Despite promises to the contrary, it should come as no surprise that the city is unable to meet its obligations. And it won’t be the last. City and state governments all over America are in the same boat.
This is a serious occurrence, and one that will not only destroy the financial bottom line of lenders and wipe out retirement promises for tens of thousands of current and former employees, but may well foreshadow events to come throughout the rest of the United States in the near future:
The city of Detroit defaulted on $2.5 billion of its outstanding debt. The creditors are getting what they deserve.
He who lends to government depends on the exploitation of the people to get repaid.
The city‚Äôs retired city workers were also warned that significant cuts in pensions and health insurance would take place.
This is the problem all governments face. They promised the moon. Then when those workers retired, they had to be replaced. The cost of government is rising exponentially and this causes higher taxes and it becomes a dog chasing its own tail.
There is¬†NO¬†way out but collapse.
The economic model upon which government has been designed post-WWII is simply braindead. Dumb and Dumber could have done a better job.
The ¬†size of government escalates and this creates a deflationary vortex through which the economy is sucked dry.
There is no surviving this crisis.
Politicians are desperate to cling to power so they buy tanks and guns to defend against the inevitable.
Detroit and Stockton are mere microcosms compared to the almost unimaginable debt obligations held by the United States government. We’re talking about tens of trillions of dollars that will never, ever be repaid. There’s so much money that has been borrowed that future generations yet to be born are already indebted.
Detroit, Chicago and other cash-strapped cities are¬†turning into domestic tribal war zones akin to the middle east, with cops outnumbered 500-to-1. Now, with the revelation that they have no money left, people who believed in the benevolence of government and depended on them to pay for their retirements are going to be left high and dry.
We will see the same across the rest of this nation, as the federal government runs into similar funding problems for the one hundred million Americans dependent on monthly disbursement checks. These checks are either going to be cut, or more likely, our money will be inflated away driving prices for essential goods like food and energy to the moon.
It will end in disaster, and as Martin Armstrong notes, will lead to violent confrontations when people who thought they’d be taken care of from cradle to grave realize that no help is coming.
When it hits the fan, don’t say we didn’t warn you. Mac Slavo is the editor of SHTFplan.com, a resource hub for alternative news, contrarian commentary and strategies that you can take to protect yourself from the coming global paradigm shift.
Last week, the newest example of a Police State began crawling in Brazil.
It happened in Porto Alegre, Sao Paulo and Brasilia, the district of criminals, the equivalent of Washington DC in North America and London, England. Along with the inauguration of the Police State, we‚Äôve also seen the start of the drainage of wealth from Brazil by FIFA, which will slowly and surely change shape once Petrobras begins extracting crude oil in larger amounts from the Pre-sal.
The Police State will have another chance to show off its face during the other games of the Confederations Cup, which will occur in the center and north of the country.¬† Brazilians disappointed with their government‚Äôs management of resources, much of it inherited from the Lula administration, have taken to the streets to voice their concern about how billions of their tax payer money is used to build so-called ‚Äúwhite elephants‚ÄĚ, a term used to identify new soccer stadiums to host the Confederations Cup, the World Cup in 2014 and the Olympics in 2016.
The Brazilian government had been preparing for a long time for these sports events as well as for the protests that could arise. As we have reported before, the Brazilian regime increased its purchase of weapons from Israeli military manufacturers to a point that turned it into one of the largest purchasers of military equipment in recent years. The government of the state of Rio Grande do Sul is working with Israeli military contractors to establish a military hub in Rio Grande do Sul, where weapons such as drones will be produced.
For now, only tear gas, pepper spray and rubber bullets have been used against the people who dared walk on the streets to demand improvements in education, health and basic services, as supposed to paying FIFA billions to let the country host sports events. The violence with which the police forces have oppressed the people has caught many by surprise. Even Sao Paulo‚Äôs mayor, Fernando Haddad, accepted that the police used excessive force against protesters last Thursday.
Although security is one of the most important concerns for Brazilians, they are not asking the government to make it safer. How could they, when government forces are the ones hitting them with clubs, spraying them and gassing them?
Twenty cents that broke the camels back
Despite major examples of government corruption over the last three decades, it was a 20 cent increase in public transport what made protests florish not only in Brazil, but also in other 24 cities around the world. Brazilians who live abroad gathered in Dublin this weekend and will gather in Montreal, Boston, London, Paris and other major cities to show their support for the protests at home, where millions of young Brazilians have ignited an anti-government sentiment all over the South American nation.
S√£o Paulo, Rio de Janeiro and Porto Alegre rose last week against a 20 cent increase in public transport fares. This wave of demonstrations, still poorly organized, set a precedent in a country with a debilitated democracy of just 28 years in which its citizens take to the streets after the scandalous cases of corruption to which they are exposed to every day.
The demonstration Thursday in S√£o Paulo, marked by ‚Äúpolice violence‚ÄĚ, ended with 235 detained and over 100 injured. Most of the injured were affected by tear gas and rubber bullets shot at close range. Although the Ministry of Security investigates whether abuse occurred during the protest, the governor Geraldo Alckmin of the opposition Brazilian Social Democratic Party (PSDB), defended the actions of the agents and justified the violence by saying that the protests had a ‚Äúpolitical taint‚ÄĚ.
Partisan or not, the proclamations, clashes with police and vandalized benches, buses and subway stations are not motivated solely because the public transportation ticket reach $1.50 in a country where the minimum wage is $250. ‚ÄúI don‚Äôt use public transportation, but I think the increase is unfair and has motivated Brazilians to organized. We do not have a culture of protest: because Brazilians are not informed, are not education and do not know their rights. I haven‚Äôt seen protests since the demonstrations against President Fernando Collor in 1992,‚ÄĚ says Iva Oliveira, who at 49 years of age was one of the veterans of the march.
Violence is another reason that moves this young crowd, many of them still in college. The State of S√£o Paulo coexists with significant crime rates, although low when compared with other states of the country. According to official numbers, there are 11.5 homicides per 100,000 inhabitants.
The frustration is not only directed against criminals who do not blink before pulling the trigger, but also against police procedures that has rendered one death of a protester who the police says ‚Äúresisted while being arrested.‚ÄĚ
‚ÄúThis movement is not of action but reaction. The authorities do not open the dialogue, its policy is not transparent ‚Äúcriticized Deborah Ungaretti, a 23 year-old law student who participated of the demonstration. ‚ÄúI did not use violence, but I understand how it was justified. I came to protest against the banks and the financial system that is dominating us, military police base were attacked because they are the ones who are oppressing us, buses were burned because there are still 35 million Brazilians who do not have access to public transport because they can not afford it‚ÄĚ.
It is still early to say whether this can be the start of strong movement, but many of those who attended the demonstration yesterday hope so. ‚ÄúWe will take no more corruption, problems in the health system, lack of education ‚Ä¶ The bus fare is just the tip of the iceberg‚ÄĚ, says Antonio Marcos a 28-year real estate agent, a supporter of Anonymous, who protested along a group of neighbors. ‚ÄúWhat we hope is that this will become something bigger and for that we have to go outside to show who should have the power,‚ÄĚ he said.
The manifestations caught authorities with the pants down, especially the President Dilma Rousseff, who was booed on Saturday at the Mane Garricha Stadium in Brasilia.
The Minister of Institutional Relations, Ideli Salvati, has condemned the violence and justified the reasons that have led protesters to the street: ‚ÄúTransport is expensive. There are people who spend three or four hours to reach their destination.‚ÄĚ
Luis R. Miranda is the Founder and Editor of The Real Agenda. His 16 years of experience in Journalism include television, radio, print and Internet news. Luis obtained his Journalism degree from Universidad Latina de Costa Rica, where he graduated in Mass Media Communication in 1998. He also holds a Bachelor’s Degree in Broadcasting from Montclair State University in New Jersey. Among his most distinguished interviews are: Costa Rican President Jose Maria Figueres and James Hansen from NASA Space Goddard Institute.
Eventually the money runs out.¬† Much of America was shocked when the city of Detroit defaulted on a$39.7 million¬†debt payment and announced that it was suspending payments on¬†$2.5 billion¬†of unsecured debt, but those who visit¬†my site¬†on a regular basis were probably not too surprised.¬† Anyone with half a brain and a calculator could see this coming from a mile away.¬† But people kept foolishly lending money to the city of Detroit, and now many of them are going to get hit really hard.¬† Detroit Emergency Manager Kevyn Orr has submitted a proposal that would pay unsecured creditors about¬†10 cents¬†on the dollar.¬† Similar haircuts would be made to underfunded pension and health benefits for retirees.¬† Orr is hoping that the creditors and the unions that he will be negotiating with will accept this package, but he concedes that there is still a “50-50 chance” that the city of Detroit will be forced to formally file for bankruptcy.¬† But what Detroit is facing is not really that unique.¬† In fact, Detroit is a perfect example of what the future of America is going to look like.¬† We live in a nation that is rotting, decaying, drowning in debt and racing toward insolvency.¬† Already there are dozens of other cities across the nation that are poverty-ridden, crime-infested hellholes¬†just like Detroit is, and hundreds of other communities are rapidly heading in that direction.¬† So don’t look down on Detroit.¬† They just got there before the rest of us.
The following are some facts about Detroit that are absolutely mind-blowing…
1¬†- Detroit was once the fourth-largest city in the United States, and in 1960 Detroit had the¬†highest per-capita income¬†in the entire nation.
2¬†- Over the past 60 years, the population of Detroit has fallen by¬†63 percent.
3¬†- At this point, approximately¬†40 percent¬†of all the streetlights in the city don’t work.
4¬†- Some ambulances in the city of Detroit have been used for so long that they have¬†more than 250,000 miles¬†on them.
‚ÄúWhat the average Detroiter needs to understand is that where we are right now is a culmination of years and years and years of kicking the can down the road,‚ÄĚ said Orr, adding that¬†his proposal should not be seen as a ‚Äúhostile act‚ÄĚ but as a step in the right direction.
Does that sound familiar?
U.S. politicians have also been kicking the can down the road for “years and years and years”.
But eventually you can’t kick the can down the road anymore.
Sometimes it is helpful to step back and look at what we have done to ourselves over the past several decades.
In fact, if you started paying off¬†just the new debt¬†that the U.S. has accumulated during the Obama administration at the rate of one dollar per second, it would take¬†more than 184,000 years¬†to pay it off.
#3¬†During fiscal year 2011,¬†over a trillion dollars¬†of government money was spent on 83 different welfare programs, and those numbers do not even include Social Security or Medicare.
#4¬†Over the past four years, welfare spending has increased by¬†32 percent.¬† In inflation-adjusted dollars, spending on those programs has risen by¬†378 percent¬†over the past 30 years.¬† At this point, more than100 million Americans¬†are enrolled in at least one welfare program run by the federal government.¬† Once again, these figures do not even include Social Security or Medicare.
#5¬†Over the past year, the number of Americans getting a free cell phone from the federal government has grown¬†by 43 percent.¬† Now more than 16 million Americans are enjoying what has come to be known as an “Obamaphone”.
#6¬†When Barack Obama first entered the White House, about 32 million Americans were on food stamps.¬† Now,¬†47 million Americans¬†are on food stamps.¬† And this has happened during what Obama refers to as “an economic recovery”.
#7¬†The U.S. government recently spent¬†27 million dollars¬†on pottery classes in Morocco.
#8¬†The U.S. Department of Agriculture recently spent¬†$300,000¬†to encourage Americans to eat caviar at a time when more families than ever are having a really hard time just trying to put any food on the table at all.
#10¬†The U.S. Department of Agriculture gave the largest snack food maker in the world (PepsiCo Inc.) a total of 1.3 million dollars in corporate welfare that was used to help build “a Greek yogurt factory in New York.”
#11¬†The National Science Foundation recently gave researchers at Purdue University¬†$350,000.¬† They used part of that money to help fund a study that discovered that if golfers imagine that a hole is bigger it will help them with their putting.
#12¬†If you can believe it,¬†$10,000¬†from the federal government was actually used to purchase talking urinal cakes up in Michigan.
#13¬†The National Science Foundation recently gave a whopping¬†$697,177¬†to a New York City-based theater company to produce a musical about climate change.
#14¬†The National Institutes of Health recently gave¬†$666,905¬†to a group of researchers that is studying the benefits of watching reruns on television.
#15¬†The National Science Foundation has given¬†1.2 million dollars¬†to a team of “scientists” that is spending part of that money on a study that is seeking to determine whether elderly Americans would benefit from playing World of Warcraft or not.
#16¬†The National Institutes of Health recently gave¬†$548,731¬†to a team of researchers that concluded that those that drink heavily in their thirties also tend to feel more immature.
#17¬†The National Science Foundation recently spent¬†$30,000¬†on a study to determine if “gaydar” actually exists.¬† This is the conclusion that the researchers reached at the end of the study…
“Gaydar is indeed real and‚Ä¶ its accuracy is driven by sensitivity to individual facial features”
#18¬†Back in 2011, the National Institutes of Health spent¬†$592,527¬†on a study that sought to figure out once and for all why chimpanzees throw poop.
#19¬†The U.S. government spends more on the military than China, Russia, Japan, India, and the rest of NATO¬†combined.¬† In fact, the United States accounts for¬†41.0%¬†of all military spending on the planet.¬† China is next with only¬†8.2%.
#21¬†In 2006, only¬†12 percent¬†of all federal workers made $100,000 or more per year.¬† Now, approximately¬†22 percent¬†of all federal workers do.
#22¬†If you can believe it, there are¬†77,000 federal workers¬†that make more than the governors of their own states do.
#23¬†During 2010, the average federal employee in the Washington D.C. area received total compensation¬†worth more than $126,000.
#24¬†The U.S. Department of Defense had just nine civilians earning $170,000 or more back in 2005.¬† When Barack Obama became president, the U.S. Department of Defense had 214 civilians earning $170,000 or more.¬† By June 2010, the U.S. Department of Defense had¬†994 civiliansearning $170,000 or more.
#26¬†If you can believe it,¬†close to 15,000¬†retired federal employees are currently collecting federal pensions for life worth at least $100,000 annually.¬† That list includes such names as Newt Gingrich, Bob Dole, Trent Lott, Dick Gephardt and Dick Cheney.
#27¬†During 2010, the federal government spent¬†$33,387¬†on the hair care needs of U.S. Senators.
#28¬†During 2010, U.S. Senators pulled¬†$72,370¬†out of the “Senate Restaurant Fund”.
#29¬†During 2010, an average of¬†$4,005,900¬†of U.S. taxpayer money was spent on “personal” and “office” expenses per Senator.
#30¬†In 2013,¬†3.7 million dollars¬†will be spent to support the lavish lifestyles of former presidents such as George W. Bush and Bill Clinton.
#31¬†During 2011, the federal government spent a total of¬†1.4 BILLION dollars¬†just on the Obamas.
#32¬†When you combine all federal government spending, all state government spending and all local government spending, it comes to¬†approximately 41 percent¬†of U.S. GDP.¬† But don’t worry, all of our politicians insist that this is not socialism.
#33¬†As I have written about¬†previously, less than 30 percent of all Americans lived in a home where at least one person received financial assistance from the federal government back in 1983.¬† Today, that number is sitting at an all-time high of¬†49 percent.
#34¬†Back in 1990, the federal government accounted for just¬†32 percent¬†of all health care spending in America.¬† This year, it is being projected that the federal government will account¬†for more than 50 percent¬†of all health care spending in the United States.
#35¬†The number of Americans on Medicaid soared from 34 million in 2000 to¬†54 million¬†in 2011, and it is being projected that Obamacare will add¬†16 million more Americans¬†to the Medicaid rolls.
#36¬†In one of my¬†previous articles, I discussed how it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to¬†73.2 million¬†in 2025.
#37¬†If you can believe it, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.¬† That comes to approximately¬†$328,404¬†for each and every household in the United States.
#40¬†When Barack Obama first took office, the U.S. national debt was about 10.6 trillion dollars.¬† Now it is about¬†16.7 trillion dollars.¬† That is an increase of 6.1 trillion dollars in a little more than 4 years.
#41¬†The federal government has now run a budget deficit of more than a trillion dollars for¬†four years in a row.
#42¬†If right this moment you went out and started spending one dollar every single second,¬†it would take you¬†more than 31,000 years¬†to spend¬†one trillion dollars.
#43¬†If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.
#44¬†Some suggest that “taxing the rich” is the answer.¬† Well, if Bill Gates gave every single penny of his entire fortune to the U.S. government, it would only cover the U.S. budget deficit¬†for 15 days.
#45¬†If the federal government used GAAP accounting standards like publicly traded corporations do, the real federal budget deficit for 2011 would have been¬†5 trillion dollars¬†instead of 1.3 trillion dollars.
#46¬†The United States already has more government debt¬†per capita¬†than Greece, Portugal, Italy, Ireland or Spain does.
#47¬†At this point, the United States government is responsible¬†for more than a third¬†of all the government debt in the entire world.
#48¬†The amount of U.S. government debt held by foreigners is¬†about 5 times larger¬†than it was just a decade ago.
#49¬†Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared¬†by 61%¬†during that same time period.
#51¬†The U.S. national debt is now more than 5000 times larger than it was when the¬†Federal Reserve¬†was first created.
#52¬†The U.S. national debt jumped more¬†on the very first day¬†of fiscal year 2013 than it did from 1776 to 1941 combined.
