20 Signs That The U.S. Economy Is Heading For Big Trouble In The Months Ahead

20 Signs That The U.S. Economy Is Heading For Big Trouble In The Months Ahead.

 

#1 Freight shipment volumes have hit their lowest level in two years, and freight expenditures have gone negative for the first time since the last recession.

#2 The average price of a gallon of gasoline has risen by more than 50 cents over the past two months. This is making things tougher on our economy, because nearly every form of economic activity involves moving people or goods around.

#3 Reader’s Digest, once one of the most popular magazines in the world, has filed for bankruptcy.

#4 Atlantic City’s newest casino, Revel, has just filed for bankruptcy. It had been hoped that Revel would help lead a turnaround for Atlantic City.

#5 A state-appointed review board has determined that there is “no satisfactory plan” to solve Detroit’s financial emergency, and many believe that bankruptcy is imminent. If Detroit does declare bankruptcy, it will be the largest municipal bankruptcy in U.S. history.

#6 David Gallagher, the CEO of Town Sports International, recently said that his company is struggling right now because consumers simply do not have as much disposable income anymore…

“As we moved into January membership trends were tracking to expectations in the first half of the month, but fell off track and did not meet our expectations in the second half of the month. We believe the driver of this was the rapid decline in consumer sentiment that has been reported and is connected to the reduction in net pay consumers earn given the changes in tax rates that went into effect in January.“

#7 According to the Conference Board, consumer confidence in the U.S. has hit its lowest level in more than a year.

#8 Sales of the Apple iPhone have been slower than projected, and as a result Chinese manufacturing giant FoxConn has instituted a hiring freeze. The following is from a CNET report that was posted on Wednesday…

The Financial Times noted that it was the first time since a 2009 downturn that the company opted to halt hiring in all of its facilities across the country. The publication talked to multiple recruiters.

The actions taken by Foxconn fuel the concern over the perceived weakened demand for the iPhone 5 and slumping sentiment around Apple in general, with production activity a leading indicator of interest in the product.

#9 In 2012, global cell phone sales posted their first decline since the end of the last recession.

#10 We appear to be in the midst of a “retail apocalypse“. It is being projected that Sears, J.C. Penney, Best Buy and RadioShack will also close hundreds of stores by the end of 2013.

#11 An internal memo authored by a Wal-Mart executive that was recently leaked to the press said that February sales were a “total disaster” and that the beginning of February was the “worst start to a month I have seen in my ~7 years with the company.”

#12 If Congress does not do anything and “sequestration” goes into effect on March 1st, the Pentagon says that approximately 800,000 civilian employees will be facing mandatory furloughs.

#13 Barack Obama is admitting that the “sequester” could have a crippling impact on the U.S. economy. The following is from a recentCNBC article…

Obama cautioned that if the $85 billion in immediate cuts — known as the sequester — occur, the full range of government would feel the effects. Among those he listed: furloughed FBI agents, reductions in spending for communities to pay police and fire personnel and teachers, and decreased ability to respond to threats around the world.

He said the consequences would be felt across the economy.

“People will lose their jobs,” he said. “The unemployment rate might tick up again.”

#14 If the “sequester” is allowed to go into effect, the CBO is projecting that it will cause U.S. GDP growth to go down by at least 0.6 percent and that it will “reduce job growth by 750,000 jobs“.

#15 According to a recent Gallup survey, 65 percent of all Americans believe that 2013 will be a year of “economic difficulty“, and 50 percent of all Americans believe that the “best days” of America are now in the past.

#16 U.S. GDP actually contracted at an annual rate of 0.1 percentduring the fourth quarter of 2012. This was the first GDP contraction that the official numbers have shown in more than three years.

#17 For the entire year of 2012, U.S. GDP growth was only about 1.5 percent. According to Art Cashin, every time GDP growth has fallen this low for an entire year, the U.S. economy has always ended up going into a recession.

#18 The global economy overall is really starting to slow down…

The world’s richest countries saw their economies contract for the first time in almost four years during the final three months of 2012, the Organisation for Economic Co-operation and Development said.

The Paris-based thinktank said gross domestic product across its 34 member states fell by 0.2% – breaking a period of rising activity stretching back to a 2.3% slump in output in the first quarter of 2009.

All the major economies of the OECD – the US, Japan, Germany, France, Italy and the UK – have already reported falls in output at the end of 2012, with the thinktank noting that the steepest declines had been seen in the European Union, where GDP fell by 0.5%. Canada is the only member of the G7 currently on course to register an increase in national output.

#19 Corporate insiders are dumping enormous amounts of stockright now. Do they know something that we don’t?

#20 Even some of the biggest names on Wall Street are warning that we are heading for an economic collapse. For example, Seth Klarman, one of the most respected investors on Wall Street, said in his year-end letter that the collapse of the U.S. financial system could happen at any time…

 

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The day of reckoning for global total debt – total credit market debt up from $28 trillion in 2001 to $53 trillion in 2012. US consumer debt went up in last few months but largely because of giant amounts of student loan debt taken on.

You have to really question what passes for financial analysis these days. One financial show was discussing the recent increase in consumer debt as something positive. In the same breath this person also said that households increased savings. Now think about this statement. If you financed a $2,000 vacation on your credit card but increased savings by $500 did your balance sheet improve? Of course not. Let us not even dive into the fact that most of the recent consumer debt increase has come at the hands of student debt which is already in a massive bubble. We are simply repeating the same mistakes with a different soundtrack. We are trying to get out of a debt led crisis with more debt. The facts even show this and we have compiled some of the more troubling data by putting the entire debt market into perspective here. Is it really possible to solve a problem based on too much debt with more debt?
The total market of debt shows our addiction to borrowed money

We flat out have an addiction to borrowing. Total market debt is now up to an astonishing $53 trillion and continues to grow. Take a look at this frightening data:

In 2001 total credit market debt was up to $28 trillion. Today it is now well above $53 trillion and inching closer to slapping on another trillion dollars this year. If you look at Greece as a microcosm of the bigger issue, you realize they are treating a solvency issue as if it were a liquidity issue. Let us be absolutely clear that all of this debt will never be paid off. This warrants repeating:

“The $53 trillion in total credit market debt will never be fully repaid.”

In essence the total debt markets are growing even though the debt will never be paid off. Since most thinking people get this, the banking sector is leveraging central banks to basically print money since no person would lend money out knowing they would never be paid back. Do people really think we are going to pay off our $15 trillion national debt when our deficits look like this:

We’ve been running continuous budget deficits since the late 1970s. We had a brief respite when it came to having a surplus with the tech boom but that was blown out the window completely with the real estate mania. Contrary to what most will say, deficits do matter and massive deficits really matter.

Let us be abundantly clear that the total market debt is incredible. You now start having this challenging race where you are trying to avoid having your total debt surpass your annual GDP. The US has passed that mark and so have many other countries. The results in the long-run are never positive especially when people wise up and start asking for their money back. Since most don’t have the funds, they pay for it via inflation and a devaluation of their currencies. A few articles have circulated where Greece is trying to enforce stronger tax collections yet their system on collecting taxes is so corrupted that they have no way of achieving this without completely revamping the system.

If you think Europe is done just look at Portugal since they are next in the debt grinder queue:

To the debt increase in the US

The access to easy debt creates massive amounts of bubbles. We saw this in housing and now we are seeing it here in the US with the giant higher education bubble:

Keep in mind this is only a tiny part of the student debt market. This year we will surpass $1 trillion point for student loan debt. I believe this will be another crisis that will hit and many indebted students are already feeling this. Many are being sucked into paper mill for-profits that are essentially scam factories that raid the government backed student loan funds. They lobby Congress to make it easier for them to report horrific placement data and change the metric on default reporting so it doesn’t look as atrocious. Even with these softballs from our bought out politicians, the data is still horrible.

