The End Of All Crossroads

Where the TAXI makes a stop, to ponder upon which road mayhap be true

Tag: economy

Goldman Sachs’ Global Coup D’etat

“Goldman made similar deals here in the United States, masking the true value of investments, then selling those worthless investments to customers while placing bets that those same investments would eventually fail.”

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Tuesday, 27 November 2012 16:07
By Thom Hartmann and Sam Sacks

When the people of Greece saw their democratically elected Prime Minister George Papandreou forced out of office in November of 2011 and replaced by an unelected Conservative technocrat, Lucas Papademos, most were unaware of the bigger picture of what was happening all around them.

Similarly, most of us in the United States were equally as ignorant when, in 2008, despite the switchboards at the US Capitol collapsing under the volume of phone calls from constituents urging a “no” vote, our elected representatives voted “yes” at the behest of Bush’s Treasury Secretary Henry Paulsen and jammed through the biggest bailout of Wall Street in our nation’s history.

But now, as the Bank of England, a key player in the ongoing Eurozone crisis, announces that former investment banker Mark Carney will be its new chief, we can’t afford to ignore what’s happening around the world.

Steadily – and stealthily – Goldman Sachs is carrying out a global coup d’etat.

Greek Prime Minister Lucas Papademos in his office at the Presidential Palace in Athens, Greece, January 16, 2012. (Photo: Eirini Vourloumis / The New York Times)

There’s one tie that binds Lucas Papademos in Greece, Henry Paulsen in the United States, and Mark Carney in the U.K., and that’s Goldman Sachs. All were former bankers and executives at the Wall Street giant, all assumed prominent positions of power, and all played a hand after the global financial meltdown of 2007-08, thus making sure Goldman Sachs weathered the storm and made significant profits in the process.

But that’s just scratching the surface.

As Europe descends into an austerity-induced economic crisis, Goldman Sachs’s people are managing the demise of the continent. As the British newspaper The Independent reported earlier this year, the Conservative technocrats currently steering or who have steered post-crash fiscal policy in Greece, Germany, Italy, Belgium, France, and now the UK, all hail from Goldman Sachs. In fact, the head of the European Central Bank itself, Mario Draghi, was the former managing director of Goldman Sachs International.

And here in the United States, after Treasury Secretary and former Goldman CEO Henry Paulsen did his job in 2008 securing Goldman’s multi-billion dollar bailout, he was replaced in the new Obama administration with Tim Geithner who worked very closely with Goldman Sachs as head of the New York Fed and made sure Goldman received more than $14 billion from the bailout of failed insurance giant AIG.

What’s happening here goes back more than a decade.

In 2001, Goldman Sachs secretly helped Greece hide billions of dollars through the use of complex financial instruments like credit default swaps. This allowed Greece to meet the baseline requirements to enter the Eurozone in the first place. But it also created a debt bubble that would later explode and bring about the current economic crisis that’s drowning the entire continent. But, always looking ahead, Goldman protected itself from this debt bubble by betting against Greek bonds, expecting that they would eventually fail.

Ironically, the man who headed up the Central Bank of Greece while this deal was being arranged with Goldman was – drumroll please – Lucas Papademos.

Goldman made similar deals here in the United States, masking the true value of investments, then selling those worthless investments to customers while placing bets that those same investments would eventually fail. The most notorious example was the “Timberwolf” deal, which brought down an Australian hedge fund, and which Goldman Sachs banksters emailed each other about, bragging, “Boy, that Timberwolf was one shitty deal.”

This sort of behavior by Goldman helped inflate, and then eventually pop, the housing bubble in the United States. The shockwave then ran across the Atlantic, hitting Europe and turning Goldman’s debt-masking deal with Greece years earlier sour, thus deepening the crisis.

All of these antics should have brought about the demise of Goldman as well, but with their alumni in key policy positions on both sides of the Atlantic, Goldman not only survived, it flourished.

As the DailyKos sums up, “The normal scenario usually involves helping a nation hide a problem and sell its debt until the problem blows up into a bubble that bursts in a spectacular way…Goldman Sachs then puts their ‘man’ into a position of power to direct the bailouts so that Goldman gets all its money back and more, while the nation’s economy gets gutted.”