#53¬†Historically, the interest rate on 10 year U.S. Treasuries has averaged¬†6.68 percent.¬† If the average interest rate on U.S. government debt rose to that level today, the U.S. government would find itself spending more than a trillion dollars per year just on interest on the national debt.
#55¬†Boston University economist Laurence Kotlikoff is warning that the U.S. government is facing a gigantic tsunami of unfunded liabilities in the coming years that we are counting on our children and our grandchildren to pay.¬† Kotlikoff speaks of a “fiscal gap” which he defines as “the present value difference between projected future spending and revenue”.¬† His calculations have led him to the conclusion that the federal government is facing a fiscal gap of¬†222 trillion dollars¬†in the years ahead.
Please share this article with as many people as you can.¬† We are in the process of committing national financial suicide and time is rapidly running out to do anything about it.
Just like Detroit, a day is rapidly approaching when America will not be able to kick the can down the road anymore.
Sadly, our politicians don’t seem inclined to do anything about it and most of the population seems to think that our exploding national debt is not a significant problem.
By the time it becomes clear how wrong they were, it will be far too late to do anything about it.
Detroit said it will stop making payment on $2.5 billion of the city‚Äôs massive $18.5 billion debt and has asked creditors to accept 10 cents in the dollar of what the city owes them in a bid to avoid the largest municipal bankruptcy filing in US history.
Detroit Emergency Manager Kevyn Orr said the city would stop making payments on its unsecured debt in a bid to ‚Äúconserve cash‚ÄĚ for vital services like police and firefighters. He further said pension benefits both present and future along with healthcare would face cuts, while control over the city‚Äôs water and sewage would be turned over to an independent body.
‚ÄúWe‚Äôre tapped out,”¬†Orr was quoted by WWJ-TV as saying.¬†“We need to come up with a plan to restructure our debt obligations and our legacy obligations going forward ‚ÄĒ that is: pension, other employee benefits, healthcare, so on and so forth.”
Orr continued that $1.25 billion would be set aside over the next decade, $750 million of which will go towards public safety, including funds for police, fire, streetlights and other endeavors. The remaining $500 million will be for blight removal.
The emergency manager spent two hours with about 180 bond insurers, pension trustees, union representatives and other creditors holding Detroit debt on Friday in an effort to fix fiscal problems which have left the city insolvent.
One bond holder present at the meeting who asked not to be identified told Reuters Orr‚Äôs proposal was likely more than debt holders would be able to accept.
“It’s just too much. It is an unprecedented amount to ask.”
If creditors reject the plan, Detroit could be forced into what would be by far the largest-ever municipal bankruptcy in US history.
Orr said there is a¬†‚Äú50:50‚ÄĚ¬†chance the city will be forced into bankruptcy and that decision would likely happen in the next 30 days.
“Financial mismanagement, a shrinking population, a dwindling tax base and other factors over the past 45 years have brought Detroit to the brink of financial and operational ruin,”¬†Orr said.
In a report issued to creditors on Friday, Detroit‚Äôs skyrocketing debt, pension and healthcare obligations will sell to almost 65 percent of total city revenue by 2017, up from the current level of 42.5 percent.
Detroit has also experienced a 26 percent decline in population since 2000, while unemployment surged from 6.3 percent in June 2000 to 18.3 percent in June 2012, further shrinking the city‚Äôs revenue base. Meanwhile, the city‚Äôs budget deficit is likely to exceed $380 million by July 1.
Orr, who was appointed three months ago by Michigan Governor Rick Snyder to salvage the city‚Äôs finances and operations, has been met with skepticism by local residents who have accused him of exaggerating the current situation.
‚ÄúWe feel that the bankers and the creditors who are here today with the emergency manager are not going to negotiate in the best interest of the people of the city of Detroit. And we are saying that the same financial institutions that Mr. Orr is negotiating with today are responsible in large part for the crisis that exists in Detroit,‚ÄĚ¬†Abayomi Azikiwe, a protester outside the meeting told PBS.
Leaders of some of Detroit‚Äôs 48 public sector unions were also upset by the proposals, with water and sewage workers vowing to strike over the privatization plans.
As the dust had settled from Bilderberg‚Äôs global weekender held at¬†The Grove Hotel¬†in Watford, England, some members of the alternative media stayed on site continuing to dig for answers‚Ä¶
Investigative journalists from the¬†UK Column, American Free Press¬†and¬†Sovereign Independentaccidentally wandered into a presentation suite at the Grove ‚Äď only discover the remnants of a presentation by Thomson Reuters which Bilderberg organisers had neglected to take down after the event. It read ‚Äú‚ÄĚunleashing the power of our unified platform on financial markets‚ÄĚ.
Of course this reminds us of a similar international cartel , or syndicate called LIBOR, where bankers successfully gamed global interest rates enabling them to reap easy billions at the expense of the lower classes. Money for nothing. They did so with impunity, all but laughing in public at any attempt to bring any of the gold collar criminals to book for financial fraud and racketeering.
It‚Äôs no coincidence that LIBOR‚Äôs biggest inside player was also in attendance at Bilderberg 2013. The¬†teflon banker¬†himself ‚Äď the elusive¬†Marcus Agius, the former Group Chairman of Barclays, and chairman of the¬†British Bankers Association¬†(BBA). It‚Äôs worth pointing that LIBOR‚Äôs rate scam was being calculated and published by¬†Thomson Reuters¬†on behalf of the BBA.
Only days after, events on the news wires ‚Äď of international banking tycoon gaming the world‚Äôs currency markets ‚Äď provided the connection to this topic discussed behind closed doors between members of the global industrial and political elite.
Continuing conflict in the Middle East has pushed oil prices to their highest in 9 months. The prices reached their highest level since September 2012 on the news that President Obama is to arm Syrian rebels due to the use of chemical weapons by the Assad regime.
Syria is not a big oil producer but with Russia and Iran against the intervention there is the potential for the conflict to spread to the wider Middle East which could affect the supply.
Olivier Jakob of Petromix said:
“One way or another, the Syrian conflict is escalating. It is not only morphing into a US-Russia proxy war but also into a US-Iran proxy war and nobody knows how this will terminate,”¬†(source)
Deep corruption is eating away at every level of American society like cancer.¬† We can see this in our families, we can see this in our businesses, and we can especially see this in our government.¬† We have the highest rate of divorce in the world, we have the highest rate of teen pregnancy in the world, we have the highest rate of obesity in world, and nobody has higher rates of cancer, heart disease and diabetes than we do.¬† The suicide rate is soaring and our economy is falling apart.¬† Meanwhile, our politicians seem absolutely clueless and we have piled up the biggest mountain of debt that the world has ever seen.¬† Has America ever been in such bad shape before?¬† The following are 20 examples of how America is rapidly going down the toilet‚Ä¶
#1¬†Why do so many members of the media have family members that work for the White House?¬† Is this one of the reasons why the mainstream media is so soft on Obama?¬† Just check out the following list which was recently compiled¬†by the Washington Post‚Ä¶
The list of prominent news people with close White House relations includes ABC News President¬†Ben Sherwood, who is the brother of Elizabeth Sherwood-Randall, a top national-security adviser to President Obama. His counterpart at CBS, news division president¬†David Rhodes, is the brother of Benjamin Rhodes, a key foreign-policy specialist. CNN‚Äôs deputy Washington bureau chief,¬†Virginia Moseley, is married to¬†Tom Nides,¬†who until earlier this year was deputy secretary of state under Hillary Rodham Clinton.
Further, White House press secretary Jay Carney‚Äôs wife is¬†Claire Shipman, a veteran reporter for ABC. And NPR‚Äôs White House correspondent,¬†Ari Shapiro, is married to a lawyer, Michael Gottlieb, who joined the White House counsel‚Äôs office in April.
#2¬†Why are IRS agents training¬†with AR-15 rifles?¬† Exactly who do those IRS agents expect to be using those weapons against?
#3¬†The city of Detroit is on the verge of declaring the largest municipal bankruptcy in U.S. history, but a 41-year-old city worker is about to starting drawing a¬†$96,000 annual pension‚Ä¶
Matt Schenk isn‚Äôt your average retiree. He‚Äôs 41, works full-time and collects $194,000 a year at the Detroit Water and Sewerage Department.
But as soon as next month, he‚Äôll start collecting an estimated $96,000 annual pension, courtesy of an early retirement incentive offered to Wayne County appointees.¬† It had no age restriction.
#4¬†The number of sexual assaults in the U.S. military is up¬†35 percent¬†since 2010.
#5¬†The suicide rate for Americans between the ages of 35 and 64 rose¬†by close to 30 percent¬†between 1999 and 2010.¬† The number of Americans that are killed by suicide now exceeds the number of Americans that die as a result of car accidents.
#6¬†The United States has the highest rate of obesity on the planet¬†by far.¬† The U.S. also has the highest rate of cancer, the highest rate of heart disease and the highest rate of diabetes.
#7¬†An illegal immigrant¬†brutally raped and killed a 9-month-old girl¬†in Richland, Washington recently, but you won‚Äôt hear anything about it from the big mainstream news networks because it might hurt the immigration bill being pushed through Congress.
#8¬†Even though the United States has been able to fully secure the border between North Korea and South Korea for the past 60 years, U.S. Senator Check Schumer says that it would take ‚Äúyears and years and years‚ÄĚ to secure the border between the United States and Mexico.
#9¬†All over America illegal immigrants are turning pleasant communities into crime-infested cesspools.¬† The following is what¬†Doug Hoagland¬†says is going on down in California‚Ä¶
Three decades ago, before past amnesties opened the flood gates to illegal criminals, all of the farming communities mentioned in this report were thriving small towns with low crime rates and an extremely pleasing quality of life. Now, every single one of these once fine little towns are cesspools of crime, infested with drug smugglers, anchor baby welfare trolls, where decent people can no longer walk the streets at night. According to the latest census report Selma is, like most of California‚Äôs invaded cities, 78 percent Hispanic‚Ä¶.and likely half of them illegal.
Also cited in this same report is the tragic fact that the local jails are so full these criminals must be turned out early to make way for the next fresh batch of arrestees. The Chief of Police lamented the fact that the ‚Äúcriminal early out‚ÄĚ program allows the newly released criminals to go out and commit more crime.
During my entire 22-year Air Force career I always dreamed of retiring to my sedate and peaceful little town where I grew up. Then I came home, took a look around, saw the gangsters and the prolific graffiti that graces every street in town and decided to dwell elsewhere.
#10¬†The U.S. family is rapidly breaking down.¬† 100 years ago, 4.52 were living in the average U.S. household, but now the average U.S. household only consists of¬†2.59 people.
#12¬†Why is the University of Chicago removing pews¬†from an 88-year-old chapel¬†in order to make room to accommodate Islamic prayer rugs?
#13¬†Barack Obama has decided to allow the sale of the Plan B One-Step abortion pill¬†to girls under the age of 17¬†without a prescription.¬† So now young girls will be able to go to the drug store and pick up these pills at any time and their parents might not ever find out about it.
#14¬†The United States has lost¬†more than 56,000¬†manufacturing facilities since 2001, and millions upon millions of good paying jobs have been shipped out of the country.¬† But Barack Obama is¬†secretly negotiating¬†even more ‚Äúfree trade‚ÄĚ agreements which will destroy our economic infrastructure even further.
#15¬†The state legislature of California¬†has just passed a law¬†that allows boys to shower with girls in the public schools if that is more ‚Äúconsistent‚ÄĚ with their gender identity.
#16¬†Why is Barack Obama¬†strongly against¬†a measure that is being proposed in Congress that would protect the ‚Äúreligious liberty‚ÄĚ of American service members?
#17¬†In the United States today, the government treats military veterans¬†like human garbage.¬† Back in 2009, the number of veterans that had been waiting for more than a year to have their veteran benefits approved was¬†11,000.¬† Today, that number has soared to¬†245,000.¬† While they are waiting, the federal government is glad to provide them with ‚Äúend of life‚ÄĚ literature that helps them to determine when their lives are ‚Äúno longer worth living‚Äú.
#18¬†Today, the U.S. ranks only 51st in the world for life expectancy even though we spend far more on health care than anyone else on the planet does.¬† Sadly, our health care system has become¬†a giant money making scam¬†that is not really concerned about whether most of us live or die.
#19¬†The level of government dependence in the United States is at a level¬†that we have never seen before.¬† Back in 1960, the ratio of social welfare benefits to salaries and wages was approximately¬†10 percent.¬† In the year 2000, the ratio of social welfare benefits to salaries and wages was approximately¬†21 percent.¬† Today, the ratio of social welfare benefits to salaries and wages is approximately35 percent.
#20¬†The U.S. national debt is now $16,738,704,836,178.59, and it is being projected that it will increase by another¬†106 trillion dollars¬†over the next 30 years.¬† Of course that will never happen.¬† The truth is that the financial system of America will totally collapse long before we ever add another 106 trillion dollars to our debt.
The IRS has recently been under the microscope for targeting conservative groups with audits, fines, and other “special attention.” However, a Congressman from South Carolina observed something the puts a whole new spin on the word “target” – he witnessed IRS agents training with AR-15s at the Department of Homeland Security.
CTN News¬†broke the story with captures of Rep. Jeff Duncan’s (R-S.C.) tweets:
Later he added:
And this, for the doubters he ran into on Twitter:
But maybe there‚Äôs a reasonable explanation.
That was the opinion of one responder, Abduljesh‚Ä¶but Duncan quickly counters it:
Another responder sees Duncan‚Äôs point‚Ä¶and does him one better:
And the questions keep coming‚Ä¶
Maybe our internal revenue isn‚Äôt ending up in rightful hands, as this person notes:
If you were ¬†wondering why the DHS was buying enough ammunition to kill every man, woman and child in America several times over, this should make it clear that they are circling the wagons. ¬†They are drawing battle lines and training “soldiers”.
The IRS – it’s not just for paper pushers anymore.
In an official response to legally binding parliamentary questions on his 2013 Bilderberg attendance, Mark Rutte hid behind Bilderberg‚Äôs Chatham House Rule while admitting the Dutch taxpayer is left with the bill for his expenses.
Answering parliamentary questions yesterday, Dutch Prime-Minister Mark Rutte refused to disclose information about his participation in the 2013 Bilderberg meeting in the UK. Citing Bilderberg‚Äôs official excuse for its long-time secrecy, the Chatham House Rule, Rutte deflected all requests for details about the meeting.
Published on the government‚Äôs official website, the Prime-Minister disclosed nothing in regards to the details pertaining to the meeting or what was discussed. He did however disclose that the Dutch taxpayer was good for the costs of his attendance.
‚ÄúThe costs for travel- and attendance of the Prime-Minister are booked on the national account, and amounted to Euro 1223‚ÄĚ, Rutte responded.
Investigating the legal conditions under which a member of the government, including the Prime-Minister, may send the bill to the taxpayer for his travelling expenses,¬†ExplosiveReports.Com has learned¬†that Rutte may only do so when representing official state business abroad. He is not allowed to do so when he visits a private gathering that operates under some house Rule, Chatham House or otherwise. Rutte is therefore violating a government decree, ironically signed by the former queen Beatrix who herself attends the meetings annually since the 1980s. The government guidelines state that the PM may invoice these costs to the taxpayer only when ‚Äúa written authorization by a proper authority is forwarded for travel-expenses pertaining to dealings outside the Netherlands‚ÄĚ.
In 2012, Rutte¬†was also questioned¬†following his Bilderberg attendance in Chantilly, when he joined queen Beatrix and her son to the conference, answering similar parliamentary questions with similar official responses- namely that he attended the conference in his official capacity.
Question: In what way can the fact you have been invited to Bilderberg in your capacity as Prime-Minister be reconciled with the starting-point of the organizers (of Bilderberg), namely that no one is invited on the basis of their official capacity but rather on personal title and qualities?
Answer: As previously stated I was invited as Prime-Minister-of the Netherlands. However, the talks during the conference take place under the Chatham House Rules, to encourage and promote an open exchange of ideas and opinions.‚ÄĚ
Rutte seems to be saying that he‚Äôs in official capacity only when travelling towards the conference, only to then become subject to Bilderberg‚Äôs House Rule, instantly turning him into a private visitor as soon as he steps over the threshold. What the PM in effect says is that his official capacity somehow melts away completely under the all-powerful sun of the Chatham House Rule. In other words, Chatham House Rule outweighs constitutional Rule. There‚Äôs no other way to read it.
‚ÄúThe meeting is subject under the Chatham House Rule, guaranteeing a meaningful exchange of thoughts.‚ÄĚ, Rutte stated again yesterday, retreating into the official Bilderberg mantra.
Again: It‚Äôs important to note that under Dutch law, government officials may only invoice their expenses on the national account when on official government business in their official capacity. In addition to Prime-Minister Rutte stressing he was invited to Bilderberg in his official capacity as Prime-Minister in 2012, his foreign affairs minister joined him in admitting he attended the 2011 meeting in his-again- official capacity. These repeated statements are clearly contrasting Bilderberg‚Äôs own statements on its¬†official website, which states that ‚Äúthe participants are not bound by the conventions of office or by pre-agreed positions‚ÄĚ.