A debt bubble cannot be solved with more debt. That should be obvious just like saying savings increased but people went into more debt should cause you to pause. Yet few in the financial media ever take a timeout and many missed the tech bubble bust, the housing bubble bust, and gear up because they will miss the other debt bubble bust as well.

 

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The day of reckoning for global total debt – total credit market debt up from $28 trillion in 2001 to $53 trillion in 2012. US consumer debt went up in last few months but largely because of giant amounts of student loan debt taken on.

Our Collapsing Economy and Currency

“Is the “fiscal cliff” real or just another hoax? The answer is that the fiscal cliff is real, but it is a result, not a cause. The hoax is the way the fiscal cliff is being used.”

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December 1, 2012

The fiscal cliff is the result of the inability to close the federal budget deficit. The budget deficit cannot be closed because large numbers of US middle class jobs and the GDP and tax base associated with them have been moved offshore, thus reducing federal revenues. The fiscal cliff cannot be closed because of the unfunded liabilities of eleven years of US-initiated wars against a half dozen Muslim countries–wars that have benefitted only the profits of the military/security complex and the territorial ambitions of Israel. The budget deficit cannot be closed, because economic policy is focused only on saving banks that wrongful financial deregulation allowed to speculate, to merge, and to become too big to fail, thus requiring public subsidies that vastly dwarf the totality of US welfare spending.

The hoax is the propaganda that the fiscal cliff can be avoided by reneging on promised Social Security and Medicare benefits that people have paid for with the payroll tax and by cutting back all aspects of the social safety net from food stamps to unemployment benefits to Medicaid, to housing subsidies. The right-wing has been trying to get rid of the social safety net ever since Franklin D. Roosevelt constructed it, out of fear or compassion or both, during the Great Depression.

Washington’s response to the fiscal cliff is austerity: spending cuts and tax increases. The Republicans say they will vote for the Democrats’ tax increases if the Democrats vote for the Republican’s assault on the social safety net. What bipartisan compromise means is a double-barreled dose of austerity.

Ever since John Maynard Keynes, economists have understood that tax increases and spending cuts suppress, not stimulate, economic activity. This is especially the case in an economy such as the American one, which is driven by consumer spending. When spending declines, so does the economy. When the economy declines, the budget deficit rises.

This is especially the case when an economy is weak and already in decline. A declining economy means less sales, less employment, less tax revenues. This works against the effort to close the federal budget deficit with austerity measures. Instead of strengthening the economy, the austerity measures weaken it further. To cut unemployment benefits and food stamps when unemployment is high or rising would be to provoke social and political instability.

Bread Lines of the Modern Era– The Great Recession
IF all EBT recipients shopped at only Walmart Super Centers for ALL their SNAP benefits, then this is how the Bread Line would look each month– 14,588 people.
There are 3051 Walmart Super Centers in USA and 44,510,598 participants in SNAP (2011), making the average SNAP line at each Walmart at 14,588 people.
The Modern Era’s Bread Lines are not visible because the business is handled discreetly through EBT Cards.
According to this Food Stamps report pg 16-17, Walmart receives half of all SNAP dollars in Oklahoma.
Walmart is the largest retailer in America.
Short Facts:
47% of Food Stamp participants are children.
78.6% of all SNAP participants are in metropolitan areas.
93.2% of all SNAP benefits go to US citizens.
Only 4% are self-employed.
(CLICK IMAGE FOR SOURCEPAGE)

Some economists, such as Robert Barro at Harvard University, claim that stimulative measures, the opposite of austerity, don’t work, because consumers anticipate the higher taxes that will be needed to cover the budget deficit and, therefore, reduce their spending and increase their saving in order to be able to pay the anticipated higher taxes.

In other words, the Keynesian effort to stimulate spending causes consumers to reduce their spending. I don’t know of any empirical evidence for this claim.

Regardless, the situation on the ground at the present time is that for the majority of people, incomes are stretched to the limit and beyond. Many cannot pay their bills, their mortgages, their car payments, their student loans. They are drowning in debt, and there is nothing that they can cut back in order to save money with which to pay higher taxes.

Many commentators are complaining that Congress will refuse to face the difficult issues and kick the can down the road, leaving the fiscal cliff looming. This would probably be the best outcome. As the fiscal cliff is a result, not a cause, to focus on the fiscal cliff is to focus on the symptoms rather than the disease.

The US economy has two serious diseases, and neither one is too much welfare spending.

One disease is the offshoring of US middle class jobs, both manufacturing jobs and professional service jobs such as engineering, research, design, and information technology, jobs that formerly were filled by US university graduates, but which today are sent abroad or are filled by foreigners brought in on H-1B work visas at two-thirds of the salary.

The other disease is the deregulation, especially the financial deregulation, that caused the ongoing financial crisis and created banks too big to fail, which has prevented capitalism from working and closing down insolvent corporations.

The Federal Reserve’s policy is focused on saving the banks, not on saving the economy. The Federal Reserve is purchasing not only new Treasury bonds issued to finance the more than one trillion dollar annual federal deficit but also the banks’ underwater financial instruments, taking them off the banks’ books and putting them on the Federal Reserve’s books.

Normally, debt monetization of this amount results in rising inflation, but the money that the Federal Reserve is creating in its attempt to manage the public debt and the banks’ private debt is hung up in the banking system as excess reserves and is not finding its way into the economy. The banks are too busted to lend, and consumers are too indebted to borrow.

However, the debt monetization poses a second threat that is capable of biting the US economy and consumer living standards very hard. Foreign central banks, foreign investors in US stocks and financial instruments, and Americans themselves observing the Federal Reserve’s continuous monetization of US debt cannot avoid concern about the dollar’s value as the supply of ever more dollars continues to pour out of the Federal Reserve.

Already there is evidence of central banks and individuals moving out of dollars into gold and silver bullion and into other currencies of countries that are not hemorrhaging debt and money. According to John Williams of Shadowstats.com, the US dollar as a percentage of global holdings of reserve assets has declined from 36.6% in 2006 to 28.7% in 2012. Gold has increased from 10.5% to 12.8% and other foreign currencies except the euro increased from 38.4% to 44.4%.

Russia, China, Brazil, India, and South Africa intend to conduct trade among themselves in their own currencies without use of the dollar as reserve currency. The EU countries conduct their trade with one another in euros, and although not reported in the US media, Asian countries are discussing a new common currency for trade among themselves.

The world is abandoning the use of the dollar to settle international accounts, and the demand for dollars is falling as the Federal Reserve increases the supply of dollars.

This means that the price of the dollar is threatened.

Concern over the dollar means concern over dollar-denominated financial instruments such as stocks and bonds. The Chinese hold some $2 trillion in US financial instruments. The Japanese hold about $1 trillion in US Treasuries. The Saudis and the oil emirates also hold large quantities of US dollar financial instruments. At some point the move away from the dollar also means a move away from US financial instruments. The dumping of US stocks and bonds would destabilize US financial markets and wipe out the remainder of US wealth.

As I have previously written, the Federal Reserve can create new money with which to purchase the dumped financial instruments, thus maintaining their prices. But the Federal Reserve cannot print gold or foreign currencies with which to buy up the dollars that foreigners are paid for their US stocks and bonds. When the dollars in turn are dumped, the exchange value of the dollar will collapse, and US inflation will explode.