For years, tinfoil hat crazies who’ve bookmarked Glenn Beck’s websites and often appear as “experts” on Fox so-called News have warned us about a one-world government (here, here, and here). The latest threat, according to them, is Agenda 21 and the creation of a Soviet-style world authority that will confiscate private party everywhere, redistribute wealth to developing nations, and force us all to live by new global laws that sacrifice our national sovereignty. It’s totalitarian governments and not transnational corporations that we should be afraid of, they warn.

But when the tinfoil hat is removed, you can see that a sort of one-world government has already been established in a far more subtle form, through the rise of Goldman Sachs and their colleagues in the Wall Street elite.

A million questions arise when looking at what’s happening around the world. But many of these questions can be answered, once it’s acknowledged that Goldman Sachs alumni have executed a global coup d’etat.

Why are the working people of Greece, Portugal, Spain, and Italy suffering under austerity and being asked to sacrifice their pensions, their wages, and their jobs when, after five years, it’s clear these policies are only making these nations’ debts even harder to pay off?

It’s because Goldman Sachs is sucking the last remaining wealth out of those nations to recoup whatever failed investments they made before the Crash.

Why have thousands of homeowners in the United States turned to suicide, domestic violence, and even mass murder when faced with home foreclosure, when a simple solution like re-writing mortgages, which FDR did successfully during the Great Depression, could put an end to the bloodshed and misery?

It’s because re-writing mortgages would force banks like Goldman Sachs to take a hit. And thanks to the game they’ve created, they actually make more money when a home they own is foreclosed on.

Why, despite mountains of evidence, have banksters at Goldman Sachs and other Wall Street institutions not been thrown in jail for defrauding customers, manipulating LIBOR interest rates, and throwing thousands of Americans out of their homes illegally in a massive robo-signing scandal?

It’s because we have a two-tiered justice system in which those in power, like Goldman Sachs executives, get a slap on the wrist when they steal $50 billion, but people like you and me go to jail for stealing a 7-11 Slurpee.

Now does it make sense why Wall Street was bailed out and Main Street was sold out?

In this post-crash world, where agents of Goldman Sachs have infiltrated key positions of power all around the world, we must all fundamentally re-understand how we view the global economy and just how much effect our democratic institutions have on this economy.

We no longer have an economy geared to benefit working people around the world; we have an economy that’s geared to exploit working people for Goldman Sachs’ profits. Trader Alessio Rastani told the BBC in September before Goldman’s Lucas Papademos was installed as Greece’s Prime Minister, “We don’t really care about having a fixed economy, having a fixed situation, our job is to make money from it…Personally, I’ve been dreaming of this moment for three years. I go to bed every night and I dream of another recession.” Rastani continued, “When the market crashes… if you know what to do, if you have the right plan set up, you can make a lot of money from this.”

And as we’ve seen over the last decade, Goldman Sachs knows exactly what to do. They’ve had the right plan set-up, and it’s nothing short of a global coup d’etat.

As Rastani bluntly told the BBC, “This is not a time right now for wishful thinking that governments are going to sort things out. The governments don’t rule the world, Goldman Sachs rules the world.”

 

SOURCE:
http://truth-out.org/opinion/item/12996-goldman-sachs-global-coup-de-tat.html#13547977288201&action=collapse_widget&id=3478441

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Fare #1: Introduction To The Ride

…okay. Today I’ve decided to share some of my thoughts about the very awkward contemporary scenarios that have been simultaneously happening all thorough the world – and what are me personal fears upon most of the possible, plausible crossroads ahead. I tend nay to do it quite often, as I think that sometimes my means of expressing meself in English mayhap lead to a kinda clumsy text. But hey, let’s go.

Let’s ride.

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(Don’t forget to check all links along the reading – they open on new tabs. Their sources help to best illustrate what I wath to share with you all. Peace on Earth, people. Learn to read between the lines)
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Whilst we hop in this fare on, alongside, please do allow me to turn our TAXI’s radio on. I promise that I be changing radiostations alongtime.

