good for Germany. Its economic ascendancy over Europe is beyond challenge. In the old days less efficient economies could devalue their currencies, or manipulate interest rates, or both, to stay competitive. Locked into the German-dominated European Central Bank shackles, they are now permanently dependent on Merkel’s grudging willingness to bail them out when absolutely necessary, while lecturing them on the need to further tighten their belts. Referring to Germany’s ability to keep its unit labor costs low and maintain competitiveness, Merkel said “What we have done, everyone else can do.” This is not so. The southern eurozone countries are now permanently vulnerable to Germany’s domination of their domestic markets for industrial products and permanently unable to kick-start growth by stimulating aggregate demand.
Most Germans agree with Merkel, however, and don’t care that Greece’s economy has shrunk by 25 percent in recent years, that Italy has not grown in a decade, or that Spain’s youth unemployment exceeds 50 percent. It would be in Germany’s interest to rethink the single-minded austerity regime imposed on the southern eurozone for two reasons. Continuing slump would reduce the demand for German goods, and it may enhance anti-EU and anti-German sentiment which would be detrimental to the long-term maintenance of political status quo. Merkel’spax Germanica demands more subtle fine-tuning of the edifice. The Social Democrats understand that much, which may produce another irony of the election result: by making Germany marginally more flexible, the new grand coalition may enhance its open-ended dominance of the Old Continent.
Damascus — Few, one imagines, in the Syrian Arab Republic these days question the urgency and enormity of the task of reconstruction of their ancient country from war inflicted destruction caused by a carnage already more than half as long as World War I and approaching half as long as World War II.
For this ten millennium civilization and its thousands of priceless treasures, many partially destroyed, emergency efforts are needed today to preserve and protect the structures from thieves and war damage. Not many here would disagree with this priority of the Syrian government.
Historic sites damages or in danger include several among those listed on the UNESCO’s World Heritage List registry including the Ancient City of Aleppo (1986), Ancient City of Bosra (1980), Ancient City of Damascus(1979), Ancient Villages of Northern Syria (2011), Crac des Chevaliers and Qal’at Salah El-Din (2006) and the Site of Palmyra (1980). Centuries-old markets and archaeological treasures have already been gutted by flames and gunfire in places like Aleppo and Homs.
Examining and discussing in Syria and Lebanon, some of the assessments of damage now being painstakingly documented, as well as pursuing some summaries of the data and analysis from on-the-scene government investigators, it is clear that plans for reconstruction at the earliest possible opportunity are being readied. Taking the lead, and poised to help, is the Syrian population as well as officials exhibiting pent up kinesis waiting to be released at the first sign of a credible cease fire so as to begin to rebuild their country.
Reconstruction of Syria will be aided by three regime reshuffles since the beginning of the March 2011 uprising, which has infused much ‘new blood’ into the Syrian government. This process includes more than 20 changes at the ministerial level in recent months, in some cases replacing well entrenched and influential, if slightly fossilized, political operatives with overboard government roles from decades past. The bold reformist initiative is designed to reshuffle the corridors of power and have one claimed goal: To push and achieve reform.
More than a few officials have advised this observer of their deep convictions and their commitments for reforms which they note are spreading inside as well as outside government. “God knows we made serious mistakes and misjudgments and we will be judged by God for our failures. But in the meantime we need to reform for our people, families and for our own self-respect. And we are constructing massive reforms here in Syria which are not yet apparent but that will surprise many and please more. We are Syrians! We know what is right and that changes and reforms are overdue and what our duty is!”
Last month’s most recent infusion of 7 Minsters, known for their competence not political pedigree, include several ‘independents’ intended, according to one adviser to Syria’s President Assad, to bring much needed new blood and energy to the leadership. Their mandate is to face the current challenges straight on while eschewing entangling perceived political obligations from the past. These ‘best and the brightest’ are being empowered here to help rebuild Syria, it was explained to this observer by two university professors as being a government priority but without the American best and brightest noblesse oblige arrogance and fascist tendencies of the Bundy brothers and McNamara’s ‘whiz kids’ from the 1960’s.