The onset of hyperinflation can be as sudden as the collapse of a currency’s exchange value.

The real crisis facing the US is the impending collapse of the US dollar’s foreign exchange value. The US dollar’s value in relation to silver and gold has already collapsed. In the past ten years, gold’s price in US dollars has increased from $250 per ounce to $1,750 per ounce, an increase of $1,500. Silver’s price has risen from $4 per ounce to $34 per ounce. These price rises are not due to a sudden scarcity of gold and silver, but to a flight from the dollar into the two forms of historical money that cannot be created with the printing press.

The price of oil has risen from $20 a barrel ten years ago to as high as $120 per barrel earlier this year and currently $90 a barrel. This price rise has come about despite a weak world economy and without any supply restrictions other than those caused by the attempted US occupation of Iraq, the Western assault on Libya, and the self-harming Western sanctions on Iran, impacts most likely offset by the Saudis, still Washington’s faithful puppet, a country that pumps out its precious life fluid in order to save the West from its own mistakes. The moronic neoconservatives wish to overthrow the Saudi Arabian government, but what more faithful servant has Washington ever had than the Saudi royal house?

What can be done? For a number of years I have pointed out that the problem is the loss of US employment, consumer income, GDP, and tax base to offshoring. The solution is to reverse the outward flow of jobs and to bring them back to the US. This can be done, as Ralph Gomory has made clear, by taxing corporations according to where they add value to their product. If the value is added abroad, corporations would have a high tax rate. If they add value domestically with US labor, they would face a low tax rate. The difference in tax rates can be calculated to offset the benefit of the lower cost of foreign labor.

As all offshored production that is brought to the US to be marketed to Americans counts as imports, relocating the production in the US would decrease the trade deficit, thus strengthening belief in the dollar. The increase in US consumer incomes would raise tax revenues, thus lowering the budget deficit. It is a win-win solution.

The second part to the solution is to end the expensive unfunded wars that have ruined the federal budget for the past 11 years as well as future budgets due to the cost of veterans’ hospital care and benefits. According to ABC World News, “In the decade since the Sept. 11, 2001 terrorist attacks on the World Trade Center, 2,333,972 American military personnel have been deployed to Iraq, Afghanistan or both, as of Aug. 30, 2011 [more than a year ago].” These 2.3 million veterans have rights to various unfunded benefits including life-long health care. Already, according to ABC, 711,986 have used Veterans Administration health care between fiscal year 2002 and the third-quarter of fiscal year 2011. http://abcnews.go.com/Politics/us-veterans-numbers/story?id=14928136#1

The Republicans are determined to continue the gratuitous wars and to make the 99 percent pay for the neoconservatives’ Wars of Hegemony while protecting the 1 percent from tax increases.

The Democrats are little different.

No one in the White House and no more than one dozen members of the 535 member US Congress represents the American people. This is the reason that despite obvious remedies nothing can be done. America is going to crash big time.

And the rest of the world will be thankful. America along with Israel is the world’s most hated country. Don’t expect any foreign bailouts of the failed “superpower.”

 

SOURCE:

Our Collapsing Economy and Currency

Clashes over Internet rules to mark Dubai meeting

“More than 900 proposed regulatory changes have been proposed, but details have not been made public. Broad consensus is needed to adopt any items — the first major review of the U.N.’s telecommunications protocols since 1988, well before the Internet age.”

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By BRIAN MURPHY
— Dec. 3 8:50 AM EST

DUBAI, United Arab Emirates (AP) — The U.N.’s top telecommunications overseer sought Monday to quell worries about greater Internet controls emerging from global talks in Dubai, but any attempts for major Web regulations will likely face stiff opposition from groups led by a high-powered U.S. delegation.

The 11-day conference, seeking to update codes last reviewed when the Web was virtually unknown, highlights the fundamental shift from tightly managed telecommunications networks to the borderless sweep of the Internet.

Some at the Dubai conference, including a 123-member U.S. delegation with envoys from tech giants such as Google Inc. and Microsoft Corp., worry that any new U.N. oversight could be used by nations such as China and Russia to justify further tightening of Web blocks and monitoring.

“Love the free and open Internet? Tell the world’s governments to keep it that way,” said a message on the main search page of Google.com with a link for comments directed to the Dubai conference, which opened Monday.

The agenda for the gathering of more than 1,900 participants from 193 nations covers possible new rules for a broad range of services such as the Internet, mobile roaming fees and satellite and fixed-line communications. Questions include how much sway the U.N. can exert over efforts such as battling cyber-crimes and expanding the Internet into developing nations.

The secretary-general of the U.N. International Telecommunications Union, Hamadoun Toure, said that accusations that the meeting could limit Web freedoms are “completely untrue” and predicted only “light-touch” regulations.

“Many countries will come to reaffirm their desire to see freedom of expression embedded in this conference,” he told reporters.

But the head of the American contingent, Ambassador Terry Kramer, said the U.S. would propose taking all Internet-related discussions off the table and concentrating on already regulated services such as phone networks.

“What we don’t want to do is bring in all the private networks, the Internet networks, the government networks, etc.,” he told The Associated Press. “That opens the door to censorship.”

The outcome of the Dubai gathering is far from certain.

More than 900 proposed regulatory changes have been proposed, but details have not been made public. Broad consensus is needed to adopt any items — the first major review of the U.N.’s telecommunications protocols since 1988, well before the Internet age.

The gathering is also powerless to force nations to change their Internet policies, such as China’s notorious “Great Firewall” and widespread blackouts of political opposition sites in places including Iran and the Gulf Arab states. Last week, Syria’s Internet and telephone services disappeared for two days during some of the worst fighting in months to hit the capital, Damascus.

Kramer told reporters last week in Washington that all efforts should be made to avoid a “Balkanization” of the Internet in which each country would impose its own rules and standards that could disrupt the flow of commerce and information.

“That opens the door … to content censorship,” he said.

The International Trade Union Confederation, representing labor groups in more than 150 countries, claimed a bloc that includes China, Russia and several Middle East nations seeks to “pave the way for future restrictions on both Internet content or its users.”

“It is clear that some governments have an interest in changing the rules and regulations of the Internet,” the confederation said in statement Monday.

Another battle that will likely take place in Dubai is over European-backed suggestions to change the pay structure of the Web to force content providers — such as Google, Facebook Inc. and others — to kick in an extra fee to reach users across borders.

“Potentially, the content developers — they could be Googles, they could be universities — would end up being charged potentially to have traffic sent abroad,” said Kramer in Dubai. “Either way, you slow down Internet traffic and you actually exacerbate the digital divide, the income divide, because you have a lot of people who are accessing things for free.”

Advocates of the changes say the money raised could pay to expand broadband infrastructures in developing countries.

Toure said he hoped for a “landmark” accord on trying to bring broadband Internet to developing countries. “The Internet remains out of reach for two-thirds of world’s people,” said Toure, who is from Mali.

The U.N. telecommunications agency dates back to 1865, when the telegraph revolutionized the speed of information. Over the decades, it has expanded to include telephone, satellite and other advances in communications.

SOURCE:

Popular Culture Promotes the Police State

“The State has but one face for me: that of the police. To my eyes, all of the State’s ministries have this single face, and I cannot imagine the ministry of culture other than as the police of culture, with its prefect and commissioners.” – Jean Dubuffet

 

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Popular Culture Promotes the Police State

The New World Order, designed around a functional police state that is encouraged by continuous popular cultural messages, is apparent to even the most avid establishment apologist. Liberty and freedom, hardly ever mentioned in a positive light by the mass media, is a direct threat to the ruling class. The proliferation of degenerate behavior is lauded so that those who object to such conduct will be demeaned as outcasts of the decadent society. The imposition of a police state is necessary to coerce decent people into forced obedience.