#1 – Koyaanisqatsi

Hop in the cab, whilst I tell Ye some of the wrongedland we’re about to ride thorough. It is nay bright. ‘Tis dark and tends to turn macabre.

The road ahead seems dark and somber; the paths, slicky and among whitethick myst. About the road, incrusted inwith mountains atop, toxic rains befall upon our track; scorching weathers had droughten all soils aleft; awkward tremors and sounds are now heard all around the Globe; bare wastelands do lay their sore carcasses of flourishing nothingness across the entire crust that be perceived afar the Horizont – albeit be the whole landscape nay deprived of pulsing, yet dormant Life.

There live goats and sheeple, grazing still. So much are still in deep slumber. ‘Tis but time to get awaken.

Mother Nature struggles to survive upon Her very Land, as there be a such antique plague which had installed itself upon Her board – but nay since Her birth. Such were befallen from the Sky about a deep, deep Eon ago – and so much a list of the ancient fragments which we have already stumbled upon did try to tell Ye all of this road.

But Nay – Ye heard Nay of all the warnings, and visits, mayhap due to yer deep slumber.

And, as soon as they had arrived, there thus had also begun its pandemic infection upon Mother Nature: in such a frantic frenzy, this illness achieved to be omnipresent within the Earth, having awkward stone cages as their dwellings.

Bare, sterile vessels. Once that the Sun had yet naÿven arisen, theyr activities commence.

Before daylight struggles to shine thorough the illthick air, there be the Virus. Masoned by It, all infected sheeple begin to move and act according to theyr grandmasters’ wishes.

To serve all goats that be alive, as such Virus relies on this vessel to procreate and proliferate within sheeple vessels. Once infected, the sheep will go to wherever the Virus commands them to; will then massively moving themselves in such an artificial pattern of habits and practises and fashions – absolutelly alien to theyr natural, dormantkept behaviour.

Many feel tired; stressed; depressed because of such treat – but ther dare nay to disobey. They simply proceed into smiling; deceiving; consuming. This is the real, bare truth.

Theyr lifes, hear Ye!, are as sterile as theyr masters’ desires want so.

Unaware of such parasitism of an entire, plural flock of still too many sheeple, many persist on replicating such behaviours – in a unfruitful pathway that leads to naught but vanity and perpetual submission – and yet even more: sprinkled by artificially implanted struggles among Ye sheeple, so that Ye all incline to seceed from the other beings.

Thus leading all Life to a spiral of eternal, sterile experience of artificialness in order to fulfill mere material, mercantile necessities of the vesselbeing, so that such slumber of consciousness among all beings and around theyr environments perpetuate.

That is, untill there be more sheeple awaken. The answer, mayhap it be coming within upwards.

Until then, all existence of all Ye sheeple be doomed as to be assembled upon the Earth’s plate as if Ye be but mere components of a giant, round circuit board.

If that be so, then also be our thoughts the agent eletrons of such core.

It is now but time to have a rest and stop alongside this next crossroad – inwhich one of the pathways would lead Ye to gravitons, matter and gravity force: allegedly modern, yet ancient concepts and practises which were verily mastered by the ancient peoples and tribes who inhabited the planet.

There be also the Sun, and how Its mechanics DO affect Life and Its wellfare. But this, let be at another time.

Now, let us come back to fantasy.

#2 Fantasia

==>> REMEMBER <<==
* * * DISCERN. Question, and ponder. Develop your critical thinking.

Entire Ukraine government resigns

“Ukrainian Prime Minister Mykola Azarov and the entire government resigned today in a surprise move after controversial elections as the economy teeters on the brink of recession.”

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3:46PM GMT 03 Dec 2012

The presidency said President Viktor Yanukovych had accepted Mr Azarov’s request to give up his post and become an MP, a move expected to be repeated by several cabinet ministers.

It remained unclear who would fill the powerful post of premier, with some analysts speculating it could go to a member of the elite close to Mr Yanukovych known as the “Family”.

“President Viktor Yanukovych accepted the resignation of Prime Minister Mykola Azarov, satisfying the demand of the latter,” the statement added.