How can this intolerable friction even exist? Either Bilderberg is right in saying the annual confab is nothing but a private party, in which case the invited officials go on their own dime- or it‚Äôs a public function, as the elected officials state, in which case the exact minutes should be turned over instantly. There‚Äôs nothing for it.
The Gold manipulation will continue until the Gold market is totally broken, until the big banks that control it are totally broken, or until the USDollar & USTBond structures are totally broken.¬† Personally, I am encouraged by the mid-April events to crash the Gold price. It has resulted in exposure of the criminal element, in¬†exposure of the COMEX & LBMA as being desperately low in Gold inventory, in exposure of the great difference between paper Gold price (futures contracts) and physical Gold price (actual high volume sales), and in tremendous motivation by the very wealthy to reclaim their Gold in Allocated Gold Accounts.¬†The bankers have brought to the table a Prima Facie case that their corrupt Gold market attack was motivated by having no Gold for contract delivery.
The Jackass forecast is for the next great scandal to be centered upon the Allocated Gold Account thefts, which my excellent source informs me involves the improper usage, leasing, and theft of over 20,000 metric tons of Gold bullion.¬†The German Government formal request for repatriation is the tip of the iceberg.¬† It is a contest, a race, between the breakdown of the USD/USTBond structure and the COMEX & LMBA Gold market structure. The former is in the process of being rejected by the Eastern nations, now organized.¬†The latter is in the process of being recognized as an empty arena with no Gold in inventory.
‚ÄúIn view of the on-going manipulation in the gold and silver paper markets, I have decided to do a multi-interview with three prominent voices in the precious metal markets, and ask them exactly the same questions about gold and silver manipulation :¬†Chris Powell (GATA), Egon Von Greyerz (Goldswitzerland.com) and Jim Willie (Goldenjackass.com).
Investors (in the know about the manipulation) have a few essential questions, so I tried to focus on some that go straight to the point.
I have already explained, in my latest¬†Market Report,¬†that there is a disconnection going on between the paper and the physical markets but, this time, with these three interviews, I wanted to share the views of three key analysts who do recognize that gold and silver paper prices have been manipulated for years.
After¬†Chris Powell,¬†here is the second interview with¬†Jim Willie¬†of¬†GoldenJackass.com.
The Golden Jackass is designed to inform and instruct in the complex¬†ways of gold, currencies, bonds, interest rates,¬†stocks, commodities, futures, derivatives, and the world economy, with¬†no respect shown for inept bankers and¬†economists, whose policies and practices contribute toward the slow¬†motion degradation, if not destruction,¬†of the financial world.‚ÄĚ
Fabrice Drouin Ristori
Fabrice Drouin Ristori:¬†Mr Willie, thanks for accepting this interview.¬†How long can the manipulation of the precious metal markets last ?
Jim Willie:¬†Rather than focusing on the time spectrum, think instead on the event spectrum. Focus not on a sequence of time, but instead on an event schedule in a chain. Systems are sustained by the corrupt players, institutions, and policies. The Gold manipulation will continue until the Gold market is totally broken, until the big banks that control it are totally broken, or until the USDollar & USTBond structures are totally broken. Personally, I am encouraged by the mid-April events to crash the Gold price. It has resulted in exposure of the criminal element, in exposure of the COMEX & LBMA as being desperately low in Gold inventory, in exposure of the great difference between paper Gold price (futures contracts) and physical Gold price (actual high volume sales), and in tremendous motivation by the very wealthy to reclaim their Gold in Allocated Gold Accounts. The bankers have brought to the table a Prima Facie case that their corrupt Gold market attack was motivated by having no Gold for contract delivery. The Jackass forecast is for the next great scandal to be centered upon the Allocated Gold Account thefts, which my excellent source informs me involves the improper usage, leasing, and theft of over 20,000 metric tons of Gold bullion. The German Government formal request for repatriation is the tip of the iceberg. The banks will not break first since far too protected. It is a contest, a race, between the breakdown of the USD/USTBond structure and the COMEX & LMBA Gold market structure. The former is in the process of being rejected by the Eastern nations, now organized. The latter is in the process of being recognized as an empty arena with no Gold in inventory.
FDR:¬†What will put an end to it ? Physical demand ? Geopolitical event (BRICS) ? ¬†¬†
JW: My strong suspicion is that the COMEX & LMBA corrupt schemes will continue ad nauseum, despite the growing recognition of their corruption and empty inventory. Those in control of the Gold market are not subject to regulatory rules or legal prosecution, operating as essential parts of the sprawling fascist system. So they will continue. However, the end will come with the global isolation and then rejection of the USDollar in trade settlement. The recent G20 Meeting in Turkey brought attention to the bypass of the USD/USTBond system. The Eastern nations are working fast to create an alternative system, frustrated and angry at the abuses and corruption in the open. The Jackass forecast is for the new Gold Trade Standard to come, which will arrive within several months. It will not create a standard for banking and currency, as in SWIFT rules and FOREX rules. It will involve a new BRICS Development Fund, which will transform into a USTBond processing plant, converting the toxic USGovt debt into Gold bars. The trade settlement will work toward Gold payments, with an important intermediary function provided by Turkey. When crude oil abolishes the USDollar as the standard payment vehicle, the game is over. The G7 Meeting hastily called in emergency session in the first week of May demonstrated that the Western nations have noticed that time is almost up completely. The death of the Petro-Dollar defacto standard will coincide with the death of the USDollar global reserve currency. The end is being driven by China & Russia working within the BRICS, the G20, and the Shanghai Coop Organization.
FDR:¬†What will be the signs proving that the manipulation is ending ?
JW: When the COMEX & LBMA are turned into an empty arena, with very few players and very little activity and a storm of controversy about contract fraud with growing lists of lawsuit cases. When the COMEX shows no posted Gold price at all, amidst broad controversy as to why, an implicit invitation for lawsuits over contract fraud and cases to recover past losses by investors. When the COMEX official Gold price shows not a small discrepancy with the actual physical Gold price from known publicized transactions at the major trading centers, but rather a gigantic and embarrassing discrepancy. My term is the great price spread between the paper Gold price and the physical Gold price. It is growing, since very tiny supply is available at the paper price, and high premiums are required at the physical price. Shortages will become a major problem, a desired problem for the gold community. When the spread widens further, the Jackass forecast is for the debate to enter the room on whether the COMEX price is an anachronism, an artifact from a corrupt era, a recognized den of thieves under financial press scrutiny, a point in fact as evidence for legal court cases (lawsuit damage or criminal prosecution). Expect court cases long before regulatory action.
FDR: Do you anticipate an overnight ending of the manipulation or a progressive process ?
JW: A progressive degeneration is far more the case, the pathogenesis of a cancerous organism. The Jackass expects the manipulation to continue far beyond what most people anticipate. The manipulation will soon become absurd. Another Gold market ambush attack is likely soon. When the paper Gold price is $600 to $800 per ounce lower in the paper COMEX price, the banking authorities will continue their charade, but have a difficult time maintaining credibility or a straight face before public questioning of Congressional grilling. Remember their motive, which in the Jackass opinion is to escape the clutches of their mountain of short Gold futures contracts by means of a declared Force Majeure. The true Gold price might be several $100s higher than the COMEX price, but the banking cartel does not care. They wish to escape the consequences of the short Gold futures contracts with a legally recognized COMEX Gold price, even though corrupt. If the courts recognize and endorse the corrupt lower paper Gold price presented by the COMEX, then the big bankers can legally escape from catastrophic losses and slither like snakes into the forests of Paraguay. That is their goal, and they do not care if the public laughs at the process, or if the financial analysts harshly criticize them. They care about the legal escape route offered by Force Majeure, then establishment of a fascist police state.
FDR: Is the gold/silver paper spot price still relevant to value physical gold and silver ?
JW:¬†Not at all. It is a guideline which is becoming more and more ignored. Rather the spot price is becoming more understood as the starting point, the reference point, in a negotiated price. That price will vary in different parts of the world, already the case. The remarkable fact to the Jackass is that premiums on physical Gold purchases (whether bars, coins, talens) is coming down from the rising levels seen in mid-April right after the Gold market smash assault attack with a flood of paper rubbish slamming the market. The big challenge to the banker cartel will be to bring Gold to market in order to meet the growing demand. They must avoid grand and even grotesque shortages. The bankers will be drained. Recall back in March through July, the London banks were drained of 5000 metric tons by angry motivated Asian entities. The event was kept out of the news, but not out of the Hat Trick Letter. If price is to be kept stable, then supply must meet the heightened demand. The banker cartel has two choices: to continue to bring supply to market and be drained dry, or to refuse to bring supply to market and watch the physical price premium grow toward $1000 per ounce amidst well advertised shortages and an empty COMEX.
FDR: What direct consequences would a free gold/silver market have on people worldwide ‚ÄĒ not investors, people in general ?
JW: The consequences could fill an entire book. But the Jackass would write the chapter headings as follows. People could save in a true sense with a proper legitimate store of value, in instruments which do not represent a counter-party risk like in debt securities or gold certificate holders. People could be protected from central bank actions that exhibit extremely destructive policies toward the debasement of money itself. People could be assured that their life savings could not be leased, assigned, subjugated, hypothecated, or otherwise stolen by banking and government officials. People could build more effective barriers from the ravages of price inflation. People would not have to constantly search for investment vehicles that act as inflation hedges from the endorsed ruin of money. People could be protected from banker thefts, hidden and overt.
Silver prices peaked in April 2011 and dropped about 60% over the next 25 months. Sentiment by almost any measure is currently terrible. Few are interested in silver; most have lost money (on paper) if they bought in the last two and one half years, and the emotional pain seems considerable. It reminds me of the years after the NASDAQ crash in 2000.
So will silver drop under $15 or rally back above $50?
To help answer that question, I examined the chart of silver for the last 25 years and identified several long-term cycles. Then I constructed a spreadsheet that attempted to model the price of weekly silver based on those cycles and a few assumptions.
Use only long-term cycles ‚Äď a year or longer.
The weight assigned to each cycle is approximately proportional to its length. A 200-week cycle should be approximately twice as heavily weighted as a 100-week cycle.
This is NOT a trading vehicle but a long-term indication of reasonable price projections based on past relationships. Those past relationships may or may not continue, even if they have been valid for over 20 years.
Keep it simple. Do not over-complicate the model or aggressively ‚Äúcurve-fit‚ÄĚ it.
Prices are assumed to rise more slowly than they fall, so 62% of the cycle is related to the rising portion of the cycle, and 38% of the cycle is related to the falling portion of the cycle.
¬† ¬† ¬†65 weeks, 72 weeks, and 234 weeks
¬† ¬† ¬†102 weeks
¬† ¬† ¬†1/1/1990 ‚Äď 6/30/2002: no growth ‚Äď 0.0%/year
¬† ¬† ¬†6/30/2002 ‚Äď present: 21% per year, calculated weekly
Find the beginning dates (lows) for the 65, 72, and 234 week cycles, and assign those beginning dates an index value of -1.0. Proportionally increase those index values from -1.0 to +1.0, and then reduce those index values from +1.0 to ‚Äď 1.0, and repeat for each low-to-low cycle. Use the beginning index value on the 102-week high to high cycle as + 1.0. Extend the proportional increases on all time cycles from -1.0 to + 1.0 so that period takes 62% of the cycle length.
Assign each cycle a weight approximately proportional to the cycle length. Use a beginning value and calculate the exponential increase (0% or 21% per year) for each week, and then add or subtract the percentage changes for each weekly time cycle. Adjust the cycle index weights to obtain the best visual fit on a graph of actual silver prices versus the calculated price of silver.
What Could Go Wrong?
The exponential increase might not continue from 2013 forward. I doubt it, but it is possible. See¬†Caveats.
The cycles, although relevant for over 20 years, might be less relevant from 2013 forward.
The calculated price was ‚Äúcurve-fit‚ÄĚ to the actual prices, and that ‚Äúcurve-fit‚ÄĚ result might be less accurate from 2013 forward.
Statistical correlation over the last 20 years is about 0.95. The calculated silver price is generally consistent with the actual silver price, even though occasional large variations are clearly evident.
Click on image to enlarge.
Calculated low: 2/4/05 at $4.96
Actual low: 5/7/04 at $5.60
Calculated high: 3/17/06 at $13.33
Actual high: 5/12/06 at $14.24
Calculated high: 5/4/07 at $18.13
Actual high: 3/14/08 at $20.66
Calculated low: 12/12/08 at $8.15
Actual low: 10/24/08 at $9.30
Calculated high: 3/2/12 at $42.98
Actual high: 4/29/11 at $48.59
Calculated low: 5/10/13 at $23.32
Actual low: 5/17/13 at $22.25 (actual weekly low, so far)
This simple model, which uses only four cycles and an exponential increase, indicates that a low in the silver price was expected approximately February ‚Äď July 2013 and that the next high is expected approximately Mar ‚Äď October 2014 in the $50 ‚Äď $60 range. Further, the model suggests that a silver price of $90 ‚Äď $110 is possible in the September 2015 ‚Äď March 2016 time period.
There are many. This is not a prediction, it is simply a projection based on the entirely reasonable, but possibly incorrect, assumption that silver prices will continue to rise about 20% per year, on average, and that these four cycles will push actual prices well above and below that exponential growth trend.
Why will silver prices continue to increase? Our current monetary system depends upon an exponentially increasing debt and money supply. It seems likely that the US government will continue to run massive budget deficits and thereby increase total debt. In addition, the central banks of Japan, the EU, and the US will continue to monetize debt and increase the money supply to promote asset inflation and to overwhelm the deflationary forces in their respective economies. Silver supply increases slowly, the demand increases much more rapidly, while each Dollar, Euro, & Yen purchase less, on average, each year. It seems quite reasonable to expect that silver (and gold) prices will increase substantially from their current low level. Read:¬†Silver ‚Äď A Bipolar Roller Coaster.
The model was basically correct (over the last decade) on timing and price with some large variations. Clearly there are more factors driving the price of silver than four simple cycles. Those political, emotional, and economic factors will push the price higher or lower, sooner or later, than the model indicates. Regardless, it has some value indicating the approximate price and timing for long-term highs and lows in the price of silver.
About Deviant Investor: I am a retired accountant who has 30 years of experience following markets, investing, and trading both futures and stocks. I have made and lost money during my investing career, and those successes and losses have taught me much about markets, timing, risk, inflation, and crashes. I currently invest for the long term, and I swing trade (in a trade from one to four weeks) stocks and ETFs. I offer opinions and commentary, but not investment advice.
Years ago I did graduate work in physics (all but dissertation), so I strongly believe in data, analysis, objective facts, and rational decisions based on hard data. I currently live in Texas.
Household debt edged down at an annual rate of 0.6¬†percent in the first quarter. Home mortgage debt¬†contracted 2.3 percent, about the same as the decline in¬†2012. Consumer credit rose at an annual rate of 5.7¬†percent, slightly less than the increase in 2012.
Nonfinancial business debt rose at an annual rate of¬†5.3 percent in the first quarter, after a 6 percent increase¬†in 2012. As in recent years, corporate bonds accounted¬†for the largest increase.
State and local government debt rose at an annual rate¬†of 1.9 percent in the first quarter, after declining slightly¬†in 2012.¬†Federal government debt rose at an annual rate of 10.3¬†percent in the first quarter of 2013 after a 10.9 percent increase last year.
That’s the “big picture.” ¬†Consumer¬†debt has gone exactly nowhere. ¬†The so-called “recovery” has been carried by business debt that has grown at a rate¬†roughly double¬†that of economic expansion, and the government is growing debt at a rate¬†more than triple¬†that rate.
The “big picture” looks like this:
Note that the absolute level of debt to GDP, however, refuses to go under 350%; it has now started rising again¬†but is entirely coming from two sectors — business credit and the Federal Government.
The problem with this paradigm is that we’re doing the¬†same¬†thing that led to the 2008 blowup — we’ve learned exactly¬†nothing. ¬†In real terms our GDP is in fact¬†contracting¬†by about $500 billion a quarter, after adjusting for debt expansion — that’s $2 trillion a year, more or less.
This is real purchasing power out of your pocket.
That’s not an annualized figure it’s a¬†quarterly¬†one. ¬†For annualized take it to the 4th power, of course — which means we’re contracting in purchasing power adjusted for new debt¬†at more than 10% over the last four quarters.
It gets worse.
Note that your¬†real¬†income, annualized and¬†ignoring¬†the leverage expansion (or contraction) of financial firms, took a¬†big¬†dump last quarter. ¬†This is due to the non-financial business and federal government debt expansion coupled with a¬†negative¬†personal income change last quarter.
Meanwhile monetary inflation in real terms .vs. income looks like this:
You’re falling further and further behind — again. ¬†The difference is that this time consumers are¬†not¬†gearing up. Whether because they can’t or simply refuse doesn’t matter in the end; what matters is that it’s not happening, which means this so-called “expansion” driven by ZIRP and deficits¬†has a use-by date that has expired and we are now trying to evade the fact that the fish is well into the “stinks up the joint” stage.
This is all bad. ¬†The imminent danger signals, however, are found here:
The gap between corporate equity prices¬†and tangible assets¬†is greater now than it was in 2007 — materially so. ¬†Equity values are higher¬†and tangible assets are lower.
This is not (yet) to the level of 1999/2000, but it’s getting there and we didn’t have to go that far last time to get a nasty blow-up. ¬†All it takes is something going wrong — like, for instance, in Japan or Europe.