Cultural celebrities and icons come and go, but their art often rings on for good or bad. Political propaganda, embedded in media projects, has transcended subliminal messages and now emphasizes in your face brashness. The breakdown of the traditional value society is so complete, that what was once viewed as insulting political disinformation now passes as a promotion for a loyalist NWO drama.
One such Showtime production is the pathetic Homeland series.
Rachel Shabi offers her review assessment in the piece; Does Homeland just wave the American flag?

“Instead, Homeland presents a retuned version of the same unshakeable assurance that, even when things are really complicated, American values are the fairest, the most right and the best. Sure, the series shows US forces doing terrible things: covering up a drone attack that kills civilians in Iraq; trigger-happy in a US mosque, leaving innocents dead there, too. But these are presented as necessary acts in pursuit of far worse crimes. Homeland’s core message is that the US means well, but sometimes has to do bad things; while the Arab and/or Muslim enemy doesn’t mean well and hence does unfathomably bad things. Not much of a progression really, is it?”

When the postmortem of the Patriotic Act era is dissected, the treason of intelligence community operations will be written in their full horror. The police state glorified in Homeland episodes is meant to prepare the public for the next stage of centralized oppression.

While cable or broadcast TV is so removed from Little House on the Prairie, today’s programming is designed to facilitate the psychological acceptance of the transition into a maximum lock down prison society.
In the essay, Mass Mind Control Through Network Television, Alex Ansary warns of the prison industrial complex.
“Turn on your local newscast. You have a few minutes of blue-collar crime, hardly any white collar crime, a few minutes of sports, misc. chit chat, random political jibber-jabber, and a look at the weather that no one is forecasting correctly. Is that what happened in your town? And we’re supposed to own the airwaves! The mainstream media openly supports the interests of the prison industrial complex. The stories focus on minority criminal groups, and exploit the real threat to appear much more dangerous than they are. Think about the growing per capita number of prisoners in the country. Then remember that this is happening at the same time that our prison boom began. The police on our streets have created criminals. The focus is to keep us in a state of fear, that way the elitists can attack any group they want to without fear of consequence. This is why the media is continuing to craft the timeless art of dehumanization.”

The cutting edge of mind control has long included the use of music and lyrics that produce subconscious meanings. Now the fascist messages in street music indoctrinate not only the youth but target to reinforce the despotic aspirations of TSA flunkies.
The article, The Transhumanist and Police State Agenda in Pop Music, provides two examples of globalist messages disguised as performances by Rihanna and Beyonce.
“In hip-hop slang, the term “hard” usually refers to someone who is street-savvy, gritty, rebellious and who is decisively “not down with police”. Hard transposes this term to a military context. Her militaristic video features a gang of uniformed men dancing under the orders of “General Rihanna”. We’ve come a long way from Public Enemy’s Fight the Power…it is now Submit to the Power. All of this military/dictatorial imagery is mixed with Rihanna’s sexy moves and outfits, appealing to the masses’ basest instinct: sex.”

“Beyonce walks on stage with a bunch of men dressed in riot gear… the type of unit a police state would use to repress opposition during popular turmoil. What are they doing in Beyonce’s performance? Contributing to permeate popular culture with police-state imagery.”

In the follow-up account, you can read the description mentioned in this report.
“Two recent examples of the perpetuation of the police state agenda in popular culture are Jay-Z and Kanye West’s music video No Church in the Wild and Adam Lambert’s Never Close our Eyes. In spite of, or perhaps because of, the fact that these songs are two different genres that aim to reach two different markets, they both contribute to the saturation of popular culture with police state imagery. While the authorities are not necessarily portrayed as the “good guys”, they are nevertheless there, as if their presence at any kind of public demonstration is normal.”

Contrast this dark brute force portrayal, with an age of optimism and hope. The peace and love themes in the music and political actions of John Lennon offer a rudimentary alternative to the grisly atrocities that the establishment commits routinely in the name of national security.

Gangster rap has little in common with All You Need is Love.

Rebellion of youth is natural, but resigned acceptance for submission to the police state is repression. The thirty-two years since his assassination has been one long road into oblivion. Read the “Interview With Investigative Reporter Jack Jones” for insights into the elimination of a dangerous messenger of peace.What a long way away from John Lennon’s lyrics in the song Revolution.

You say you’ll change the constitution

Well, you know

We all want to change your head

You tell me it’s the institution

Well, you know

You’d better free your mind instead

But if you go carrying pictures of Chairman Mao

You ain’t gonna make it with anyone anyhow
Now, transition from the mental liberation of the Beetle era, and go back and examine the overt war crimes of the premier American despot, Abraham Lincoln. Biographer and jingoism jezebel LBJ groupie, Doris Kearns Goodwin’s book, Team of Rivals: The Political Genius of Abraham Lincoln served as the backdrop of Steven Spielberg’s production of the recent released Lincoln film.

Alec Ryan writes in the American Renaissance:

“In the modern Hollywood narrative, all American history revolves around the Sacred Black Experience. Lincoln confirms this, bending historical truth to paint the most ruthless, bloody-minded, strong-willed American leader in history as some kind of smug, pre-post-modern storyteller croaking gamely through the difficulties like a paleface Obama sans teleprompter. The few Southerners are snarling, greasy bigots, recoiling before the erect, scowling black Union guards as they slink by during a meeting that led to the Hampton Roads peace conference of February 1865.

The film has throughout a sense of hushed awe, as if kowtowing to its own self-evident righteousness. There is no balance, no complexity, no sense of inner struggle or desperation. No opposing arguments. Its simplistic outlook more closely resembles the popcorn-psychology Avengers or Justice League rather than the serious historical movie that it clearly wishes to be acclaimed.”
The point of evaluating the worship adoration of the destroyer of the Republic with the authoritarianism of the newly re-elected president is to equate the despotism of both of their regimes. The imposition of the police state is part of the master plan to enslave the inherent autonomy of free citizens.

The insidious popular culture strips the institutions of traditional constitutional protections and separations of powers by diminishing the will of sovereign citizens to fight tyranny. The goal of imposing savage dehumanizing ruthlessness seeks to spread the Sons of Anarchy mindset into positions of authority. The merging of law enforcement into the ranks of criminal organizations becomes a common occurrence in the police state environment.

Once upon a time, the peace officer maintained order and balance. Now law enforcement deems that natural rights are arbitrary and conditional on obedience to government dictates.
911 provided the excuse to inflict a “War of Terror” under the disguise of national security. The Homeland program scripts that foster the ends justify the means are repugnant to every liberty advocate. Each day, the evolving police state is becoming more invasive and punitive.

A culture that glorifies jack booted thugs that order innocent citizens around as sinister terrorists destroys the essence of the nation. The New World Order essentially uses depressing indoctrination of the inevitability for submission to their mind game matrix.

The walking dead that accept a dependent society administered by bureaucratic goons, willingly tolerant a fate of bondage. Since texting is all the rage and the written language is sorely deficient, maybe the best way to communicate though the popular culture is to withdraw from the experience as much as possible. Try one on one contact; you might be surprised with the results.

SARTRE – December 2, 2012

SOURCE:
http://batr.org/autonomy/120212.html

UK banks face £60bn black hole

“Britain’s banks face a financial black hole of up to £60bn from regulatory demands, hidden losses, and potential mis-selling costs that threaten to jeopardise future growth, the Bank of England has warned.”