The move cames as a new parliament prepares to meet after October 28 legislative elections which raised new concerns about democratic standards under Mr Yanukovych.

The ruling Regions Party appears to have retained control of the Verkhovna Rada with the help of independents despite a strong challenge from the opposition parties of boxer Vitali Klitschko and imprisoned ex-premier Yulia Tymoshenko.

OSCE observers slammed the polls as a setback for Ukraine, marred by the absence of Ms Tymoshenko who is serving a seven-year sentence on abuse of power charges she says were trumped up by Mr Yanukovych.

But economists also fear the country is entering troubled times and could be on the brink of a new recession that would see it seek billions of dollars in disbursements from an IMF standby package.

Ukraine’s economy contracted by 1.2 percent in the third quarter of this year, and several banks fear the country is heading for zero growth in 2012, not to mention a sharp devaluation of the local currency.

“This (the resignation) is linked to a number of economic challenges which Ukraine has fallen into thanks to this president and this government,” said opposition leader Arseniy Yatsenyuk.

A Russian-speaking bureaucrat mocked by many in Ukraine for his dry and humourless image, Mr Azarov took office in 2010 shortly after Mr Yanukovych defeated Ms Tymoshenko in a fiercely-contested presidential election.

Mr Azarov has always been seen as a close ally of Mr Yanukovych, but some analysts believe his power base has been undermined by the recent rise of a “Family” of close acquaintances of the president into top positions.

Possible successors to Mr Azarov could include First Deputy Prime Minister Valery Khoroshkovsky and National Bank chief Sergiy Arbuzov, analysts said.

mr Arbuzov, 36, is seen as a key member of the “Family” of Yanukovych allies.

His meteoric rise to one of the most important economic jobs in the country has raised eyebrows in Ukraine. He is a confidant of Mr Yanukovych’s increasingly powerful son Olexander, who is regarded as the Family kingpin.

“It is possible that this radical resignation makes sense; it is better to dissolve the government and appoint another one,” said Kostyantyn Bondarenko, head of the Ukrainian Politics Institute.

He said that resignation made sense for Mr Azarov, who was approaching the pension age of 65 and would have had to work on replacing a string of ministers had he stayed in power.

Mr Yanukovych has been criticised for concentrating ever more power around himself and allies since defeating the leaders of the pro-Western Orange Revolution in the 2010 polls.

Other candidates for prime minister could include national security chief Andriy Kluyev and deputy presidential chief of staff Iryna Akimova.

Ukrainian parliament speaker Volodymyr Lytvyn said that a decision on the composition of the new government could be taken on December 13 or 14 after the new parliament convenes.

The ministers will remain in their posts until a new government is formed, the presidency said.

It also noted that under Ukrainian law, whenever the prime minister resigns the entire government must do so.

The presidency explained the mass resignation by saying that Mr Azarov had decided to take up a parliamentary seat rather than staying on as prime minister.

Under Ukrainian law, deputies have to cease their former work in order to take up their seats in parliament.

Along with Mr Azarov, a number of other ministers were elected to parliament including Deputy Prime Minister Sergiy Tigipko and Economy Minister Petro Poroshenko.

SOURCE:
http://www.telegraph.co.uk/news/worldnews/europe/ukraine/9719263/Entire-Ukraine-government-resigns.html

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.

 

SOURCE:
http://www.mybudget360.com/day-of-reckoning-for-global-total-debt-total-credit-market-debt-consumer-debt-large-charge-of-household-debt-trillions/

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.

America: The Food Stamp Nation

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.

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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.

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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:
http://www.paulcraigroberts.org/2012/12/01/our-collapsing-economy-and-currency/

US households already went off their fiscal cliff and breached their debt ceiling – US quickly approaching another debt ceiling limit aligning with the fiscal cliff

Few people realize that the debt ceiling is aligning right on track with the fiscal cliff. Total public outstanding debt is now at $16.369 trillion and is only $63 billion away from breaching the limit. Not a coincidence that the fiscal cliff is also on the horizon. In essence, we are addicted to debt. However US households have been on a multi-year long process of deleveraging yet this is not being asked from banks or governmental institutions. Of course we knew this was coming. Anyone that was honestly objective realized that we were on an unsustainable path. Yet the name of the game is now about kicking the can furiously down the road so it falls beyond or line of vision. Then we act surprised when we arrive at the can and it has only gotten heavier with debt. So as we are T-minus a few days from the fiscal cliff, let us examine the debt ceiling.

