Will Falling Oil Prices Crash The Markets?

Shale Leads The Way…

Crude oil prices dipped lower on Wednesday pushing down yields on US Treasuries and sending stocks down sharply. The 30-year UST slipped to a Depression era 2.83 percent while all three major US indices plunged into the red. The Dow Jones Industrial Average (DJIA) led the retreat losing a hefty 268 points before the session ended. The proximate cause of Wednesday’s bloodbath was news that OPEC had reduced its estimate of how much oil it would need to produce in 2015 to meet weakening global demand. According to USA Today:

“OPEC lowered its projection for 2015 production to 28.9 million barrels a day, or about 300,000 fewer than previously forecast, and a 12-year low…. That’s about 1.15 million barrels a day less than the cartel pumped last month, when OPEC left unchanged its 30 million barrel daily production quota…

The steep decline in crude price raises fears that small exploration and production companies could go out of business if the prices fall too low. And that, in turn, could cause turmoil among those who are lending to them: Junk-bond purchasers and smaller banks.” (USA Today)

Lower oil prices do not necessarily boost consumption or strengthen growth. Quite the contrary. Weaker demand is a sign that deflationary pressures are building and stagnation is becoming more entrenched. Also, the 42 percent price-drop in benchmark U.S. crude since its peak in June, is pushing highly-leveraged energy companies closer to the brink. If these companies cannot roll over their debts, (due to the lower prices) then many will default which will negatively impact the broader market. Here’s a brief summary from analyst Wolf Richter:

“The price of oil has plunged …and junk bonds in the US energy sector are getting hammered, after a phenomenal boom that peaked this year. Energy companies sold $50 billion in junk bonds through October, 14% of all junk bonds issued! But junk-rated energy companies trying to raise new money to service old debt or to fund costly fracking or off-shore drilling operations are suddenly hitting resistance.

And the erstwhile booming leveraged loans, the ugly sisters of junk bonds, are causing the Fed to have conniptions. Even Fed Chair Yellen singled them out because they involve banks and represent risks to the financial system. Regulators are investigating them and are trying to curtail them through “macroprudential” means, such as cracking down on banks, rather than through monetary means, such as raising rates. And what the Fed has been worrying about is already happening in the energy sector: leveraged loans are getting mauled. And it’s just the beginning…

“If oil can stabilize, the scope for contagion is limited,” Edward Marrinan, macro credit strategist at RBS Securities, told Bloomberg. “But if we see a further fall in prices, there will have to be a reaction in the broader market as problems will spill out and more segments of the high-yield space will feel the pain.”…Unless a miracle happens that will goose the price of oil pronto, there will be defaults, and they will reverberate beyond the oil patch.” (Oil and Gas Bloodbath Spreads to Junk Bonds, Leveraged Loans. Defaults Next, Wolf Ricter, Wolf Street)

The Fed’s low rates and QE pushed down yields on corporate debt as investors gorged on junk thinking the Fed “had their back”. That made it easier for fly-by-night energy companies to borrow tons of money at historic low rates even though their business model might have been pretty shaky. Now that oil is cratering, investors are getting skittish which has pushed up rates making it harder for companies to refinance their debtload. That means a number of these companies going to go bust, which will create losses for the investors and pension funds that bought their debt in the form of financially-engineered products. The question is, is there enough of this financially-engineered gunk piled up on bank balance sheets to start the dominoes tumbling through the system like they did in 2008?

That question was partially answered on Wednesday following OPEC’s dismal forecast which roiled stocks and send yields on risk-free US Treasuries into a nosedive. Investors ditched their stocks in a mad dash for the exits thinking that the worst is yet to come. USTs provide a haven for nervous investors looking for a safe place to hunker down while the storm passes.

Economist Jack Rasmus has an excellent piece at Counterpunch which explains why investors are so jittery. Here’s a clip from his article titled “The Economic Consequences of Global Oil Deflation”:

“Oil deflation may lead to widespread bankruptcies and defaults for various non-financial companies, which will in turn precipitate financial instability events in banks tied to those companies. The collapse of financial assets associated with oil could also have a further ‘chain effect’ on other forms of financial assets, thus spreading the financial instability to other credit markets.” (The Economic Consequences of Global Oil Deflation, Jack Rasmus, CounterPunch)

Falling oil prices typically drag other commodities prices down with them. This, in turn, hurts emerging markets that depend heavily on the sale of raw materials. Already these fragile economies are showing signs of stress from rising inflation and capital flight. In a country like Japan, however, one might think the effect would be positive since the lower yen has made imported oil more expensive. But that’s not the case. Falling oil prices increase deflationary pressures forcing the Bank of Japan to implement more extreme measures to reverse the trend and try to stimulate growth. What new and destabilizing policy will Japan’s Central Bank employ in its effort to dig its way out of recession? And the same question can be asked of Europe too, which has already endured three bouts of recession in the last five years. Here’s Rasmus again on oil deflation and global financial instability:

“Oil is not only a physical commodity bought, sold and traded on global markets; it has also become an important financial asset since the USA and the world began liberalized trading of oil commodity futures…

Just as declines in oil spills over to declines of other physical commodities…price deflation can also ‘spill over’ to other financial assets, causing their decline as well, in a ‘chain like’ effect.

That chain like effect is not dissimilar to what happened with the housing crash in 2006-08. At that time the deep contraction in the global housing sector ( a physical asset) not only ‘spilled over’ to other sectors of the real economy, but to mortgage bonds…and derivatives based upon those bonds, also crashed. The effect was to ‘spill over’ to other forms of financial assets that set off a chain reaction of financial asset deflation.

The same ‘financial asset chain effect’ could arise if oil prices continued to decline below USD$60 a barrel. That would represent a nearly 50 percent deflation in oil prices that could potentially set in motion a more generalized global financial instability event, possibly associated with a collapse of the corporate junk bond market in the USA that has fueled much of USA shale production.” (CounterPunch)

This is precisely the scenario we think will unfold in the months ahead. What Rasmus is talking about is “contagion”, the lethal spill-over from one asset class to another due to deteriorating conditions in the financial markets and too much leverage. When debts can no longer be serviced, defaults follow sucking liquidity from the system which leads to a sudden (and excruciating) repricing event. Rasmus believes that a sharp cutback in Shale gas and oil production could ignite a crash in junk bonds that will pave the way for more bank closures. Here’s what he says:

“The shake out in Shale that is coming will not occur smoothly. It will mean widespread business defaults in the sector. And since much of the drilling has been financed with risky high yield corporate ‘junk’ bonds, the shale shake out could translate into a financial crash of the US corporate junk bond market, which is now very over-extended, leading to regional bank busts in turn.” (CP)

The financial markets are a big bubble just waiting to burst. If Shale doesn’t do the trick, then something else will. It’s just a matter of time.

Rasmus also believes that the current oil-glut is politically motivated. Washington’s powerbrokers persuaded the Saudis to flood the market with petroleum to push down prices and crush oil-dependent Moscow. The US wants a weak and divided Russia that will comply with US plans to increase its military bases in Central Asia and allow NATO to be deployed to its western borders. Here’s Rasmus again:

“Saudi Arabia and its neocon friends in the USA are targeting both Iran and Russia with their new policy of driving down the price of oil. The impact of oil deflation is already severely affecting the Russian and Iranian economies. In other words, this policy of promoting global oil price deflation finds favor with significant political interests in the USA, who want to generate a deeper disruption of Russian and Iranian economies for reasons of global political objectives. It will not be the first time that oil is used as a global political weapon, nor the last.” (CP)

Washington’s strategy is seriously risky. There’s a good chance the plan could backfire and send stocks into freefall wiping out trillions in a flash. Then all the Fed’s work would amount to nothing.

Karma’s a bitch.

Subprime Loans And Auto Sales: Debt On Wheels

“It’s not the underlying economics that’s driving things, it’s central bank liquidity.”

— Matt King, Citigroup

Soaring auto sales are not so much a sign of a strong economy as they are an indication of financial hanky-panky. We saw this same type of fakery play out in housing between 2004 – 2006, when prices went through the roof due to a mortgage-lending scam (“subprime”) that crashed the stock market and sent the economy reeling. Now the bigtime money guys are at it again, writing up auto loans for anyone who can sit upright in a chair and scribble an “X” on the dotted line. As a result, car sales have surged to over 16 million for the last 6 months. (A full 7 million more than the low point in January, 2009.)   And it’s not hard to see why either. The finance gurus are packaging these sketchy subprimes into bonds, offloading them on eager investors, and recycling the profits into more crappy loans. It’s a perfect circle and it won’t end until the loans start blowing up, jittery investors head for the exits,  and Uncle Sugar rides to the rescue with more bailouts.

But we’re getting ahead of ourselves.  First take a look at these charts by House of Debt which shows the disparity between auto spending and other types of spending since the end of the slump in 2009.

House of Debt:  “New auto purchases have driven the consumer spending recovery to a large degree. The chart below shows the spending recovery for new auto sales and for all other retail spending…

From 2009 to 2013, spending on new autos increased by 40% in nominal terms. All other spending increased by only 20%. Further, excluding autos, 2013 saw lower growth in nominal retail spending than 2012…

The concern is that a lot of auto purchases are being fueled with debt, given a strong recovery in the auto loan market. Below is the net flow of auto loans from 2002 to 2013. It is a net flow because it includes pay downs in addition to new originations. As it shows, auto lending in 2012 and 2013 tops any other year during the previous expansion from 2002 to 2007 (although it is still below the amount of new auto loans in 2000 and 2001).

(“Another Debt-Fueled Spending Spree?” House of Debt) 

How about that? So there’s a bigger debt bubble in auto loans today than there was before the bust. But why? Is it because demand is strong,  jobs are plentiful, wages are rising, the economy is growing, and people are optimistic about the future?

Heck, no. It’s because rates are low, credit is easy, and dealers are ready to put anyone with a license and a heartbeat into a brand-spanking new car no questions asked.  Here are the details from an article in the New York Times titled “In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates” by Jessica Silver-Greenberg and Michael Corkery:

”Auto loans to people with tarnished credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered subprime — people with credit scores at or below 640.

The explosive growth is being driven by some of the same dynamics that were at work in subprime mortgages. A wave of money is pouring into subprime autos, as the high rates and steady profits of the loans attract investors. Just as Wall Street stoked the boom in mortgages, some of the nation’s biggest banks and private equity firms are feeding the growth in subprime auto loans by investing in lenders and making money available for loans.

And, like subprime mortgages before the financial crisis, many subprime auto loans are bundled into complex bonds and sold as securities by banks to insurance companies, mutual funds and public pension funds — a process that creates ever-greater demand for loans.

The New York Times examined more than 100 bankruptcy court cases, dozens of civil lawsuits against lenders and hundreds of loan documents and found that subprime auto loans can come with interest rates that can exceed 23 percent. The loans were typically at least twice the size of the value of the used cars purchased, including dozens of battered vehicles with mechanical defects hidden from borrowers. Such loans can thrust already vulnerable borrowers further into debt, even propelling some into bankruptcy, according to the court records, as well as interviews with borrowers and lawyers in 19 states.

In another echo of the mortgage boom, The Times investigation also found dozens of loans that included incorrect information about borrowers’ income and employment, leading people who had lost their jobs, were in bankruptcy or were living on Social Security to qualify for loans that they could never afford.” (“In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates”, New York Times)

Can you believe that this kind of chicanery is going on in broad daylight without the regulators stepping in? Think about it for a minute: If the NYT’s journalists can find “dozens of loans that included incorrect information about borrowers’ income and employment”, then why can’t the government regulators? It’s ridiculous. What we’re talking about here is a new version of “liar’s loans” where dealers are helping people who don’t have the means to repay the debt, to fudge the details on their loan application so they can drive off in a shiny new Impala.

Haven’t we seen this movie before?

Here’s more from USA Today: “In the first quarter of 2014, 24.9% of all new-car loans were 73 to 84 months long. Four years ago, less than 10% of loans were that long. In fact, such lengthy terms have pulled the average new-car loan to 66 months. That’s an all-time record.”

7 years to pay off a car?  You got to be kidding me? It’s like a second mortgage. And there’s more, too. The average monthly payment and average amount financed hit record highs in the first quarter too. This is from Auto News:

“The average monthly new-vehicle payment was $474 in the first quarter, up 3.3 percent from a year ago. The average monthly used-vehicle payment was $352, up 1.1 percent, Experian Automotive said.

Also in the first quarter, the average amount financed on a new-vehicle loan was $27,612, an increase of $964, or 3.6 percent. For used vehicles, the average amount financed was $17,927, up $395 or 2.3 percent.”

(“Auto loan terms, monthly payments hit high in Q1, Experian says“, Auto News)

So Americans are not just loading on more debt, they’re also assuming that they’re financial situation is going to be stable enough to make these large payments well into the future.  Good luck with that.

It’s also worth noting that, in many transactions, dealers are actually lending more than the value of the vehicle. According to Reuters David Henry,

“The average loan-to-value on new cars rose to 110.6 percent… On used cars it rose to 133.2 percent…

Auto lenders often provide loans that exceed the value of cars they are financing because borrowers want cash to pay sales taxes and fees.”

(“U.S. car buyers borrow more as rates fall and standards loosen“, David Henry, Reuters)

Let me see if I got this straight: You walk onto a car lot without a dime in your pocket, and drive off in a brand new car with everything paid for upfront? Such a deal! Can you see why we think that the sales numbers are a big fake?  This isn’t the sign of a strong economy. It’s the sign of another gigantic credit bubble rip-off. But what do the dealers get out of this thing? Is it really worth their while to botch the underwriting when they know that eventually they’ll have to repossess the vehicle? Sure, it is, because there’s big money in stuffing people into loans they can’t afford.

Here’s how the Times explains it: ”Auto loans to borrowers considered subprime, those with credit scores at or below 640, have spiked in the last five years. The jump has been driven in large part by the demand among investors for securities backed by the loans, which offer high returns at a time of low interest rates. Roughly 25 percent of all new auto loans made last year were subprime, and the volume of subprime auto loans reached more than $145 billion in the first three months of this year.”

Bingo. So not only do they make dough on the high interest rates they charge their subprime borrowers, (Sometimes 23 percent or more.) they also make it by selling the loan to investors who are eager to buy any manner of crappy bond provided it offers a better return than US Treasuries. This is the mess Bernanke created by fixing interest rates at zero for nearly 6 years.  Zirp (zero interest rate policy) unavoidably leads to excessive risk taking by yield-crazed speculators.    The voracious appetite for subprime securities (ABS–Asset-Backed Securities) has even surprised the bond issuers who are constantly beating the bushes looking for sketchier products.  This is from the same article by the NY Times:

“Investors, seeking a higher return when interest rates are low, recently flocked to buy a bond issue from Prestige Financial Services of Utah. Orders to invest in the $390 million debt deal were four times greater than the amount of available securities.

What is backing many of these securities? Auto loans made to people who have been in bankruptcy.

An affiliate of the Larry H. Miller Group of Companies, Prestige specializes in making the loans to people in bankruptcy, packaging them into securities and then selling them to investors.

“It’s been a hot space,” Richard L. Hyde, the firm’s chief operating officer, said during an interview in March. Investors are betting on risky borrowers. The average interest rate on loans bundled into Prestige’s latest offering, for example, is 18.6 percent, up slightly from a similar offering rolled out a year earlier…. To meet that rising demand, Wall Street snatches up more and more loans to package into the complex investments.” (NYT)

HA! Now there’s a good way to feather the old retirement fund; load up on bonds made up of loans to people who’ve gone bust.

This is the impact that zero rates have on investor behavior. The abundance of cheap and plentiful liquidity invariably leads to trouble. And there are victims in this Central Bank-authored gold rush too, namely the unsophisticated borrowers who pay prohibitively high rates on beater vehicles that are typically worth less-than-half the value of the loan. (Check the NYT article for examples.)

The Times also notes that the ratings agencies have been playing along with the finance companies just as they did during the subprime mortgage fiasco. Here’s more from the Times:

“Rating agencies, which assess the quality of the bonds, are helping fuel the boom. They are giving many of these securities top ratings, which clears the way for major investors, from pension funds to employee retirement accounts, to buy the bonds. In March, for example, Standard & Poor’s blessed most of Prestige’s bond with a triple-A rating. Slices of a similar bond that Prestige sold last year also fetched the highest rating from S.&P. A large slice of that bond is held in mutual funds managed by BlackRock, one of the world’s largest money managers.” (NYT)

Ask yourself this, dear reader: How are the ratings agencies able to give “many of these securities top ratings”, when the investigators from the Times found “dozens of loans that included incorrect information about borrowers’ income and employment, leading people who had lost their jobs, were in bankruptcy or were living on Social Security to qualify for loans that they could never afford”?

Let’s face it: The regulatory changes in Dodd-Frank haven’t done a damn thing to protect the victims of these dodgy subprime schemes. Borrowers and investors are both getting gouged by a system that only protects the interests of the perpetrators. The sad fact is that nothing has changed. The system is just as corrupt as it was when Lehman went down.

So, how long can this go on before the market implodes?

According to the Times:

“financial firms are beginning to see signs of strain. In the first three months of this year, banks had to write off as entirely uncollectable an average of $8,541 of each delinquent auto loan, up about 15 percent from a year earlier, according to Experian…

In another sign of trouble ahead, repossessions, while still relatively low, increased nearly 78 percent to an estimated 388,000 cars in the first three months of the year from the same period a year earlier, according to the latest data provided by Experian. The number of borrowers who are more than 60 days late on their car payments also jumped in 22 states during that period….” (NYT)

(According to Amber Nelson at loan.com: “In the second quarter, the value of all auto loans late by 60 days or more was more than $4 billion, up 27 percent from the prior year, according to Experian.”)

So, yeah, the trouble is mounting, but that doesn’t mean that this madness won’t continue for some time to come. It probably will. It’ll probably drag-on until the economy turns south and more borrowers start falling behind on their payments. That will lead to more defaults, heavier losses on auto bonds, and a hasty race to the exits by investors. Isn’t that how the subprime mortgage scam played out?

Indeed. But at least there are signs of hope on the regulatory front. Check out this clip from an article at CNBC:

“In August, both Santander Consumer and General Motors Financial Co. acknowledged receiving Justice Department subpoenas in connection with a probe over possible violations of civil-fraud laws. And the Consumer Financial Protection Bureau and the Securities and Exchange Commission have both stepped up their scrutiny of the auto-loan market.” (“New debt crisis fear: Subprime auto loans“, CNBC)

So the SEC, the DOJ, and the CFPB are actually investigating the underwriting practices of these behemoth finance companies to see if they violated “civil fraud laws”?

Will wonders never cease?

Just don’t hold your breath waiting for convictions.