By Philip Aldrick, Economics Editor
6:46PM GMT 29 Nov 2012

In its Financial Stability Report (FSR), the Bank revealed that the big four lenders – RBS, Lloyds, Barclays and HSBC – may need to take £15bn of extra provisions on consumer loans and European debt, “a further £4bn-£10bn” to cover fines and customer compensation, and “between £5bn and £35bn” to meet regulatory risk standards.

The Bank of England has just crossed the line into straight government financing (Click for Article)

 

Sir Mervyn King, the Bank’s Governor, said the potential losses distorted the “picture of banks’ health” and that lenders may have to “raise capital or take steps to restructure”. He added: “The danger to be avoided is that of inadequately capitalised banks holding back our recovery.”

However, he stressed that no more taxpayer money would be put on the line. “It was made very clear that the Treasury did not want to put more into the state-owned banks,” he said.

Markets have lost confidence in the banks due to their “complex and opaque” numbers and, to recover investors’ trust, lenders need to set aside capital for “expected losses” and for potential compensation and fines over customer mis-selling and Libor rigging, the Bank said. Risk levels also need to be calculated more prudently.

The decision was taken after last week’s meeting of the Financial Policy Committee. In the most dramatic intervention since the £67bn bail-out of lenders from RBS to Lloyds, the proposal will see regulators from the Financial Services Authority sent into banks and building societies to ensures losses are properly declared by March next year.

However, the Bank declined to put a single number on the scale of potential recapitalisations, stressing that it would depend on the FSA judgement on each individual bank. Sir Mervyn added: “The problem is manageable, and is already understood at least in part by markets.”

Bank shares reacted favourably as fears of a worse outcome proved unfounded. Barclays shares closed up 1pc at 244.6p, RBS was 1.5pc higher at 299p, and Lloyds rose 1.5pc to 46.64p. Jason Napier, an analyst at Deutsche Bank, said: “Overall, the FSR is in line with our expectation, and in areas the report is better than we had feared.”

The plan could lead to a shake-up of the industry with rights issues, asset sales, and disposals – so long as they “do not hinder lending to the real economy”.

Barclays has already raised $3bn (£1.8bn) in contingent capital, Royal Bank of Scotland has previously been asked by the regulators to consider selling its US operation Citizens, and Lloyds Banking Group is rumoured to be looking at the disposal of its stake in wealth manager St James’s Place.

Sir Mervyn said: “The recommendation we have made will soon get the banks back to a position where they can support our economic recovery.”

The Bank also released separate data yesterday showing that write-offs by UK banks fell to £3.5bn in the third quarter from £4bn in the previous three months – well below the peak of £6.3bn in 2011 and the lowest since 2009. Citi’s economist Michael Saunders said: “The drop may be a symptom of increased banking forbearance and reluctance to face losses .”

 

SOURCE:
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9712722/UK-banks-face-60bn-black-hole.html

Ukraine Crushed in $1.1bn Fake Gas Deal

By Jen Alic | Thu, 29 November 2012 16:05

Certainly the folks at Gazprom are having a good snicker, reveling in the mockery that has been made of what should have been a landmark Ukraine-Spain gas deal that would have loosened Russia’s gas grip on Kiev.

Everyone wondered how Russia would respond to Ukraine’s attempt at gas independence. But this is what happens when you mess with Gazprom.

It was a horrible moment for Ukraine on Monday—all the more horrible because the whole event was televised—when the historical $1.1 billion deal it was about to sign with Spain’s Gas Natural Fenosa turned out to be fake.

Why was the deal historical? It would have secured $1.1 billion in investment for the construction of Ukraine’s first liquid natural gas (LNG) terminal on the Black Sea and a pipeline connecting the country’s vast gas network to the terminal.

More to the point, this would enable Ukraine to import by tanker up to 10 billion cubic meters of European gas at a price 20% cheaper than Gazprom. Even more to the point, it would be a major first step toward reducing Ukraine’s dependence on Russia.

The deal was that investors had apparently signed agreements through a newly formed consortium for the construction of the $1.1 billion LNG terminal.

Here’s how the ill-fated signing ceremony went down:

While Ukrainian Prime Minister Mykola Azarov and Energy Minister Yuriy Boyko were cutting the ribbon on the construction of the terminal in a live televised ceremony, the country’s investment chief, Vladislav Kaskiv, was attending the official investment signing ceremony elsewhere, also via live video feed. This is where walls caved in very suddenly.

Signing on behalf of Fenosa was one Jordi Sarda Bonvehi. At the 11th hour, Fenosa let it be known that they have no idea who Bonvehi is and that he certainly does not represent the company in any way. Fenosa apparently had no idea it was signing a landmark agreement with Ukraine.

Kiev was necessarily taken aback, and Bonvehi remained conveniently silent at the signing ceremony once the news broke out.

Of course, what no one knows is how Ukrainian authorities were led to believe—during multiple rounds of negotiations—that Bonvehi was a Fenosa representative.

The story being bandied about by authorities in Kiev is now that Bonvehi was under the impression that Fenosa would sign the deal with Ukraine and that he would be given the authority to sign the deal retroactively.

But Fenosa denies it has ever considered such a deal and continues to deny any relationship at all with Bonvehi.

So where does that leave us? It leaves Ukraine in the lurch. There is no way it can fund this terminal on its own, despite its claims to the contrary. We probably don’t have to look much further than Gazprom and the Ukrainian oligarchy to find where this beautifully crafted charade was hatched.

In the meantime, Bonvehi—if such a person of that name even exists—remains elusive. No one knows who he really is or who he really works for.

More than anything, it’s an advertisement for due diligence.

By. Jen Alic of Oilprice.com

SOURCE:
http://oilprice.com/Energy/Natural-Gas/Ukraine-Crushed-in-1.1bn-Fake-Gas-Deal.html

Now sick babies go on death pathway: Doctor’s haunting testimony reveals how children are put on end-of-life plan

“‘I know, as they cannot, the unique horror of witnessing a child become smaller and shrunken, as the only route out of a life that has become excruciating to the patient or to the parents who love their baby.’”

-x-x-x-x-x-x-x-x-x-

Practice of withdrawing food and fluid by tube being used on young patients
Doctor admits starving and dehydrating ten babies to death in neonatal unit
Liverpool Care Pathway subject of independent inquiry ordered by ministers
Investigation, including child patients, will look at whether cash payments to hospitals to hit death pathway targets have influenced doctors’ decisions

By Sue Reid and Simon Caldwell

This picture was NOT taken from the original source – ’tis but a REAL photograph of child dehydration’s mortal effects. Sorry if I hadn’t make that clear.

PUBLISHED: 23:03 GMT, 28 November 2012 | UPDATED: 00:54 GMT, 29 November 2012

Sick children are being discharged from NHS hospitals to die at home or in hospices on controversial ‘death pathways’.

Until now, end of life regime the Liverpool Care Pathway was thought to have involved only elderly and terminally-ill adults.

But the Mail can reveal the practice of withdrawing food and fluid by tube is being used on young patients as well as severely disabled newborn babies.

One doctor has admitted starving and dehydrating ten babies to death in the neonatal unit of one hospital alone.

Writing in a leading medical journal, the physician revealed the process can take an average of ten days during which a baby becomes ‘smaller and shrunken’.

The LCP – on which 130,000 elderly and terminally-ill adult patients die each year – is now the subject of an independent inquiry ordered by ministers.