Debt ceiling being breached

We are fast approaching the debt ceiling:

total-debt-to-gdp_0

As stated, we are $63 billion away from hitting this.  This week another $26 billion will be added courtesy of a few auctions so we will hit this before the New Year.  Debt has been expanding at a furious pace:

Total-Debt-Dec-3

snowball. The reality is, the only way out of these mountains of debt is through a slow methodical inflation. The Fed is not even shy about admitting this. Why else would they be digitally printing money with no fear? They realize the debt destruction of American households is enough to offset the trillions of extensions and side programs that are being offered to the banking system. But after years of this, we are now seeing spillover effects via housing bubbles, student loan bubbles, food price hikes, healthcare costs soaring, and other items of that nature all in line with stagnant incomes.

An interesting parallel is looking at US households. Instead of adjusting to lower incomes in the 1990s and 2000s, US households decided to go into massive debt. Yet that access to debt has now been breached. In essence, US households hit their own debt ceiling and fiscal cliff:

household-debt

It is rather clear where the deleveraging started to happen. This is now a typical recession. This is shifting the landscape of how much debt households can really take on. Yet for government and banks, there doesn’t seem to be a limit although globally we are starting to see peak debt situations. Many countries are having issues even servicing their interest payments let alone thinking about paying back the debt they owe. These bailouts are simply methods of extending lines of credits to pay off already existing lines.

US households are clearly facing the grim reality that maybe they were not as wealthy as they once thought. After all, many do not even have enough for retirement and millions will completely rely on Social Security for years to come. This works well when you have a small older population with a large healthy working young population. Today we have a larger older population with a young less affluent population, with many not even working unfortunately.

So here we are hitting another debt ceiling limit right on time for the fiscal cliff. Combine this with 47 million Americans on food stamps and you need to ask yourself if this really sounds like an economic recovery.

 

SOURCE:
http://www.mybudget360.com/us-households-fiscal-cliff-debt-ceiling-2012-peak-debt/

Pentagon Fraud

“The contractor fraud provision would make the Department of Defense identify firms that received contracts after they were previously sanctioned for defrauding the Pentagon.”

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November 30, 2012

The Senate on Friday agreed to make the Pentagon compile annual reports on contracting fraud. The provision by Sen. Bernie Sanders was added to a Department of Defense authorization bill. Another Sanders amendment added to the bill today would make public a list of senior military officials who leave the government and land on the payrolls of defense contractors. “This country has a $16 trillion national debt. It is unacceptable that the Department of Defense continues to lose vast sums of taxpayer money because of fraud perpetrated by major defense contractors. This has got to stop,” Sanders said.

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The contractor fraud provision would make the Department of Defense identify firms that received contracts after they were previously sanctioned for defrauding the Pentagon.

Over the past decade, the Department of Defense paid more than $400 billion to contractors who had been previously sanctioned in cases involving $1 million or more in fraud, according to a 2011 Pentagon report. That study, the first of its kind, was required by a Sanders amendment to an earlier defense authorization bill.

Major contractors among the many examples of fraud cited in the report included:
Lockheed Martin. The nation’s largest defense contractor landed $200 billion in taxpayer-funded contracts even after paying $60.95 million in fraud judgments and settlements over the previous 10 years. In 2008, for example, Lockheed paid $10.5 million to settle charges that it submitted false invoices for a multi-billion dollar contract connected to the Titan IV space launch vehicle program. The very next year, Lockheed received $30.2 billion in Pentagon contracts.
The Boeing Company. It paid at least $644 million in fraud judgments and settlements while it received more than $21 billion in contracts in the last decade. In 2000, for example, Boeing agreed to pay $54 million to settle charges that it placed defective gears in more than 140 Chinook helicopters and then sold the helicopters to the Army.
Northrop Grumman Corp. Despite paying at least $410 million in fraud judgments and settlements, the nation’s No. 3 defense contractor was awarded more than $9 billion in taxpayer-funded contracts in the last decade. In 2005, Northrop Grumman paid $62 million to settle charges that it concealed basic inventory problems. Despite the serious charges, Northrop Grumman received $12.7 billion in contracts the next year, a 16 percent increase over the year before.