The American Dream, Gone

15 Reasons Why Americans Think We’re Still in a Recession…

1: Wage Stagnation:  Why America’s Workers Need Faster Wage Growth—And What We Can Do About It, Elise Gould, EPI

Economic Policy Institute:

“The hourly compensation of a typical worker grew in tandem with productivity from 1948-1973. …. After 1973, productivity grew strongly, especially after 1995, while the typical worker’s compensation was relatively stagnant. This divergence of pay and productivity has meant that many workers were not benefitting from productivity growth—the economy could afford higher pay but it was not providing it.

Between 1979 and 2013, productivity grew 64.9 percent, while hourly compensation of production and nonsupervisory workers, who comprise over 80 percent of the private-sector workforce, grew just 8.0 percent. Productivity thus grew eight times faster than typical worker compensation…” (EPI)

(Note: Flatlining wages are the Number 1 reason that the majority of Americans still think we’re in a recession.)

2: Most people still haven’t recouped what they lost in the crash: Typical Household Wealth Has Plunged 36% Since 2003, Zero Hedge

Zero Hedge:

“According to a new study by the Russell Sage Foundation, the inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36% decline… Welcome to America’s Lost Decade.

Simply put, the NY Times notes, it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.

The reasons for these declines are complex and controversial, but one point seems clear: When only a few people are winning and more than half the population is losing, surely something is amiss. (chart)”

3: Most working people are still living hand-to-mouth:  76% of Americans are living paycheck-to-paycheck, CNN Money

CNN:

“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.”

4: Millennials are Drowning in Red Ink:  Biggest economic threat? Student loan debt, USA Today

USA Today:

“Total student loan debt has grown more than 150% since 2005… We have more than $1.2 trillion of student loan debt…
And while 6.7 million borrowers in repayment mode are delinquent, the sad fact is that many lenders aren’t exactly incentivized to work with borrowers. Unlike all other forms of debt, student loans can’t be discharged in bankruptcy. Moreover, lenders can garnish wages and even Social Security benefits to get repaid…

In 2005 student loans accounted for less than 13% of the total debt load for adults age 20-29. Today, student loans account for nearly 37% of that group’s outstanding debt. Student loan debt’s slice of the total debt pie for the age group nearly tripled! The average loan balance for that age group is now more than $25,500, up from $15,900 in 2005.”

5: Downward mobility is the new reality: Middle-Class Death Watch: As Poverty Spreads, 28 Percent of Americans Fall Out of Middle Class, Truthout

Truthout:

“The promise of the American dream has given many hope that they themselves could one day rise up the economic ladder. But according to a study released those already in financially-stable circumstances should fear falling down a few rungs too. The study…  found that nearly a third of Americans who were part of the middle class as teenagers in the 1970s have fallen out of it as adults…  its findings suggest the relative ease with which people in the U.S. can end up in low-income, low-opportunity lifestyles — even if they started out with a number of advantages. Though the American middle class has been repeatedly invoked as a key factor in any economic turnaround, numerous reports have suggested that the middle class enjoys less existential security than it did a generation ago, thanks to stagnating incomes and the decline of the industrial sector.”

6: People are more vulnerable than ever:  “More Than Half Of All Americans Can’t Come Up With $400 In Emergency Cash… Unless They Borrow“, Personal Liberty

“According to a Federal Reserve report on American households’ “economic well-being” in 2013,  fewer than half of all Americans said they’d be able to come up with four Benjamins on short notice to deal with an unexpected expense…
Under a section titled “Savings,” the report notes that “[s]avings are depleted for many households after the recession,” and lists the following findings:

*Among those who had savings prior to 2008, 57 percent reported using up some or all of their savings in the Great Recession and its aftermath.

*39 percent of respondents reported having a rainy day fund adequate to cover three months of expenses.

*Only 48 percent of respondents said that they would completely cover a hypothetical emergency expense costing $400 without selling something or borrowing money.

7: Working people are getting poorer: The Typical Household, Now Worth a Third, New York Times

NYT:

“The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation.

Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially….“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001,” said Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.

The reasons for these declines are complex and controversial, but one point seems clear: When only a few people are winning and more than half the population is losing, surely something is amiss.”

8: Most people can’t even afford to get their teeth fixed:  7 things the middle class can’t afford anymore, USA Today

USA Today:

“A vacation is an extra expense that many middle-earners cannot afford without sacrificing something else. A Statista survey found that this year 54% of people gave up purchasing big ticket items like TVs or electronics so they can go on a vacation. Others made sacrifices like reducing or eliminating their trips to the movies (47%), reducing or eliminating trips out to restaurants (43%), or avoiding purchasing small ticket items like new clothing (43%).

2–New vehicles…
3–To pay off debt…
4–Emergency savings…
5–Retirement savings…
6–Medical care…
7–Dental work…

According to the U.S. Department of Health and Human Services, “the U.S. spends about $64 billion each year on oral health care — just 4% is paid by Government programs.” About 108 million people in the U.S. have no dental coverage and even those who are covered may have trouble getting the care they need, the department reports.”

9: The good, high-paying jobs have vanished:  Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones, New York Times

NYT:

“The deep recession wiped out primarily high-wage and middle-wage jobs. Yet the strongest employment growth during the sluggish recovery has been in low-wage work, at places like strip malls and fast-food restaurants.

In essence, the poor economy has replaced good jobs with bad ones. That is the conclusion of anew report from the National Employment Law Project, a research and advocacy group, analyzing employment trends four years into the recovery.

“Fast food is driving the bulk of the job growth at the low end — the job gains there are absolutely phenomenal,” said Michael Evangelist, the report’s author. “If this is the reality — if these jobs are here to stay and are going to be making up a considerable part of the economy — the question is, how do we make them better?”

10: More workers are throwing in the towel:  Labor Participation Rate Drops To 36 Year Low; Record 92.6 Million Americans Not In Labor Force, Zero Hedge

Zero Hedge:

“For those curious why the US unemployment rate just slid once more to a meager 5.9%, the lowest print since the summer of 2008, the answer is the same one we have shown every month since 2010: the collapse in the labor force participation rate, which in September slid from an already three decade low 62.8% to 62.7% – the lowest in over 36 years, matching the February 1978 lows. And while according to the Household Survey, 232,000 people found jobs, what is more disturbing is that the people not in the labor force, rose to a new record high, increasing by 315,000 to 92.6 million!

Bottom line: Unemployment has gone down because more people aren’t working and have fallen off the radar.”

11: Nearly twice as many people still rely on Food Stamps than before the recession: Food-stamp use is falling from its peak, Marketwatch

Marketwatch:

“Food-stamp use is finally moving away from the peak. At 46.1 million people, total food-stamp usage is down about 4% from its high in December 2012 of 47.8 million. Only eight states in March (the latest data available) were up from the same month of 2013.

It’s still not great news, however, considering there were 26.3 million people receiving food stamps in 2007…”

12: The ocean of  red ink continues to grow: American Household Credit Card Debt Statistics: 2014, Nerd Wallet Finance

Nerd Wallet Finance:

U.S. household consumer debt profile:

*Average credit card debt: $15,607

*Average mortgage debt: $153,500

*Average student loan debt: $32,656

In total, American consumers owe:

*$11.63 trillion in debt

*An increase of 3.8% from last year

*$880.5 billion in credit card debt

*$8.07 trillion in mortgages

*$1,120.3 billion in student loans

*An increase of 11.5% from last year

13: No Recovery for working people: The collapse of household income in the US, World Socialist Web Site

WSWS:

“The US Federal Reserve’s latest Survey of Consumer Finances, released last Thursday, documents a devastating decline in economic conditions for a large majority of the population during the so-called economic recovery.

The report reveals that between 2007 and 2013, the income of a typical US household fell 12 percent. The median American household now earns $6,400 less per year than it did in 2007.

Source: Federal Reserve Survey of Consumer Finances

Much of the decline occurred during the “recovery” presided over by the Obama administration. In the three years between 2010 and 2013, the annual income of a typical household fell by an additional 5 percent.

The report also shows that wealth has become even more concentrated in the topmost economic layers. The wealth share of the top 3 percent climbed from 44.8 percent in 1989 to 54.4 percent in 2013. The share of wealth held by the bottom 90 percent fell from 33.2 percent in 1989 to 24.7 percent in 2013.”

14: Most people will work until they die:  The Greatest Retirement Crisis In American History, Forbes

Forbes:

“We are on the precipice of the greatest retirement crisis in the history of the world. In the decades to come, we will witness millions of elderly Americans, the Baby Boomers and others, slipping into poverty.

Too frail to work, too poor to retire will become the “new normal” for many elderly Americans.

That dire prediction… is already coming true. Our national demographics, coupled with indisputable glaringly insufficient retirement savings and human physiology, suggest that a catastrophic outcome for at least a significant percentage of our elderly population is inevitable. With the average 401(k) balance for 65 year olds estimated at $25,000 by independent experts …the decades many elders will spend in forced or elected “retirement” will be grim…

The signs of the coming retirement crisis are all around you. Who’s bagging your groceries: a young high school kid or an older “retiree” who had to go back to work to supplement his income or qualify for health insurance?”

15: Americans are more pessimistic about the future, Polling Report

According to a CNN/ORC Poll May 29-June 1, 2014:

“Do you agree or disagree? The American dream has become impossible for most people to achieve.”

Agree: 59%

Disagree: 40%

Unsure: 1%

According to a NBC News/Wall Street Journal Poll conducted by the polling organizations of Peter Hart (D) and Bill McInturff (R). April 23-27, 2014:

“Do you agree or disagree with the following statement? Because of the widening gap between the incomes of the wealthy and everyone else, America is no longer a country where everyone, regardless of their background, has an opportunity to get ahead and move up to a better standard of living.”Agree: 54%

Disagree: 43%

Mixed: 2%

Unsure: 1%

Also, according to a CBS News Poll. Jan. 17-21, 2014. N=1,018 adults nationwide.

“Looking to the future, do you think most children in this country will grow up to be better off or worse off than their parents?”Better off: 34%

Worse off: 63%

Same: 2%

Unsure: 1%

The majority of people in the United States, no longer believe in the American dream, or that America is the land of opportunity, or that their children will have a better standard of living than their own.  They’ve grown more pessimistic because  they haven’t seen the changes they were hoping for, and because their lives are just as hard as they were right after the crash.  In fact, according to a 2014 Public Religion Research Institute poll– 72 percent of those surveyed said they think “the economy is still in recession.”

Judging by the info in the 15 links above,  they’re probably right.

“There You Go Again”

Reince Priebus, the chairman of the Republican National Committee (RNC), was on a conference call this past Monday evening, which was sponsored by TheTeaParty.net and attended by hundreds of Tea Party activists. During the conference call, a Tea Party activist asked him about President Barack Obama’s plans for executive amnesty. Priebus replied, “It’s unconstitutional, illegal, and we don’t support it.”

Breitbart.com covered the story. “‘While I can’t speak for the legislature, I’m very confident we will stop that,’ Priebus said. ‘We will do everything we can to make sure it doesn’t happen: Defunding, going to court, injunction. You name it. It’s wrong. It’s illegal. And for so many reasons, and just the basic fabric of this country, we can’t allow it to happen and we won’t let it happen. I don’t know how to be any stronger than that. I’m telling you, everything we can do to stop it we will.’”

Breitbart goes on to quote Priebus, “‘I have said repeatedly on immigration that the first thing is border security and the second thing is upholding the law that’s in place today. What ever happened to the border fence that was promised by Congress in 2006? It never happened. What about these sanctuary cities out there that take federal money and they’re not even upholding the law that we have in place? So somehow or another what can’t get lost in any of this conversation is the importance of border security and making sure that any sort of immigration reform talk doesn’t even begin without taking that first step.’”

As Ronald Reagan said to President Jimmy Carter, “There you go again.” There the GOP goes again: making a promise they have absolutely no intention of keeping.

Priebus’ promise that, should the GOP capture the U.S. Senate, they will stop Obama’s executive amnesty is just so much hot air. I guess he thinks that we have all forgotten then Speaker of The House Newt Gingrich’s “Contract With America.”

During the congressional elections of 1994, Gingrich promised the American people that if they put Republicans in charge of the Congress, they would pass legislation to eliminate five federal departments (Education, Energy, Commerce, Interior, and Housing and Urban Development), 95 federal domestic programs, and slash federal spending across the board. The GOP promises made during the ’94 elections became known as the “Contract With America.”

GOP promises during that election cycle proved extremely successful. In the House of Representatives there was a 54-seat swing to the Republicans, which gave them a majority of seats for the first time since 1954. In the U.S. Senate there was an eight-seat swing, which allowed the GOP to capture both houses of Congress.

During the succeeding congressional session, many of the elements of the Contract were indeed passed by the Republican-led House of Representatives. It was quite another story in the GOP-led Senate. In the Senate, most of the promised bills were either killed altogether or seriously compromised through a variety of watered-down amendments. A few bills–and I mean a precious few bills–made it somewhat intact out of the Senate. At the end of the session, very little of the Contract survived. In fact, during that time, Republican senators reminded everyone that the Contract With America was only the promise of the GOP House, that the GOP Senate never joined in that promise. (Politicians are the slickest liars in the world, are they not?)

While there were several positive results of that “Republican Revolution” of 1994, including a balanced budget in 1998 and surpluses in the federal budgets from 1999-2001–all of these budgets being proposed by Democratic President Bill Clinton–Gingrich and Senate Majority Leader Trent Lott quickly began to compromise away most of the principles of the 1994 Contract. This led to Gingrich being ousted as Speaker of the House.

Of course, none of the five federal departments targeted were eliminated–neither were any of the 95 targeted federal programs. In fact, not only were these departments and programs not eliminated, funding for all of these departments and programs actually INCREASED under the GOP-led Congress. In 2000, Edward Crane, president of the Cato Institute, noted that “the combined budgets of the 95 major programs that the Contract With America promised to eliminate have increased by 13%.” And, in case Republicans want to try and blame the Democrat Bill Clinton for these budgetary backslidings, the facts just don’t support it.

Consider the fact that from 2001 through 2006, the GOP controlled the entire federal government: the White House, House of Representatives, and Senate. Plus, Republican-appointed justices comprised a majority on the U.S. Supreme Court. (That has been the case since the early 1970s). During those long six years, the GOP-dominated federal government NEVER revisited the principles of the Contract With America. In fact, the Bush years are on record as seeing the most explosive growth in federal spending and overreach in U.S. history to that time. There has been absolutely NOTHING fiscally conservative about the Twenty-First Century GOP. And that’s a fact.

Again, even though the GOP controlled the entire federal government for the first six years of this century, there was no attention given to the promises of the 1994 Contract With America. In addition, no attention was given to overturning Roe v. Wade and ending legalized abortion-on-demand, and no attention was given to overturning Bill Clinton’s egregiously unconstitutional Executive Orders. In fact, no attention was given to G.W. Bush’s campaign promises of fiscal restraint and no-nation building, non-aggressive foreign policy promises, or his vow to honor the Constitution by curbing the usurpations of Washington, D.C., of individual liberties and civil rights. What a joke that turned out to be!

Now we have a Democratic President, Barack Obama, who is one of the most unpopular presidents of our entire history, and the GOP is struggling to energize its own base. How pathetic is that? That’s why RNC Chairman Reince Priebus took to the air with a live conference call with Tea Party activists. The national GOP has so alienated Tea Party conservatives that it is concerned that even with a despised Democrat President, disenfranchised conservatives within the GOP could stay home in large numbers next Tuesday.

Priebus’ concern is warranted.

So, Priebus makes a Contract With America-type promise: give us the Senate and we will stop Obama’s executive amnesty. And even though it was a conference call, I assume he said it with a straight face. The problem is, it is a lie, and Priebus knows it.

Obama is going to sign his executive amnesty order soon after the elections and before the Senate convenes next year. And there are about as many Republicans in the Senate that favor amnesty as there are Democrats. Does anyone really think that John McCain, Lindsey Graham, Lamar Alexander, et al. are going to get exercised over amnesty? The Chamber of Commerce establishment Republicans are salivating over amnesty for illegals. Some of them are trying to hide an amnesty amendment in the upcoming NDAA even as we speak. Plus, just exactly what is the Senate going to do to overturn an executive amnesty order? I can already hear it. After the GOP wins the Senate, they will say, “Well, as the U.S. Senate, we can’t really do anything; we need a Republican President in 2016. Then we will do something about it.” And the beat goes on.

It’s not about stopping amnesty; it’s about political posturing for a November election. House Speaker John Boehner has promised Big Business Republicans an amnesty deal. Does anyone in their right mind believe the GOP is going to overturn an Obama amnesty order? It’s a campaign bluff. I know it; and so does Barack Obama. (I would love to be proven wrong; but the GOP track record says I am 100% right.)

The Breitbart report goes on to say, “Priebus said at the end of the town hall that he thinks it’s important for Tea Partiers and the grassroots to hold Republicans accountable.

“‘I think it’s important to build our party through addition and make sure that we don’t subtract people out of our party,’ he said. ‘It’s also important for the Tea Party to hold the Republican Party accountable. I get that. It’s not always a cheerleading opportunity. It’s both that we’re going to be with you and help you, but we have to hold you accountable once in a while. And I understand that and respect it.’”

See the report here:

No, Priebus doesn’t understand that; neither does he respect it. This is pure partisan party electioneering.

The GOP leadership has not allowed itself to be held accountable to ANYBODY. They wouldn’t let Ross Perot do it; they wouldn’t let Pat Buchanan do it; they wouldn’t let Ron Paul do it; and they aren’t letting the Tea Party Republicans do it. They think themselves above their own platform, above their conservative base, and even above the U.S. Constitution. Accordingly, they have been subtracting numbers from their own ranks for a long, long time. Where do you think the Libertarian and Constitution parties came from? Where do you think so many of the registered independent voters came from?

In any given national election the numbers of people who stay home and don’t vote always outnumber the ones who do vote. Why is that? It’s because both the Democrat and Republican parties have been ignoring so much of their grassroots base that people from both parties have been drifting away by the millions. People by the millions have given up on both major parties. Neither party in Washington, D.C., respects the people of the United States or the U.S. Constitution. Both parties grovel before Big Money. That’s why so many people have removed themselves from the two major parties.

If the Republican leadership in Washington, D.C., had been listening to its base over the past several years, Barack Obama would not be President today and the GOP would not be biting its fingernails as to whether they can take back the Senate. This should be a slam-dunk election for the GOP. And, despite the stiff-necked, Big Business, Big Brother leadership of the national Republican Party, I think the GOP will take the Senate. But if you think for one minute that a GOP-led Senate and House will do diddly squat to stop Obama’s amnesty order or to close our Southern Border, there is this bridge in the Mojave Desert you need to look at. The GOP is famous for doing NOTHING after elections are won.