The non-financial leverage ratio is also warning of trouble ahead:
Again, corporate leverage is once again reaching for the sky and warns of markets being “priced for perfection.”
Goods producing jobs declined, with manufacturing losing another 4,000 jobs, but the New Economy produced 179,000 service jobs.
Are these jobs the high-powered, high-wage ‚Äúinnovation jobs‚ÄĚ that economists promised would be our reward from Globalism. I‚Äôm afraid not.
According to the Bureau of Labor Statistics, the jobs created are the usual lowly paid
non-exportable domestic service jobs‚Äďthe jobs of a third world country.
Retail trade accounts for 27,700 of the jobs.
Wholesale trade accounts for 7,900 jobs.
Ambulatory health care services accounts for 15,300 of the jobs.
Waitresses and bartenders account for 38,100 of the jobs.
Local government accounts for 13,000 of the jobs.
Amusements, gambling, and recreation account for 12,500 of the jobs.
Temporary help services provided 25,600 jobs.
Business support services provided 4,300 jobs.
Services to buildings and dwellings provided 6,400 jobs.
Accounting and bookkeeping services provided 3,100 jobs.
Architectural and engineering services provided 4,900 jobs.
Computer systems design and related provided 6,000 jobs (most likely filled by H-1B work visas).
Management and technical consulting services provided 3,200 jobs.
For a decade this has been the jobs profile of ‚Äúthe world‚Äôs most powerful economy.‚ÄĚ It is the profile of third world India 40 years ago. The jobs that made the US the dominant economy have been moved off shore by corporations threatened by Wall Street with takeovers if they did not increase their profits.
The easiest way for corporations to increase profits is to take advantage of cheap labor in countries with massive quantities of unemployed labor.
So, if we believe the BLS report, and the reported new jobs are not simply a product of faulty season adjustments and a faulty birth-death model, why is the financial press happy that the US economy can only create third world jobs? Why was the stock market up on the news that the US economy has created 179,000 third world jobs? Would rational markets be up on such discouraging news?
But are the jobs really there?
With retail sales going nowhere, why 35,600 new jobs in wholesale and retail trade?
With real median incomes declining, why 38,100 more waitresses and bartenders? For every month as long as I can remember the BLS reports numerous new jobs in waitresses and bartenders, despite the long-term decline in real median income.
In the May jobs report, where are the jobs for the vast number of new college graduates?
The US now has more hotel maids, bartenders, and waitresses than it has manufacturing workers. The US has twice as many people employed in government than in manufacturing.
The services of maids, bartenders, waitresses, and government cannot be exported.
Therefore, the US trade deficit remains large and without exports to reduce it, a crisis in itself.
What the BLS jobs reports have been telling us for many years is that the US economy is in crisis, in a death-spiral. Yet, not a handful of economists‚Äô voices have been raised.
Today president obama‚Äôs economist said that the notch upward in the unemployment rate was because the economic outlook was so good that more people were encouraged to enter the labor market than there were new jobs available.
The conclusion is inescapable: The same government that lies about weapons of mass destruction, Saddam Hussein‚Äôs al-Qaeda connections, Iranian nukes, and so on, also lies about jobs, the unemployment rate, the inflation rate, rigs every financial and commodity market, pretends that terrorism is such a threat that the US Constitution must be set aside and that Americans are safer without the protection of habeas corpus and due process.
It is amazing how rare terrorism is, especially with Washington in the second decade of trying to stir up terrorism by invading countries on totally false pretenses, murdering citizens of countries, such as Pakistan and Yemen with drones, and supporting Israel‚Äôs never-ending murder and dispossession of the Palestinians.
After such massive provocations from Washington, one would think that the world would be ablaze with terrorism. But it isn‚Äôt.
As there is so little terrorism, Washington and its presstitute media call those who resist
Washington‚Äôs invasion of their countries ‚Äúterrorists.‚ÄĚ Everyone who resists Washington‚Äôs military aggression is a terrorist. Just ask the New York Times, Fox News, or any neoconservative. Or, for that matter, the Bilderbergs, the Council on Foreign Relations, the Trilateral Commission, and Homeland Security, the Gestapo organization that now defines all American dissenters to be ‚Äúdomestic extremists.‚ÄĚ
Washington‚Äôs claim that Americans have ‚Äúfreedom and democracy‚ÄĚ is the sickest joke in human history.
In 21st century America, defendants have no more rights than the accused in Nazi Germany or Stalinist Russia. The FBI now shoots suspects brought in for questioning in the back of the head even before the suspect is arrested.¬†http://lewrockwell.com/spl5/fbi-executed-my-boy.html
Long before Bradley Manning‚Äôs trial the presstitutes have convicted the accused based on lies leaked by the prosecutors. Consider Bradley Manning. After three years of detention, including one year of torture, he is brought to a rigged trial as a national security danger. All that Bradley Manning did was to comply with the Military Code and report war crimes. As his corrupt superiors did not want to know, he complied with his duty, apparently, by going public.
Now he is being made an example. The message is clear: Support Washington‚Äôs war crimes or be destroyed.
The Amerika that exists today has more in common with Nazi Germany than with the America in which I grew up. The young don‚Äôt know any different. But those my age realize that we have lost our country. America no longer exists.
Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Visit his web site at the Institute for Political Economy.
This article has been posted with permission from Dr. Paul Craig Roberts.
Our economy is, as it has been for many years, on the brink of collapse. They may not have announced it officially just yet, but recent data suggest that we are most certainly in another recession (we may never have actually gotten out of the first one). While official statistics indicate there is very mild economic growth, the fact is that the growth is coming from monetary expansion driven by the Fed. As more money is slammed into the system prices rise, forcing consumers to pay more for everything from food to stocks. This, in the eyes of the government is growth. In reality, however 55% of America’s wealth has been vaporized in the last five years, a quarter of American households are on food stamps, and consumers are tapped out.
On the political front, we have the President of the United States, his administration and his subordinates at domestic intelligence agencies, the IRS, the Pentagon and the Justice Department embroiled in scandals and activities that have even their most ardent supporters questioning what is really going on behind closed doors.
Yes, something is wrong. But no one is talking – at least not in an official capacity.
Thus, we are left to connect the dots ourselves with the help of various sources made available through alternative media.
We certainly can’t expect government officials to openly admit that some very bad things have happened, are happening and will likely happen in the future. But there are those inside the halls of our most hallowed and respected institutions that risk their lives to get information out so that we can be prepared for what may well be coming down the pike.
We can downplay anonymous sources and pretend like this is all made up, or, we can simply look around and see what’s going on in the world and put two-and-two together.
A report filed in December of 2012 from a source operating inside of the Department of Homeland Security noted that there would be a massive hit to precious metals around the Spring of 2013. This drop in prices was to be a prime indicator that events would start accelerating. That slide in precious metals prices has happened – to the tune of over 25% in just a few months.
Now, with revelations that the Obama administration has been snooping on journalists, as well as¬†millions of Americans, the same DHS source has revealed that his department has been actively preparing plans to deal with the coming calamity that can be described as nothing short of the ultimate global doomsday scenario.
With our national leadership involved in criminal behavior bordering on treason, there is a real possibility that a crisis, or crises, will be needed to take the focus off of 1600 Pennsylvania Ave and all of those involved in an agenda that has militarized our domestic police force, supplanted our most fundamental laws, and impoverished our fellow citizens.
Government officials are some of the dirtiest people on this planet – often concerned with only money, power and their personal advancement. So, it’s not too much of a stretch of the imagination to suggest that some of them will do whatever it takes maintain their positions.
They are getting ready for some serious sh%t to hit the fan. You should be doing the same.
‚ÄúIf anyone thinks that what‚Äôs going on right now with all of this surveillance of American citizens is to fight some sort of foreign enemy, they‚Äôre delusional. If people think that this ‚Äėscandal‚Äô can‚Äôt get any worse, it will, hour by hour, day by day.¬†This has the ability to bring down our national leadership,¬†the administration and other senior elected officials working in collusion with this administration, both Republican and Democrats. People within the NSA, the Department of Justice, and others, they know who they are, need to come forth with the documentation of ‚Äėpolicy and practice‚Äô in their possession, disclose what they know, fight what‚Äôs going on, and just do their job. I have never seen anything like this, ever. The present administration is going after leakers, media sources, anyone and everyone who is even suspected of ‚Äėbetrayal.‚ÄĚ That‚Äôs what they call it, ‚Äėbetrayal.‚Äô Can you believe the size of their cahones? This administration considers anyone telling the truth about Benghazi, the IRS, hell, you name the issue, ‚Äėbetrayal,‚Äô‚ÄĚ he said.
‚ÄúWe know all this already,‚ÄĚ I stated. He looked at me, giving me a look like I‚Äôve never seen, and actually pushed his finger into my chest. ‚ÄúYou don‚Äôt know jack,‚ÄĚ he said, ‚Äúthis is bigger than you can imagine, bigger than¬†anyone¬†can imagine. This administration is collecting names of sources, whistle blowers¬†and their families, names of media sources and everybody they talk to and have talked to, and they already have a huge list. If you‚Äôre not working for MSNBC or CNN, you‚Äôre probably on that list. If you are a website owner with a brisk readership and a conservative bent, you‚Äôre on that list. It‚Äôs a political dissident list, not an enemy threat list,‚ÄĚ he stated.
‚ÄúWhat‚Äôs that exactly mean, being on that list, that is,‚ÄĚ I asked, trying to make sense of it all.
‚ÄúIt means that there will be censorship under the color of authority of anyone in the U.S. who is attempting to expose what‚Äôs going on in our name. It‚Äôs about controlling any damning information from reaching epidemic proportions. It‚Äôs damage control to the extreme. It‚Äôs about the upcoming censorship of the internet in the name of national security. The plans are already in place. These latest reports about ‚Äúspying eyes‚ÄĚ have turned this administration and others connected to it into something very, very dangerous. They feel cornered and threatened, and I‚Äôm hearing about some plans they have to shut down the flow of information that is implicating them of wrongdoing. Time is short,‚ÄĚ he stated.
‚ÄúHow are they going to do this? How is it even possible?‚ÄĚ I asked.
‚ÄúFirst, they intend to use the Justice Department to silence journalists like in the Rosen case, but they won‚Äôt stop there. They will use a host of national security policies, laws, letters, whatever to take out the bigger threats,‚ÄĚ he stated.
Next, they will use some sort of excuse, an external threat, and I believe it will be a combination of the economic collapse and a Mid-East war that will begin in Syria to throttle the information that is accessible on the Internet. And you know what? People will believe it!‚ÄĚ
Based on what I‚Äôve seen, most of which I should not have seen, the DHS is co-ordinating efforts with other federal agencies to begin to threaten American citizens with incarceration for non-compliance. You know the old talk of color coded lists? Well, this is what they will be using. People exposing the truth about Benghazi, killing the U.S. Dollar, even those questioning Obama‚Äôs legal status and eligibility to be President are the current targets. And they‚Äôve had five long years to get to this point. The ugly truth is that these policies and practices did not start under Obama, but long before. This is about the killing of our Constitutional Republic. The murder of our country and the stripping of our rights. While many have been preoccupied with one issue, few have seen the bigger issue. This is the ‚Äėend game,‚Äô for all the marbles,‚ÄĚ he stated.
More to come
‚ÄúPlease,‚ÄĚ pleaded my source, ‚Äúget this information out while you can. Tell people what I‚Äôm saying, that we don‚Äôt have much time, that after the latest exposure of spying, Obama, Jarrett, Axelrod, and others, including members of Congress, have put their plans into high gear.
This is about the Marxist takeover of America. This is about our country being able to survive another July 4th¬†holiday. This is about a world war about to break out that will kill millions of people, all because of the agenda of this administration.‚ÄĚ
‚ÄúThey are very dangerous and will do anything and everything to stop the onslaught of negative information that‚Äôs being reported by the main stream media. But only about one quarter of the real information is being reported. The other three quarters will be the game changer. But first, tell people what I‚Äôve said. Let them know that more will follow but get this information out right now while the internet is still relatively free. Do it today.‚ÄĚ
My source provided additional information, but I am abiding by his wish to get this much out. I am writing now to let people know that we are in for seriously dangerous times ahead. ¬†Deadly times. War, and censorship under the color of authority and under the pretext of of national security. It‚Äôs about to get a lot uglier. Stay tuned.
When it hits the fan, don’t say we didn’t warn you. Mac Slavo is the editor of SHTFplan.com, a resource hub for alternative news, contrarian commentary and strategies that you can take to protect yourself from the coming global paradigm shift.
Are you ready for a future where China will employ millions of American workers and dominate thousands of small communities all over the United States?¬† Such a future would be unimaginable to many Americans, but the truth is that it is already starting to happen.¬† Chinese acquisition of U.S. businesses set a new all-time record last year, and it is on pace to absolutely shatter that record this year.¬† Meanwhile, China is voraciously gobbling up real estate and is establishing economic beachheads all over America.¬† If China continues to build economic power inside the United States, it will eventually become the dominant economic force in thousands of small communities all over the nation.¬† Just think about what the Smithfield Foods acquisition alone will mean.¬† Smithfield Foods is the largest pork producer and processor in the world.¬† It has facilities in 26 U.S. states and it employs tens of thousands of Americans.¬† It directly owns 460 farms and has contracts with approximately 2,100 others.¬† But now a Chinese company has bought it for¬†$4.7 billion, and that means that the Chinese will now be the most important employer in dozens of rural communities all over America.¬† If you don’t think that this is important, you haven’t been paying much attention to what has been going on in the world.¬† Thanks in part to our massively bloated trade deficit with China, the Chinese have trillions of dollars to spend.¬† They are only just starting to exercise their economic muscles.
And it is important to keep in mind that there is often not much of a difference between “the Chinese government” and “Chinese corporations”.¬† In 2011,¬†43 percent¬†of all profits in China were produced by companies that the Chinese government had a controlling interest in.¬† Americans are accustomed to thinking of “government” and “business” as being separate things, but in China they are often one and the same.¬† Even when there is a separation in ownership, the reality is that no major Chinese corporation is going to go against the authority and guidance of the Chinese government.¬† The relationship between government and business in China is much different than it is in the United States.
Over the past several years, Chinese companies have become increasingly aggressive.¬† Last year a Chinese company spent $2.6 billion to purchase AMC entertainment – one of the largest movie theater chains in the United States.¬† Now that Chinese company controls more movie ticket sales than anyone else in the world.¬† At the time, that was the largest acquisition of a U.S. firm by a Chinese company, but now the Smithfield Foods deal has greatly surpassed that.
But China is not just relying on acquisitions to expand its economic power.¬† The truth is that “economic beachheads” are being established all over America.¬† For example, Golden Dragon Precise Copper Tube Group, Inc. recently broke ground on a¬†$100 million plant¬†in Thomasville, Alabama.¬† I am sure that many of the residents of Thomasville, Alabama will be glad to have jobs, but it will also become yet another community that will now be heavily dependent on communist China.
And guess where else Chinese companies are putting down roots?
Dozens of companies from China are putting down roots in Detroit, part of the country’s steady push into the American auto industry.
Chinese-owned companies are investing in American businesses and new vehicle technology, selling everything from seat belts to shock absorbers in retail stores, and hiring experienced engineers and designers in an effort to soak up the talent and expertise of domestic automakers and their suppliers.
If you recently purchased an “American-made vehicle”, there is a really good chance that it has Chinese parts in it.
In fact, it is becoming harder and harder to get auto parts that are actually made in America by American companies.¬† A lot of those companies are dying off.¬† One example of this is a battery maker that had received $132 million from the federal government that¬†was recently gobbled up¬†by a huge Chinese corporation…
Industry analysts are hard-pressed to put a number on the Chinese suppliers operating in the United States. “We simply don’t know how many there are,” said David Andrea, an official with the Original Equipment Suppliers Association, a trade organization for auto parts makers.
In one of the more prominent deals, the Wanxiang Group bought most of the assets of the battery maker A123 Systems, which filed for bankruptcy last year despite receiving $132 million of $249 million in federal grants to build two factories in Michigan.
Congressional Republicans criticized the deal, saying A123′s technology could support military applications in China. Still, the buyout was approved this year by the Committee on Foreign Investment in the United States, a federal government panel.
China seems particularly interested in acquiring energy resources in the United States.¬† For example, did you know that China is actually mining for coal in the mountains of Tennessee?
Guizhou Gouchuang Energy Holdings Group spent 616 million dollars to acquire Triple H Coal Co. in Jacksboro, Tennessee.¬† At the time, that acquisition really didn’t make much news, but now a group of conservatives in Tennessee is trying to stop the Chinese from blowing up their mountains and taking their coal.¬† The following is from a¬†Wall Street Journal article¬†back in March…
The Tennessee Conservative Union began airing an ad Tuesday that says lawmakers have failed to protect the state’s scenic mountains and are allowing the “Chinese to destroy our mountains and take our coal‚Ä¶the same folks who hold our debt.”
But when it comes to our energy resources, China has been most interested in our oil and natural gas.¬† It is a complete and total mystery why the federal government would allow China to buy up our precious domestic sources of energy, but it is happening.¬† The following is a list of some of the oil and natural gas deals that China has been involved in during the last few years that was compiled¬†by the Wall Street Journal…
Colorado:¬†Cnooc gained a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming in a $1.27 billion pact with Chesapeake Energy Corp.