The most recent changes have included bringing in the following gentlemen (why no women!) who are known for their competence rather than simply as stalwarts of the ruling Baath party.
Qadri Jamil: Deputy Prime Minister for Economic Affairs
- Malek Ali: Minister of Higher Education
- Khodr Orfali: Minister of Economy and Foreign Trade
- Kamal Eddin Tu’ma: Minister of Industry
- Samir Izzat Qadi Amin: Minister of Internal Trade and Consumer Protection
- Bishr Riyad Yazigi: Minister of Tourism
- Hassib Elias Shammas: Minister of State, replacing Najm Eddin Khreit.
One of the “new breed” of Syrian public servants is Bishr Riyad Yazigi, a non-Baathist, independent Member of Parliament, who appears beholden only to his vision of restoring Syria and its vital tourism industry, as part of rebuilding his country, and for which he was appointed Minister on 8/22/13.
Minister Yazigi, who I first met up on Mount Quisoun several weeks ago, is distinctively Kennedyesque in his good looks, charm, vigor, progressive ideas and charisma.
A businessman, born in Aleppo in 1972, is currently the youngest member of the Assad Cabinet, land like others, is not a Baath Party member. He holds a Bachelor’s degree in Informatics Engineering from Aleppo University (1995) and is an independent member of the People’s Assembly (Syrian Parliament) for Aleppo city. He is married and has three children.
Yazigi is reputed to spend these days often working around the clock to rebuild Syria’s tourist industry. “Not just to help our economy, even though tourism brought in more than $8 billion annually before the crisis two and one half years ago,” one official who admires Yazigi explained, “But the Tourism Ministry is working to reconnect to the World the way we Syrians used to reach out. Syria’s treasures, from the cradle of civilization that we are, fundamentally belong to all of humanity and please accept our promise that we will do our best to repair all damage to the antiquities and will welcome every assistance as we shall welcome every visitor again before long, enshallah (God willing).”
Earlier this month, Minister Yaziqui stressed to a gathering of “Loyalty to Syria” members anxious to start rebuilding their country, the importance of NGO’s in revealing the reality of events in Syria to global public opinion and pledged to work with them to present the image of Syria as a tourist destination given its richness with historical and religious monuments. Meeting members of “Loyalty to Syria” Initiative, he pointed out that the Tourism Ministry is working to show the image of Syria as a tourist destination of unparalleled richness of historical and religious monuments and that all Syrian must redouble their efforts to achieve their goals of “boosting the social values and developing national capacity to serve the best interest of Syria.”
The Syrian reformers tasks are daunting. Yet so were those, admittedly on a smaller scale, that faced Lebanon following 33 days of near carpeting bombing by the Israeli government employing, as they have done for more than three decades, a vast array of American weapons gifted by American taxpayers with neither their knowledge, consent nor opportunity to object.
The cost of rebuilding Syria is perhaps incalculable. The Syrian government announced this week that it has earmarked 50 billion Syrian pounds ($250 million) for reconstruction next year in the war-torn country. For 2013, the figure was 300 billion Syrian pounds. ($ 1.2 billion).
But these sums are a drop in the bucket.
According to Syrian real estate experts, including Ammar Yussef, if the war in Syria suddenly stopped and reconstruction began today, around $73 billion would be needed to put the country back on track. Yussef, insists that the bombings, fighting and sabotage of infrastructure during the conflict has as of August 30, 2013, partially or completely destroyed 1.5 million dwellings. If the rebuilding were to start today, led by the new ‘reform team’ it would include rebuilding more than 11,000 sites, some being full blocks, requiring 15,000 trucks, 10,000 cement mixers and more than six million skilled workers.