Reince Priebus lamented over the failure of Congress to honor its promise to close the Southern Border back in 2006. Well, Mr. Priebus, it was the Republican Party that controlled the federal government from 2001-2006, and despite their promises to close the Southern Border, did NOTHING to actually do it. And you think a GOP-led Congress is going to do something about it now? What a joke! Most of the anti-amnesty Republicans are in the House, and they are not even a majority within their own caucus there. Try to name the anti-amnesty senators. The only ones I can recall who have been outspoken against amnesty are Jeff Sessions, Ted Cruz, and Mike Lee. Even Rand Paul has softened on the subject.

I wasn’t on the Tea Party conference call last Monday evening with Mr. Priebus when he said what he said, but I’m hoping someone on the call hollered, “There you go again.”

Risky Business “Easy Money”

Here we go again.

Last week, the country’s biggest mortgage lenders scored a couple of key victories that will allow them to ease lending standards, crank out more toxic assets, and inflate another housing bubble.  Here’s what’s going on.

On Monday,  the head of the Federal Housing Finance Agency (FHFA), Mel Watt, announced that Fannie and Freddie would slash the minimum down-payment requirement on mortgages from 5 percent to 3 percent while making loans more available to people with spotty credit. If this all sounds hauntingly familiar, it should. It was less than 7 years ago that shoddy lending practices blew up the financial system precipitating the deepest slump since the Great Depression. Now Watt wants to repeat that catastrophe by pumping up another credit bubble. Here’s the story from the Washington Post:

“When it comes to taking out a mortgage, two factors can stand in the way: the price of the mortgage,…and the borrower’s credit profile.”

On Monday, the head of the agency that oversees the mortgage giants Fannie Mae and Freddie Mac outlined … how he plans to make it easier for borrowers on both fronts. Mel Watt, director of the Federal Housing Finance Agency, did not give exact timing on the initiatives. But most of them are designed to encourage the industry to extend mortgages to a broader swath of borrowers.

Here’s what Watt said about his plans in a speech at the Mortgage Bankers Association annual convention in Las Vegas:

Saving enough money for a downpayment is often cited as the toughest hurdle for first-time buyers in particular. Watt said that Fannie and Freddie are working to develop “sensible and responsible” guidelines that will allow them to buy mortgages with down payments as low as 3 percent, instead of the 5 percent minimum that both institutions currently require.”

Does Watt really want to “encourage the industry to extend mortgages to a broader swath of borrowers” or is this just another scam to enrich bankers at the expense of the public?  It might be worth noting at this point that Watt’s political history casts doubt on his real objectives.   According to Open Secrets, among the Top 20 contributors to Watt’s 2009-2010 campaign were Goldman Sachs, Bank of America, Citigroup Inc., Bank of New York Mellon, American bankers Association, US Bancorp, and The National Association of Realtors. (“Top 20 Contributors, 2009-2010“, Open Secrets)

Man oh man,  this guy’s got all of Wall Street rooting for him. Why is that, I wonder? Is it because he’s faithfully executing his office and defending the public’s interests or is it because he’s a reliable stooge who brings home the bacon for fatcat bankers and their brood?

This is such a farce, isn’t it? I mean, c’mon, do you really think that the big banks make political contributions out of the kindness of their heart or because they want something in return?  And do you really think that a guy who is supported by Goldman Sachs has your “best interests” in mind?  Don’t make me laugh.

The reason that Obama picked Watt was because he knew he could be trusted to do whatever Wall Street wanted, and that’s precisely what he’s doing. Smaller down payments and looser underwriting are just the beginning; teaser rates, balloon payments, and liars loans are bound to follow. In fact, there’s a funny story about credit scores in the Washington Post that explains what’s really going on behind the scenes. See if you can figure it out:

“Most housing advocates agree that a bigger bang for the buck would come from having lenders lower the unusually high credit scores that they’re now demanding from borrowers.

After the housing market tanked, Fannie and Freddie forced the industry to buy back billions of dollars in loans. In a bid to protect themselves from further financial penalties, lenders reacted by imposing credit scores that exceed what Fannie and Freddie require. Housing experts say the push to hold lenders accountable for loose lending practices of the past steered the industry toward the highest-quality borrowers, undermining the mission of Fannie and Freddie to serve the broader population, including low- to moderate- income borrowers.

Today, the average credit score on a loan backed by Fannie and Freddie is close to 745, versus about 710 in the early 2000s, according to Moody’s Analytics. And lenders say they won’t ease up until the government clarifies rules that dictate when Fannie and Freddie can take action against them.” (Washington Post)

Can you see what’s going on? The banks have been requiring higher credit scores than Fannie or Freddie.

But why? After all, the banks are in the lending business, so the more loans they issue the more money they make, right?

Right. But the banks don’t care about the short-term dough. They’d rather withhold credit and slow the economy in order to blackmail the government into doing what they want.

And what do they want?

They want looser regulations and they want to know that Fannie and Freddie aren’t going to demand their money back (“put backs”) when they sell them crappy mortgages that won’t get repaid. You see, the banks figure that once they’ve off-loaded a loan to Fannie and Freddie, their job is done.  So, if the mortgage blows up two months later, they don’t think they should have to pay for it. They want the taxpayer to pay for it. That’s what they’ve been whining about for the last 5 years. And that’s what Watt is trying to fix for them. Here’s the story from Dave Dayen:

“Watt signaled to mortgage bankers that they can loosen their underwriting standards, and that Fannie and Freddie will purchase the loans anyway, without much recourse if they turn sour. The lending industry welcomed the announcement as a way to ease uncertainty and boost home purchases, a key indicator for the economy. But it’s actually a surrender to the incorrect idea that expanding risky lending can create economic growth.

Watt’s remarks come amid a concerted effort by the mortgage industry to roll back regulations meant to prevent the type of housing market that nearly obliterated the economy in 2008. Bankers have complained to the media that the oppressive hand of government prevents them from lending to anyone with less-than-perfect credit. Average borrower credit scores are historically high, and lenders make even eligible borrowers jump through enough hoops to garner publicity. Why, even Ben Bernanke can’t get a refinance done! (Actually, he could, and fairly easily, but the anecdote serves the industry’s argument.)

(“The Mortgage Industry Is Strangling the Housing Market and Blaming the Government“, Dave Dayen, The New Republic)

Can you see what a fraud this is?  6 years have passed since Lehman crashed and the scum-sucking bankers are still  fighting tooth-and-nail to unwind the meager provisions that have been put in place to avoid another system-shattering disaster. It’s crazy. These guys should all be in Gitmo pounding rocks and instead they’re setting the regulatory agenda. Explain that to me? And this whole thing about blackmailing the government because they don’t want to be held responsible for the bad mortgages they sold to the GSE’s is particularly irritating. Here’s more from Dave Dayen:

“After the housing market tanked, Fannie and Freddie forced the industry to buy back billions of dollars in loans. In a bid to protect themselves from further financial penalties, lenders reacted by imposing credit scores that exceed what Fannie and Freddie require. ….And lenders say they won’t ease up until the government clarifies rules that dictate when Fannie and Freddie can take action against them.”

So the industry has engaged in an insidious tactic: tightening lending well beyond required standards, and then claiming the GSEs make it impossible for them to do business. For example, Fannie and Freddie require a minimum 680 credit score to purchase most loans, but lenders are setting their targets at 740. They are rejecting eligible borrowers….so they can profit much more from a regulation-free zone down the line.

So, I ask you, dear reader; is that blackmail or is it blackmail?

And what does Watt mean when he talks about “developing sensible and responsible guidelines’ that will allow them (borrowers) to buy mortgages with down payments as low as 3 percent”?

What a joke.  Using traditional underwriting standards, (the likes of which had been used for  the entire post-war period until we handed the system over to the banks) a lender would require a 10 or 20 percent down, decent credit scores, and a job. The only reason Watt wants to wave those requirements is so the banks can fire-up the old credit engine and dump more crap-ass mortgages on Uncle Sam.  That’s the whole thing in a nutshell. It’s infuriating!

Let me fill you in on a little secret: Down payments matter! In fact, people who put more down on a home (who have “more skin in the game”) are much less likely to default.  According to David Battany, executive vice president of PennyMac, “there is a strong correlation between down payments to mortgage default. The risk of default almost doubles with every 1%.”

Economist Dean Baker says the same thing in a recent blog post:

“The delinquency rate, which closely follows the default rate, is several times higher for people who put 5 percent or less down on a house than for people who put 20 percent or more down.

Contrary to what some folks seem to believe, getting moderate income people into a home that they subsequently lose to foreclosure or a distressed sale is not an effective way for them to build wealth, even if it does help build the wealth of the banks.”

(“Low Down Payment Mortgages Have Much Higher Default Rates“, Dean Baker, CEPR)

Now take a look at this chart from Dr. Housing Bubble which helps to illustrate the dangers of low down payments in terms of increased delinquencies:

Data on mortgage delinquencies by downpayment. Source:  Felix Salmon 

“When the mortgage industry starts complaining about the 14 million people who would be denied the chance to buy a qualified mortgage if they don’t have a 5% downpayment, it’s worth remembering that qualified mortgages for people who don’t have a 5% downpayment have a delinquency rate of 16% over the course of the whole housing cycle.” (“Why a sizable down payment is important“, Dr. Housing Bubble)

So despite what Watt thinks,  higher down payments mean fewer defaults, fewer foreclosures, fewer shocks to the market, and greater financial stability.

And here’s something else that Watt should mull over:  The housing market isn’t broken and doesn’t need to be fixed.  It’s doing just fine, thank you very much. First of all, sales and prices are already above their historic trend. Check it out from economist Dean Baker:

“If we compare total sales (new and existing homes) with sales in the pre-bubble years 1993-1995, they would actually be somewhat higher today, even after adjusting for population growth. While there may be an issue of many people being unable to qualify for mortgages because of their credit history, this does not appear to be having a negative effect on the state of market. Prices are already about 20 percent above their trend levels.” (“Total Home Sales Are At or Above Trend“, Dean Baker, CEPR)

Got it? Sales and prices are ALREADY where they should be, so there’s no need to lower down payments and ease credit to start another orgy of speculation. We don’t need that.

Second, the quality of today’s mortgages ARE BETTER THAN EVER, so why mess with success? Take a look at this from Black Knight Financial Services and you’ll see what I mean:

“Today, the Data and Analytics division of Black Knight Financial Services … released its November Mortgage Monitor Report, which found that loans originated in 2013 are proving to be the best-performing mortgages on record…..

“Looking at the most current mortgage origination data, several points become clear,” said Herb Blecher, senior vice president of Black Knight Financial Services’ Data & Analytics division. “First is that heightened credit standards have resulted in this year being the best-performing vintage on record. Even adjusting for some of these changes, such as credit scores and loan-to-values, we are seeing total delinquencies for 2013 loans at extremely low levels across every product category.”

(“Black Knight Financial Services’ Mortgage Performance Data Shows 2013 Loans Best Performing on Record“, LPS)

Okay, so sales and prices are fine and mortgage quality is excellent. So why not leave the bloody system alone? As the saying goes: If it ain’t broke, don’t fix it.

But you know why they’re going to keep tinkering with the housing market. Everyone knows why. It’s because the banks can’t inflate another big-honking credit bubble unless they churn out zillions of shi**y mortgages that they offload onto Fannie and Freddie. That’s just the name of the game: Grind out the product (mortgages), pack it into sausages (securities and bonds), leverage up to your eyeballs (borrow as much as humanly possible), and dump the junk-paper on yield-chasing baboons who think they’re buying triple A “risk free” bonds.

Garbage in, garbage out.  Isn’t this how the banks make their money?

You bet it is, and in that regard things have gotten a helluva a lot scarier since last Wednesday’s announcement that the banks are NOT going to be required to hold any capital against the securities they create from bundles of mortgages.

Huh?

You read that right. According to the New York Times:  “there will be no risk retention to speak of, at least on residential mortgage loans that are securitized.”

But how can that be, after all, it wasn’t subprime mortgages that blew up the financial system (subprime mortgages only totaled $1.5 at their peak), but the nearly $10 trillion in subprime infected mortgage-backed securities (MBS) that stopped trading in the secondary market after a French Bank stopped taking redemptions in July 2007. (a full year before the crisis brought down Lehman Brothers) . That’s what brought the whole rattling financial system to a grinding halt. Clearly, if the banks had had a stake in those shabby MBS— that is, if they were required to set aside 5 or 10 percent capital as insurance in the event that some of these toxic assets went south– then the whole financial collapse could have been avoided, right?

Right. It could have been avoided. But the banks don’t want to hold any capital against their stockpile of rancid assets, in fact, they don’t want to use their own freaking money at all, which is why 90 percent of all mortgages are financed by Uncle Sugar. It’s because the banks are just as broke as they were in 2008 when the system went off the cliff. Here’s a summary from the New York Times:

“Once upon a time, those who made loans would profit only if the loan were paid back. If the borrower defaulted, the lender would suffer.

That idea must have seemed quaint in 2005, as the mortgage lending boom reached a peak on the back of mushrooming private securitizations of mortgages, which were intended to transfer the risk away from those who made the loans to investors with no real knowledge of what was going on.

Less well remembered is that there was a raft of real estate securitizations once before, in the 1920s. The securities were not as complicated, but they had the same goal — making it possible for lenders to profit without risking capital.

The Dodd-Frank Act of 2010 set out to clean that up. Now, there would be “risk retention.” Lenders would have to have “skin in the game.” Not 100 percent of the risk, as in the old days when banks made mortgage loans and retained them until they were paid back, but enough to make the banks care whether the loans were repaid.

At least that was the idea. The details were left to regulators, and it took more than four years for them to settle on the details, which they did this week.

The result is that there will be no risk retention to speak of, at least on residential mortgage loans that are securitized.

“…..Under Dodd-Frank, the general rule was to be that if a lender wanted to securitize mortgages, that lender had to keep at least 5 percent of the risk…….But when the final rule was adopted this week, that idea was dropped.”  (“Banks Again Avoid Having Any Skin in the Game”, New York Times)

No skin in the game, you say?

That means the taxpayer is accepting 100 percent of the risk. How fair is that?

Let’s review: The banks used to lend money to creditworthy borrowers and keep the loans on their books.

They don’t do that anymore, in fact, they’re not really banks at all, they’re just intermediaries who sell their loans to the USG or investors.

This arrangement has changed the incentives structure. Now the goal is quantity not quality.  “How many loans can I churn-out and dump on Uncle Sam or mutual funds etc.” That’s how bankers think now.  That’s the objective.

Regulations are bad because regulations stipulate that loans must be of a certain quality, which reduces the volume of loans and shrinks profits. (Can’t have that!) Therefore, the banks must use their money to hand-pick their own regulators  (“You’re doin’ a heckuva job, Mel”) and ferociously lobby against any rules that limit their ability to issue credit to anyone who can fog a mirror. Now you understand how modern-day banking works.

It would be hard to imagine a more corrupt system.

Our Population Growth Totalitarian Future

As the world explodes in violence, war, riots, and uprisings, it is challenging to step back and examine the bigger picture. With airliners being shot down over the Ukraine, missiles flying between Israel and Gaza, ongoing civil war in Syria, Iraq falling apart as ISIS gains ground, dictatorship crackdown in Egypt, Turkey on the verge of revolution, Iran gaining control of Iraq, Saudi Arabia fomenting violence, Africa dissolving into chaos, South America imploding and sending their children across our purposely porous southern border, Mexico under the control of drug lords, China experiencing a slow motion real estate collapse, Japan experiencing their third decade of Keynesian failure, facing a demographic nightmare scenario while being slowly poisoned by radiation, and Chinese-Japanese relations moving towards World War II levels, it is easy to get lost in the day to day minutia of history in the making.

Why is this happening at this point in history? Why is the average American economically worse off today than they were at the height of the economic crisis in 2009? Why is the Cold War returning with a vengeance? Why is the Federal Reserve still employing emergency monetary policies when we are supposedly five years into a recovery and the stock market has attained record highs? Why do the ECB and European politicians continue to paper over the insolvency of their banks and governments? Why did the U.S. support the ouster of a dictator we supported for decades in Egypt and then support the elevation of a new dictator after we didn’t like the policies of the democratically elected president? Why did the U.S. eliminate the leader of Libya and allow the country to descend into anarchy and civil war? Why did the U.S. fund and provoke a revolutionary overthrow of a democratically elected leader in the Ukraine? Why did the U.S. fund and arm Al Qaeda associated rebels in Syria who are now fighting our supposed allies in Iraq? Why has the U.S. been occupying Afghanistan for the last thirteen years with the result being a Taliban that is stronger than ever? Why are the BRIC countries forming a monetary union to challenge USD domination? Why is the U.S. attempting to provoke Russia into a conflict with NATO?

Why is the U.S. government collecting every electronic communication made by every American? Why is the U.S. government spying on world leader allies? Why is the U.S. government providing military equipment to local police forces? Why is the U.S. military conducting training exercises within U.S. cities? Why is the U.S. government attempting to restrict Second Amendment rights? Why is the U.S. government attempting to control and lockdown the internet? Why has the U.S. government chosen to treat the Fourth Amendment as if it is obsolete? Why is the national debt still rising by $750 billion per year ($2 billion per day) if the economy is back to normal? Why have 12 million working age Americans left the workforce since the economic recovery began? How could the unemployment rate be back at 2008 levels when there are 14 million more working age Americans and the same number employed as in 2008? Why are there 13 million more people on food stamps today than there were at the start of the economic recovery in 2009? Why have home prices risen by 25% since 2012 when mortgage applications have been at fourteen year lows? Why are Wall Street profits and bonuses at record highs while the real median household income stagnates at 1998 levels?

Why do 98% of incumbent politicians get re-elected when congressional approval levels are lower than whale shit? Why are oil prices four times higher than they were in 2003 if the U.S. is supposedly on the verge of energy independence? Why do the corporate controlled mainstream media choose to entertain and regurgitate government propaganda rather than inform, investigate and seek the truth? Why do corporations and shadowy billionaires control the politicians, media, judges, and financial system in their ravenous quest for more riches? Why has the public allowed a privately owned bank to control our currency and inflate away 96% of its value in 100 years? Why have American parents allowed their children to be programmed and dumbed down by government run public schools? Why have Americans allowed themselves to be lured into debt in an effort to appear wealthy and successful? Why have Americans permitted their brains to atrophy through massive doses of social media, reality TV, iGadget addiction, and a cultural environment of techno-narcissism? Why have Americans lost their desire to read, think critically, question authority, act responsibly, defer gratification, and care about future generations? Why have Americans sacrificed their freedoms, liberties and rights for the false expectation of safety and security? Why will we pay dearly for our delusional, materialistic, debt financed idiocy? – Because we never learn the lessons of history.