Louisiana:¬†Sinopec has a one-third interest in 265,000 acres in the Tuscaloosa Marine Shale after a broader $2.5-billion deal with Devon Energy.
Michigan:¬†Sinopec gained a one-third interest in 350,000 acres in a larger $2.5 billion deal with Devon Energy.
Ohio:¬†Sinopec acquired a one-third stake in Devon Energy‚Äôs 235,000 Utica Shale acres in a larger $2.5 billion deal.
Oklahoma:¬†Sinopec has a one-third interest in 215,000 acres in a broader $2.5 billion deal with Devon Energy.
Texas:¬†Cnooc acquired a one-third interest in Chesapeake Energy‚Äôs 600,000 acres in the Eagle Ford Shale in a $2.16-billion deal.
Wyoming:¬†Cnooc has a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming after a $1.27 billion pact with Chesapeake Energy. Sinopec gained a one-third interest in Devon Energy‚Äôs 320,000 acres as part of a larger $2.5 billion deal.
Gulf of Mexico:¬†Cnooc Ltd. separately acquired minority stakes in some of Statoil ASA‚Äôs leases as well as six of Nexen Inc.‚Äôs deep-water wells.
How could we be so stupid?
Sadly, as our politicians endlessly bicker China just continues to aggressively push ahead.
And pretty soon China may want to build entire cities in the United States just like they have been doing in other countries.¬† According to¬†Bloomberg, right now China is actually building a city larger than Manhattan just outside of the capital of Belarus…
China is building an entire city in the forests near the Belarusian capital Minsk to create a manufacturing springboard between the European Union and¬†Russia.
Belarusian President¬†Aleksandr Lukashenko¬†allotted an area 40 percent larger than¬†Manhattan¬†around Minsk‚Äôs international airport for the $5 billion development, which will include enough housing to accommodate 155,000 people, according to Chinese and Belarusian officials.
And this is actually already happening on a much smaller scale in this country.¬† For example, as I have written about¬†previously, a Chinese company known as “Sino-Michigan Properties LLC” has purchased 200 acres of land near the little town of Milan, Michigan.¬† Their stated goal is to construct a “China City” that has artificial lakes, a Chinese cultural center and hundreds of housing units for Chinese citizens.
In other cases, large chunks of real estate in the middle of major U.S. cities are being gobbled up by Chinese “investors”.¬† Just check out what aFortune article¬†from a while back says has been happening in Toledo, Ohio…
In March 2011, Chinese investors paid $2.15 million cash for a restaurant complex on the Maumee River in Toledo, Ohio. Soon they put down another $3.8 million on 69 acres of newly decontaminated land in the city’s Marina District, promising to invest $200 million in a new residential-commercial development. That September, another Chinese firm spent $3 million for an aging hotel across a nearby bridge with a view of the minor league ballpark.
#2¬†During 2012, we sold about¬†110 billion dollars¬†worth of stuff to the Chinese, but they sold about¬†425 billion dollars¬†worth of stuff to us.¬† That was the largest trade deficit that one nation has had with another nation in the history of the world.
#12¬†One of the reasons it is so hard to export stuff to China is because of their tariffs.¬† According to¬†the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to all the tariffs.
#13¬†The Chinese economy has grown¬†7 times faster¬†than the U.S. economy has over the past decade.
#19¬†Since the auto industry bailout, approximately¬†70 percent¬†of all GM vehicles have been built outside the United States.
#20¬†After being bailed out by U.S. taxpayers, General Motors is currently involved in¬†11 joint ventures¬†with companies owned by the Chinese government.¬† The price for entering into many of these ‚Äújoint ventures‚ÄĚ was a transfer of ‚Äústate of the art technology‚ÄĚ from General Motors to the communist Chinese.
#21¬†Back in 1998, the United States had 25 percent of the world‚Äôs high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China‚Äôs share had¬†soared to 20 percent.
#22¬†The United States has lost¬†more than a quarter¬†of all of its high-tech manufacturing jobs over the past ten years.
#39¬†The average household debt load in the United States is 136% of average household income.¬† In China, the average household debt load¬†is 17%¬†of average household income.
#40¬†The Chinese have begun to buy up huge amounts of U.S. real estate.¬†¬†In fact, Chinese citizens purchased¬†one out of every ten homes¬†that were sold in the state of California in 2011.
And what we have seen so far may just be the tip of the iceberg as far as Chinese “investment” in U.S. real estate is concerned.¬† The following is a brief excerpt from a Bloomberg article¬†that was posted just last week…
China is studying the possibility of investing a portion of its $3.4 trillion in foreign-exchange reserves in U.S. real estate, said two people with direct knowledge of the situation.
The State Administration of Foreign Exchange began the study after seeing signs of a recovery in the U.S. property market, said the people, who asked not to be identified as they weren‚Äôt authorized to speak publicly about the matter. China may acquire properties, invest in real estate funds or buy stakes in property companies, they said. The safety of the investments will be the top priority, said the people, who didn‚Äôt elaborate on a timetable or other details.
So what can we do about all of this?
Unfortunately, not a whole lot.¬† Both major political parties seem to be fully convinced that merging our economy with the economy of communist China is a great idea.¬† I would not expect major changes in our policies regarding China any time soon.
For now, I will just leave you with one piece of advice…
Learn to speak Chinese.¬† You might need it someday.
Days after Philadelphia officials pushed the city one step closer to a so-called ‚Äúdoomsday‚ÄĚ education plan that would see two dozen schools close, construction began on a $400-million prison said to be the second-most expensive state project ever.
Pennsylvania‚Äôs School Reform Commission voted on June 1 to approve a $2.4 billion budget, ignoring hours of pleas from students, parents, educators and community members who warned the budget would cripple city schools.
The plan would close 23 public schools, roughly 10 per cent of the city‚Äôs total. Commissioners rejected a proposal that would have only closed four of the 27 schools that were on the block for closure.
Without the means to cover a $304 million debt, the Philadelphia Inquirer reported, students can expect to go back to school in September without new books, paper, counselors, clubs, librarians, assistant principals or secretaries. All athletics, art and music programs would be eliminated and as many as 3,000 people could lose their jobs.
Only one of five state commissioners voted against the proposal, warning that Republican Pennsylvania Governor Tom Corbett‚Äôs administration had not looked hard enough elsewhere for proper funds.
That $304 million windfall is unlikely to be filled because the Republican-controlled Pennsylvania House of Representatives recently passed a tax break for corporations that will cost Pennsylvania residents an estimated $600 million to $800 million annually.
Reuters / George Widman / Pool PA / DL
Newly unemployed teachers might consider submitting their resumes to the Department of Corrections, though, with the news that the supposedly cash-strapped government is digging deep to spend $400 million for the construction of State Correctional Institutions Phoenix I and II.
The penitentiary, which is technically two facilities, will supplement at least two existing jails, the Western Penitentiary at Pittsburgh and Fayette County Jail. Pittsburgh‚Äôs Western Penitentiary was built in 2003 with the original intention of replacing Fayette County Jail, but the prison has struggled with lawsuits claiming widespread physical and sexual abuse of prisoners.
Scheduled to be completed in 2015, the new prison‚Äôs cell blocks and classroom will be capable of housing almost 5,000 inmates. Officials said there will be buildings for female inmates, the mentally ill and a death row population.
Journalist Rhania Khalek noted that the racial disparities in the education system and prison complex, where 60 per cent of all people are of color, have created a literal ‚Äúschool-to-prison-pipeline.‚ÄĚ
‚ÄúIn Philadelphia, black students comprise 81 per cent of those who will be impacted by the closings despite accounting for just 58 per cent of the overall student population,‚ÄĚ she wrote. ‚ÄúIn stark contrast, just 4 per cent of those affected are white kids who make up 14 per cent of Philly students. And though they make up 81 per cent of Philadelphia students, 93 per cent of kids affected by the closings are low-income.‚ÄĚ
What in the world is China up to?¬† Why are the Chinese hoarding so much gold?¬† Does China plan to back the yuan with gold and turn it into a global reserve currency?¬† Could it be possible that China actually intends for the yuan to eventually replace the U.S. dollar as¬†the¬†primary reserve currency of the planet?¬† Most people in the western world assume that China just wants a “seat at the table” and is content to let the United States run the show.¬† But that isn’t the case at all.¬† The truth is that China doesn’t just want to compete with the United States.¬† Rather, China actually plans to¬†replace¬†the United States as the dominant economic power on the planet.¬† In fact, China already accounts¬†for more global trade¬†than the United States does.¬† So what would happen one day if China announced that it was backing the yuan with gold and that it would no longer be using the U.S. dollar in international trade?¬† It would cause a financial shift so cataclysmic that it is hard to even imagine.¬† Most of those that write about the “death of the U.S. dollar” usually fail to point out that China is holding a lot of the cards as far as the fate of the dollar is concerned.¬† China owns about a trillion dollars of¬†our debt, China is the second largest economy on the planet, and nobody uses the dollar in international trade more than China does except for the United States.¬† Up until now, China has had to use the U.S. dollar in international trade because there has not been an attractive alternative.¬† But a gold-backed yuan would change all of that very rapidly.
And without a doubt, the Chinese government has already been very busy promoting the use of the yuan in international trade.¬† In a recent note,¬†John McCormick of RBS Group¬†stated the following…
Financial crises in the US and Europe mean the world needs a new, more stable global reserve currency, and trade in RMB is growing rapidly. In the FX market, for example, our figures show that volumes are now worth around USD 5-6 billion daily ‚Äď double what they were a year ago.
A number of factors suggest that the Chinese authorities want to make RMB internationalisation happen by 2015.
For China, having a global reserve currency is not just about economics.¬† It is also about power.
McCormick ended his recent note this way…
China‚Äôs new leadership faces a number of problems. The country‚Äôs economy is slowing and, although we would expect the rate of GDP growth to pick up a little, it is unlikely to be a steep rebound.
But promoting RMB as a global reserve currency, with all the economic benefits that will bring in addition to exerting more political influence on the global stage, clearly remains high on their agenda.
Beijing is undertaking a long, gradual campaign to establish the yuan as a more market-oriented, international currency. China’s State Council, or cabinet, said in a statement this month that the country would draft a plan to allow the yuan to become fully convertible. Meanwhile, the People’s Bank of China is guiding the currency higher and set the median point of its permitted daily trading band last week at the strongest level ever.
We don’t hear much about these sorts of things in the western media, but the convertibility of the Chinese yuan is a very big deal.¬† Up until recently, the yuan was only directly convertible into dollars and yen.¬† But now that is rapidly changing.¬† So far this year, the Chinese government has entered into currency convertibility agreements¬†with Australia and New Zealand.
So instead of having to change yuan into U.S. dollars to trade with Australia and New Zealand, now China can cut U.S. dollars completely out of the process.
But right now there is nothing that really gives the Chinese yuan a significant competitive edge over the U.S. dollar.¬† If Chinese authorities truly want the yuan to end up replacing the U.S. dollar as the primary reserve currency of the planet, they need to do something that will make the rest of the world want to use it.
And they could do that by backing the yuan with gold.¬† In fact, there are persistent rumors that China has been busily preparing for that.
For example,¬†the Economic Policy Journal¬†recently pointed out that Dr. Pippa Malmgren, the President and founder of Principalis Asset Management who once worked in the White House as an adviser to President Bush, is claiming that China has plans to turn the yuan into “a hard, gold-backed currency” that will have a distinct competitive edge over the rapidly depreciating paper currencies that the rest of the globe is currently using…
The most interesting piece of the puzzle is that the Chinese have emerged as the biggest buyers of gold, mainly off-market. They want the yuan to emerge as a hard, gold-backed currency in a world where everyone else has chosen to inflate and devalue.
The recent bilateral currency deals with Australia, France, Russia and Singapore, and many others, reflect this desire to displace the USD as the world‚Äôs reserve currency.
It may be an interesting and long race between the Chinese reaching for convertibility and the Western central banks straining credibility.
Other analysts are also fully convinced that the goal of the Chinese is a gold-backed yuan.¬† The following is what money manager Stephen Leeb¬†told King World News recently…
Countries have been battling each other in order to cheapen their currencies. The problem with a cheaper currency is that commodities cost more. So China has decided to opt for a higher currency.
The move in the yuan overnight was one of the most significant upticks I have seen. Like I said, the yuan moved to an all-time high. The yuan has advanced roughly 5% against the US dollar in just nine months. China also imported over 200 tons of gold for the most recent month. That is an extraordinary number. At that rate that‚Äôs over 2,400 tons of gold per year on an annualized basis.
This simply speeds up the point at which China will be the largest gold holder in the world. China saw gold come down and they didn‚Äôt just buy on the dip, instead they bought as much as the market would give them. And, again, you see the yuan going up so that is making the price of gold even cheaper for the Chinese.
It‚Äôs only a matter of time before the Chinese back the yuan with gold. This will push the yuan front and center as a key element in terms of being part of the world‚Äôs reserve currency basket. China gets the message. They are doing whatever it takes to establish their dominance in the world, particularly in the commodity arena. Their currency is flying and they are importing as much gold as they possibly can.
And without a doubt, China has been hoarding massive amounts of gold.¬† Everyone agrees on that.¬† But what nobody knows is exactly how much gold China currently has stockpiled, because China is not telling anybody.
One recent estimate put China’s gold reserves at¬†more than 7,000 tons of gold, but it could potentially be far higher than that.¬† When China does finally tell the rest of us how much gold they have, they will probably be just a move or two away from checkmate.
What we do know is that China is importing absolutely enormous amounts of gold right now even though China is also the number one gold producer on the planet.
According to¬†Reuters, more than 223 tons of gold was imported into China from Hong Kong in March.¬† That smashed the previous record of 114 tons in December.
Overall, Chinese imports of gold from Hong Kong tripled in 2012, and the final number for 2013 is going to absolutely smash what we saw in 2012.
Obviously something is happening.
China is massively hoarding gold at the same time that it is trying to substantially raise the international influence of the yuan.
It doesn’t take a genius to see where all of this is headed.
If China does decide to back the yuan with gold and no longer use the U.S. dollar in international trade, it will have devastating effects on the U.S. economy.¬† Demand for the U.S. dollar and U.S. debt would drop like a rock, and prices on the things that we buy every day would soar.¬† At that point you could forget about cheap gasoline or cheap Chinese imports.¬† Our entire way of life depends on the U.S. dollar being the primary reserve currency of the world and being able to import things very inexpensively.¬† If the rest of the world (led by China) starts to reject the U.S. dollar, it would result in a massive tsunami of currency coming back to our shores and a very painful adjustment in our standard of living.¬† Today, most U.S. currency is actually used¬†outside of the United States.¬† If someday that changes and we are no longer able to export our inflation that is going to mean big trouble for us.
So keep an eye on China, and look out for any news about the yuan.
It won’t happen next week or next month, but eventually we could see China back the yuan with gold.
When that happens, it is going to be a complete and utter financial disaster for the United States.
Did you know that Barack Obama has been secretly negotiating the most important trade agreement since the formation of the World Trade Organization?¬† Did you know that this agreement will impose very strict Internet copyright rules, ban all “Buy American” laws, give Wall Street banks much more freedom to trade risky derivatives and force even more domestic manufacturing offshore?¬† If you have not heard about this treaty, don’t feel bad.¬† Obama has refused to even give Congress a copy of the draft agreement and he has banned members of Congress from attending the negotiations.¬† The plan is to keep this treaty secret until the very last minute and then to railroad it through Congress and have it signed into law by October.¬† The treaty is known as “the Trans-Pacific Partnership”, and the nations that are reported to be involved in the development of this treaty include the United States, Canada, Japan, South Korea, Australia, New Zealand, Chile, Peru, Brunei, Singapore, Vietnam and Malaysia.¬† Opponents of this treaty refer to it as “the NAFTA of the Pacific”, and if it is enacted it will push the deindustrialization of America into overdrive.
The “one world” economic agenda that Barack Obama has been pushing is absolutely killing the U.S. economy.¬† As you will see later in this article, we are losing jobs and businesses at an astounding pace.¬† And each new “free trade” agreement makes things even worse.
For example, just check out the impact that the recent free trade agreement that Obama negotiated with South Korea¬†is having on us…
A 10 percent decline of U.S. exports to Korea
The U.S. trade deficit with Korea has climbed 37 percent
U.S. auto industry has been crippled
Loss of U.S. control where international trade, banking and finance is concerned
A projected 159,000 jobs will be lost
Wait a second – I though that “free trade” agreements were actually supposed to¬†increase¬†exports.
So why have they declined by 10 percent?
Did someone make a really bad deal?
And of course we have all seen the economic devastation that NAFTA has wrought.
When NAFTA was pushed through Congress in 1993, the United States actually had a trade¬†surplus¬†with Mexico of 1.6 billion dollars.¬† By 2010, we had a trade¬†deficit¬†with Mexico of¬†61.6 billion dollars.
And “free trade” with China has turned out to be a complete and total nightmare as well.
Back in 1985, our trade deficit with China was approximately¬†6¬†million¬†dollars¬†(million with a little “m”) for the¬†entire¬†year.
In 2012, our trade deficit with China was¬†315¬†billion¬†dollars.¬† That was the largest trade deficit that one nation has had with another nation in the history of the world.