Under a separate Sanders amendment, the Pentagon would have to shed light on defense contractors that hire retiring Pentagon brass to help them land lucrative government contracts.

A recent study by Citizens for Responsibility and Ethics in Washington and the Brave New Foundation found that 70 percent of recently-retired three-and-four star generals left the Pentagon for employment by major defense contractors. At least two of the former generals continued to serve on Defense Department advisory panels. The report did not find that any generals were breaking rules, but said that ethics codes are “riddled with loopholes” and suggested increased public scrutiny could prevent conflicts of interest.

 

SOURCE:
http://www.sanders.senate.gov/newsroom/news/?id=2DF44679-35D7-424E-BB35-6AD57DE44786

Our Broken World: The Toxic Nexus of Power and Money

“In our global society, only money gives a few people access to power which in return allows the very same people the possibility to accumulate even more wealth.”

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By Gilbert Mercier
NEWS JUNKIE POST
Jan 19, 2012 at 8:41 pm

A Crisis of Ontology

The deadly disease of our global capitalist system is rather easy to understand from a philosophical standpoint. The crisis is ontological, a profound existential turmoil. Human beings are currently defined and valued by what they have, not by what they are. The quantitative aspect of our lives is in the forefront of all human interactions-either between groups or individuals within a group-while the qualitative aspect has been pushed aside, not even on the back burner of our collective consciousness, but literally into the trash of our social interactions. Usually, people are gauged by their assets, incomes, and cars they drive not by evaluating what contributions they make to the common good. We live in a world where a person is defined by quantity not quality, and it is probably our biggest systemic problem.

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This is reflected by countless examples in the popular culture with expressions such as “show me the money”, “money talks” or the famous line in Brian De Palma’s “Scarface”: “First you get the money, than you get the power”. Poor kids, dreaming of a better future, are constantly bombarded by the spectacle of the “bling, the cool cribs, the fancy rides and the sexy babes” which are the trademarks of most Hip Hop music videos. Money is always center stage in this out of reach universe of “players” which regardless of any tangible cultural meaning serve as heroes and role models for the disenfranchised. It is the deadly equation of money= success + happiness + self respect =power. The same toxic component motivates some of the brightest and best educated young people in the United States to opt for a career on Wall Street instead of becoming doctors, engineers or scientists.

In our global society, only money gives a few people access to power which in return allows the very same people the possibility to accumulate even more wealth. A typical example of this vicious cycle is the constant revolving door between investment banks, such as Goldman Sachs and the highest jobs at the US Treasury Department. Top finance executives with a taste for power- such as Hank Paulson or Larry Summers- under the premises of an interest in “public service”, work for governmental branches for a few years, then go back to their extremely lucrative jobs in finance, and so on.

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Anxiety Rising: Occupy Versus Fear and Paradigm Paralysis

Some people are still living under the pretense that “things” in our broken global system will eventually fix themselves up spontaneously by some kind of miracle. Of course it will not happen, and this model is, by essence, the definition of magical thinking. Recently, a Haitian woman, interviewed for the occasion of the second anniversary of the earthquake, said that she was “putting her trust in god not in people” to rebuild Haiti from the horrific disaster. With a rising uncertainty and global anxiety building up like a pressure cooker, most people are scared and either try to escape reality by putting their heads in the sand or are convinced that the global system can be salvaged by making changes from within.

But, what they refuse to see is that following this model of a “business as usual” mentality impair their judgments and lock them into the box of paradigm paralysis. Even so most people feel that we have already entered an extraordinary period of global paradigm shift, the fear of the unknown makes them want to hang on to a system in advance state of decay. More people worldwide are getting aware of the fact that it is not a question of if the system will collapse but rather when.