There are so many questions and no truthful answers forthcoming from those who pass for leaders in this increasingly totalitarian world. Our willful ignorance, apathy, hubris and arrogance will have consequences. Just because it hasn’t happened yet, doesn’t mean it’s not going to happen. The cyclicality of history guarantees a further deepening of this Crisis. The world has evolved from totalitarian hegemony to republican liberty and regressed back to totalitarianism throughout the centuries. Anyone honestly assessing the current state of the world and our country would unequivocally conclude we have regressed back towards a totalitarian regime where a small cabal of powerful oligarchs believes they can control and manipulate the masses in their gluttonous desire for treasure. Aldous Huxley foretold all the indicators of a world descending into totalitarianism due to overpopulation, propaganda, brainwashing, consumerism, and dumbing down of a distracted populace in his 1958 reassessment of his 1931 novel Brave New World.

Is There a Limit?

“At the rate of increase prevailing between the birth of Christ and the death of Queen Elizabeth I, it took sixteen centuries for the population of the earth to double. At the present rate it will double in less than half a century. And this fantastically rapid doubling of our numbers will be taking place on a planet whose most desirable and pro­ductive areas are already densely populated, whose soils are being eroded by the frantic efforts of bad farmers to raise more food, and whose easily available mineral capital is being squandered with the reckless extravagance of a drunken sailor getting rid of his accumulated pay.” –Aldous Huxley – Brave New World Revisited – 1958

Demographics are easy to extrapolate and arrive at an accurate prediction, as long as the existing conditions and trends remain relatively constant. Huxley was accurate in his doubling prediction. The world population was 2.9 billion in 1958. It only took 39 years to double again to 5.8 billion in 1997. It has grown by 24% in the last 17 years to the current level of 7.2 billion. According to United Nations projections, world population is projected to reach 9.6 billion in 2050. The fact that it would take approximately 70 years for the world’s population to double from the 1997 level reveals a slowing growth rate, as the death rate in many developed countries surpasses their birth rate. The population of the U.S. grew from 175 million in 1958 to 320 million today, an 83% increase in 56 years.

The rapid population growth over the last century from approximately 1.8 billion in 1914, despite two horrific world wars, is attributable to cheap, easy to access oil and advances in medical technology made possible by access to cheap oil. The projection of 9.6 billion in 2050 is based upon an assumption the world’s energy, food and water resources can sustain that many people, no world wars kill a few hundred million people, no incurable diseases spread across the globe and there is no catastrophic geologic, climate, or planetary events. I’ll take the under on the 9.6 billion.

Anyone viewing the increasingly violent world situation without bias can already see the strain that overpopulation has created. Today, six countries contain half the world’s population.

A cursory examination of population trends around the world provides a frightening glimpse into a totalitarian future marked by vicious resource wars, violent upheaval and starvation for millions. India, a country one third the size of the United States, has four times the population of the United States. A vast swath of the population lives in poverty and squalor. India contains the largest concentration (25%) of people living below the World Bank’s international poverty line of $1.25 per day. According to the U.N. India is expected to add 400 million people to its cities by 2050. Its capital city Delhi already ranks as the second largest in the world, with 25 million inhabitants. The city has more than doubled in size since 1990. The assumptions in these U.N. projections are flawed. Without rapidly expanding economic growth, capital formation and energy resources, the ability to employ, house, feed, clothe, transport, and sustain 400 million more people will be impossible. Disease, starvation, civil unrest, war and a totalitarian government would be the result. With its mortal enemy Pakistan, already the sixth most populated country in the world, jamming 182 million people into an area one quarter the size of India and one twelfth the size of the U.S. and growing faster than India, war over resources and space will be inevitable. And both countries have nuclear arms.

More than half the globe’s inhabitants now live in urban areas, with China, India and Nigeria forecast to see the most urban growth over the next 30 years. Twenty-four years ago, there were 10 megacities with populations pushing above the 10 million mark. Today, there are 28 megacities with areas of developing nations seeing faster growth: 16 in Asia, 4 in Latin America, 3 in Africa, 3 in Europe and 2 in North America. The world is expected to have 41 sprawling megacities over the next few decades with developing nations representing the majority of that growth. Today, Tokyo, with 38 million people, is the largest in the world, followed by New Delhi, Jakarta, Seoul, Shanghai, Beijing, Manila, and Karachi – all exceeding 20 million people.

To highlight the rapid population growth of the developing world, the New York metropolitan area containing 18 million people was ranked as the third largest urban area in the world in 1990. Today it is ranked ninth and is expected to be ranked fourteenth by 2030. The U.S. had the fewest births since 1998 last year at 3.95 million. We also had the highest recorded deaths in history at 2.54 million.  The fertility rate for 20- to 24-year-olds is now 83.1 births per 1,000 women, a record low. That combination created a gap in births over deaths that is the lowest it has been in 35 years.

This is the plight of the developed world (U.S., Europe, Japan) and even China (due to one child policy). According to the U.N. report, the population of developed regions will remain largely unchanged at around 1.3 billion from now until 2050. In contrast, the 49 least developed countries are projected to double in size from around 900 million people in 2013 to 1.8 billion in 2050. The rapid growth of desperately poor third world countries like Nigeria, Afghanistan, Niger, Congo, Ethiopia, and Uganda will create tremendous strain on their economic, political, social, and infrastructural systems. Nigeria’s population is projected to surpass the U.S. by 2050. Japan, Europe and Russia are in demographic death spirals. China is neutral, and the U.S. is expected to grow by another 89 million people. I wonder how many of them the BLS will classify as not in the labor force.

What are the implications to mankind of the world adding another billion people in the next twelve years, primarily in the poorest countries of Asia, Africa and South America? What does the world think of the U.S., which constitutes 4.4% of the world’s population, but consumes 20% of the world’s oil production and 24% of the world’s food? Will there be consequences to having the 85 richest people on earth accumulating as much wealth as the poorest 3.5 billion, with 1.2 billion surviving on less than $1.25 per day? Can a planet with finite amount of easily accessible financially viable extractable resources support an ever increasing number of people? Is there a limit to growth? I believe these questions will be answered in the next fifteen years as the dire consequences play out in civil strife, resource wars, totalitarian regimes, and societal collapse.  cycles always sweep away the existing social order and replace it with something new. It could be better or far worse.

Impact of Over-Population

“The problem of rapidly increasing numbers in relation to natural resources, to social stability and to the well-being of individuals — this is now the central problem of mankind; and it will remain the central problem certainly for another century, and perhaps for several centuries thereafter. Unsolved, that problem will render insoluble all our other problems. Worse still, it will create conditions in which individual free­dom and the social decencies of the democratic way of life will become impossible, almost unthinkable. Not all dictatorships arise in the same way. There are many roads to Brave New World; but perhaps the straightest and the broadest of them is the road we are travel­ing today, the road that leads through gigantic num­bers and accelerating increases.” 

The turmoil roiling the world today is a function of Huxley’s supposition that over-population pushes societies towards centralization and ultimately totalitarianism. The relentless growth in the world’s population, not matched by growth in energy resources, water, food, and living space, results in increasing tension, anger, economic decline, government dependency, war and ultimately totalitarianism. Huxley believed politicians and governments would increasingly resort to propaganda and misinformation to mislead citizens as the problems worsened and freedoms were revoked. Could this recent statement by our commander and chief of propaganda have made Edward Bernays and Joseph Goebbels any prouder?

“The world is less violent than it has ever been. It is healthier than it has ever been. It is more tolerant than it has ever been. It is better fed then it’s ever been. It is more educated than it’s ever been.”

I’m sure the people living in Gaza, the Ukraine, Libya, Syria, Iraq, Afghanistan, Thailand, Turkey, Africa and American urban ghettos would concur with Obama’s less violent than ever mantra. Disease (Cholera, Malaria, Hepatitis, Aids, Tuberculosis, Ebola, Plague, SARS) and malnutrition beset third world countries, while the U.S. obesity epidemic caused by consumption of corporate processed food peddled to the masses through diabolical marketing methods enriches the mega-corporate food companies, as well as the corporate sick care complex. Religious wars and culture wars rage across the world as intolerance for others beliefs reaches all-time highs. After three decades of government controlled public education they have succeeded in dumbing down the masses through social engineering, propaganda, and promoting equality over excellence. Obama should stop trying to think and stick to what he does best – golf and fundraising. After reading his drivel, I’m reminded of a far more pertinent quote from Huxley:

“Facts do not cease to exist because they are ignored.”

The chart below details the fact that 12% of the world’s population in countries producing 9% of the world’s oil are currently in a state of war. The violence, war, and civil unrest roiling the Ukraine, Syria, Egypt, Libya, Iraq, and Afghanistan are a direct result of U.S. meddling, instigation, and provocation. The U.S. government funds dictators (Hussein, Mubarak, Assad, Gaddafi) until they no longer serve their interests, engineer the overthrow of democratically elected leaders in countries (Iran, Egypt, Ukraine) that don’t toe the line, and dole out billions in military aid and arms to countries around the world in an effort to make them do our dirty work and enrich the military industrial complex. The true motivation behind most of the violence, intrigue and war is the U.S. need to maintain the U.S. petro-dollar hegemony and to control the flow of oil and natural gas throughout the world. The ruling oligarchy’s power, influence, and wealth are dependent upon dictating currency valuations and flow of oil and gas from foreign fiefdoms.

In Huxley’s 1931 Brave New World fable the world’s population is maintained at an optimum level (just under 2 billion) calculated by those in control. This is done through technology and biological manipulation. Procreation through sexual intercourse is prohibited. Creation of the desired number of people in each class is scientifically determined and the classes are conditioned from birth to fulfill their roles in society. When Huxley reassessed his novel in 1958’s Brave New World Revisited he didn’t argue for an optimum level of population. He simply hypothesized a close correlation between too many people, multiplying too rapidly, and the formulation of authoritarian philosophies and rise of totalitarian sys­tems of government.

The introduction of penicillin, DDT, and clean water into even the poorest countries on the planet had the effect of rapidly decreasing death rates around the globe. Meanwhile, birth rates continued to increase due to religious, social and cultural taboos surrounding birth control and the illiteracy and ignorance of those in the poorest regions of the world. The ultimate result has been an explosion in population growth in the developing world, least able to sustain that growth. Huxley just uses common sense in concluding that as an ever growing population presses more heavily upon accessible resources, the economic position of the society undergoing this ordeal becomes ever more precarious.

It essentially comes down to the laws of economics. Most of the developing world is economic basket cases. They cannot produce food, consumer goods, housing, schools, infrastructure, teachers, managers, scientists or educated workers at the same rate as their population growth. Therefore, it is impossible to improve the wretched conditions of the vast majority, as they wallow in squalor. Unless a country can produce more than it consumes, it cannot generate the surplus capital needed to invest in machinery, agricultural production, manufacturing facilities, and education. The rapidly growing population sinks further into poverty and despair. Huxley grasps the nefarious implications for freedom and liberty as over-population wreaks havoc around the globe:

“Whenever the economic life of a nation becomes pre­carious, the central government is forced to assume additional responsibilities for the general welfare. It must work out elaborate plans for dealing with a criti­cal situation; it must impose ever greater restrictions upon the activities of its subjects; and if, as is very likely, worsening economic conditions result in polit­ical unrest, or open rebellion, the central government must intervene to preserve public order and its own authority. More and more power is thus concentrated in the hands of the executives and their bureaucratic managers.”– Aldous Huxley – Brave New World Revisited – 1958

Despots, dictators, and power hungry presidents arise in an atmosphere of fear, scarce resources, hopelessness, and misery. As the power of the central government grows the freedoms, liberties and rights of the people are diminished and ultimately relinquished.

Source: The Millennium Report

Neil Young & Crazy Horse: How About Waging Heavy Peace In Tel Aviv?

On July 17^th Neil Young & Crazy Horse will perform at Hayarkon Park, Tel Aviv, a park built on the ruins of the Palestinian village Al Mirr, a land and people, destroyed and buried amidst unspeakable violence, but not forgotten. 

Neil Young is a Canadian singer, songwriter, guitarist and author of WAGING HEAVY PEACE

Crazy Horse is an American band best known for their association with Young beginning in 1969.

Crazy Horse has been co-credited on 11 studio albums and numerous live albums billed as by “Neil Young and Crazy Horse”.

In Waging Heavy Peace, Neil Young’s 2012 autobiography, Young documents his life and career shifting from the past to present and from career to personal experiences.

On page 346, Neil Young wrote:

Somewhere along the line I had suggested the name Crazy Horse after the great Indian chief and the guys liked it. Neil Young with Crazy Horse. Not ‘and’…I liked that I was with them. Like we were together, not separate.

On page 137, Neil Young wrote:

When music is your life, there is a key that gets you to the core. I am so grateful that I still have Crazy Horse…they are my window to the cosmic world where the music lives and breathes. I can find myself there and go to the special area of my soul…

Just getting there is the key thing, and Crazy Horse is my way of getting there…

Am I too cosmic about this? I think not…

Do not doubt me in my sincerity, for it is that which has brought us to each other now.

In 2005, a coalition of over 170 Palestinian civil society organizations launched a campaign calling the international community to boycott Israel culturally, academically, and commercially  UNTIL Israel recognizes the indigenous Palestinian people’s right to self-determination, UNTIL Israel fully complies with international law and finally honors the UNIVERSAL DECLARATION of HUMAN RIGHTS upon which the Establishment of their very Statehood was contingent upon!

 Article 1.
All human beings are born free and equal in dignity and rights.They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood.

On the day of the termination of the British mandate and on the strength of the United Nations General Assembly declare The State of Israel will be based on freedom, justice and peace as envisaged by the prophets of Israel: it will ensure complete equality of social and political rights to all its inhabitants irrespective of religion it will guarantee freedom of religion [and] conscience and will be faithful to the Charter of the United Nations.- May 14, 1948. The Declaration of the Establishment of Israel

In November 2006, Father Manuel, the parish Priest at the Latin Church and school in Gaza warned the world:

Gaza cannot sleep! The people are suffering unbelievably. They are hungry, thirsty, have no electricity or clean water. They are suffering constant bombardments and sonic booms from low flying aircraft. They need food: bread and water. Children and babies are hungry…people have no money to buy food. The price of food has doubled and tripled due to the situation. We cannot drink water from the ground here as it is salty and not hygienic. People must buy water to drink. They have no income, no opportunities to get food and water from outside and no opportunities to secure money inside of Gaza. They have no hope.

Without electricity children are afraid. No light at night. No oil or candles…Thirsty children are crying, afraid and desperate…Many children have been violently thrown from their beds at night from the sonic booms. Many arms and legs have been broken. These planes fly low over Gaza and then reach the speed of sound. This shakes the ground and creates shock waves like an earthquake that causes people to be thrown from their bed. I, myself weigh 120 kilos and was almost thrown from my bed due to the shock wave produced by a low flying jet that made a sonic boom.

Gaza cannot sleep…the cries of hungry children, the sullen faces of broken men and women who are just sitting in their hungry emptiness with no light, no hope, no love. These actions are War Crimes!

Because this American cannot improve on this Letter to Neil Young from the Palestinian Students’ Campaign for the Academic Boycott of Israel University Teachers’ Association it follows in full here:

16.03.2014

Besieged Gaza, Palestine

Dear Neil

We are Palestinian students and youth from the besieged Gaza Strip; we write to you now on a night engulfed by huge explosions ripping through our houses and neighborhoods again, more common than the thunder and hard rain also filling the night air.

And now we hear you plan on playing your inspiring music to a packed house in Hayarkon Park, Tel Aviv, a park built on the ruins of the Palestinian village Al Mirr, a land and people, destroyed and buried amidst unspeakable violence, but not forgotten. The residents of that Palestinian village and hundreds of other villages forcibly emptied by the nascent Israeli army, were either killed or denied return, denied the chance to even visit or commemorate the lives they once had. ⁽¹⁾

While the world turns its back, we hope that you don’t turn yours, that you heed the call of over 170 Palestinian civil society organizations, for boycott, divestment and sanctions against the Israeli regime until it abides by international law and stops denying us the right to live as any other human beings would expect.

Just as you didn’t perform in Apartheid South Africa, just as you stood up against racism in the US South, just as you have so admirably supported indigenous rights in Canada against the drilling for Tar Sands, we ask you to support indigenous, displaced people wherever they may be, including we Palestinians. The words of the Native American and Indigenous Studies Association in their recent move to boycott the Israeli regime echo the struggle for indigenous rights in America. ⁽²⁾

As this letter is penned the sound of more Israeli bombing reverberates around the tight refugee camps and narrow alleys where we live.

The camps are in complete darkness as the electricity has been cut.

The Israeli siege and previous bombing of our only power-plant has lead to huge fuel shortages, leaving us with just 6 hours of electricity each day.

This is just one night, but it is comparable to many other nights in Gaza, many worse nights.

We are used to facing the wrath of Israeli Merkhava tanks, drones, shellings, bombs and snipers that have brutally murdered and maimed our people for decades, for the crime of being born Palestinians, the wrong “ethnic group” for the Israeli regime who since it was established has done everything to wipe us off the map.

Listening to music is difficult in these circumstances, despite our passion for it. We have our own big range of music we love to play and Debka dance. But we have few instruments. Israel’s air, land and sea blockade of all our borders has meant for years musical instruments were banned from entry to Gaza.^[3]

Other items denied to us were coriander, nutmeg, ginger, dried fruit, fresh meat, lentils, pasta, chocolate, fishing rods, cattle, toys, donkey, workbooks and newspapers. Dov Weisglass, an advisor to former Prime Minister Ehud Olmert, explicitly outlined their intentions to collectively punish our population, “The idea is to put the Palestinians on a diet, but not to make them die of hunger”, he announced, in contravention of article 33 of the Geneva Conventions and condemned by all major human rights organizations. ^(4]

The violence behind Israel’s military occupation of our land is relentless and this week is no different. It began with Israeli border police shooting and killing a 38 year old Palestinian judge Raed Zeitar, the other bus passengers forced to sit and watch as he bled to death. Then 18-year-old Saji Darwish, Humanities student at Birzeit university, was shot in the head in Beitin, near Ramallah. Thousands attended his funeral the following day.

Tuesday saw four more murdered in the West Bank and Gaza.

On Wednesday Israeli authorities approved the construction of 387 housing units in the illegal settlement of Ramat Shlomo, denying the Palestinian towns of Beit Hanina and Shuafat the possibility to expand. And today a three-month old baby Ahmed Ammar Abu Nahal died of enlarged heart and liver as a result of the closure of Gaza crossings, a closure that has also left our hospitals bereft of medical supplies.

And right now we sit paralyzed in our homes as the bombs fall on us in Gaza.

Who knows when the current attacks will end.

Permanently etched on our minds are the rivers of blood that ran through the Gaza streets when for over 3 weeks in 2009 over 1400 were killed including over 330 children, with white phosphorous and other chemical weapons used in civilian areas and contaminating our land with a rise in cancers as a result.