But instead of learning from the mistakes of the past, Barack Obama is pressing for more “free trade” agreements.
The agreement, under negotiation since 2008, would set new rules for everything from food safety and financial markets to medicine prices and Internet freedom. It would include at least 12 of the countries bordering the Pacific and be open for more to join. President Obama has said he wants to sign it by October.
Although Congress has exclusive constitutional authority to set the terms of trade, so far the executive branch has managed to resist repeated requests by members of Congress to see the text of the draft agreement and has denied requests from members to attend negotiations as observers ‚ÄĒ reversing past practice.
While the agreement could rewrite broad sections of nontrade policies affecting Americans‚Äô daily lives, the administration also has rejected demands by outside groups that the nearly complete text be publicly released.
So exactly who in the world does this guy think that he is?¬† Why won’t Obama let us know exactly what is in this treaty?
Fortunately, there have been a few leaks.¬† One thing that we have discovered is that this new treaty would reportedly ban all “Buy American laws“.
That certainly would not be popular if it got out.
The American people wanted nothing to do with the very strict Internet copyright provisions of SOPA and loudly expressed their displeasure to members of Congress.
Unfortunately, now the provisions of SOPA are back.¬† It is being reported that most of the provisions of SOPA have been quietly inserted into this treaty.¬† If this treaty is enacted, those provisions will become law and the American people will not be able to do anything about it.
And according to¬†the New York Times, there are all sorts of other disturbing things that have been slipped into the treaty…
And yet another leak revealed that the deal would include even more expansive incentives to relocate domestic manufacturing offshore than were included in Nafta ‚ÄĒ a deal that drained millions of manufacturing jobs from the American economy.
The agreement would also be a boon for Wall Street and its campaign to water down regulations put in place after the 2008 financial crisis. Among other things, it would practically forbid bans on risky financial products, including the toxic derivatives that helped cause the crisis in the first place.
Are you starting to understand why the Obama administration is keeping this treaty such a secret?
If the details of this treaty were revealed to the American people right now, it would create such an uproar that Congress would never approve this treaty.
So please share this article with as many people as you can.¬† We have got to get the American people educated about this.
Enough damage has already been done to the U.S. economy by “free trade” agreements.¬† Just consider the following statistics…
-The United States has lost¬†more than 56,000¬†manufacturing facilities since 2001.
And many people know that ‚Äď prior to becoming the Attorney General ‚Äď Holder was a partner at a big firm which¬†did some despicable¬†things to represent the big banks and MERS.
But Holder‚Äôs see-no-evil act actually started more than a decade ago.
Specifically, in 1999, as Deputy Attorney General, Holder¬†wrote a memo¬†arguing against prosecuting large financial service companies:
Prosecutors may consider the¬†collateral consequences¬†of a corporate criminal conviction in determining whether to charge the corporation with a criminal offense.
One of the factors in determining whether to charge a natural person or a corporation is whether the likely punishment is appropriate given the nature and seriousness of the crime.
In the corporate context,¬†prosecutors may take into account the possibly substantial consequences to a corporation‚Äôs officers, directors, employees, and shareholders, many of whom may, depending on the size and nature (e.g., publicly vs. closely held) of the corporation and their role in its operations, have played no role in the criminal conduct, have been completely unaware of it, or have been wholly unable to prevent it.
Further, prosecutors should also be aware of non-penal sanctions that may accompany a criminal charges, such as potential suspension or debarment from eligibility for government contracts or federal funded programs such as health care. Whether or not such non-penal sanctions are appropriate or required in a particular case is the responsibility of the relevant agency, a decision that will be made based on the applicable statutes, regulations, and policies.
Virtually every conviction of a corporation, like virtually every conviction of an individual, will have an impact on innocent third parties‚Ä¶.
Matt Taibbi points out that ‚Äď when the Department of Justice subsequently prosecuted accounting giant Arthur Andersen for covering up Enron‚Äôs fraudulent schemes ‚Äď Anderson ran with Holder‚Äôs argument, and threatened the DOJ ‚Äúusing their employees as human shields‚ÄĚ.
Specifically, Andersen said that ‚Äď unless the DOJ dropped the prosecution ‚Äď innocent Andersen employees would lose their jobs.
Andersen was prosecuted and convicted, and some innocent employees ‚Äď as well as the big time fraudsters ‚Äď lost their jobs.
Since then, the Justice Department has gotten so gun-shy that we basically haven‚Äôt had any criminal indictments against a large financial services company since then.
And Matt Taibbi notes that ‚Äď for the first time -¬† Holder is¬†now¬†saying that not only can‚Äôt we indict the companies, but we can‚Äôt even indict any of the¬†individual¬†criminals at the companies.¬† In other words, Holder is implementing a¬†permanent shield¬†for employees and executives at large institutions.
One year ago this month it was revealed that throughout the course of this crisis some 40% of all wealth in America had been vaporized. It was a stunning number to be sure, and one that many analysts predicted would reverse as the Bernanke/Obama recovery took hold. Now, a full year on, the news has not gotten any better. It’s gotten much, much worse. According to a new report, the average American household has lost 55% of their net worth since the onset of the recession in 2008.
Many are likely holding to the belief that our benevolent government politicians and financial leaders have taken the necessary steps to turn this economy around.
But they’d be wrong.
The next wave of crisis is imminent and the end result will be a total wipe out for Americans:
“I think we are heading for a worse economic crisis than we had in 2007,” [Peter] Schiff said. “You’re going to have a collapse in the dollar…a huge spike in interest rates… and our whole economy, which is built on the foundation of cheap money, is going to topple when you pull the rug out from under it.”
According to Schiff, these numbers are unsustainable.
And the Fed has no credible “exit strategy.”
Eventually interest rates will rise… and when they do, Schiff says, stocks will tank and bonds dip to nothing. Massive new tax hikes will be imposed and programs and entitlements will be cut to the bone.
“The crisis is imminent,” Schiff said. “I don’t think Obama is going to finish his second term without the bottom dropping out. And stock market investors are oblivious to the problems.”
“We’re broke, Schiff added.
“We owe trillions. Look at our budget deficit; look at the debt to GDP ratio, the unfunded liabilities. If we were in the Eurozone, they would kick us out.”
Schiff points out that the market gains experienced recently, with the Dow first topping 14,000 on its way to setting record highs, are giving investors a false sense of security.
“It’s not that the stock market is gaining value… it’s that our money is losing value. And so if you have a debased currency… a devalued currency, the price of everything goes up. Stocks are no exception,” he said.
“The Fed knows that the U.S. economy is not recovering,” he noted. “It simply is being kept from collapse by artificially low interest rates and quantitative easing. As that support goes, the economy will implode.“
When it hits the fan, don’t say we didn’t warn you. Mac Slavo is the editor of SHTFplan.com, a resource hub for alternative news, contrarian commentary and strategies that you can take to protect yourself from the coming global paradigm shift.
It should be clear that our economic and monetary systems are wholly unsustainable and will lead to continued impoverishment of the populace through job losses, wage reductions and monetary price inflation. With that in mind consider your specific financial needs, what means you have available to you, and what your financial assets will look like when the next collapse wreaks havoc in the markets.
When it all comes down you must be positioned in assets that will not only store wealth, but build it as well. Once you have the basics covered – food, shelter, personal safety – consider gold as one such option. History shows that, as a mechanism of exchange, gold has survived every major global calamity. As our government managed socio-economic safety nets continue to unravel, with our money losing purchasing power and our creditors losing confidence in our ability to ever repay our debts, gold may well be the only financial asset left standing after the dust has settled.
When it hits the fan, don’t say we didn’t warn you. Mac Slavo is the editor of SHTFplan.com, a resource hub for alternative news, contrarian commentary and strategies that you can take to protect yourself from the coming global paradigm shift.
**This interview was recorded Friday evening, 5/31/2013**
I had the chance on Friday to reconnect with¬†technical gold trader¬†Gary Savage,¬†publisher of the¬†‚ÄúSmart Money Tracker‚ÄĚ¬†daily gold market commentary and trading service, which has outperformed most of the world‚Äôs hedge funds in 2011 and 2012.
It was a powerful conversation as Gary indicated the S&P 500 is¬†at its most overbought level in nearly 40 years, and¬†may crash 10%-20%¬†within a few trading days as a result. Following this crash, Gary expects a¬†massive central bank monetary intervention¬†to create the ‚Äúlaunch pad‚ÄĚ for an explosive move higher in gold and gold equities, ushering in the final bubble stage of the bull market.
‚ÄúWe‚Äôre at a very important crossroads here,‚ÄĚ¬†Gary explained at the beginning of the interview.¬†‚ÄúThe S&P 500 [broke] through 1640‚Ä¶and I expect we‚Äôre¬†going to have some kind of crash, or semi-crash over the next 5-10 days‚Ä¶The selling is probably going to get huge‚Ä¶and it [may] take everything [down] with it.‚ÄĚ
When asked why he‚Äôs expecting a crash of such magnitude to occur, Gary replied,¬†‚ÄúIf you look at [a]¬†long-term market chart‚Ä¶you can see that at the recent¬†peak, [it] was stretched further above the 200 day moving average then it‚Äôs ever been in the last 30 or 40 years. So the forces of regression are going to be¬†extremely powerful‚Ä¶We‚Äôre probably going to [cut] right through the 200 day moving average and [it] may make the 2011 correction look small [in comparison].‚ÄĚ
This fragile equities market plays a key role in determining gold‚Äôs next move according to Gary, in that,¬†‚ÄúWhen it breaks, the Fed is going to freak out, [and] they‚Äôre going to double, triple, and quadruple down on QE to try and pump stocks back up, [and] that liquidity‚Ä¶[is]¬†going to find something else‚Ä¶I don‚Äôt believe it‚Äôs going to pump up a double parabola in stocks‚Ä¶[It's]¬†going to look for something that‚Äôs undervalued‚Ä¶and that right now is commodities in general,¬†more specifically‚ÄĒgold.‚ÄĚ¬†
As to the consequences of gold being driven down so far when compared to this blow-off in equities, Gary stated that,¬†‚ÄúRegression to the mean not only works on the upside, but also on the downside, and gold is in the mirror position of the stock market‚ÄĒit‚Äôs¬†stretched extremely far below the 200 day moving average. So when [the] regression occurs, it‚Äôs going to be an extremely violent move back towards the 200 day moving¬†average, and like I said, I think what will trigger this [move in gold], will be the stock market crash, the Fed, and the central banks‚Äô response to [the] unraveling‚Ä¶[it's]¬†what I imagine would happen before the bubble phase begins.‚Äú
When asked about the small signals investors should look for in gold and gold equities to identify an early start to the bubble move, Gary said,¬†‚ÄúAt some point the selling exhausts‚Ä¶and [when] the liquidity¬†starts to flow into that area‚Ä¶value investors [start] coming in, and then you start to get these 5%-6% days, and [the] next thing you know you‚Äôve got an 11% week, and then the momentum starts to shift¬†and then you get a buying panic into the area where people are making money‚Ä¶So I think we have a [perfect] setup for the bubble phase in gold.‚ÄĚ
As a final comment Gary advised further patience in holding gold equities, saying,¬†‚ÄúThey may temporarily follow [the market] down, but they‚Äôre going to rebound out of that extremely violently,¬†and leave the stock market in the dust.‚Äú
This was another powerful interview with one of the world‚Äôs most successful gold traders, and is required listening for investors looking to profitably trade this gold bull market.
To listen to the interview, click the following link and/or save to to your desktop:
This is no time to be complacent.¬† Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine.¬† In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing.¬† Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer.¬† Just look at what is happening in Europe.¬† The eurozone is now in the midst of the longest recession that it has ever experienced.¬† Just look at what is happening over in Asia.¬† Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control.¬† One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have “kicked the can down the road” by recklessly printing money and by borrowing money at an unprecedented rate.¬† Unfortunately, the “sugar high” produced by those foolish measures is starting to wear off.¬† We are going to experience a massive amount of economic pain along with the rest of the world – it is just a matter of time.
But for the moment, there are a lot of skeptics out there.
For the moment, there are a lot of people that are declaring that the problems of the past have been fixed and that we are heading for incredibly bright economic times ahead.
Unfortunately, those people appear to be purposely ignoring the economic horror that is breaking out all over the globe.
The following are 18 signs that massive economic problems are erupting all over the planet…
#1¬†The eurozone is now in the midst of its longest recession ever.¬† Economic activity in the eurozone has declined¬†for six quarters in a row.
“I’ve sent CVs everywhere, I come to the unemployment agency every day, for 3 or 4 hours to look for work as a truck driver and there’s never anything,” said 42-year old Djamel Sami, who has been unemployed for a year, leaving a job agency in Paris.
#7¬†Unemployment in the eurozone as a whole has just hit a brand new all-time record high of¬†12.2 percent.
#8¬†Youth unemployment continues to soar to unprecedented heights in Europe.¬† The following is from an article that was recently posted¬†on the website of the Guardian¬†that detailed how bad things are getting in some of the worst countries…
In Greece, 62.5% of young people are out of work, in Spain it’s 56.4%, then Portugal with 42.5%, and then Italy with 40.5%.
#9¬†Youth unemployment is being partially blamed for the worst rioting that Sweden has seen in many years.¬† The following is how¬†the Daily Mail¬†described the riots…
Sweden is reeling after a third night of rioting in largely run-down immigrant areas of the capital Stockholm.
In the last 48 hours violence has spread to at least ten suburbs with mobs of youths torching hundreds of cars and clashing with police.
It is Sweden’s worst disorder in years and has shocked the country and provoked a debate on how Sweden is coping with youth unemployment and an influx of immigrants.
#10¬†An astounding¬†10 percent¬†of all banking deposits were pulled out of banks in Cyprus during the month of April alone.
#12¬†Suddenly Australia is experiencing some tremendous economic challenges.¬† The following quotes are from a recent¬†Zero Hedge article…
-‚ÄúWe‚Äôre seeing a much sharper contraction in the Australian economy than we‚Äôd anticipated four or five months ago‚ÄĚ.¬†Coffey MD, John Douglas. The engineering group has seen its shares, which traded above $4 in 2007, hit 10c last week.
-‚ÄúBy 10am, the Fitness First gym in the city is packed full of brokers who‚Äôve had a gutful of sitting at their desk doing nothing ‚Äď salary cuts are starting and next it will be jobs‚ÄĚ¬†Perth broker
-‚ÄúOh mate, the funding market is dead. You are now seeing a few deeply discounted rights issues for those that are reaching desperate levels ‚Ä¶.. liquidity has completely disappeared‚ÄĚ¬†Perth broker
#13¬†The financial system in Japan is beginning to spin¬†wildly out of control.¬† The Japanese stock market has now declined¬†about 15 percent¬†from the peak, and many believe that the yen will continue to get weaker and that interest rates in Japan will start to rise significantly.
#14¬†Global cash flow is declining at a rate not seen¬†since the last recession.¬† This indicates that we could be headed for a global credit crunch.
#15¬†Real wages continue to decline in the United States.¬† Even though we are being told that the U.S. is experiencing an “economy recovery”, real weekly earnings have declined from¬†$297.79¬†in 2010 to¬†$295.49¬†in 2011 to¬†$294.83¬†in 2012.¬† (The preceding calculation is based on 1982-1984 dollars)
#16¬†Wall Street is buzzing about the fact that “the Hindenburg Omen” appeared at the end of last week.¬† So exactly what is “the Hindenburg Omen”?¬† The following are¬†the criteria¬†that are used to determine whether it has appeared or not…
1. The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must¬†both¬†be greater than 2.2 percent of total NYSE issues traded that day.
2. The smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.
3. That the NYSE 10 Week moving average is rising.
4. That the McClellan Oscillator ( a market breadth indicator used to evaluate the rate of money entering or leaving the market and interpretively indicate overbought or oversold conditions of the market)is negative on that same day.
5. That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs).
When the Hindenburg Omen makes an appearance, it supposedly means that the U.S. stock market is likely to experience a serious decline within the next 40 days.
#17¬†As I wrote about¬†the other day, the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been¬†in more than two years.¬† That means that lots of “smart money” has been getting out of the market and lots of “dumb money” has been pouring in.
#18¬†Margin debt on the New York Stock Exchange has set a new all-time high.¬† The following is from a recent¬†Market Oracle article…
Margin debt‚ÄĒthat‚Äôs the amount of money borrowed to purchase stocks‚ÄĒon the New York Stock Exchange (NYSE) reached its all-time high in April. Margin debt on the NYSE registered at $384.3 billion as the key stock indices hit new record-highs. (Source: New York Stock Exchange web site, last accessed May 29, 2013.) The highest margin debt ever reached prior to this was in July of 2007, when it stood just above $381.0 billion. At that time, just like today, the key stock indices were near their peaks and ‚Äúbuy now before it‚Äôs too late‚ÄĚ was the prominent theme of the day
Whenever margin debt spikes like this, a stock market crash almost always follows.¬† If you doubt this, just check out the chart in¬†this article.