The investigation, which will include child patients, will look at whether cash payments to hospitals to hit death pathway targets have influenced doctors’ decisions.

Medical critics of the LCP insist it is impossible to say when a patient will die and as a result the LCP death becomes a self-fulfilling prophecy. They say it is a form of euthanasia, used to clear hospital beds and save the NHS money.

The use of end of life care methods on disabled newborn babies was revealed in the doctors’ bible, the British Medical Journal.

Earlier this month, an un-named doctor wrote of the agony of watching the protracted deaths of babies. The doctor described one case of a baby born with ‘a lengthy list of unexpected congenital anomalies’, whose parents agreed to put it on the pathway.

The doctor wrote: ‘They wish for their child to die quickly once the feeding and fluids are stopped. They wish for pneumonia. They wish for no suffering. They wish for no visible changes to their precious baby.

‘Their wishes, however, are not consistent with my experience. Survival is often much longer than most physicians think; reflecting on my previous patients, the median time from withdrawal of hydration to death was ten days.

‘Parents and care teams are unprepared for the sometimes severe changes that they will witness in the child’s physical appearance as severe dehydration ensues.

‘I know, as they cannot, the unique horror of witnessing a child become smaller and shrunken, as the only route out of a life that has become excruciating to the patient or to the parents who love their baby.’

According to the BMJ article, the doctor involved had presided over ten such deaths in just one hospital neonatal unit.

In a response to the article, Dr Laura de Rooy, a consultant neonatologist at St George’s Hospital NHS Trust in London writing on the BMJ website, said: ‘It is a huge supposition to think they do not feel hunger or thirst.’

The LCP for children has been developed in the North West, where the LCP itself was pioneered in the 1990s. It involves the discharge to home or to a hospice of children who are given a document detailing their ‘end of life’ care.

One seen by the Mail, called ‘Liverpool Pathway for the Dying Child’ is issued by the Royal Liverpool Children’s NHS Trust in conjunction with the flagship children’s hospital Alder Hey. It includes tick boxes, filled out by hospital doctors, on medicines, nutrients and fluids to be stopped.

The LCP was devised by the Marie Curie Palliative Care Institute in Liverpool for care of dying adult patients more than a decade ago. It has since been developed, with paediatric staff at Alder Hey Hospital, to cover children. Parents have to agree to their child going on the death pathway, often being told by doctors it is in the child’s ‘best interests’ because their survival is ‘futile’.

Bernadette Lloyd, a hospice paediatric nurse, has written to the Cabinet Office and the Department of Health to criticise the use of death pathways for children.

She said: ‘The parents feel coerced, at a very traumatic time, into agreeing that this is correct for their child whom they are told by doctors has only has a few days to live. It is very difficult to predict death. I have seen a “reasonable” number of children recover after being taken off the pathway.

‘I have also seen children die in terrible thirst because fluids are withdrawn from them until they die.

‘I witnessed a 14 year-old boy with cancer die with his tongue stuck to the roof of his mouth when doctors refused to give him liquids by tube. His death was agonising for him, and for us nurses to watch. This is euthanasia by the backdoor.’

Alder Hey confirmed that children and babies are discharged for LCP end of life care ‘after all possible reversible causes for the patient’s condition are considered’.

‘There is a care pathway to enable a dying child to be supported by the local medical and nursing teams in the community, in line with the wishes of the child patients, where appropriate, and always their parents or carers.’ Alder Hey said children were not put on the LCP within the hospital itself.

Teresa Lynch, of protest group Medical Ethics Alliance, said: ‘There are big questions to be answered about how our sick children are dying.’

A Department of Health spokesman said: ‘End of life care for children must meet the highest professional and clinical standards, and the specific needs of children at the end of their life.

‘Staff must always communicate with the patient and the patient’s family, and involve them in all aspects of decision making.’

SOURCE (continues): Daily Mail
http://www.dailymail.co.uk/news/article-2240075/Now-sick-babies-death-pathway-Doctors-haunting-testimony-reveals-children-end-life-plan.html

Hungry For The Holidays: 20 Facts About Hunger In America That Will Blow Your Mind

All over America there are millions of people that will be missing meals and going hungry this holiday season. Even as much of the country indulges in the yearly ritual of unbridled consumerism that we refer to as “the holiday season”, more families in the United States than ever before will be dealing with not having enough food to eat. Food stamp use is at an all-time high. Demand at food banks is at an all-time high. They keep telling us that we are in an “economic recovery” and yet the middle class continues to shrink and the number of Americans living in poverty just continues to grow. We are witnessing unprecedented hunger in America, and this especially seems tragic during the holidays. Much of the country is partying as if the good times will never stop, but families that are living from one meal to the next are facing a completely different reality. How do you tell your children that there isn’t going to be any food to eat for dinner? How do you explain to them that other families have plenty to eat but you don’t? Sadly, many food banks are overstretched at this point. All over the nation, food pantries have actually had to turn people away because of the overwhelming demand. And more Americans used food stamps to buy their Thanksgiving dinners this year than ever before. This is a problem that is not going away any time soon, and when the next major economic downturn strikes the problem of hunger in America is going to get even worse.

For many Americans, hunger has become a way of life. Families that don’t have enough money are often faced with some absolutely heartbreaking choices. Just check out what one Maine official that works with the Emergency Food Assistance Program recently had to say…

“One in six people in Maine don’t know where their next meal is coming from, or skip a meal so their kids can eat, or have to choose between paying for prescriptions and food, or fuel for your car and food,” Hall said. “What’s amazing is that food is always the first thing to go from your budget. It’s staggering, the choices people have to make.”

Food banks all over the country try their best to do what they can, especially during the holidays, but it is often not enough. In fact, some food banks ran out of turkeys well in advance of Thanksgiving this year…

Three days in advance of Thanksgiving, the Pear Street Cupboard and Café in Framingham, Massachusetts, is out of turkeys. According to organizers, “requests for help are up 400 percent over last year.”

But it isn’t just during the holidays that food banks are having problems keeping up with demand. The truth is that many food banks find themselves out of food and having to turn away hungry families all throughout the year. The following is from a recent Reuters article…

Overall, food pantries and soup kitchens reported a 5 percent spike in demand in 2012, according to the survey. More than half of providers said they were forced to turn away clients, reduce portion sizes, or limit their hours.

In Staten Island, all of the agencies that respond to hunger reported not having enough food to meet demand, while in the Bronx that was true for 80 percent of agencies. In Queens and Brooklyn, more than 60 percent of agencies did not have enough food to meet the needs of the populations they serve.

If you are able, please support your local food bank. The needs are great and they are only going to get greater.

The following are 20 facts about hunger in America that will blow your mind…

#1 According to one calculation, the number of Americans on food stamps now exceeds the combined populations of “Alaska, Arkansas, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Vermont, West Virginia, and Wyoming.”

#2 In October 2008, 30.8 million Americans were on food stamps. By August 2012 that number had risen to 47.1 million Americans.

#3 Right now, one out of every seven Americans is on food stamps and one out of every four American children is on food stamps.

#4 It is projected that half of all American children will be on food stamps at least once before they turn 18 years of age.

#5 According to new numbers that were just released by the U.S. Census Bureau, the number of Americans living in poverty increased to a new all-time record high of 49.7 million last year.

#6 The number of Americans living in poverty has increased by about 6 million over the past four years.

#7 Today, about one out of every four workers in the United States brings home wages that are at or below the federal poverty level.

#8 According to the U.S. Census Bureau, the poverty rate for children living in the United States is about 22 percent.