More recently 170 more were killed in the weeklong attacks in late November 2012.

How many more sleeping in their beds now will face the same fate in the coming days, weeks and months? The trauma, fear and uncertainty never goes away.

Over two thirds of the Palestinians here in Gaza are UN registered refugees.

Over half of us are children.

We or our descendants were dispossessed entirely and forcibly removed from our homes.

The extent of this ethnic cleansing was such that one in three refugees worldwide is a Palestinian.

Expulsions of Palestinians continue today especially in Jerusalem and the West Bank, places that we in Gaza are no longer able to visit.

For what crime? The crime of being born Palestinian.

The Israeli regime denies us the freedom to come to enjoy your music, we live our lives surrounded by Navy Gunships along the sea, jeeps and wall tower snipers along the land frontier, and skies filled with the kind of aircraft unleashing yet more devastating attacks tonight.

The Gaza Strip has been made an outdoor prison, a reality beyond which most youth can never imagine, because most can never leave.

Others are hearing us and the world is beginning to wake up.

Many of your contemporaries are taking a stand including Carlos Santana, Roger Waters, Annie Lennox, Elvis Costello and the late, great Pete Seeger and Gil Scott Heron, who said he wouldn’t play in Israel “until everyone is welcome there”. ⁽⁵⁾

As Israeli Apartheid week kicked off in South Africa this week, an event that has taken place in over 150 different locations worldwide, Archbishop Desmond Tutu called for the world to support the Boycott Divestment and Sanctions of Israel, just as many other Anti Apartheid heroes from South Africa have affirmed. Tutu said in his statement on Monday, “I have witnessed the systemic humiliation of Palestinian men, women and children by members of the Israeli security forces. Their humiliation is familiar to all black South Africans who were corralled and harassed and insulted and assaulted by the security forces of the apartheid government.” ⁽⁶⁾

Long before he died, Nelson Mandela demanded that we should have the self determination of any other people. “We know too well that our freedom is incomplete without the freedom of the Palestinians”, he said.

Will you sing “living with war” to an audience most of which will have served or are serving in the Israeli army that during the day were bombing our families, or manning the hundreds of checkpoints that make simple journeys daily acts of humiliation?

While we in Gaza can never return to our homes that lay buried around the areas in which you will be travelling freely, will you sing, “A hundred voices from a hundred lands, need someone to listen.  People are dying here and there.”

On the struggle to support First Nations rights in Canada and environmental protection you said: “If you have a conscience, you can`t go through your day without realizing what`s going on, and questioning it, and going, “Is this right?”⁽⁷⁾

This is the question to mull over as here in Gaza a short period of silence has descended after the bombs rained down on us yet again tonight Show the courage to say that this system of violent discrimination and racial segregation is unacceptable in Palestine, just as you showed it to be unacceptable in the American South, unacceptable in Apartheid South Africa and unacceptable for the Indigenous of the Americas.

Stand on the right side of history and stand with us, and don’t entertain apartheid Israel this July.

Palestinian Students’ Campaign for the Academic Boycott of Israel University Teachers’ Association

###

How about Neil Young & Crazy Horse entertain Tel Aviv and wage some heavy peace by broadcasting this image on the stage at Hayarkon Park on July 17?

References:

(1) http://cosmos.ucc.ie/cs1064/jabowen/IPSC/php/place.php?plid=1985

(2) http://electronicintifada.net/blogs/ali-abunimah/major-indigenous-studies-group-endorses-israel-boycott

(3) http://www.gazagateway.org/tag/musical-instruments/

(4) http://www.guardian.co.uk/world/2006/apr/16/israel#sthash.EtPIzrik.dpuf

(5) http://www.usacbi.org/2010/04/gil-scott-heron-announces-cancellation-of-tel-aviv-concert-artist-won%E2%80%99t-play-in-israel-%E2%80%9Cuntil-everyone-is-welcome-there%E2%80%9D/

(6) http://www.haaretz.com/news/diplomacy-defense/1.578872

(7) http://edition.cnn.com/TRANSCRIPTS/0604/18/sbt.01.html

Who Will Save Iraq?

“We gave Iraq a chance” –  President Obama

Recent events in Iraq are a tiny foreshadowing of the horrors to come. A glance at smoldering Syria reveals Iraq’s fate if current events continue. And while such a crisis demands that something be done, the solutions offered will only expedite Iraq’s descent into a prolonged nightmare.

The rise of the Islamic State of Iraq and Syria (ISIS) should strike terror in the hearts of all Iraqis. Unfortunately, there are anti-government groups in Iraq making the same foolish mistakes made by the Syrian opposition: both naively treat ISIS — and other al-Qaeda-type groups — as an ally towards bringing down the government. But ISIS remains the leader of this movement, and an ISIS-led government would be an unnecessary tragedy for all Iraqis.

The marriage between ISIS and the Iraqi opposition will be short, and the divorce brutal. Ultimately the broader Sunni-led opposition desperately needs a progressive vision for the country. Simply being anti-government is a shallow goal if the outcome is ISIS coming to power.

The other main force in Sunni-dominated politics are former Baathists, who simply want a return to an Iraq where they received special perks as they dominated the Shia population. Between the Baathists and ISIS the legitimate grievances of the broader Iraqi Sunni population have no representation in this fight.

Some argue that because ISIS is so horrific that U.S. military intervention is justified, since it would be an actual case of “humanitarian intervention.”

However, ISIS is a Frankensteinan monster raised by the Gulf state monarchies and aided and abetted by the Obama administration. The exceptional Middle East journalist Patrick Cockburn recently wrote:

“Since the U.S. supports the Syrian opposition and the Syrian opposition is dominated by ISIS and al-Qa’ida groups, the Iranians wonder if the U.S. might not be complicit in the ISIS blitzkrieg that destabilised [Iraqi Prime Minister] Maliki and his Shia-dominated pro-Iranian government.”

Yes, Obama’s bloody fingerprints are all over this unfolding crime, which is why the U.S. cannot be relied on to have any positive impact. The U.S. government is incapable of using foreign policy in a “helpful” way. Indeed, the U.S. government prioritizes “U.S. interests,” which have continually led to the train wreck that is currently the Middle East. Obama’s “humanitarian” assistance in Syria is what led to the disaster now infecting Iraq.

Any U.S. intervention will also empower ISIS, since the majority of Iraqis want U.S. soldiers out of their country, and more U.S. soldiers will simply push the broader Sunni population into the arms of the Islamic extremists.

The Shia religious community of Iraq cannot save Iraq for similar reasons. The greater that the Shia community comes together to face ISIS, the more sectarian ammunition ISIS will have to agitate the broader Sunni community, who would otherwise be repulsed by ISIS’ ideology. The lunatic sectarianism of ISIS cannot be countered by a sectarian response without further dragging the country into chaos.

For similar reasons the Iranians can be no real help to the situation. Iran is in many ways the leader of the world’s Shia community, and thus despised by the Sunni extremists leading the revolt in Iraq. Any Iranian intervention will only help ISIS attract more recruits. Iran also has its own geo-political interests, which often prioritize brokering a peace/nuclear deal with the U.S. while Iraq and Syria are used as bargaining chips.

An increasingly popular idea to “save Iraq” among U.S. politicians has the greatest potential to destroy it. The solution of partition seems to be gaining ground, where Iraq will be splintered either into independent nations or autonomous zones dominated by a Sunni, Shia, and a Kurdish region. The U.S. loves partition because it creates weak, easily exploitable countries, giving greater power to U.S. allies in the region.

History has shown time and again that re-drawing borders on ethnic-religious grounds creates large scale ethnic-religious cleansing, as the new nation seeks to give its majority population a stronger political mandate by getting rid of minorities.

Those minorities who remain become official second class citizens, since they are not believers in the official faith or lack the official blood of the nation state. The splintering of Yugoslavia and India are especially good examples of how partition kills, while Israel and Saudi Arabia are good models that show the psychopathic discrimination embedded in a nation founded on religion.

Many politicians argue that Iraq’s partition is already complete, and refer to it as “de-facto partition.”  They argue: why not make the reality official by drawing new boarders and creating new states? But such a move would just be the beginning of even greater conflicts, which will exacerbate ethnic-religious cleansing, intensify the war in Syria and give greater license for similar types of proxy wars toward an even greater disintegration of the Middle East.

All of the above solutions to Iraq’s problems are no solutions at all, and must be met with a truly progressive counter-force. The religious extremists who are working collaboratively with corporate politicians to tear apart the Middle East can’t be defeated by competing religious and business interests.

To fight the ideology of religious-ethnic division that is destroying the Middle East, a countervailing force is required which unites, that has the potential to unify the vast majority of people against the minority of economic-religious elites who pursue this destructive divide and rule strategy.

Sunnis, Shias and Kurds have more in common than differences, but their differences are being preyed upon and exacerbated by religious-corporate elites who profit by maintaining their despicable leadership over these communities.

Unity is possible when common interests are focused on, such as the dignity that all people desire that requires a decent, job, education, housing, health care, etc. A political vision that prioritizes these needs can create a new progressive movement, much like the pan-Arab socialist revolutionary movements that transformed the Middle East in the 1950’s and 60’s.  But this means that the U.S. government, with its imperialist interests, must not be allowed to intervene.

The Middle East elites used ethnic and religious divisions and foreign intervention to defeat the pan-Arab movement, but the outcome for the Middle East has been nonstop catastrophe. The Middle East cannot be saved outside of a new ideology of political and economic unity, similar to the principles that drove the revolutionary pan-Arab socialist movement in the past.

America: Escape Valve For Third World Refugees

In the last few months, 47,000 refugee children stormed America’s southern border.    They arrived from Central and South America.  The usual onslaught from Mexico’s overburdened population continued by the thousands.

In excess of 15 million undocumented Mexican border crossers now call America home.  They feed off America’s welfare systems from housing, food, educational and medical care.  They cost taxpayers in excess of $346 billion annually across 15 federal agencies.

Bush, Clinton, Bush II and Obama stopped enforcing our borders 30 years ago.  The word spread like a California wildfire.

Journalist Tom Ashbrook reported:  “The numbers of children surging over the southern US border now – unaccompanied, as young as six – is just staggering.  Forty thousand-plus.  Up 90 percent.  Still growing, flooding in.  Coming up from Central America, Mexico. Coming a thousand miles and more from Honduras.  Scared north by vicious gangs.   And now, piling up in US facilities not designed for an influx of kids.”

The third world uses America, Canada, Europe and Australia for a human “escape valve.”  Since the third world adds 80 million desperate children annually to already staggering populations in China, India, Bangladesh, Mexico, Indochina and most of Africa—Western countries face shocking migration numbers that will collapse civilizations.

Because of relentless, enormous and endless legal and illegal immigration, America faces an added 300,000,000 (million) more people within this century.

Ironically, Diane Sawyer, Brian Williams, Shepard Smith, Scott Pelley and Wolf Blitzer benignly report the invasion of our country—but they refuse to interview anyone who speaks about the end result of adding 300,000,000 people to America.

This is what it will look like:

“Immigration by the numbers—off the chart” by Roy Beck  

If every American saw this video, they would scream at Congress and Obama to effectively close down mass migration into America.

Instead, powerful forces like the U.S. Chamber of Commerce, Speaker of the House John Boehner and corporations clamor for more immigration in the face of 48 million Americans subsisting on food stamps and tens of millions living off taxpayers with Section 8 housing.

“Late last week, the Obama administration asked Congress for $1.4 billion in extra funding to help house, feed and transport the tens of thousands of children being caught trying to cross the border illegally, and turned to the Defense Department to help temporarily house more than 1,000 of the children,” said Chris Sherman, DC journalist.

Every dollar paid out to care for endless legal and illegal immigration must be borrowed from foreign nations.  Our country stands a mind-numbing $18 trillion in debt.

As a country, as a civilization, as a people, we cannot continue on this path of accepting the world’s endless refugee line.  If we continue, we face ultimate collapse ourselves.  It’s that simple.

Our citizens chose 2.0 children per female since 1970, but the world eschewed birth control to continue adding 80 million annually, net gain.  Now, because of mass starvation of 10,000,000 (million children) annually, they cannot and we cannot solve the overload.

As a world traveler, I can tell you that the line never ends; it only grows exponentially.  Humanity faces hard choices in the 21^st century that it continues to avoid, ignore and evade. But not much longer.

“It is abundantly clear that the reason for the uptick …has to do with what’s going on in Central American countries,” said an administration official on the conference call. “The federal government prepared for this trend,” an official said, “but it was larger than we had anticipated.”

As we continue accepting millions as the “human population escape valve” of the 21^st century, the third world, driven by the Catholic Church, Islamic Church and other ancient religions refuse to advocate for birth control—continues exponentially.

This humanitarian crisis cannot and will not end well for Americans or the migrants.

What needs to be done:

• Distribute birth control to third world countries.
• Focus on the Catholic and Islamic churches to come to terms with human overpopulation in the 21^st century worldwide; demand they come to terms with the 21^st century and advocate for birth control.
• Guard America’s borders to allow no one to breach our country by using our military. Force those countries to deal with their own human overload. Stop encouraging endless immigration.
• Reduce all legal immigration into the United States to less than 100,000 annually instead of the current 100,000 every 30 days.
• Promote a world conference on human overpopulation and all nations’ stake in providing birth control throughout the human family.
• Interview top experts who scientifically show the end result if we fail to take destiny into our own hands.

What is that destiny?

If we don’t halt population growth with justice and compassion, it will be done for us by nature, brutally and without pity – and will leave a ravaged world.  ~Nobel Laureate Dr. Henry W. Kendall

“The raging monster upon the land is population growth. In its presence, sustainability is but a fragile theoretical construct.  To say, as many do, that the difficulties of nations are not due to people, but to poor ideology and land-use management is sophistic.”  Harvard scholar and biologist E.O. Wilson

“Unlimited population growth cannot be sustained; you cannot sustain growth in the rates of consumption of resources. No species can overrun the carrying capacity of a finite land mass. This Law cannot be repealed and is not negotiable.” Dr. Albert Bartlett,  , University of Colorado, USA.

“Most Western elites continue urging the wealthy West not to stem the migrant tide [that adds 80 million net gain annually to the planet], but to absorb our global brothers and sisters until their horrid ordeal has been endured and shared by all—ten billion humans packed onto an ecologically devastated planet.” Dr. Otis Graham, Unguarded Gates

To stop the invasion, join for free:   ;  ;  ; 

The Wealth Divide Never Wider

The Robber Barons of the 19th and 20th century had nothing over the elites of today’s globalist transnational financial conglomerates. The Richest Americans, listed in Forbes conceals the real power that controls the economy. Net worth is deficient in gauging dominance in financial commercialism and monetary preeminence. The Top 50 Highest-Paid CEOs as reported by ABC News ties into Michael Hiltzik’s account that CEO-to-worker pay gap is obscene, “The average CEO-to-worker pay ratio in 2012 was about 350 to 1.” Yet the divide in pay does not exemplify the exact lose in a livable standard of living for the ordinary staffer.If corporate multinationals were really about creating actual wealth, the pay of inspirational leadership and senior management talent, that executes the business plan, would be incidental if the employees were sharing in affluence. Those who demand higher minimum wage compensation do not understand how business works. The inordinate wealth divide, cannot and will not be reduced, until genuine economic prosperity is achieved.

Analyze the idiocy of a naive Undergraduate Research Fellow, Brian Chesley in 3 Ways to Reduce the Wealth Gap.

1. Open higher education to everyone.

2. Increase the minimum wage.

3. Increase taxes on the rich.

Such ignorant and illiterate attitudes demonstrate that institutions of higher learning encourage an atmosphere of social collectivism that plays directly into the hands of the new tyrannical tycoons.

The New York Times OP-ED piece by Daniel Altman (an adjunct associate professor of economics at the New York University Stern School of Business and a former member of the New York Times editorial board), proposes a foolish mindset and proposal in To Reduce Inequality, Tax Wealth, Not Income.

“In 1992, the top tenth of the population controlled 20 times the wealth controlled by the bottom half. By 2010, it was 65 times. Our graduated income-tax system redistributes a small amount of money every year but does little to slow the polarization of wealth.”

American household wealth totaled more than $58 trillion in 2010. A flat wealth tax of just 1.5 percent on financial assets and other wealth like housing, cars and business ownership would have been more than enough to replace all the revenue of the income, estate and gift taxes, which amounted to about $833 billion after refunds. Brackets of, say, zero percent up to $500,000 in wealth, 1 percent for wealth between $500,000 and $1 million, and 2 percent for wealth above $1 million would probably have done the trick as well.”

Absent in redistribution of wealth schemes is that the method of authentic free enterprise is never understood. Nor is there ever an effort to reestablish the principles of real business competition. The marketplace of voluntary and mutually beneficial commercial transactions, destroyed by the systemic Corporatocracy model, is the ultimate reason why wealth disparity is so great. The literal legacy of the Robber Barons is the internationalist financial system of central banking that predetermines the outcomes of selective patrons from calculating crony capitalism.

Public companies, once established to develop, produce and sell innovative goods or services are rare in an environment where financial manipulation is the primary vehicle to riches. Equity exchanges, based upon raising capital for industrious and constructive ventures, seldom function for this utilitarian purpose. The global economy, in reality, has perfected an anti-free enterprise filter that stamps out initiative and penalties upstarts that are not part of the cartels.

With the insolvency of the world-banking system an inescapable fact, the prospects for even more concentration of real assets into the hands of the financial elites, posed for the final wealth confiscation, of resources not already in their hands, is upon us.

When the internationalist financial system implodes and business screeches to a halt, a populist movement to clawback century long fraudulent gains of the hidden stashes from the interlocked illuminati families is the only coherent alternative to establish a fiscally sound financial future.

“The 2014 Bilderberg meeting is another example of those “blurred lines” between government, big oil and the financial sector, the three pillars of war. According to some reports, the topics of discussion at this year’s meeting will include the situation in Ukraine and the Russia-NATO relationship, as well as the Transatlantic Trade and Investment Partnership (TTIP), an agreement which, according to Stop TTIP, “is in fact a corporate coup that will take us to a ‘corporatocracy’, a corporate-run world.”

The mental confusion that blocks out the way the world fundamentally functions prevents focusing upon any essential debate as to substitute economic parameters for an equitable stake and remuneration for productive contributions to the success of any commercial venture.

The term Robber Barons, should not be substituted for every prosperous risk taker or self-made entrepreneur. The corruption within the cabal economy is rooted in the very nature of the favorable treatment given to participants in the criminal corporatist syndicate.

As Ms. Lévesque correctly describes the methods and operations of this New World Order neo-feudalism, the only structure that offers any prospects for an economic renaissance must target and strip the political influence of the globalists as much as the confiscation of their vast holdings.