Wall Street has had a good couple of years, but it has been a “false prosperity” that has been pumped up by reckless money printing by the Federal Reserve.¬† Just like all of the other stock market bubbles that we have seen in recent years, this one is going to burst too.¬† And as¬†Marc Faber¬†recently pointed out, this bubble has been particularly beneficial to the wealthy…
The Fed has been flooding the system with money. The problem is the money doesn’t flow into the system evenly. It doesn’t increase economic activity and asset prices in concert. Instead, it creates dangerous excesses in countries and asset classes. Money-printing fueled the colossal stock-market bubble of 1999-2000, when the Nasdaq more than doubled, becoming disconnected from economic reality. It fueled the housing bubble, which burst in 2008, and the commodities bubble. Now money is flowing into the high-end asset market – things like stocks, bonds, art, wine, jewelry, and luxury real estate.
Money-printing boosts the economy of the people closest to the money flow. But it doesn’t help the worker in Detroit, or the vast majority of the middle class. It leads to a widening wealth gap. The majority loses, and the minority wins.
The fact that the U.S. stock market has set new all-time record high after new all-time record high in recent months means very little.¬† At this point, the stock market has become completely divorced from economic reality.¬† When this current bubble bursts, the adjustment is going to be very painful.¬† Wall Street will likely whine and complain and ask for more bailouts, but they may find that authorities are not nearly as sympathetic this time.
Much of the rest of the world is already experiencing the next major wave of the economic collapse.¬† Reckless money printing by the Fed and reckless borrowing and spending by the federal government may have delayed the inevitable in the United States for a little while, but those measures have also made our long-term problems even worse.
There was one piece of advice that Ben Bernanke included in his¬†commencement speech¬†to students at Princeton recently that I thought was particularly ironic…
“Don’t be afraid to let the drama play out.”
Will he take his own advice when the next great financial crisis strikes the United States?
That seems very unlikely.
Unfortunately, things are not going to be so easy to fix this next time.
What happened back in 2008 was just a preview.
What is coming next is going to absolutely shock the world.
South Africa‚Äôs rand punched through the psychological barrier of 10 to the dollar as investors flee countries with big current account deficits, deemed most at risk. The country‚Äôs central bank said it would take action to stem the fall in the rand if moves became ‚Äúabrupt and disorderly‚ÄĚ.
The Johannesburg Stock Exchange says foreigners have withdrawn ‚ā¨1.1bn (¬£940m) from South African bonds over the past 10 days. The Turkish lira fell to the lowest in 17 months against the dollar, though it has just been upgraded to ‚Äúinvestment‚ÄĚ quality by Moody‚Äôs. The Thai baht fell to a one-year low, a pattern seen in much of emerging Asia.
Bond yields have spiked sharply in Turkey, South Africa, Mexico and Hungary, rippling through down corporate spreads. Yields on 10-year Polish bonds have jumped 60 basis points to 3.60pc in May as even the strongest are drawn into the turmoil. ‚ÄúThis is the end of the bull market,‚ÄĚ said Benoit Anne from Societe Generale. ‚ÄúI am now throwing in the towel. We are out of virtually all our emerging market bonds.‚ÄĚ
Mr Anne said hedge funds have already taken profits but ‚Äúreal-money‚ÄĚ institutions have yet to follow. ‚ÄúWe have seen some selling, but nothing that looks like capitulation yet. When and if this kicks off, it will fuel another massive wave of correction.‚ÄĚ HSBC said last week that it was retreating from emerging debt, parking 42pc of its tactical portfolio in US Treasuries.
Bartosz Pawlowski from BNP Paribas said the latest ructions are driven by exaggerated fears of Fed tightening. ‚ÄúEven if the Fed tapers bond purchases by $20bn [¬£13.2bn] a month, it is still adding stimulus, as is the Bank of Japan, so it is not that deadly. But foreign investors have been badly burned this month, and when things get hairy in emerging markets, everything gets hit.‚ÄĚ
Outflows so far have been a tiny fraction of $8 trillion stock of foreign capital in emerging markets. The concern is that the sums are now so huge and the economies so big that an exodus could have systemic effects for the world. ‚ÄúIf something goes really wrong in one of these behemoths, it could create a chain reaction,‚ÄĚ said Mr Pawlowski.
The sell-off has yet to hit emerging market equities with full force, though India‚Äôs Sensex fell 2.3pc on Friday after growth slid to 4.8pc in the first quarter.
Stephen Jen from SLJ Macro Partners said South Africa is the ‚Äúcanary in the coal mine‚ÄĚ, the first to break after a global resource boom and an emerging market investment bubble.
The World Bank warned this week that the economy could contract ‚Äúsubstantially‚ÄĚ if labour disputes escalate and the country fails to tackle its electricity crisis. A third of South Africa‚Äôs platinum mines are operating below marginal costs.
The country has a current account deficit of 6.5pc of GDP and the picture is deteriorating as commodity prices slide.
Analysts say Turkey is also skating on thin ice with a deficit near 7pc. ‚ÄúWe think it may be the most vulnerable of all,‚ÄĚ said one City bank.
According to a study that was just released by Boston Consulting Group, the wealthiest one percent now own39 percent¬†of all the wealth in the world.¬† Meanwhile, the bottom 50 percent only own1 percent¬†of all the wealth in the world¬†combined.¬† The global financial system has been designed to funnel wealth to the very top, and the gap between the wealthy and the poor continues to expand at a frightening pace.¬† The global elite continue to hoard wealth and heap together enormous mountains of treasure in these troubled days even though the economic suffering around the planet continues to grow.¬† So exactly how have the global elite accumulated so much wealth?¬† Well, one of the primary ways is through the use of debt.¬† As I have written about¬†previously, there is about 190 trillion dollars of debt in the world but global GDP is only about 70 trillion dollars.¬† Our debt-based global financial system systematically transfers wealth from us and our governments into the hands of the global elite.¬† And of course the gigantic banks and corporations that the elite control are constantly gobbling up everything of value that they can find: natural resources, profitable small businesses, real estate, politicians, etc.¬† Money, power, ownership and control are becoming very, very tightly concentrated at the top of the food chain, and that is a very dangerous thing for humanity.¬† When too much money and power gets into too few hands, it almost always results in tyranny.
What will eventually happen when the global elite have ALL the wealth?
Will the rest of us work as serfs in a system that they have iron-fisted control over?
And what if they decide that they don’t really need billions of people working for them?¬† Will they decide to implement population control measures in order to reduce the number of “useless eaters”?¬† It is already happening in China and other highly centralized societies.
When all of the economic rewards of a society go to a very small handful of people, it tends to be very destabilizing.¬† We have seen this again and again throughout history.
When people have everything taken away from them and they have nothing left to lose, they tend to become very desperate.¬† And right now we are rapidly hurtling toward a time of great global instability.¬† Anger and frustration are growing all over the globe, and the rate at which the gap between the wealthy and the poor is widening seems to be accelerating.¬† Just check out these numbers…
-The wealthiest 1 percent of the global population now owns¬†39 percent¬†of all the wealth on the planet.
-According to a report that was released last summer, the global elite have up to¬†32 TRILLION dollars¬†stashed in offshore banks around the planet.
-According to a study conducted by Credit Suisse, the bottom two-thirds of the global population owns¬†just 3.3%¬†of all the wealth.
-A study by the World Institute for Development Economics Research discovered that the bottom half of the world population owns¬†approximately 1 percent¬†of all global wealth.
-It is estimated that the entire continent of Africa only owns¬†approximately 1 percent¬†of the total wealth of the world.
-Approximately¬†1 billion people¬†throughout the world go to bed hungry each night.
In the world that we live in, money equals power.¬† And the more money that the top one percent accumulate, the more power they will accumulate as well.
So exactly who are the top one percent?¬† I discussed this at length in my previous article entitled “Who Runs The World? Solid Proof That A Core Group Of Wealthy Elitists Is Pulling The Strings“.¬† The global elite are absolutely obsessed with power and control and they have been working to implement their agenda for a very long time.¬† In the end, they hope to unite the entire planet under a monolithic global system that they control.¬† They are actually quite open about this – it is just that most people do not want to believe it.
The gap between the wealthy and the poor is rapidly growing in the United States as well.¬† Sadly, this means that¬†the middle class¬†is steadily disappearing as the ranks of those that are¬†living in poverty¬†continues to increase.
But of course not everyone is doing badly in the U.S. right now.¬† In fact, those that own stocks have had lots of reasons to celebrate in recent months.
So who owns stocks?
Well, the wealthy do of course.¬† In fact, approximately¬†60 percent¬†of all individually held stocks are owned by the top 5 percent of all Americans.
During the last recession, Americans lost 16 trillion dollars of wealth.¬† Since then, about 45 percent of that wealth has been “recovered”, but the vast majority of that “recovery” has been due to rising stock prices.¬† The following comes from a recent¬†Washington Post article…
From the peak of the boom to the bottom of the bust, households¬†watched a total of $16 trillion in wealth disappear¬†amid sinking stock prices and the rubble of the real estate market. Since then, Americans have only been able to recapture 45 percent of that amount on average, after adjusting for inflation and population growth, according to the report from the St. Louis Fed released Thursday.
In addition, the report showed most of the improvement was due to gains in the stock market, which primarily benefit wealthy families. That means the recovery for other households has been even weaker.
‚ÄúA conclusion that the financial damage of the crisis and recession largely has been repaired is not justified,‚ÄĚ the report stated.
Once upon a time, the United States had the largest and most thriving middle class in the history of the world.¬† That was a great thing.¬† But now the middle class is being destroyed and government dependence¬†has surged to an all-time high.
The following are some of the incredible statistics that show how wide the gap between the wealthy and the poor in America is becoming…
-The wealthiest 1 percent of all Americans now own¬†more than a third¬†of all the wealth in the United States.
If wonderful times are ahead for U.S. financial markets, then why is so much of the smart money heading for the exits?¬† Does it make sense for insiders to be getting out of stocks and real estate if prices are just going to continue to go up?¬† The Dow is up about¬†17 percent¬†so far this year, and it just keeps setting new record high after new record high.¬† U.S. home prices have risen about 11 percent from a year ago, and some analysts are projecting that we are on the verge of a brand new housing boom.¬† Why would the smart money want to leave the party when it is just getting started?¬† Well, of course the truth is that the “smart money” is regarded as being smart because they usually make better decisions than other people do.¬† And right now the smart money is screaming that it is time to get out of the markets.¬† For example, the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been¬†in more than two years.¬† The smart money is busy selling even as the dumb money is busy buying.¬† So precisely what does the smart money expect to happen?¬† Are they anticipating a market “correction” or something bigger than that?
Those are very good questions.¬† Unfortunately, the smart money rarely divulges their secrets, so we can only watch what they do.¬† And right now a lot of insiders are making some very interesting moves.
For example, George Soros has been dumping almost all of his financial stocks.¬† The following is¬†from a recent article¬†by Becket Adams…
Everyone‚Äôs favorite billionaire investor is back in the spotlight, and this time he has a few people wondering what he‚Äôs up to.
George Soros has dumped his position with several major banks including JPMorgan Chase, Capitol One, SunTrust, and Morgan Stanley. He has reduced his exposure to Citigroup and decreased his stake in AIG by two-thirds.
In fact, Soros‚Äô financial stock holdings are down by roughly 80 percent, a massive drop from his position just three months ago, according to SNL Financial.
So exactly what is going on?
Why is Soros doing this?
Well, there is certainly a lot to criticize when it comes to Soros, but you can’t really blame him if he is just taking his profits and running.¬† Financial stocks have been on a tremendous run and that run is going to end at some point.¬† Smart investors lock in their profits while they still can.
And without a doubt, stocks have become completely divorced from economic reality in recent months.¬† For example, there is usually a very close relationship between corporate earnings and stock prices.¬† But as¬†CNBC¬†recently reported, that relationship has totally broken down lately…
That trend disrupted a formerly symbiotic relationship between earnings and stock prices and is indicating that the bluechip average is in for a substantial pullback, according to Tom Kee, who runs the¬†StockTradersDaily¬†investor web site.
“They’ve been moving in tandem since 2009, until recently. Earnings per share for the Dow Jones industrial average have flatlined and the price has taken off,” Kee said. “There is something happening here that defines a bubble.”
At some point there will be a correction.¬† If the relationship between earnings and stock prices was where it should be, the Dow would be¬†around 13,500¬†right now.¬† That would be a fall of nearly 2,000 points from where it is at the moment.
Of course a stock market “correction” can turn into a crash very easily.¬† Financial markets in¬†Japan¬†are¬†already crashing, and many fear that the escalating problems in the third largest economy on the planet will soon spill over into Europe and North America.
And things in Europe just continue¬†to get steadily worse.¬† In fact,¬†the New York Times¬†is reporting that the European Central Bank is warning that the risk of a “renewed banking crisis” in Europe is rising…
The European Central Bank warned on Wednesday that the euro zone‚Äôs slumping economy and a surge in problem loans were raising the risk of a renewed banking crisis, even as overall stress in the region‚Äôs financial markets had receded.
In a sober assessment of the state of the zone‚Äôs financial system, the E.C.B. said that a prolonged recession had made it harder for many borrowers to repay their loans, burdening banks that had still not finished repairing the damage caused by the 2008 financial crisis.
And there are many financial analysts out there that are warning that their cyclical indicators have peaked and that we are on the verge of a¬†fresh global downturn…
‚ÄúWe see building evidence of a cyclical downturn,‚ÄĚ said Fredrik Nerbrand, HSBC‚Äôs global asset guru. ‚ÄúWe find it highly troubling that the eurozone is still marred in a recession at the same time as our cyclical indicators appear to have peaked.‚ÄĚ
Hedge fund manager Bruce Rose was among the first investors to coax institutional money into the mom and pop business of single-family home rentals, raising $450 million last year from¬†Oaktree Capital Group LLC.
Now, with house prices climbing at the fastest pace in seven years and investors swamping the rental market, Rose says it no longer makes sense to be a buyer.
‚ÄúWe just don‚Äôt see the returns there that are adequate to incentivize us to continue to invest,‚ÄĚ Rose, 55, chief executive officer of Carrington Holding Co. LLC, said in an interview at his Aliso Viejo, California office. ‚ÄúThere‚Äôs a lot of — bluntly — stupid money that jumped into the trade without any infrastructure, without any real capabilities and a kind of build-it-as-you-go mentality that we think is somewhat irresponsible.‚ÄĚ
So what does all of this mean?
Is there a reason why the smart money is suddenly getting out of stocks and real estate?
It could just be that the insiders are simply responding to market dynamics and that many of them are just seeking to lock in their profits.
Or it could be something much more than that.
What do you think?
Why are so many insiders heading for the exits right now?
Feel free to post a comment with your thoughts below…
Government dependence in the United States has reached a level never seen before.¬† 50 years ago, the federal government handed out about 10 cents for every dollar that American workers earned.¬† Now, the federal government hands out about 35 cents for every dollar that American workers earn.¬† Yes, there are always poor people that cannot take care of themselves.¬† We never want to see a single American going hungry or sleeping in the streets.¬† But we are rapidly approaching the point where so many people are jumping on to the “safety net” that it is going to break.¬† If you can believe it, more than 100 million Americans are enrolled in at least one welfare program, and more than 70 percent of all spending by the federal government goes to “dependence-creating programs”.¬† If we really are “the greatest economy on earth”, then why is the number of people dependent on the government absolutely exploding?¬† Of course the truth is that all of this just shows that we are in the midst of a long-term economic decline that is rapidly accelerating.¬† Our economy simply does not produce enough jobs anymore, and there are a whole lot of people out there that are really suffering.
It is good to want to help all of the people that are hurting, but the reality is that we are spending far more money than we can afford to.¬† We have been borrowing (stealing) more than 100 million dollars from our children and our grandchildren every single hour of every single day to pay for all of this.¬† Our national debt is rapidly approaching 17 trillion dollars, and if future generations get the chance, they will look back and curse us for handing such a mountain of debt down to them.
So what should we do?¬† We certainly don’t want millions of Americans to go without food or a place to sleep, and yet the number of Americans that need government assistance just continues to grow.¬† Of course the ultimate solution would be to provide a job for all of those people, but our economy is falling apart.¬† Unless a miracle happens, the U.S. economy will never produce enough jobs ever again.¬† As our economy continues to crumble, dependence on the government is likely going to continue to rise.
The following are 21 facts about rising government dependence in America that will blow your mind…
1.¬†Back in 1960, the ratio of social welfare benefits to salaries and wages was approximately¬†10 percent.¬† In the year 2000, the ratio of social welfare benefits to salaries and wages was approximately¬†21 percent.¬† Today, the ratio of social welfare benefits to salaries and wages is approximately¬†35 percent.
2.¬†According to the U.S. Census Bureau,¬†49 percent¬†of all Americans live in a home that gets direct monetary benefits from the federal government.¬† Back in 1983,¬†less than a third¬†of all Americans lived in a home that received direct monetary benefits from the federal government.
4.¬†According to¬†the Survey¬†of Income and Program Participation conducted by the U.S. Census, well over¬†100 million Americans¬†are enrolled in at least one welfare program run by the federal government.¬† Sadly, that figure does not even include Social Security or¬†Medicare.
5.¬†Today, the federal government runs¬†about 80¬†different ‚Äúmeans-tested welfare programs‚ÄĚ, and almost all of those programs have experienced substantial growth in recent years.
6.¬†The number of Americans on Social Security disability now exceeds the entire population of¬†the state of Virginia.
7.¬†If the number of Americans on Social Security disability were gathered into a separate state, it would be the¬†8th largest state¬†in the country.