A U.S.-educated economist, Abdullah al-Dardari, now working with Beirut-based UN development agency, claims that more than two years of fighting have cost Syria at least $60 billion and caused the vital oil industry to crumble. A quarter of all homes have been destroyed or severely damaged, and much of the medical system is in ruins.
Al Dardari’s team estimates the overall damage to Syria’s economy, three years into the conflict, at $60-$80 billion. Syria’s economy has shrunk by about 35 percent, compared to the 6 percent annual growth Syria marked in the five years before the conflict began in March 2011. The economy has lost nearly 40 percent of its GDP, and foreign reserves have been extensively depleted. As noted above, unemployment has shot up from 500,000 before the crisis to at least 2.5 million this year. The fighting has destroyed or damaged 1.2 million homes nationwide, a quarter of all Syrian houses, al-Dardari claims. In addition, around 3,000 schools and 2,000 factories have been destroyed, and almost half of the medical system — including hospitals and health centers — is in ruins. Before the uprising, the oil sector was a pillar of Syria’s economy, with the country producing about 380,000 barrels a day and exports — mostly to Europe — bringing in more than $3 billion in 2010. But the vital industry has buckled as rebels captured many of the country’s oil fields, setting wells aflame and looters scooping up crude. Exports have ground practically to a standstill as production has dwindled.
Syria does have vital labor resource to perform high quality reconstruction and her workers are ready to begin today given that the current unemployment in Syria noted above, according to this observers’ interlocutors at the Ministry of Economic Affairs and Industry. Syrian workers are perhaps the best and most reliable in the world. Well known for building and maintaining Lebanon and the Levant, even though currently paid one half to one third what less productive nationals receive.
Despite the enormous challenges, there appears some light on the horizon if those governments involving themselves in the Syria crisis and wringing their hands at the toll of human misery and destruction, will achieve a permanent ceasefire during the current thaw in serious communications.
The new generation of officials entrusted with Syria’s salvation and reconstruction appear to be in place and are anxious to be allowed into the war zones. The politician’s duties are to open their paths without further delays.
The Federal Reserve presently lends money at a lower rate than anytime in history. In fact, the rate at which the Fed lends money is more than a full percentage point below the current rate of inflation. That means the Fed is subsidizing borrowing. Naturally, zero rates create price distortions which are greatly amplified by the Fed’s asset purchase program called Quantitative Easing. During its three rounds of QE, the Fed has ballooned its balance sheet by more than $2.8 trillion inflating the prices of financial assets across-the-board while establishing itself as the world’s biggest buyer of US Treasuries, the benchmark asset class upon which every financial asset in the world is priced. Those prices are now grossly distorted due to the Fed’s presence in the market. (Note: Fed chairman Ben Bernanke set the Federal funds rate in the range of zero to 0.25% in December, 2008 and has kept it there ever since. The policy is called zero-interest-rate-policy or ZIRP.)
When rates are cut to zero, it means that the demand for credit is weak. If the economy was growing at a faster clip, then the demand for funds would increase and the Fed would raise rates so they were closer to their normal range. But the Crash of ’08 triggered deflationary pressures (particularly massive deleveraging by homeowners who saw their home equity go up in smoke during the downturn) unlike anything experienced since the Great Depression. For the Fed to adequately address the sharp drop in demand, it would have had to set its target Fed funds rate at minus 6 percent which is impossible since the Fed cannot set rates below zero. (This is called ZLB or zero lower bound problem.) Thus, the Fed has implemented other strategies which are supposed to achieve the same thing.