The global Occupy movement has two functions in this process: firstly, to be the main catalyst for systemic change, secondly, as one of the architects setting up the foundations for a new global system where quality not quantity shall finally prevail in human relationships. Turning what seems to be Utopian into a reality is the challenge, and it is what this brave new world is all about. It is only a question of reaching a certain critical mass, and of developing the psychological ability to welcome the unknown, without fear, and to enter into uncharted territories.

Editor’s Note: All photographs by Magalie L’Abbe.

SOURCE:
http://newsjunkiepost.com/2012/01/19/our-broken-world-the-toxic-nexus-of-power-and-money/

Mississippi River could become impassable in two weeks

“”There are long-term consequences to letting the Missouri get too low” Casseau said. “There are several states involved in this situation and the Corps of Engineers is responsible for serving the nation as a whole.”

Scott Wuerz | Belleville News-Democrat

The Mississippi River could be too shallow for barge traffic between St. Louis and Cairo in two weeks due to decreasing water levels.

According to the American Waterways Operators and Waterways Council, the country’s busiest inland waterway is nearly too low already for barges loaded with coal, steel and other commerce.

And it is expected to dry up considerably in the next couple of week due to the summer drought and the U.S. Army Corps of Engineer’s move to hold back water from the Missouri River.

“Of particular concern are hazardous rock formations near Thebes and Grand Tower which threaten navigation when water levels drop to anticipated, near historic lows,” the agencies said in a joint release. “The rock formations, combined with the reduced flows from the Missouri River, will prohibit the transport of essential goods along this critical point in the river, effectively stopping barge transportation on the middle Mississippi River around Dec. 10.”

U.S Coast Guard Lt. Colin Fogarty said the river is about two feet below normal water levels. He expects it to threaten the all-time low of 6.2 feet below normal in December. The previous low water mark was set in 1940.The U.S. Army Corps of Engineers, in a controversial move, last week started to reduce to flow of water from the Missouri River into the Mississippi to make sure areas to the north have adequate water. “Congress and the Administration need to understand the immediate severity of this situation,” American Waterways Operators President and CEO Tom Allegrett said. “The Mississippi River is an economic superhighway that efficiently carries hundreds of millions of tons of essential goods for domestic use as well as national export.

“We need to address this situation swiftly, cut through bureaucratic red tape, and prevent the closure of the Mississippi.”Fogarty said the Coast Guard and Corps of Engineers are already working to try to keep the Mississippi River traffic flowing.”At this point in time the Missouri River has been cut off as we have been expecting since early July,” Fogarty said. “The Army Corps of Engineers has begun heavy dredging and the Coast Guard has been moving assets to St. Louis to help in any way it can.”

Fogarty said he is not resigned to the idea that the Mississippi will be shut down by low water.”We will not speculate when or if the river will be closed,” Fogarty said. “We’re doing everything we can to ensure river traffic will continue to flow. Despite the fact that we have these low water conditions, we’re hopeful to keep traffic moving.”

Corps of Engineers spokesperson Sue Casseau said the restrictions on the Missouri are something that happen every year to prevent it from becoming too low over the winter and spring. She said usually it isn’t a problem because the Mississippi doesn’t often suffer from too little water.

“There are long-term consequences to letting the Missouri get too low” Casseau said. “There are several states involved in this situation and the Corps of Engineers is responsible for serving the nation as a whole.

“Despite the Corps of Engineer’s dredging efforts, there is little that can be done to deepen the channel at Thebes, where the bottom of the Mississippi is rock, not clay like it in most of the channel. The river is nine feet deep at Thebes, a town on the Illinois side of the river south of Cape Girardeau.

“Most barges need at least a 9 foot draft,” Fogarty said. But oil barges and ones that carry things like anhydrous ammonia don’t need as deep of a draft to get through.”Fogarty said while some old wrecks have been exposed by the low water, none of them are in the channel or otherwise a threat to navigation. He predicted the low water mark record will be broken about Dec. 15.

SOURCE:
http://www.mcclatchydc.com/2012/11/28/175790/mississippi-river-could-become.html#emlnl=Daily_News_Update#storylink=cpy

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.

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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