#9 Overall, approximately 57 percent of all children in the United States are living in homes that are either considered to be either “low income” or impoverished.

#10 In the United States today, close to 100 million Americans are considered to be either “poor” or “near poor”.

#11 One university study estimates that child poverty costs the U.S. economy 500 billion dollars each year.

#12 Households that are led by a single mother have a 31.6 percent poverty rate.

#13 In 2010, 42 percent of all single mothers in the United States were on food stamps.

#14 According to the National Center for Children in Poverty, 36.4 percent of all children in Philadelphia are living in poverty, 40.1 percent of all children in Atlanta are living in poverty, 52.6 percent of all children in Cleveland are living in poverty and 53.6 percent of all children in Detroit are living in poverty.

#15 Since 2007, the number of children living in poverty in the state of California has increased by 30 percent.

#16 Family homelessness in the Washington D.C. region (one of the wealthiest regions in the entire country) has risen 23 percent since the last recession began.

#17 There are 314 counties in the United States where at least 30 percent of the children are facing food insecurity.

#18 More than 20 million U.S. children rely on school meal programs to keep from going hungry.

#19 Right now, more than 100 million Americans are enrolled in at least one welfare program run by the federal government. And that does not even count Social Security or Medicare.

#20 According to the Natural Resources Defense Council, approximately 40 percent of all food in America “is routinely thrown away by consumers at home, discarded or unserved at restaurants or left unharvested on farms.”

By Michael, on November 26th, 2012

Bread Lines of the Modern Era– The Great Recession
IF all EBT recipients shopped at only Walmart Super Centers for ALL their SNAP benefits, then this is how the Bread Line would look each month– 14,588 people.
There are 3051 Walmart Super Centers in USA and 44,510,598 participants in SNAP (2011), making the average SNAP line at each Walmart at 14,588 people.
The Modern Era’s Bread Lines are not visible because the business is handled discreetly through EBT Cards.
According to this Food Stamps report pg 16-17, Walmart receives half of all SNAP dollars in Oklahoma.
Walmart is the largest retailer in America.
Short Facts:
47% of Food Stamp participants are children.
78.6% of all SNAP participants are in metropolitan areas.
93.2% of all SNAP benefits go to US citizens.
Only 4% are self-employed.
(CLICK IMAGE FOR INFOGRAPHIC SOURCE)

SOURCE:
http://theeconomiccollapseblog.com/archives/hungry-for-the-holidays-20-facts-about-hunger-in-america-that-will-blow-your-mind

Goodbye Petrodollar, Hello Agri-Dollar?

Submitted by Tyler Durden on 11/24/2012 09:50 -0500

When it comes to firmly established, currency-for-commodity, self reinforcing systems in the past century of human history, nothing comes close to the petrodollar: it is safe to say that few things have shaped the face of the modern world and defined the reserve currency as much as the $2.3 trillion/year energy exports denominated exclusively in US dollars (although recent confirmations of previously inconceivable exclusions such as Turkey’s oil-for-gold trade with Iran are increasingly putting the petrodollar status quo under the microscope). But that is the past, and with rapid changes in modern technology and extraction efficiency, leading to such offshoots are renewable and shale, the days of the petrodollar “as defined” may be over. So what new trade regime may be the dominant one for the next several decades? According to some, for now mostly overheard whispering in the hallways, the primary commodity imbalance that will shape the face of global trade in the coming years is not that of energy, but that of food, driven by constantly rising food prices due to a fragmented supply-side unable to catch up with increasing demand, one in which China will play a dominant role but not due to its commodity extraction and/or processing supremacy, but the contrary: due to its soaring deficit for agricultural products, and in which such legacy trade deficit culprits as the US will suddenly enjoy a huge advantage in both trade and geopolitical terms. Coming soon: the agri-dollar.

But first, some perspectives from Karim Bitar on CEO of Genus, on what is sure to be the biggest marginal player of the agri-dollar revolution, China, whose attempt to redefine itself as a consumption-driven superpower will fail epically and very violently, unless it is able to find a way to feed its massive, rising middle class in a cheap and efficient manner. But before that even, take note of the following chart which takes all you know about global trade surplus and deficit when narrowed down to what may soon be that all important agricultural (hence food) category, and flips it around on its head.

Karim Bitar on China:

Structurally, China is at a huge disadvantage as it accounts for 20% of the world’s population, but only 7% of arable land. Compare that with Brazil which has the reverse of those ratios. What that does for a country like China is to incentivise the adoption of technification. Let’s look at their porcine market, which represents 50% of global production and consumption. In China, to slaughter roughly 600 mn pigs per year, which is about six times the demand in the US, they have a breeding herd of about 50 mn animals. In the US, the comparable number is only about 6 mn so there is a huge productivity lag.

Owing to its structural disadvantages, China is much more focused on increasing efficiency. For that, it needs to accelerate technification. So, we’re seeing a whole series of government incentives at a national level, a provincial level and a local level, focusing on the need to move toward integrated pork production because that’s a key way to optimise total economics, both in terms of pig production, slaughtering, processing and also actually taking the pork out into the marketplace.

The Chinese government is important as a customer to us because of its clarity of vision on food security. It has seen the Arab Spring, and it is cognisant of the strong socio-political implications of higher food prices. Pork prices could account for about 25% of the CPI, so it knows it can be a major issue. It’s because of all these pressures, that China is more focused on responding to the food challenge. It’s a sort of a burning platform there.

…Take milk production in China and India. China is basically trying to leapfrog and avoid small-scale farming by adopting a US model. In the US, you tend to have very large herds. Today about 30% of US milk production is from herds of 2,000 plus, and we expect that to reach 60% within the next five years. Today in China, there are already several hundred dairy herds of over 1,000. However in India, there’ll be less than 50. The average dairy herd size is closer to five, so it’s very fragmented. So the reality is that a place like China, because of government policies, subsidies and a much more demanding focused approach to becoming self-sufficient, has a much greater ability to respond to a supply challenge rapidly.

The problem for China, and to a lesser extent India, however one defines it, is that it will need increasingly more food, processed with ever greater efficiency for the current conservative regime to be able to preserve the status quo, all else equal. And for a suddenly very food trade deficit-vulnerable China, it means that the biggest winners may be Brazil, the US and Canada. Oh and Africa. The only question is how China will adapt in a new world in which it finds itself in an odd position: a competitive trade disadvantage, especially its primary nemesis: the USA.

So for those curious how a world may look like under the Agri-dollar, read on for some timely views from GS’ Hugo Scott-Gall.

Meaty problems, simmering solutions

What potential impacts could a further re-pricing of food have on the world? Why might food re-price? Because demand is set to rise faster than supply can respond. The forces pushing demand higher are well known, population growth, urbanisation and changing middle class size and tastes. In terms of economic evolution, the food price surge comes after the energy price surge, as industrialisation segues into consumption growth (high-income countries consume about 30% more calories than low income nations, but the difference in value is about eight times). Here, we are keenly interested in how the supply side can respond, both in terms of where and how solutions are found, and who is supplying them. We are drawn towards an analogy with the energy industry here: the energy industry has invested heavily in efficiency, and through innovation, clusters of excellence, and access to capital has created solutions, the most obvious of which are renewable energy and shale. The key question for us is, can and will something similar happen in food?