8.¬†In 1968, there were 51 full-time workers for every American on disability.¬† Today, there are just¬†13 full-time workers¬†for every American on disability.
9.¬†Right now, there are approximately 56 million Americans collecting Social Security benefits.¬† By 2035, that number is projected to soar to an astounding¬†91 million.
14.¬†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.”
15.¬†According to a report from the Center for Immigration Studies,¬†43 percentof all immigrants that have been in the United States for at least 20 years are still on welfare.
16.¬†Back in 1965, only one out of every 50 Americans was on Medicaid.¬† Today,¬†one out of every 6¬†Americans is on Medicaid, and things are about to get a whole lot worse.¬† It is being projected that Obamacare will add¬†16 million more Americans¬†to the Medicaid rolls.
17.¬†As I wrote about¬†recently, it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to¬†73.2 million¬†in 2025.
18.¬†At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.¬† That comes to approximately¬†$328,404¬†for every single household in the United States.
19.¬†Back in 1990, the federal government accounted for just¬†32 percent¬†of all health care spending in America.¬† It is being projected that the federal government will account¬†for more than 50 percent¬†of all health care spending in the United States very soon.
20.¬†The amount of money that the federal government gives directly to the American people has increased¬†by 32 percent¬†since Barack Obama entered the White House.
37 million Americans currently have outstanding student loans, and the delinquency rate on those student loans has now reached a level never seen before.¬† According to a new report that was just released by the U.S. Department of Education,¬†11 percent¬†of all student loans are at least 90 days delinquent.¬† That is a brand new record high, and it is almost double the rate of a decade ago.¬† Total student loan debt exceeds a trillion dollars, and it is now the second largest category of consumer debt after home mortgages.¬† The student loan debt bubble has been growing particularly rapidly in recent years.¬† According to the Federal Reserve, the total amount of student loan debt has risen by¬†275 percent¬†since 2003.¬† That is a staggering figure.¬† Millions upon millions of young college graduates are entering the “real world” only to discover that they are already financially crippled for decades to come by oppressive student loan debt burdens.¬† Large numbers of young people are even putting off buying homes or getting married simply because of student loan debt.
So why is this happening?¬† Well, a big part of the problem is that the cost of college tuition has gotten wildly out of control.¬† Since 1978, the cost of college tuition has risen¬†even more rapidly¬†then the cost of medical care has.¬† Tuition costs at public universities have risen by¬†27 percent¬†over the past five years, and there appears to be no end in sight.
We keep encouraging our young people to take out all of the loans that are necessary to pay for college, because a¬†college education¬†is supposedly the “key” to their futures.
But is that really the case?
Sadly, the reality of the matter is that millions of young Americans are graduating from college only to discover that the jobs that they were promised simply do not exist.
In fact, at this point¬†about half¬†of all college graduates are working jobs that do not even require a college degree.
This is leading to mass disillusionment with the system.¬† One¬†survey¬†found that¬†70% of all college graduates¬†wish that they had spent more time preparing for the ‚Äúreal world‚ÄĚ while they were still in college.
And because so many of them cannot get decent jobs, more college graduates then ever are finding that they cannot pay back the huge student loans that they were encouraged¬†to sign up¬†for.¬† The following is from a recent¬†Bloomberg¬†article.
Eleven percent of student loans were seriously delinquent — at least 90 days past due — in the third quarter of 2012, compared with 6 percent in the first quarter of 2003, according to the report by the U.S.Education Department.¬† Almost 30 percent of 20- to 24-year-olds aren‚Äôt employed or in school, the study found.
Everyone agrees that we are now dealing with an unprecedented student loan debt bubble, but none of our leaders seem to have any solutions.
The two charts posted below come from a recent¬†Zero Hedge article, and they are very illuminating.¬† The first chart shows how the amount of student loan debt owned by the federal government has absolutely exploded in recent years, and the second chart shows how the percentage of student loan debt that is at least 90 days delinquent has risen to a brand new record high…
How is the economy ever going to recover if an increasingly large percentage of our young college graduates are financially crippled by student loan debt?
And things are about to get even worse.
If Congress takes no action, the interest rate on federal student loans is going to double to¬†6.8 percent¬†on July 1st.¬† That rate increase would affect more than 7 million students.
And debt burdens just continue to increase in size.¬† In fact, according to¬†one recent study, “70 per cent of the class of 2013 is graduating with college-related debt ‚Äď averaging $35,200 ‚Äď including federal, state and private loans, as well as debt owed to family and accumulated through credit cards.”
And of course delinquency rates remain very high on other forms of debt as well.¬† For example, delinquency rates on home mortgages have typically been around 2 to 3 percent historically.¬† But as you can see from the chart below, the delinquency rate on single-family residential mortgages is currently close to 10 percent…
So are we really having an “economic recovery”?
Of course not.
Things are good for those that have lots of money in the stock market (for now), but for the vast majority of Americans¬†things continue to get worse.
And we continue to forget the lessons that we should have learned from the financial crisis of 2008.¬† Right now, we are seeing a resurgence of cash out financing.¬† But this time, people are leveraging their inflated stock portfolios instead of their home equity.¬† The following is from a¬†CNN report…
The recent¬†run-up in the market, financial advisers say, has led to a resurgence of the type of loan not seen since the end of the housing boom — cash out financing. But this time, though, people aren’t tapping their inflated house for money. These days stock portfolios appear to be the well of choice.
Financial planners say in recent months clients have taken out so-called margin loans to buy real estate, fund small business acquisitions, or to provide gap financing before a traditional loan could be secured from a bank.
“No one wants to be out of the market for 90 days,” says Mark Brown, a financial planner for Brown Tedstron in Denver. “People just don’t want to sell right now.”
We are a nation that is absolutely addicted to debt.¬† We know that it is wrong, but we just can’t help ourselves.
We are like the¬†900 pound man¬†that recently died.¬† He knew that he was eating himself to death, but he just couldn’t stop.
In the end, we are going to pay a great price for our gluttony.¬† Everyone in the world can see that we are killing the greatest economy that ever existed, but we simply do not have the self-discipline to do anything about it.
We have a word for the conscious slaughter of a racial or ethnic group: genocide.¬† And one for the conscious destruction of aspects of the environment: ecocide.¬† But we don‚Äôt have a word for the conscious act of destroying the planet we live on, the world as humanity had known it until, historically speaking, late last night.¬† A possibility might be ‚Äúterracide‚ÄĚ from the Latin word for earth.¬† It has the right ring, given its similarity to the commonplace danger word of our era: terrorist.
The truth is, whatever we call them, it‚Äôs time to talk bluntly about the terrarists of our world.¬† Yes, I know, 9/11 was horrific.¬† Almost 3,000 dead, massive towers down,¬†apocalyptic scenes.¬† And yes, when it comes to terror attacks, the Boston Marathon bombings weren‚Äôt pretty either.¬† But in both cases, those who committed the acts paid for or will pay for their crimes.
In the case of the terrarists — and here I‚Äôm referring in particular to the men who run what may be the most profitablecorporations on the planet, giant energy companies like ExxonMobil, Chevron, ConocoPhillips, BP, and Shell — you‚Äôre the one who‚Äôs going to pay, especially your children and grandchildren. You can take one thing for granted: not a single terrarist will ever go to jail, and yet they certainly knew what they were doing.
It wasn‚Äôt that complicated. In recent years, the companies they run have been extracting fossil fuels from the Earth in ever more frenetic and ingenious ways. The burning of those fossil fuels, in turn, has put¬†record amounts¬†of carbon dioxide (CO2) into the atmosphere. Only this month, the CO2 level reached¬†400 parts per million¬†for the first time in human history. A¬†consensus¬†of scientists has long concluded that the process was warming the world and that, if the average planetary temperature rose¬†more than two degrees Celsius, all sorts of dangers could ensue, including seas rising high enough to inundate coastal cities, increasingly intense¬†heat waves, droughts, floods, ever more extreme storm systems, and so on.
How to Make Staggering Amounts of Money and Do In the Planet
None of this was exactly a mystery. It‚Äôs in the scientific literature. NASA scientist James Hansen¬†first publicized¬†the reality of global warming to Congress in¬†1988. It took a while — thanks in part to the terrarists — but the news of what was happening increasingly made it into the mainstream. Anybody could learn about it.
Those who run the giant energy corporations knew perfectly well what was going on and could, of course, have read about it in the papers like the rest of us. And what did they do? They put their money into¬†funding¬†think tanks, politicians, foundations, and activists intent on¬†emphasizing ‚Äúdoubts‚ÄĚ¬†about¬†the science¬†(since it couldn‚Äôt actually be refuted); they and their allies¬†energetically promoted¬†what came to be known as climate denialism. Then they sent their agents and¬†lobbyists¬†and¬†money¬†into the¬†political system¬†to¬†ensure¬†that their plundering ways would not be interfered with. And in the meantime, they redoubled their efforts¬†to get ever tougher and sometimes ‚Äúdirtier‚ÄĚ energy out of the ground in ever tougher and dirtier ways.
The peak oil people hadn‚Äôt been wrong when they suggested years ago that we would soon hit a limit in oil production from which decline would follow.¬† The problem was that they were focused on traditional or ‚Äúconventional‚ÄĚ liquid oil reserves obtained from large reservoirs in easy-to-reach locations on land or near to shore.¬† Since then, the big energy companies have invested a remarkable amount of time, money, and (if I can use that word) energy in the development of techniques that would allow them to recover previously unrecoverable reserves (sometimes by processes that themselves burn striking amounts of fossil fuels):¬†fracking,¬†deep-water drilling, and¬†tar-sands production, among others.
They also began to go after huge deposits of what energy expert Michael Klare calls ‚Äúextreme‚ÄĚ or ‚Äútough‚ÄĚ energy — oil and natural gas that can only be acquired through the application of extreme force or that requires extensive chemical treatment to be usable as a fuel.¬† In many cases, moreover, the supplies being acquired like heavy oil and tar sands are more carbon-rich than other fuels and emit more greenhouse gases when consumed.¬† These companies have even begun¬†using climate change itself¬†– in the form of a¬†melting Arctic¬†– to exploit enormous and previously unreachable¬†energy supplies.¬† With the¬†imprimatur¬†of the Obama administration,¬†Royal Dutch Shell, for example, has been preparing to test out possible¬†drilling techniques¬†in the¬†treacherous waters¬†off Alaska.
Call it irony, if you will, or call it a nightmare, but Big Oil evidently has no qualms about making its next set of profits directly off melting the planet.¬† Its top executives continue to plan their futures (and so ours), knowing that their extremely profitable acts are destroying the very habitat, the very temperature range that for so long made life comfortable for humanity.
Their prior knowledge of the damage they are doing is what should make this a criminal activity.¬† And there are corporate precedents for this, even if on a smaller scale.¬† The¬†lead industry, the¬†asbestos industry, and the¬†tobacco companies¬†all knew the dangers of their products, made efforts to suppress the information or instill doubt about it even as they promoted¬†the glories¬†of what they made, and went right on producing and selling while others suffered and died.
And here‚Äôs another similarity: with all three industries, the negative results conveniently arrived years, sometimes decades, after exposure and so were hard to connect to it.¬† Each of these industries knew that the relationship existed.¬† Each used that time-disconnect as protection.¬† One difference: if you were a tobacco, lead, or asbestos exec, you might be able to ensure that your children and grandchildren weren‚Äôt exposed to your product.¬† In the long run, that‚Äôs not a choice when it comes to fossil fuels and CO2, as we all live on the same planet (though it’s also true that the well-off in the temperate zones are unlikely to be the first to suffer).
If Osama bin Laden‚Äôs 9/11 plane hijackings or the Tsarnaev brothers‚Äô homemade bombs constitute terror attacks, why shouldn‚Äôt what the energy companies are doing fall into a similar category (even if on a scale that leaves those events in the dust)?¬† And if so, then where is the national security state when we really need it? Shouldn‚Äôt its job be to safeguard us from terrarists and terracide as well as terrorists and their destructive plots?
The Alternatives That Weren‚Äôt
It didn‚Äôt have to be this way.
On July 15, 1979, at a time when gas lines, sometimes blocks long, were a disturbing fixture of American life, President Jimmy Carter¬†spoke directly¬†to the American people on television for 32 minutes, calling for a concerted effort to end the country‚Äôs oil dependence on the Middle East.¬† ‚ÄúTo give us energy security,‚ÄĚ he announced,
‚ÄúI am asking for the most massive peacetime commitment of funds and resources in our nation’s history to develop America’s own alternative sources of fuel — from coal, from oil shale, from plant products for gasohol, from unconventional gas, from the sun… Just as a similar synthetic rubber corporation helped us win World War II, so will we mobilize American determination and ability to win the energy war. ¬†Moreover, I will soon submit legislation to Congress calling for the creation of this nation’s first solar bank, which will help us achieve the crucial goal of 20% of our energy coming from solar power by the year 2000.‚ÄĚ
It‚Äôs true that, at a time when the science of climate change was in its infancy, Carter wouldn‚Äôt have known about the possibility of an overheating world, and his vision of ‚Äúalternative energy‚ÄĚ wasn‚Äôt exactly a fossil-fuel-free one.¬† Even then, shades of today or possibly tomorrow, he was talking about having ‚Äúmore oil in our shale alone than several Saudi Arabias.‚ÄĚ ¬†Still, it was a remarkably forward-looking speech.
Had we invested massively in alternative energy R&D back then, who knows where we might be today?¬† Instead, the media dubbed it the ‚Äúmalaise speech,‚ÄĚ though the president never actually used that word, speaking instead of an American ‚Äúcrisis of confidence.‚ÄĚ¬† While the initial public reaction¬†seemed positive, it didn‚Äôt last long.¬† In the end, the president’s energy proposals were essentially laughed out of the room and ignored for decades.
As a symbolic gesture, Carter had 32 solar panels¬†installed¬†on the White House.¬† (‚ÄúA generation from now, this solar heater can either be a curiosity, a museum piece, an example of a road not taken, or it can be a small part of one of the greatest and most exciting adventures ever undertaken by the American people: harnessing the power of the sun to enrich our lives as we move away from our crippling dependence on foreign oil.‚ÄĚ)¬† As it turned out, ‚Äúa road not taken‚ÄĚ was the accurate description.¬† On entering the Oval Office in 1981, Ronald Reagan caught the mood of the era perfectly.¬† One of his first acts was to order the removal of those panels and none were reinstalled for three decades, until Barack Obama was president.
Carter would, in fact, make his mark on U.S. energy policy, just not quite in the way he had imagined.¬† Six months later, on January 23, 1980, in his last¬†State of the Union Address, he would proclaim what came to be known as the Carter Doctrine: ‚ÄúLet our position be absolutely clear,‚ÄĚ he said. ‚ÄúAn attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.‚ÄĚ
No one would laugh him out of the room for that.¬† Instead, the Pentagon would fatefully begin organizing itself to protect U.S. (and oil) interests in the Persian Gulf on a new scale and America‚Äôs oil wars would follow soon enough.¬† Not long after that address, it would start building up a Rapid Deployment Force in the Gulf that would in the end become U.S. Central Command.¬† More than three decades later, ironies abound: thanks in part to those oil wars, whole swaths of the energy-rich Middle East are in crisis, if not chaos, while the big energy companies have put time and money into a staggeringly fossil-fuel version of Carter‚Äôs ‚Äúalternative‚ÄĚ North America.¬† They‚Äôve focused on shale oil, and on shale gas as well, and with new production methods, they are reputedly on the brink of¬†turning the United States¬†into a ‚Äúnew Saudi Arabia.‚ÄĚ
If true, this would be the worst, not the best, of news.¬† In a world where what used to pass for good news increasingly¬†guarantees¬†a nightmarish future, energy ‚Äúindependence‚ÄĚ of this sort means the extraction of ever more extreme energy, ever more carbon dioxide heading skyward, and ever more planetary damage in our collective future.¬† This was not the only path available to us, or even to Big Oil.
With their staggering profits, they could have decided anywhere along the line that the future they were ensuring was beyond dangerous.¬† They could themselves have led the way with massive investments in genuine alternative energies (solar, wind, tidal, geothermal, algal, and who knows what else), instead of the exceedingly small-scale ones they made, often for publicity purposes.¬† They could have backed a widespread effort to search for other ways that might, in the decades to come, have offered something close to the energy levels fossil fuels now give us.¬† They could have worked to keep the extreme-energy reserves that turn out to be surprisingly commonplace deep in the Earth.
And we might have had a different world (from which, by the way, they would undoubtedly have profited handsomely).¬† Instead, what we‚Äôve got is the equivalent of a tobacco company situation, but on a planetary scale.¬† To complete the analogy, imagine for a moment that they were planning to produce even more prodigious quantities not of fossil fuels but of cigarettes, knowing what damage they would do to our health.¬† Then imagine that, without exception, everyone on Earth was forced to smoke several packs of them a day.
If that isn‚Äôt a terrorist — or terrarist — attack of an almost unimaginable sort, what is?¬† If the oil execs aren‚Äôt terrarists, then who is?¬† And if that doesn‚Äôt make the big energy companies criminal enterprises, then how would you define that term?
To destroy our planet with malice aforethought, with only the most immediate profits on the brain, with only your own comfort and wellbeing (and those of your shareholders) in mind: Isn‚Äôt that the ultimate crime? Isn‚Äôt that terracide?