Do not be deceived, by communist or socialist newspeak. Sharing the wealth is not the objective. The goal is imposing an unconditionally surrender upon the banksters, which is serious business. Start with the elimination of the Rehypothecation of Collateral. Lawful business has no room for coexistence with derivatives and swaps.Holding the body politic accountable and committed to breaking up the banksters’ monopoly requires compliance regulatory resistance from within the business community. It is just as important as customer and buyer rejection of the corporate induced consumer society. Sadly, most people simply are uninformed about the principles of sound business.

Most CEO’s are not businesspersons, but are globalist enablers and often are outright thieves. The needed business revolution will not be lead by their ilk.

Real competition can never be encouraged until inventive and audacious risk-takers have practical alternatives to fund their enterprises. Only then, will the wealth ratio narrow as affluence, that is more tangible, expands and the fortunes of the oligarchy diminish.

Back In The Red

“I liken the economy to a car on a flat road that has no momentum. When you take your foot off the gas, the car just stops moving.” — Stephanie Pomboy, Interview Barron’s

If you follow the stock market, you probably think the economy is sizzling. But if bonds are your thing, then you probably think we’re still in recession.

So which is the better gauge of what’s going on in the real economy; stocks or bonds?

The bond market is more accurate. And recently, long-term yields have been dropping like a stone which is not a good sign for the economy. Investors seem to think that slow growth and low inflation are here to stay, and they could be right. According to Bloomberg, “Falling yields on longer-term Treasuries historically reflect periods of lackluster growth. Since 1960, they have predicted seven of the last eight recessions when 10-year yields fell below 3-month bill rates.” As of today, the benchmark 10-year UST is a dismal 2.44 percent.

The reason investors have been piling back into Treasuries is because is the labor market is weak and there’s no sign of inflation anywhere. When wages stagnate and incomes drop–as they have since the slump ended– then there’s no upward pressure on prices because everyone is making less dough, so there’s less demand, less growth and, hence, less inflation. Of course, Obama could have fixed the situation by holding off on slashing the deficits or by increasing the amount of stimulus in his fiscal package. That would have circulated more money into the economy boosting employment and revving up growth. But that would have put the economy back on its feet again which was not what he wanted. What he wanted was to grind working people into the ground by keeping the economy on life-support while his chiseling Wall Street buddies made out like bandits on the latest stock market bubble. The Wall Street Journal explains what’s going on:

“Bond yields are – once again – plunging worldwide. The reason for this revived buying among fixed-income investors is that central banks are – once again – signaling their intent to ease monetary conditions in yet another bid to kick-start sluggish economies and forestall a downward spiral in prices, or deflation. The prospect that central banks will continue to inject money into the world’s bond markets…has acted as a green light for the world’s bond buyers.”

So investors think the Fed will have to taper the “Taper” and start buying more government paper. But why?

Because they have no choice. Many of the usual buyers of US Treasuries have cut back on their monthly purchases or stopped buying altogether. That means that rates will have to rise to attract more buyers unless the Fed makes up the difference. Check out this blurb from Barron’s interview with Stephanie Pomboy:

“Foreigners are buying about $10 billion a month of Treasuries. This compares with deficit financing needs for the U.S. government of roughly $40 billion a month, based on this year’s deficit. So the Fed needs to pick up roughly $30 billion a month in slack. When the Fed slashed its buying to $25 billion, effective this month, it for the first time opened up a demand deficit for Treasuries. If they continue to taper, that gap will expand, and things could get bumpy in the Treasury market. Rates won’t go up five basis points before the Fed would start talking about more QE.” (Barrons Interview Posits Weak US Economy, Barron’s)

It’ll get bumpy alright, real bumpy. Higher rates will send housing and stocks into freefall. The Fed will have no choice but to step in to stop the bleeding.

The economy is already suffering from chronic lack of demand. Add higher rates to the mix, and cost-conscious consumers are going to cut back on everything from auto loans to nights-on-the-town. Yellen’s not going to let that happen. She’s going to come up with some cockamamie excuse for buying more USTs and hope-like-hell that wages and incomes rebound so she can start tapering again.

This illustrates the conceptual flaw in Central Bank policy. QE and zero rates are supposed to reduce the price of money, thereby enticing consumers to take out loans and spend like crazy. That, in turn, is supposed to generate more activity and stronger growth. But there’s a slight glitch to this theory, that is, consumers aren’t the brain-dead lab rats the Fed thinks they are. Most people don’t base their spending decisions on price alone. Sometimes, for example, it doesn’t make sense to borrow money no matter how cheap it is. The average working stiff doesn’t give a rip if he can get a loan at 3.5 percent when his credit card is already maxed out and the only job he can find is working graveyard at Jack in the Box. That guy doesn’t need more debt, he needs a decent paying job. Here’s how the managing partner of MBMG Group, Paul Gambles explained the phenom in an interview on CNBC:

“People and businesses are not inclined to borrow money during a downturn purely because it is made cheaper to do so. Consumers also need a feeling of job security and confidence in the economy before taking on additional borrowing commitments.” (Washington’s blog via Zero Hedge)

Bingo. Of course, the members of the Fed know that this whole “cheap money” thing is bogus, but they keep reiterating the same blather so they can keep the wampum flowing to their crooked friends on Wall Street. It’s worth noting that: since the end of the recession, “one-third of all income increases in this country went to just 16,000 households, 95 percent of it went to the top 1 percent, and the bottom 90 percent’s incomes fell, and they fell by 15 percent.”

In other words, the Fed knows exactly how QE works, (and who benefits) and it has nothing to do with extending credit to working people. That’s malarkey. It’s all about providing limitless liquidity for financial speculators so they can send stocks into the stratosphere and rake in record profits. Here’s a blurb from a piece by Zero Hedge that helps to illustrate what’s going on:

“According to the most recent CapitalIQ data, the single biggest buyer of stocks in the first quarter were none other than the companies of the S&P500 itself, which cumulatively repurchased a whopping $160 billion of their own stock in the first quarter!

Should the Q1 pace of buybacks persist into Q2 which has just one month left before it too enters the history books, the LTM period as of June 30, 2014 will be the greatest annual buyback tally in market history.” (Here Is The Mystery, And Completely Indiscriminate, Buyer Of Stocks In The First Quarter, Zero Hedge)

Why are companies buying shares of their own stock, you ask, when buybacks add no productive value to a company at all?

It’s because it gooses stock prices which makes shareholders happy. It’s a complete scam. And it’s a huge scam, too. Currently, total stock buybacks represent a whopping $4 trillion or 20 percent of the total stock market value. Just think of the walloping prices are going to take when these same shareholders decide it’s time to bail out? Look out below!

Now get a load of this clip from Action Forex:

“Disappointment over the pace of economic growth explains at least some of the downturn in yields. The U.S. economy very likely contracted in the first quarter of the year, perhaps by as much as 1.0% annualized … Even with a strong bounce back in the second quarter … – the average pace of growth in the first half of the year will be a tepid 2.0%, about the pace it’s been since the end of the recession…

The retrenchment in yields also reflects events abroad … However, there is perhaps another reason for the decline in yields that is more pernicious. There is the realization that even after the recovery has run its course, economic growth is likely to be slower than it has been in the past. Slower growth means that as the fed funds rate eventually moves off the floor, it will not go back to the 5.25% it was prior to the Great Recession or even the 4.0% it averaged over the quarter of a decade prior. Expectations of “lower forever”…increasingly appear to be built into longer-term interest rates.” (A year in the bond market, Action Forex)

Did you catch that part about “lower forever”?

What the author means is that the economy has reset at a lower level of activity and will not return to normal. This is an admission that the managers of the system have no intention of fixing what’s wrong; cleaning up the banks, writing down the debts, regulating the system, increasing workers buying power (boosting demand) or providing sustained fiscal stimulus until unemployment and growth are back where they should be. Instead, basic macro has been replaced with public relations, that is, a swindle that’s spearheaded by faux-liberal icons Krugman and Summers who are pushing the “secular stagnation” folderol which is just a lame excuse for maintaining the status quo plus a few anemic add-ons, like infrastructure projects. Big whoop. It’s all a fig leaf for maintaining the same wealth shifting monetary policies that are in place today.

So this is it? Are we really doomed to a future of high unemployment and slow growth?

The IMF seems to think so. Here’s an excerpt from an article by Nick Beams which gives a rundown on a recent IMF report that was ignored by the media. The article is titled “No end to economic breakdown”:

“Almost six years after the eruption of the global financial crisis, the International Monetary Fund has effectively ruled out any return to the economic growth rates that preceded September 2008.

Two major chapters of the IMF’s World Economic Outlook … provide a gloomy assessment of the state of the world economy. In the advanced economies, investment is falling as a proportion of gross domestic product (GDP), while in the “emerging markets,” there is no prospect for growth rates to return to pre-2007 levels.

The IMF notes that real interest rates have been declining since the 1980s and are “now in slightly negative territory.” But this has failed to boost productive investment. On the contrary, what it calls “scars” from the global financial crisis “have resulted in a sharp and persistent decline in investment in advanced economies.” Between 2008 and 2013, there was a two-and-a-half percentage point decline in the investment to GDP ratio in these countries. The report adds that ratios “in many advanced economies are unlikely to recover to pre-crisis levels in the next five years.”

This conclusion is of immense significance given the critical role of investment in the functioning of the capitalist economy … Investment…is the key driving force of capitalist economic growth … But if investment stagnates or declines, the circle turns vicious. This is what is now taking place.” IMF report: No end to economic breakdown (april), wsws

So no return to normal, after all. The American people are now facing a long period of high unemployment and slow growth that will shrink the middle class and change the country in ways we can hardly imagine. It’s unavoidable. It’s the policy.

NOTE: As this piece was going to press, the Wall Street Journal announced that “revised” First Quarter GDP contracted at a 0.6% annual rate. So while stocks have been setting records almost daily due to the massive injections of money from the Fed, the economy is steadily sliding towards recession.

The Ukraine In Turmoil

Imagine: you are dressed up for a night on Broadway, but your neighbours are involved in a vicious quarrel, and you have to gun up and deal with the trouble instead of enjoying a show, and a dinner, and perhaps a date. This was Putin’s position regarding the Ukrainian turmoil.

The Russians have readjusted their sights, but they do not intend to bring their troops into the two rebel republics, unless dramatic developments should force them.

It is not much fun to be in Kiev these days. The revolutionary excitement is over, and hopes for new faces, the end of corruption and economic improvement have withered. The Maidan street revolt and the subsequent coup just reshuffled the same marked deck of cards, forever rotating in power.

The new acting President has been an acting prime minister, and a KGB (called “SBU” in Ukrainian) supremo. The new acting prime minister has been a foreign minister. The oligarch most likely to be “elected” President in a few days has been a foreign minister, the head of the state bank, and personal treasurer of two coups, in 2004 (installing Yushchenko) and in 2014 (installing himself). His main competitor, Mme Timoshenko, served as a prime minister for years, until electoral defeat in 2010.

These people had brought Ukraine to its present abject state. In 1991, the Ukraine was richer than Russia, today it is three times poorer because of these people’s mismanagement and theft. Now they plan an old trick: to take loans in Ukraine’s name, pocket the cash and leave the country indebted. They sell state assets to Western companies and ask for NATO to come in and protect the investment.

They play a hard game, brass knuckles and all. The Black Guard, a new SS-like armed force of the neo-nazi Right Sector, prowls the land. They arrest or kill dissidents, activists, journalists. Hundreds of American soldiers, belonging to the “private” company Academi (formerly Blackwater) are spread out in Novorossia, the pro-Russian provinces in the East and South-East. IMF–dictated reforms slashed pensions by half and doubled the housing rents. In the market, US Army rations took the place of local food.

The new Kiev regime had dropped the last pretence of democracy by expelling the Communists from the parliament. This should endear them to the US even more. Expel Communists, apply for NATO, condemn Russia, arrange a gay parade and you may do anything at all, even fry dozens of citizens alive. And so they did.

The harshest repressions were unleashed on industrial Novorossia, as its working class loathes the whole lot of oligarchs and ultra-nationalists. After the blazing inferno of Odessa and a wanton shooting on the streets of Melitopol the two rebellious provinces of Donetsk and Lugansk took up arms and declared their independence from the Kiev regime. They came under fire, but did not surrender. The other six Russian-speaking industrial provinces of Novorossia were quickly cowed. Dnepropetrovsk and Odessa were terrorised by personal army of Mr Kolomoysky; Kharkov was misled by its tricky governor.

Russia did not interfere and did not support the rebellion, to the great distress of Russian nationalists in Ukraine and Russia who mutter about “betrayal”. So much for the warlike rhetoric of McCain and Brzezinski.

Putin’s respect for others’ sovereignty is exasperating. I understand this sounds like a joke, — you hear so much about Putin as a “new Hitler”. As a matter of fact, Putin had legal training before joining the Secret Service. He is a stickler for international law. His Russia has interfered with other states much less than France or England, let alone the US. I asked his senior adviser, Mr Alexei Pushkov, why Russia did not try to influence Ukrainian minds while Kiev buzzed with American and European officials. “We think it is wrong to interfere”, he replied like a good Sunday schoolboy. It is rather likely Putin’s advisors misjudged public sentiment. « The majority of Novorossia’s population does not like the new Kiev regime, but being politically passive and conservative, will submit to its rule”, they estimated. “The rebels are a small bunch of firebrands without mass support, and they can’t be relied upon”, was their view. Accordingly, Putin advised the rebels to postpone the referendum indefinitely, a polite way of saying “drop it”.

They disregarded his request with considerable sang froid and convincingly voted en masse for secession from a collapsing Ukraine. The turnout was much higher than expected, the support for the move near total. As I was told by a Kremlin insider, this development was not foreseen by Putin’s advisers.

Perhaps the advisors had read it right, but three developments had changed the voters’ minds and had sent this placid people to the barricades and the voting booths:

1. The first one was the fiery holocaust of Odessa, where the peaceful and carelessly unarmed demonstrating workers were suddenly attacked by regime’s thugs (the Ukrainian equivalent of Mubarak’s shabab) and corralled into the Trade Unions Headquarters. The building was set on fire, and the far-right pro-regime Black Guard positioned snipers to efficiently pick off would-be escapees. Some fifty, mainly elderly, Russian-speaking workers were burned alive or shot as they rushed for the windows and the doors. This dreadful event was turned into an occasion of merriment and joy by Ukrainian nationalists who referred to their slain compatriots as “fried beetles”. (It is being said that this auto-da-fé was organised by the shock troops of Jewish oligarch and strongman Kolomoysky, who coveted the port of Odessa. Despite his cuddly bear appearance, he is pugnacious and violent person, who offered ten thousand dollars for a captive Russian, dead or alive, and proposed a cool million dollars for the head of Mr Tsarev, a Member of Parliament from Donetsk.)

2. The second was the Mariupol attack on May 9, 2014. This day is commemorated as V-day in Russia and Ukraine (while the West celebrates it on May 8). The Kiev regime forbade all V-day celebrations. In Mariupol, the Black Guard attacked the peaceful and weaponless town, burning down the police headquarters and killing local policemen who had refused to suppress the festive march. Afterwards, Black Guard thugs unleashed armoured vehicles on the streets, killing citizens and destroying property.

The West did not voice any protest; Nuland and Merkel weren’t horrified by this mass murder, as they were by Yanukovich’s timid attempts to control crowds.

The people of these two provinces felt abandoned; they understood that nobody was going to protect and save them but themselves, and went off to vote.

3. The third development was, bizarrely, the Eurovision jury choice of Austrian transvestite Conchita Wurst for a winner of its song contest.

 

The sound-minded Novorossians decided they want no part of such a Europe.

Actually, the people of Europe do not want it either:

It transpired that the majority of British viewers preferred a Polish duo, Donatan & Cleo, with its We Are Slavic. Donatan is half Russian, and has courted controversy in the past extolling the virtues of pan-Slavism and the achievements of the Red Army, says the Independent.

The politically correct judges of the jury preferred to “celebrate tolerance”, the dominant paradigm imposed upon Europe.

This is the second transvestite to win this very political contest; the first one was Israeli singer Dana International.

Such obsession with re-gendering did not go down well with Russians and/or Ukrainians.

The Russians have readjusted their sights, but they do not intend to bring their troops into the two rebel republics, unless dramatic developments should force them.

RUSSIAN PLANS

Imagine: you are dressed up for a night on Broadway, but your neighbours are involved in a vicious quarrel, and you have to gun up and deal with the trouble instead of enjoying a show, and a dinner, and perhaps a date. This was Putin’s position regarding the Ukrainian turmoil.

A few months ago, Russia had made a huge effort to become, and to be seen as, a very civilized European state of the first magnitude. This was the message of the Sochi Olympic games: to re-brand, even re-invent Russia, just as Peter the Great once had, as part of the First World; an amazing country of strong European tradition, of Leo Tolstoy and Malevich, of Tchaikovsky and Diaghilev, the land of arts, of daring social reform, of technical achievements, of modernity and beyond — the Russia of Natasha Rostova riding a Sikorsky ‘copter. Putin spent $60 billion to broadcast this image.

The old fox Henry Kissinger wisely :

Putin spent $60 billion on the Olympics. They had opening and closing ceremonies, trying to show Russia as a normal progressive state. So it isn’t possible that he, three days later, would voluntarily start an assault on Ukraine. There is no doubt that… at all times he wanted Ukraine in a subordinate position. And at all times, every senior Russian that I’ve ever met, including dissidents like Solzhenitsyn and Brodsky, looked at Ukraine as part of the Russian heritage. But I don’t think he had planned to bring it to a head now.

However, Washington hawks decided to do whatever it takes to keep Russia out in the cold. They were afraid of this image of “a normal progressive state” as such Russia would render NATO irrelevant and undermine European dependence on the US. They were adamant about retaining their hegemony, shattered as it was by the Syrian confrontation. They attacked Russian positions in the Ukraine and arranged a violent coup, installing a viciously anti-Russian regime supported by football fans and neo-Nazis, paid for by Jewish oligarchs and American taxpayers. The victors banned the Russian language and prepared to void treaties with Russia regarding its Crimean naval base at Sebastopol on the Black Sea. This base was to become a great new NATO base, controlling the Black Sea and threatening Russia.

Putin had to deal quickly and so he did, by accepting the Crimean people’s request to join Russian Federation. This dealt with the immediate problem of the base, but the problem of Ukraine remained.

The Ukraine is not a foreign entity to Russians, it is the western half of Russia. It was artificially separated from the rest in 1991, at the collapse of the USSR. The people of the two parts are interconnected by family, culture and blood ties; their economies are intricately connected. While a separate viable Ukrainian state is a possibility, an “independent” Ukrainian state hostile to Russia is not viable and can’t be tolerated by any Russian ruler. And this for military as well as for cultural reasons: if Hitler had begun the war against Russia from its present border, he would have taken Stalingrad in two days and would have destroyed Russia in a week.