Bernanke’s asset purchase program, QE, is an attempt to push rates below zero by reducing the supply of risk-free assets. By loading up on US Treasuries (USTs) and agency mortgage-backed securities (MBS), the Fed tries to lure investors into stocks and bonds hoping to push prices higher. Higher prices create the so called “wealth effect” which paves the way for more consumption and investment. Hence, soaring stock prices create a virtuous circle which boosts demand and jump-starts the flagging economy. That’s the theory, at least. In practice, it doesn’t work so well. Five years after the policies were first implemented, the economy is still sluggish and underperforming (GDP is below 2 percent for the last 12 months), the output gap is still roughly $1 trillion per year, and unemployment is still sky-high. (Unemployment would be 14 percent if the people who have dropped off the unemployment rolls and who are no longer actively looking for work were counted.) For all practical purposes, ZIRP and QE have been a bust .
The traditional antidote for a “liquidity trap” (that is, when normal monetary policy doesn’t work because rates are already at zero) is fiscal stimulus. In other words, when monetary policy can’t gain traction because consumers and businesses refuse to borrow, then the government must use its balance sheet to keep the economy growing. That means widening the budget deficits and spending like crazy to increase demand until consumers and businesses are in a position to resume their spending. Bernanke’s monetary policy is the polar opposite of this time-tested remedy. The Fed’s policy provides zero-cost reserves to poorly run zombie banks who refuse to pass on the savings to their customers via credit cards or mortgage rates. If the Fed was serious about expanding credit and strengthening growth, it would require the banks to cut their credit card rates and mortgage rates so that consumers benefit equally from the Fed’s cheap money. (In other words, if the Feds funds rate dropped from 6% to 0% then credit card rates should be slashed from 18% to 12%. That would stimulate more consumer spending.) But the Fed has made no demands on the banks. Instead, all of the gains from the wider spreads have gone to the banks, which is why ZIRP and QE have had virtually no impact on lending at all.
The main beneficiary of the Fed’s policies has been the investor class. While low rates have helped households reduce their debtload more easily, low interest lending coupled with the ocean of liquidity provided via QE has triggered a long-term stock market rally that has increased equities funds inflows to new records, boosted margin debt to precrisis levels, quadrupled stock buybacks from their 2008 lows, buoyed covenant-lite loan sales to $188.7 billion (“far surpassing the record of 2007″), and sent all three major indices to new highs. Unable to find profitable outlets for investment in the real economy, investors have taken their lead from hedge fund manager Ben Bernanke, snatching up stocks and bonds in a ravenous, yield-crazed flurry of speculation. Indeed, they have done quite well too, raking in sizable profits even while the real economy is still flat on its back. The bottom line: All the gains from ZIRP and QE have gone to Wall Street with precious little trickling down to the workerbees.
After 5 years of monetary policy that has failed to produce a strong, sustainable recovery, reasonable people have begun to wonder if Bernanke’s real objectives are different than those in his official pronouncements. After all, the Dow Jones and S & P 500 have more than doubled in the last 4 years, corporate earnings just hit an all-time high of $2.1 trillion, the banks announced record profits of $42 billion in Q2, and–according to a new study by Emmanuel Saez, an economics professor at UC Berkeley— the top 10% of earners in the US captured 50.4% of total income in 2012, a level higher than any other year since 1917.” (LA Times) Meanwhile, 47 million people are scraping by on food stamps, labor’s share of productivity gains have never been smaller, median household income has plummeted by 7.3 percent since the end of the recession, (Sentier Research), and 46.5 million Americans now live in poverty. (US Census Bureau). Inequality– which is already at levels not seen since the Gilded Age–continues to widen at an accelerating pace while the battered and rudderless economy drifts from one crisis to another.
To pretend that the objectives of ZIRP and QE are different than the results they’ve produced (ie–greater concentration of wealth and political power, and the crushing of the middle class) is laughable given the fact that they’ve been in place for more than 5 years without any significant change. This suggests that the Fed’s policies are doing what they were designed to do, shift more wealth upwards to the uber-rich while political leaders dismantle vital safteynet programs which protect ordinary working people from the ravages of unregulated capitalism. The Central Bank and the political establishment in Washington are working hand-in-hand to restructure the economy along the same lines as they would any third world banana republic. And that’s the real goal of the current policy.