It’s hard to argue that the ingredients that sparked energy’s supply-side response are all present in the food supply chain. In food, there’s huge fragmentation, a lack of coordination, shortages of capital in support industries (infrastructure) and only pockets of isolated innovation. We suspect that the supply-side response may well remain uncoordinated and slower than in other industries. But things are changing. Those who disagree with Thomas Malthus will always back human ingenuity. As well as looking at where the innovators in the supply chain are (from page 10), and where there are sustainably high returns through IP (e.g., seeds, enzymes etc.), we need to think about the macro and micro economic impacts of higher food prices, and soberingly, the geo-political ones.

Slimming down

Could the demand destruction that higher energy prices have precipitated occur in food? There are some important differences between the two that make resolving food imbalances tougher. Food consumption is very fragmented and there is less scope for substitution.

Changing eating habits is much harder than changing the fuel burnt for power. And, ultimately, food spend is less discretionary that energy, i.e., the scope for efficient consumption is more limited and consumers will not (and cannot) voluntarily delay consumption, let alone structurally reduce it. This means that higher food prices, especially in economies where food is a greater portion of household spending, will lead to either lower consumption of discretionary items or a reduced ability to service debt (with consequent effects on asset prices). When oil prices spiked in the late 1970s, US consumers spent c.9% of their income on energy vs. an average of 7% over the previous decade. And yet, the total savings rate rose by c.2% as they overcompensated on spending cuts on other items. 2007-09 saw a similar phenomenon too. Even the most cursory browse through history shows that high food costs can act as a political tinderbox (so too high youth unemployment), and we believe there is a degree of overconfidence with regard to the economic impact of food prices in the West: food costs relative to incomes may look manageable, but when there is no buffer (i.e., a minimal savings rate) then there are problems. Food spend as a percentage of total household consumption expenditure is a relatively benign 14% in the US, versus c.20% for most major European nations and Japan. This rises to c.40% for China and 45% for India. Of course, as wages rise, the proportion of food within total consumption expenditure falls, but that is only after consumption hits a ceiling. Currently, India and China consume about 2,300 and 2,900 calories per capita per day, compared to a DM average of about 3,400. If the two countries eat like the West, then food production must rise by 12%. And if the rest of the world catches up to these levels then that number is north of 50%.

The scramble for Africa’s eggs

In terms of ownership of resources, food, like energy, can be broken into haves and have-nots. While there are countries that have been successful without resources, it is quite clear that inheriting advantages (in this case good soil, climate and water) makes life easier. But that, of course, is only half the battle; what is also required is organisation, capital, education and collaboration to make it happen. Take Africa. It has 60% of the world’s uncultivated land, enviable demographics and lots of water (though not evenly distributed). Basic infrastructure, consolidation of agricultural land and minimal use of fertilisers and crop protection could do wonders for agricultural output in the region. But that’s easier said than done. Several African economies also need better access to information, education, property rights and access to markets and capital. Put another way, it needs better institutions. If Africa does deliver over the coming decades, rising food prices will alter the economics of investing in the region. The next scramble for Africa should be about food (while it is about hard commodities now and in the late 19th century it was about empire size). Fertiliser consumption has a diminishing incremental impact on yields, but Africa (along with several developing economies elsewhere) is far from touching that ceiling. Currently, Africa accounts for just 3% of global agricultural trade, with South Africa and Côte d’Ivoire together accounting for a third of the entire continent’s exports. But if the world wants to feed itself then it needs Africa to emerge as an agricultural powerhouse.

Higher up the production curve is China, which has been industrialising its agriculture as it seeks to move towards self sufficiency. Power consumed by agricultural machinery has almost doubled over the last decade, while the number of tractors per household has tripled, driving per hectare output up by an average of more than 20% over the same period.

Even so, in just the last 10 years China has gone from surplus to deficit in several meat, vegetable and cereal categories. So a lot more needs to be done, and a shortage of water could also prove to be an impediment, especially in some of its remote areas.

The power of the pampas

With significant surpluses in soybeans, maize, meat and oilseeds, Brazil and Argentina have led the Latin American continent in terms of food trade. Current surpluses are 6x and 3x 2000 levels, versus only a 30% increase in the previous decade, and are rising. A key impediment to boosting exports is infrastructure. Food has to travel a long way just to reach the port, and then further still to reach other markets. Forty days is possibly acceptable for iron ore to reach China on a ship from Brazil, but that would prevent several perishable food items from being exported. And hence, solution providers in terms of durability, packaging, refrigeration and processing will be in demand. Also, while you could attribute a lot of the agricultural success of LatAm economies to good conditions, they have also benefitted from the adoption of agricultural innovation. For instance, more than a third of crops planted in the region are as seeds that are genetically modified, versus more than 45% in the US and about 12% in Asia. Genetically modified crops are not new. They provide solutions to some of the most frequent constraints on agricultural yields (resistance to environmental challenges including drought and more efficient absorption of soil nutrients, fertilisers and water) or add value by enhancing nutrient composition or the shelf life of the crop. And while the adoption of GM crops and seeds is far from wholehearted, particularly in Europe, it’s most certainly a key part of the solution in economies that are set to face a more severe food shortage.

The last mango in Paris?

Europe’s deficit/surplus makes for interesting reading. Seventeen of the 27 EU countries face a food trade deficit, and yet, the EU overall recorded a surplus (barely) in 2010 for only the second time in the last 50 years (see chart). Broken down further, the UK is the largest food importer, followed by Germany and Italy, while the Netherlands and France lead exports thanks to their very large processing industries. If Europe’s future is one of relative economic decline, then reduced purchasing power when bidding for scarce food resources is an unappetising prospect. Therefore, it needs all
the innovative solutions it can muster, or import substitution will have to increase. It’s important to note that being in overall surplus or deficit can mask variety at the category level, i.e., Europe is a net importer of beef, fruit & vegetables, and corn, while its exports are helped by alcohol and wine specifically. Japan, in particular, is very challenged. It is the only country in the preceding table to show a deficit in every single food category.

We conclude our trip around the world in North America. Large-scale production, access to markets, a home to innovation
and favourable regulation has meant that the US (and Canada) continues to dominate some of the key agricultural resources such as soybeans, corn, fodder, wheat and oilseeds. Put this self sufficiency together with the medium-term potential for energy self sufficiency and relatively good demographics (better than China), and a rosier prognosis for the US, versus the rest of the Western world and parts of Asia, begins to fall into place.

Agri-dollars on the rise

Before we conclude, we need to devote a few lines to the geo-political and macro economic consequences of higher food prices. It’s likely that countries will act increasingly strategically to secure food supply, and that protections (e.g., high export tariffs) may well rise. It is also likely that there are special bi-lateral deals to access stable and secure food supply.

This could obviously damage the integrity of the WTO-sponsored system. Another consequence might be the emergence of agri-dollars, in the same way that petro-dollars emerged in the 1970s. This may seem far fetched (the value of the world’s energy exports is US$2.3 tn compared to US$1.08 tn for agriculture) but it’s important to think through the consequences. The big exporters, especially those with the scope to grow their output, may well have sustainable surpluses that can be reinvested into their economies (or extracted by a narrow part of society). Similarly, the consequence of being a net importer will be an effective tax on consumption: disposable income in the US would jump if oil was US$25/bbl.

As we have said, we would expect the big gainers of a meaningful rise in food prices in real terms to be Brazil, the US and Canada, while Japan, South Korea and the UK would face challenges. The top chart is important: look how China’s surplus has turned to deficit. What will happen if the Chinese middle class swells as it is expected to? And that’s the rub; what we have been used to in terms of food’s importance is set to change. How food moves around the world is likely to change, and the flow of currency around the world will also likely be impacted.

 

SOURCE:
http://www.zerohedge.com/news/2012-11-24/goodbye-petrodollar-hello-agri-dollar