A more pro-active Russian ruler would have sent troops to Kiev a long time ago. Thus did Czar Alexis when the Poles, Cossacks and Tatars argued for it in 17^th century. So also did Czar Peter the Great, when the Swedes occupied it in the 18^th century. So did Lenin, when the Germans set up the Protectorate of Ukraine (he called its establishment “the obscene peace”). So did Stalin, when the Germans occupied the Ukraine in 1941.

Putin still hopes to settle the problem by peaceful means, relying upon the popular support of the Ukrainian people. Actually, before the Crimean takeover, the majority of Ukrainians (and near all Novorossians) overwhelmingly supported some sort of union with Russia. Otherwise, the Kiev coup would not have been necessary. The forced Crimean takeover seriously undermined Russian appeal. The people of Ukraine did not like it. This was foreseen by the Kremlin, but they had to accept Crimea for a few reasons. Firstly, a loss of Sevastopol naval base to NATO was a too horrible of an alternative to contemplate. Secondly, the Russian people would not understand if Putin were to refuse the suit of the Crimeans.

The Washington hawks still hope to force Putin to intervene militarily, as it would give them the opportunity to isolate Russia, turn it into a monster pariah state, beef up defence spending and set Europe and Russia against each other. They do not care about Ukraine and Ukrainians, but use them as pretext to attain geopolitical goals.

The Europeans would like to fleece Ukraine; to import its men as “illegal” workers and its women as prostitutes, to strip assets, to colonise. They did it with Moldova, a little sister of Ukraine, the most miserable ex-Soviet Republic. As for Russia, the EU would not mind taking it down a notch, so they would not act so grandly. But the EU is not fervent about it. Hence, the difference in attitudes.

Putin would prefer to continue with his modernisation of Russia. The country needs it badly. The infrastructure lags twenty or thirty years behind the West. Tired by this backwardness, young Russians often prefer to move to the West, and this brain drain causes much damage to Russia while enriching the West. Even Google is a result of this brain drain, for Sergey Brin is a Russian immigrant as well. So are hundreds of thousands of Russian scientists and artists manning every Western lab, theatre and orchestra. Political liberalisation is not enough: the young people want good roads, good schools and a quality of life comparable to the West. This is what Putin intends to deliver.

He is doing a fine job of it. Moscow now has free bikes and Wi-Fi in the parks like every Western European city. Trains have been upgraded. Hundreds of thousands of apartments are being built, even more than during the Soviet era. Salaries and pensions have increased seven-to-tenfold in the past decade. Russia is still shabby, but it is on the right track. Putin wants to continue this modernisation.

As for the Ukraine and other ex-Soviet states, Putin would prefer they retain their independence, be friendly and work at a leisurely pace towards integration a la the European Union.

He does not dream of a new empire. He would reject such a proposal, as it would delay his modernisation plans.

If the beastly neocons would not have forced his hand by expelling the legitimate president of Ukraine and installing their puppets, the world might have enjoyed a long spell of peace.

But then the western military alliance under the US leadership would fall into abeyance, US military industries would lose out, and US hegemony would evaporate. Peace is not good for the US military and hegemony-creating media machine. So dreams of peace in our lifetime are likely to remain just dreams.

What will Putin do?

Putin will try to avoid sending in troops as long as possible. He will have to protect the two splinter provinces, but this can be done with remote support, the way the US supports the rebels in Syria, without ‘boots on the ground’. Unless serious bloodshed on a large scale should occur, Russian troops will just stand by, staring down the Black Guard and other pro-regime forces.

Putin will try to find an arrangement with the West for sharing authority, influence and economic involvement in the failed state. This can be done through federalisation, or by means of coalition government, or even partition. The Russian-speaking provinces of Novorossia are those of Kharkov (industry), Nikolayev (ship-building), Odessa (harbour), Donetsk and Lugansk (mines and industry), Dnepropetrovsk (missiles and high-tech), Zaporozhe (steel), Kherson (water for Crimea and ship-building), all of them established, built and populated by Russians. They could secede from Ukraine and form an independent Novorossia, a mid-sized state, but still bigger than some neighbouring states. This state could join the Union State of Russia and Belarus, and/or the Customs Union led by Russia. The rump Ukraine could manage as it sees fit until it decides whether or not to join its Slavic sisters in the East. Such a set up would produce two rather cohesive and homogeneous states.

Another possibility (much less likely at this moment) is a three-way division of the failed Ukraine: Novorossia, Ukraine proper, and Galicia&Volyn. In such a case, Novorossia would be strongly pro-Russian, Ukraine would be neutral, and Galicia strongly pro-Western.

The EU could accept this, but the US probably would not agree to any power-sharing in the Ukraine. In the ensuing tug-of-war, one of two winners will emerge. If Europe and the US drift apart, Russia wins. If Russia accepts a pro-Western positioning of practically all of Ukraine, the US wins. The tug-of-war could snap and cause all-out war, with many participants and a possible use of nuclear weapons. This is a game of chicken; the one with stronger nerves and less imagination will remain on the track.

Pro and Contra

It is too early to predict who will win in the forthcoming confrontation. For the Russian president, it is extremely tempting to take all of Ukraine or at least Novorossia, but it is not an easy task, and one likely to cause much hostility from the Western powers. With Ukraine incorporated, Russian recovery from 1991 would be completed, its strength doubled, its security ensured and a grave danger removed. Russia would become great again. People would venerate Putin as Gatherer of Russian Lands.

However, Russian efforts to appear as a modern peaceful progressive state would have been wasted; it would be seen as an aggressor and expelled from international bodies. Sanctions will bite; high tech imports may be banned, as in the Soviet days. The Russian elites are reluctant to jeopardize their good life. The Russian military just recently began its modernization and is not keen to fight yet, perhaps not for another ten years.

But if they feel cornered, if NATO moves into Eastern Ukraine, they will fight all the same.

Some Russian politicians and observers believe that Ukraine is a basket case; its problems would be too expensive to fix. This assessment has a ‘sour grapes’ aftertaste, but it is widespread. An interesting new voice on the web, The Saker, promotes this view. “Let the EU and the US provide for the Ukrainians, they will come back to Mother Russia when hungry”, he says. The problem is, they will not be allowed to reconsider. The junta did not seize power violently in order to lose it at the ballot box.

Besides, Ukraine is not in such bad shape as some people claim. Yes, it would cost trillions to turn it into a Germany or France, but that’s not necessary. Ukraine can reach the Russian level of development very quickly –- in union with Russia. Under the EC-IMF-NATO, Ukraine will become a basket case, if it’s not already. The same is true for all East European ex-Soviet states: they can modestly prosper with Russia, as Belarus and Finland do, or suffer depopulation, unemployment, poverty with Europe and NATO and against Russia, vide Latvia, Hungary, Moldova, Georgia. It is in Ukrainian interests to join Russia in some framework; Ukrainians understand that; for this reason they will not be allowed to have democratic elections.

Simmering Novorossia has a potential to change the game. If Russian troops don’t come in, Novorossian rebels may beat off the Kiev offensive and embark on a counter-offensive to regain the whole of the country, despite Putin’s pacifying entreaties. Then, in a full-blown civil war, the Ukraine will hammer out its destiny.

On a personal level, Putin faces a hard choice. Russian nationalists will not forgive him if he surrenders Ukraine without a fight. The US and EU threaten the very life of the Russian president, as their sanctions are hurting Putin’s close associates, encouraging them to get rid of or even assassinate the President and improve their relations with the mighty West. War may come at any time, as it came twice during the last century – though Russia tried to avoid it both times. Putin wants to postpone it, at the very least, but not at any price.

His is not an easy choice. As Russia procrastinates, as the US doubles the risks, the world draws nearer to the nuclear abyss. Who will chicken out?

(Language editing by Ken Freeland)

Repeal of Glass-Steagall And The Too Big To Fail Culture

Indoctrinating A New Generation

Is there anyone out there who still believes that Barack Obama, when he’s speaking about American foreign policy, is capable of being anything like an honest man? In a March 26 talk in Belgium to “European youth”, the president fed his audience one falsehood, half-truth, blatant omission, or hypocrisy after another. If George W. Bush had made some of these statements, Obama supporters would not hesitate to shake their head, roll their eyes, or smirk. Here’s a sample:

– “In defending its actions, Russian leaders have further claimed Kosovo as a precedent – an example they say of the West interfering in the affairs of a smaller country, just as they’re doing now. But NATO only intervened after the people of Kosovo were systematically brutalized and killed for years.”

Most people who follow such things are convinced that the 1999 US/NATO bombing of the Serbian province of Kosovo took place only after the Serbian-forced deportation of ethnic Albanians from Kosovo was well underway; which is to say that the bombing was launched to stop this “ethnic cleansing”. In actuality, the systematic deportations of large numbers of people did not begin until a few days after the bombing began, and was clearly a reaction to it, born of Serbia’s extreme anger and powerlessness over the bombing. This is easily verified by looking at a daily newspaper for the few days before the bombing began the night of March 23/24, 1999, and the few days following. Or simply look at the New York Times of March 26, page 1, which reads:

… with the NATO bombing already begun, a deepening sense of fear took hold in Pristina [the main city of Kosovo] that the Serbs would now vent their rage against ethnic Albanian civilians in retaliation. [emphasis added]

On March 27, we find the first reference to a “forced march” or anything of that nature.

But the propaganda version is already set in marble.

– “And Kosovo only left Serbia after a referendum was organized, not outside the boundaries of international law, but in careful cooperation with the United Nations and with Kosovo’s neighbors. None of that even came close to happening in Crimea.”

None of that even came close to happening in Kosovo either. The story is false. The referendum the president speaks of never happened. Did the mainstream media pick up on this or on the previous example? If any reader comes across such I’d appreciate being informed.

Crimea, by the way, did have a referendum. A real one.

– “Workers and engineers gave life to the Marshall Plan … As the Iron Curtain fell here in Europe, the iron fist of apartheid was unclenched, and Nelson Mandela emerged upright, proud, from prison to lead a multiracial democracy. Latin American nations rejected dictatorship and built new democracies … “

The president might have mentioned that the main beneficiary of the Marshall Plan was US corporations  , that the United States played an indispensable role in Mandela being caught and imprisoned, and that virtually all the Latin American dictatorships owed their very existence to Washington. Instead, the European youth were fed the same party line that their parents were fed, as were all Americans.

– “Yes, we believe in democracy – with elections that are free and fair.”

In this talk, the main purpose of which was to lambaste the Russians for their actions concerning Ukraine, there was no mention that the government overthrown in that country with the clear support of the United States had been democratically elected.

– “Moreover, Russia has pointed to America’s decision to go into Iraq as an example of Western hypocrisy. … But even in Iraq, America sought to work within the international system. We did not claim or annex Iraq’s territory. We did not grab its resources for our own gain. Instead, we ended our war and left Iraq to its people and a fully sovereign Iraqi state that could make decisions about its own future.”

The US did not get UN Security Council approval for its invasion, the only approval that could legitimize the action. It occupied Iraq from one end of the country to the other for 8 years, forcing the government to privatize the oil industry and accept multinational – largely U.S.-based, oil companies’ – ownership. This endeavor was less than successful because of the violence unleashed by the invasion. The US military finally was forced to leave because the Iraqi government refused to give immunity to American soldiers for their many crimes.

Here is a brief summary of what Barack Obama is attempting to present as America’s moral superiority to the Russians:

The modern, educated, advanced nation of Iraq was reduced to a quasi failed state … the Americans, beginning in 1991, bombed for 12 years, with one dubious excuse or another; then invaded, then occupied, overthrew the government, tortured without inhibition, killed wantonly … the people of that unhappy land lost everything – their homes, their schools, their electricity, their clean water, their environment, their neighborhoods, their mosques, their archaeology, their jobs, their careers, their professionals, their state-run enterprises, their physical health, their mental health, their health care, their welfare state, their women’s rights, their religious tolerance, their safety, their security, their children, their parents, their past, their present, their future, their lives … More than half the population either dead, wounded, traumatized, in prison, internally displaced, or in foreign exile … The air, soil, water, blood, and genes drenched with depleted uranium … the most awful birth defects … unexploded cluster bombs lying in wait for children to pick them up … a river of blood running alongside the Euphrates and Tigris … through a country that may never be put back together again. … “It is a common refrain among war-weary Iraqis that things were better before the U.S.-led invasion in 2003,” reported the Washington Post. (May 5, 2007)

How can all these mistakes, such arrogance, hypocrisy and absurdity find their way into a single international speech by the president of the United States? Is the White House budget not sufficient to hire a decent fact checker? Someone with an intellect and a social conscience? Or does the desire to score propaganda points trump everything else? Is this another symptom of the Banana-Republicization of America?

Long live the Cold War

In 1933 US President Franklin D. Roosevelt recognized the Soviet Union after some 15 years of severed relations following the Bolshevik Revolution. On a day in December of that year, a train was passing through Poland carrying the first American diplomats dispatched to Moscow. Amongst their number was a 29 year-old Foreign Service Officer, later to become famous as a diplomat and scholar, George Kennan. Though he was already deemed a government expert on Russia, the train provided Kennan’s first actual exposure to the Soviet Union. As he listened to his group’s escort, Russian Foreign Minister Maxim Litvinov, reminisce about growing up in a village the train was passing close by, and his dreams of becoming a librarian, the Princeton-educated Kennan was astonished: “We suddenly realized, or at least I did, that these people we were dealing with were human beings like ourselves, that they had been born somewhere, that they had their childhood ambitions as we had. It seemed for a brief moment we could break through and embrace these people.”

It hasn’t happened yet.

One would think that the absence in Russia of communism, of socialism, of the basic threat or challenge to the capitalist system, would be sufficient to write finis to the 70-year Cold War mentality. But the United States is virtually as hostile to 21st-century Russia as it was to 20th-century Soviet Union, surrounding Moscow with military bases, missile sites, and NATO members. Why should that be? Ideology is no longer a factor. But power remains one, specifically America’s perpetual lust for world hegemony. Russia is the only nation that (a) is a military powerhouse, and (b) doesn’t believe that the United States has a god-given-American-exceptionalism right to rule the world, and says so. By these criteria, China might qualify as a poor second. But there are no others.

Washington pretends that it doesn’t understand why Moscow should be upset by Western military encroachment, but it has no such problem when roles are reversed. Secretary of State John Kerry recently stated that Russian troops poised near eastern Ukraine are “creating a climate of fear and intimidation in Ukraine” and raising questions about Russia’s next moves and its commitment to diplomacy.

NATO – ever in need of finding a raison d’être – has now issued a declaration of [cold] war, which reads in part:

“NATO foreign ministers on Tuesday [April 1, 2014] reaffirmed their commitment to enhance the Alliance’s collective defence, agreed to further support Ukraine and to suspend NATO’s practical cooperation with Russia. ‘NATO’s greatest responsibility is to protect and defend our territory and our people. And make no mistake, this is what we will do,’ NATO Secretary General Anders Fogh Rasmussen said. … Ministers directed Allied military authorities to develop additional measures to strengthen collective defence and deterrence against any threat of aggression against the Alliance, Mr. Fogh Rasmussen said. ‘We will make sure we have updated military plans, enhanced exercises and appropriate deployments,’ he said. NATO has already reinforced its presence on the eastern border of the Alliance, including surveillance patrols over Poland and Romania and increased numbers of fighter aircraft allocated to the NATO air policing mission in the Baltic States. … NATO Foreign Ministers also agreed to suspend all of NATO’s practical cooperation with Russia.”

Does anyone recall what NATO said in 2003 when the United States bombed and invaded Iraq with “shock and awe”, compared to the Russians now not firing a single known shot at anyone? And neither Russia nor Ukraine is even a member of NATO. Does NATO have a word to say about the right-wing coup in Ukraine, openly supported by the United States, overthrowing the elected government? Did the hypocrisy get any worse during the Cold War? Imagine that NATO had not been created in 1949. Imagine that it has never existed. What reason could one give today for its creation? Other than to provide a multi-national cover for Washington’s interventions.

One of the main differences between now and the Cold War period is that Americans at home are (not yet) persecuted or prosecuted for supporting Russia or things Russian.

But don’t worry, folks, there won’t be a big US-Russian war. For the same reason there wasn’t one during the Cold War. The United States doesn’t pick on any country which can defend itself.

Cuba … Again … Still … Forever

Is there actually a limit? Will the United States ever stop trying to overthrow the Cuban government? Entire books have been written documenting the unrelenting ways Washington has tried to get rid of tiny Cuba’s horrid socialism – from military invasion to repeated assassination attempts to an embargo that President Clinton’s National Security Advisor called “the most pervasive sanctions ever imposed on a nation in the history of mankind”.  But nothing has ever come even close to succeeding. The horrid socialism keeps on inspiring people all over the world. It’s the darnedest thing. Can providing people free or remarkably affordable health care, education, housing, food and culture be all that important?

And now it’s “Cuban Twitter” – an elaborately complex system set up by the US Agency for International Development (USAID) to disguise its American origins and financing, aiming to bring about a “Cuban Spring” uprising. USAID sought to first “build a Cuban audience, mostly young people; then the plan was to push them toward dissent”, hoping the messaging network “would reach critical mass so that dissidents could organize ‘smart mobs’ – mass gatherings called at a moment’s notice – that might trigger political demonstrations or ‘renegotiate the balance of power between the state and society’.”  It’s too bad it’s now been exposed, because we all know how wonderful the Egyptian, Syrian, Libyan, and other “Arab Springs” have turned out.

Here’s USAID speaking after their scheme was revealed on April 3: “Cubans were able to talk among themselves, and we are proud of that.”  We are thus asked to believe that normally the poor downtrodden Cubans have no good or safe way to communicate with each other. Is the US National Security Agency working for the Cuban government now?

The Associated Press, which broke the story, asks us further to believe that the “truth” about most things important in the world is being kept from the Cuban people by the Castro regime, and that the “Cuban Twitter” would have opened people’s eyes. But what information might a Cuban citizen discover online that the government would not want him to know about? I can’t imagine. Cubans are in constant touch with relatives in the US, by mail and in person. They get US television programs from Miami and other southern cities; both CNN and Telesur (Venezuela, covering Latin America) are seen regularly on Cuban television”; international conferences on all manner of political, economic and social issues are held regularly in Cuba. I’ve spoken at more than one myself. What – it must be asked – does USAID, as well as the American media, think are the great dark secrets being kept from the Cuban people by the nasty commie government?

Those who push this line sometimes point to the serious difficulty of using the Internet in Cuba. The problem is that it’s extremely slow, making certain desired usages often impractical. From an American friend living in Havana: “It’s not a question of getting or not getting internet. I get internet here. The problem is downloading something or connecting to a link takes too long on the very slow connection that exists here, so usually I/we get ‘timed out’.” But the USAID’s “Cuban Twitter”, after all, could not have functioned at all without the Internet.

Places like universities, upscale hotels, and Internet cafés get better connections, at least some of the time; however, it’s rather expensive to use at the hotels and cafés.

In any event, this isn’t a government plot to hide dangerous information. It’s a matter of technical availability and prohibitive cost, both things at least partly in the hands of the United States and American corporations. Microsoft, for example, at one point, if not at present, barred Cuba from using its Messenger instant messaging service.

Cuba and Venezuela have jointly built a fiber optic underwater cable connection that they hope will make them less reliant on the gringos; the outcome of this has not yet been reported in much detail.

The grandly named Agency for International Development does not have an honorable history; this can perhaps be captured by a couple of examples: In 1981, the agency’s director, John Gilligan, stated: “At one time, many AID field offices were infiltrated from top to bottom with CIA people. The idea was to plant operatives in every kind of activity we had overseas, government, volunteer, religious, every kind.”

On June 21, 2012, the Bolivarian Alliance for the Peoples of Our America (ALBA) issued a resolution calling for the immediate expulsion of USAID from their nine member countries, “due to the fact that we consider their presence and actions to constitute an interference which threatens the sovereignty and stability of our nations.”

USAID, the CIA, the National Endowment for Democracy (and the latter’s subsidiaries), together or singly, continue to be present at regime changes, or attempts at same, favorable to Washington, from “color revolutions” to “spring” uprisings, producing a large measure of chaos and suffering for our tired old world.

 

Notes

1. William Blum, America’s Deadliest Export – Democracy: The Truth About US Foreign Policy and Everything Else, p.22-5
2. Walter Isaacson & Evan Thomas, The Wise Men (1986), p.158
3. Washington Post, March 31, 2014
4. “NATO takes measures to reinforce collective defence, agrees on support for Ukraine”, NATO website, April 1, 2014
5. Sandy Berger, White House press briefing, November 14, 1997, US Newswire transcript
6. Associated Press, April 3 & 4, 2014
7. Washington Post, April 4, 2014
8. Associated Press, June 2, 2009
9. George Cotter, “Spies, strings and missionaries”, The Christian Century (Chicago), March 25, 1981, p.321

The Economic Scam of the Century

The leaders of the U.S. Senate Banking Committee,  Sen. Tim Johnson (D., S.D.) and Sen. Mike Crapo (R., Idaho),  released a draft bill on Sunday that would provide explicit government guarantees on mortgage-backed securities (MBS) generated by privately-owned banks and financial institutions. The gigantic giveaway to Wall Street would put US taxpayers on the hook for 90 percent of the losses on toxic MBS the likes of which crashed the financial system in 2008 plunging the economy into the deepest slump since the Great Depression. Proponents of the bill say that new rules by the Consumer Financial Protection Bureau (CFPB) –which set standards for a “qualified mortgage” (QM)– assure that borrowers will be able to repay their loans thus reducing the chances of a similar meltdown in the future. However, those QE rules were largely shaped by lobbyists and attorneys from the banking industry who eviscerated strict underwriting requirements– like high FICO scores and 20 percent down payments– in order to lend freely to borrowers who may be less able to repay their loans.  Additionally, a particularly lethal clause has been inserted into the bill that would provide blanket coverage for all MBS  (whether they met the CFPB’s QE standard or not) in the event of another financial crisis. Here’s the paragraph:

“Sec.305. Authority to protect taxpayers in unusual and exigent market conditions….

If the Corporation, the Chairman of the Federal Reserve Board of Governors and the Secretary of the Treasury, in consultation with the Secretary of Housing and Urban Development, determine that unusual and exigent circumstances threaten mortgage credit availability within the U.S. housing market, FMIC may provide insurance on covered securities that do not meet the requirements under section 302 including those for first loss position of private market holders.” (“Freddie And Fannie Reform – The Monster Has Arrived”, Zero Hedge)

In other words, if the bill passes,  US taxpayers will be responsible for any and all bailouts deemed necessary by the regulators mentioned above.  And, since all of those regulators are in Wall Street’s hip-pocket, there’s no question what they’ll do when the time comes. They’ll bailout they’re fatcat buddies and dump the losses on John Q. Public.

If you can’t believe what you are reading or if you think that the system is so thoroughly corrupt it can’t be fixed; you’re not alone. This latest outrage just confirms that the Congress, the executive and all the chief regulators are mere marionettes performing whatever task is asked of them by their Wall Street paymasters.

The stated goal of the Johnson-Crapo bill is to “overhaul” mortgage giants Fannie Mae and Freddie Mac so that “private capital can play the central role in home finance.” (That’s how Barack Obama summed it up.) Of course, that’s not really the purpose at all. The real objective is to hand over the profit-generating mechanism to the private banks (Fannie and Freddie have been raking in the dough for the last three years) while the red ink is passed on to the public. That’s what’s really going on.

According to the Wall Street Journal,  the bill will

“construct an elaborate new platform by which a number of private-sector entities, together with a privately held but federally regulated utility, would replace key roles long played by Fannie and Freddie….”

“The legislation replaces the mortgage-finance giants with a new system in which the government would continue to play a potentially significant role insuring U.S. home loans.” (“Plan for Mortgage Giants Takes Shape”, Wall Street Journal) 

“Significant role”? What significant role? (Here’s where it gets interesting.)

The WSJ:

“The Senate bill would repurpose the firms’ existing regulator as a new “Federal Mortgage Insurance Corp.” and charge the agency with approving new firms to pool loans into securities. Those firms could then purchase federal insurance to guarantee payments to investors in those bonds. The FMIC would insure mortgage bonds much the way the Federal Deposit Insurance Corp. provides bank-deposit insurance.”

Unbelievable. So they want to turn F and F into an insurance company that backs up the garbage mortgages created by the same banks that just ripped us all off for trillions of dollars on the same freaking swindle?

You can’t be serious?

More from the WSJ:  “Mortgage guarantors would be required to maintain a 10% capital buffer against losses and to have that capital extinguished before the federal insurance would be triggered.”

10 percent? What the hell difference does 10 percent make; that’s a drop in the bucket.  If the banks are going to issue mortgages to people who can’t repay the debt, then they need to cover the damn losses themselves, otherwise they shouldn’t be in the banking biz to begin with, right?

This is such an outrageous, in-your-face ripoff, it shouldn’t even require a response. These jokers should be laughed out of the senate. All the same,  the bill is moving forward, and President Twoface has thrown his weigh behind it. Is there sort of illicit, under-the-table, villainous activity this man won’t support?

Not when it comes to his big bank buddies, there isn’t. Now check out this clip from an article by economist Dean Baker. Baker refers to the Corker-Warner bill, but the Crapo-Johnson fiasco is roughly the same deal. Here’s Baker:

“The Corker-Warner bill does much more than just eliminate Fannie and Freddie. In their place, it would establish a system whereby private financial institutions could issue mortgage-backed securities (MBS) that carry a government guarantee. In the event that a large number of mortgages in the MBS went bad, the investors would be on the hook for losses up to 10 percent of its value, after that point the government gets the tab.

If you think that sounds like a reasonable system, then you must not have been around during the housing crash and ensuing financial crisis. At the peak of the crisis in 2008-2009 the worst subprime MBS were selling at 30-40 cents on the dollar. This means the government would have been picking up a large tab under the Corker-Warner system, even if investors had been forced to eat a loss equal to 10 percent of the MBS price.

The pre-crisis financial structure gave banks an enormous incentive to package low quality and even fraudulent mortgages into MBS. The system laid out in the Corker-Warner bill would make these incentives even larger. The biggest difference is that now the banks can tell investors that their MBS come with a government guarantee, so that they most they stand to lose is 10 percent of the purchase price.” (“The disastrous idea for privatizing Fannie and Freddie”, Dean Baker, Al Jazeera)

Just ponder that last part for a minute: “The bill would make these incentives even larger.”

Do you really think we should create bigger incentives for these dirtbags to rip us off? Does that make sense to you? Here’s more from Baker:

“The changes in financial regulation are also unlikely to provide much protection. In the immediate wake of the crisis there were demands securitizers keep a substantial stake in the mortgages they put into their pools, to ensure that they had an incentive to only securitize good mortgages. Some reformers were demanding as much as a 20 percent stake in every mortgage.

Over the course of the debate on the Dodd-Frank bill and subsequent rules writing this stake got ever smaller. Instead of being 20 percent, it was decided that securitizers only had to keep a 5 percent stake. And for mortgages meeting certain standards they wouldn’t have to keep any stake at all.

Originally only mortgages in which the homeowner had a down payment of 20 percent or more passed this good mortgage standard. That cutoff got lowered to 10 percent and then was lowered further to 5 percent. Even though mortgages with just 5 percent down are four times as likely to default as mortgages with 20 percent or more down, securitizers will not be required to keep any stake in them when they put them into a MBS.”

Hold on there, Dean. You mean Dodd Frank didn’t ”put things right”?  What the heck? I thought that “tough new regulations” assured us that the banks wouldn’t blow up the system again in five years or so. Was that all baloney?

Yep, sure was. 100% baloney. Once the banks unleashed their army of attorneys and lobbyists on Capital Hill,  new regulations didn’t stand a chance. They turned Dodd Frank into mincemeat and now we’re back to square one.

And don’t expect the ratings agencies to help out either because they’re in the same shape they were before the crash. No changes at all.  They still get paid by the guys who issue the mortgage-backed securities (MBS) which is about the same as if you paid the salary of the guy who grades your midterm exam. Do you think that might cloud his judgment a bit? You’re damn right, it would; just like paying the ratings agencies guarantees you’ll get the rating you want. The whole system sucks.

And as far as the new Consumer Financial Protection Bureau, well, you guessed it. The banks played a role in drafting the new “Qualified Mortgage” standard too, which is really no standard at all, since no self-respecting lender would ever use the same criteria for issuing a loan or mortgage. For example, no banker is going to say, “Heck, Josh, we don’t need your credit scores. We don’t need a down-payment. We’re all friends here, right? So, how much do you need for that mortgage old buddy, $300,000, $400,000, $500,000.  You name it. The sky’s the limit.”

No down payment? No credit scores? And they have the audacity to call this a qualified mortgage?

Qualified for what? Qualified for sticking it to the taxpayers?  The real purpose of the qualified mortgage is to protect the banks from their own shifty deals. That’s what it’s all about. It provides them with “safe harbor” in the event that the borrower defaults. What does that mean?

It means that the government can’t get its money back if the loan blows up.   The qualified mortgage actually protects the banks, not the consumer. That’s why it’s such a farce,  just like Dodd Frank is a farce. Nothing has changed. Nothing. In fact, it’s gotten worse. Now we’re on the hook for whatever losses the banks run up peddling mortgage credit to anyone who can fog a mirror.

We’ll leave the last word for Dean Baker, since he seems like the only guy in America who has figured out what the hell is going on:

“In short, the Corker-Warner plan to privatize Fannie and Freddie is essentially a proposal to reinstitute the structure of incentives that gave us the housing bubble and the financial crisis, but this time with the added fuel of an explicit government guarantee on the subprime MBS. If that doesn’t sound like a great idea to you then you haven’t spent enough time around powerful people in Washington.”

The Johnson-Crapo bill doesn’t have anything to do with “winding down” Fannie and Freddie or “overhauling” the mortgage finance industry. It’s a bald-face ripoff engineered by two chiseling senators who are putting the country at risk to beef up Wall Street’s bottom line.

It’s the scam of the century.

Housing: One Chart Says It All

Get a load of this chart from DataQuick’s National Home Sales Snapshot. It’ll tell you everything need to know about housing.

(Note: MSA=metropolitan statistical area)

As you can see, prices are flatlining or drifting lower while sales are sinking like a stone. That’s the whole ball of wax, isn’t it?

Sure, sales will increase in the spring (as they always do), but judging by the sharp dropoff in last year’s hottest markets, this could be the crappiest spring selling season since the crash.

Why?

Because prices are too high, rates are too high, “organic” demand is too weak, credit is too tight, and the pool of potential buyers has shrunk to the size of a walnut, that’s why.

The banks have reduced the percentage of distressed homes (foreclosures and short sales) on the market to roughly 11 percent from 59 percent in 2009. Fewer distressed homes mean higher prices, but higher prices mean fewer sales. It’s a trade-off. The banks get their money, but the market goes to hell. That’s how it works. According to most estimates, there are roughly 4.5 million homes in some stage of foreclosure. That means that –at the present pace–we should get through this Housing Depression a few weeks before Judgment Day. But don’t hold me to that.

Did you catch this gem on Bloomberg last week? It’s about the big private equity guys exiting the market. Take a look:

“Blackstone Group LP is slowing its purchases of houses to rent amid soaring prices after a buying binge made it the biggest U.S. single-family home landlord. Blackstone’s acquisition pace has declined 70 percent from its peak last year, when the private equity firm was spending more than $100 million a week on properties, said Jonathan Gray, global head of real estate for the New York-based firm…

“The institutional wave has passed,” Gray, who oversees almost $80 billion in property investments, said in a telephone interview. ‘It’s at a much lower level than it was 12 or 24 months ago.’

Private-equity firms, hedge funds, real estate investment trusts and other institutional investors have spent more than $20 billion to buy as many as 200,000 rental homes in the last two years. They snapped up properties after prices fell as much as 35 percent from the 2006 peak…

American Homes 4 Rent and Colony American Homes, the second- and third-largest single-family landlords, also have been scaling back as bargains dry up…

“We’re going to have to probably slow down a little bit on our acquisition pace until we have a better view or actual certainty of the capital being available,” (Chief Executive Officer David ) Singelyn said.

Colony Financial Inc. (CLNY), a REIT that invests in Colony American Homes, slowed its funding for acquisitions last year to focus on improving operations, CEO Richard Saltzman said in a November conference call…

American Residential Properties Inc. (ARPI), a landlord with 6,000 homes, slowed acquisitions by almost half in its latest quarter ending Dec. 31. It invested $104 million in 633 homes compared with $204 million on 1,251 homes in the previous quarter, the Scottsdale, Arizona-based company said in a statement.” (Blackstone’s Home Buying Binge Ends as Prices Surge, Bloomberg)

Okay, so the speculators are getting out of housing. How’s that going to effect the market?

No one really knows yet, but it can’t be good, after all, all-cash deals amounted to nearly 50 percent of all homes sales in many of the hotter markets last year. That’s why prices went up even though the economy was still in the shitter, because the fatcats were loading up on cheap real estate. Now it looks like they’re headed for the hills. That’s NOT going to be good for sales.

Did you know that existing home sales have dropped for six months straight, dipping below trend to the same level they were at in 1998?

But how can that be, you ask, when everyone’s blabbing about the recovery? How can that be when the Fed has purchased more than $1.4 trillion in mortgage-backed securities (MBS) and rates are a measly 4.5%? How can that be prices have been climbing higher for more than a year?

Sales are dropping because millions of people are underwater on their mortgages and can’t afford to move. Millions more are stuck in their homes and aren’t paying anything at all. Millions more have student debt up to their eyeballs and will probably never own a home. And millions more still can’t find a job. That’s why home sales are plunging, because the economy stinks. It’s that simple. Sure, the market got a nice little bump from Bernanke’s $4 trillion liquidity-surge. Big whoop. Besides, that was 2012-2013. Today things are different. Today the Fed is winding down QE and there’s even talk of rate-hike. How do you think that’s going to impact sales?

Now get a load of this from Redfin:

“Home sales continued to be sluggish in February, and decreasing affordability is holding back would-be buyers, according to Redfin…. Slow sales have been largely attributed to low inventory for months, but many markets have now seen inventory rise while sales continue to fall. Several markets along the West Coast have seen sharp increases in inventory, yet home sales in the West fell 13.4 percent year over year, hitting their lowest point in five years in the first two months of 2014, while prices rose 19.1 percent year over year…

West Coast Sales Hit Lowest Point in Five Years

– In Redfin’s West Coast markets, sales fell 13.4% from February 2013, and hit a five-year low in the first two months of 2014. Sales fell most dramatically in Las Vegas (-22.7%), Sacramento (-21.8%) and Ventura (-20.8%). Across 19 markets, sales fell 10.3%, with markets east of the Rockies taking a less dramatic hit and a few even seeing modest increases.” (Redfin)

Did you catch that part about “inventory rising while sales continue to fall”?

For months, the media has been using the “low inventory” excuse for the rotten sales figures. Now they’ve moved onto “bad weather” to pull the wool over people’s eyes. Talk about a lame excuse. It’s been in the 70 and 80s in California for most of the winter and sales are down by a whopping 13 percent. Are potential buyers staying at home because they’re afraid of getting skin cancer? Is that it? (That’ll probably be the next excuse.)

So why ARE home sales tanking?

It’s because you can’t buy a house if you’re working graveyard at Freddie’s Burger Bar for $8.50 an hour. It’s because you can’t put together a 20% down-payment if you’re camped out on Mom’s sofa in the attic along with Uncle Murray’s trombone and your Dad’s photo collection of soup cans. It’s because you can’t qualify for a mortgage when 100 percent of your weekly paycheck goes to paying the VISA, filling the gas-tank, and buying a few groceries at Danny’s Discount Foodmart. It can’t be done.

That’s what’s really going on. That’s why the share of firsttime homebuyers is currently at its lowest level ever. That’s why purchase applications are at an 18-year low. That’s why the homeownership rate has slipped to levels not seen since 1995. And that’s why mortgage originations were down almost 60 percent year-over-year. It’s because the economy sucks. Everyone knows it.

Now take a look at one last chart. It’s by Logan Mohtashami at dshort.com. from an article titled,Mortgage Purchase Applications Running Out Of Time.

As you can see, there’s a pretty close connection between incomes (the green line) and the mortgage purchase applications index. (The people who can afford to buy homes.)

Surprised?

Of course not, because most people assume there’s a relationship between ‘what a person earns’ and his ‘ability to buy a home’. After all, we haven’t always lived in this bizarro credit-addled world where anyone who can sit upright in a chair and sign his name on the dotted line can buy a $450,000 rambler in Orchard Hills. That’s a fairly new development.

And that brings us to the point of this article, which is to show that all the monetary hocus pocus has achieved nothing. The Fed’s Koolaid infusions have been a dead-loss. The market is still flat on its back. Kaput. Which shows, that if you want to fix housing, you have to fix the economy. And if you want to fix the economy; you have to put people back to work and pay them a fair wage. It’s that simple.

So why can’t anyone in Washington figure it out?

(Note: As this article was going to press, the latest “existing home sales” data was released.) According to USA Today:

“Existing home sales slowed again in February, falling to the lowest pace in 19 months.”

So February was even slower than the coldest month of the year, January?

Unbelievable.

Next Page »