Failing Stimulus And The IMF’s New ‘Multilateral’ World Order

Tuesday, 27 January 2015 05:24 Brandon Smith

My theme for 2015 has been the assertion that this will be a year of shattered illusions; social, political, as well as economic. As I have noted in recent articles, 2014 set the stage for multiple engineered conflicts, including the false conflict between Eastern and Western financial and political powers, as well as the growing conflict between OPEC nations, shale producers, as well as conflicting notions on the security of the dollar’s petro-status and the security and stability of the European Union.

Since the derivatives and credit crisis of 2008, central banks have claimed their efforts revolve around intervention against the snowball effect of classical deflationary market trends. The REAL purpose of central bank stimulus actions, however, has been to create an illusory global financial environment in which traditional economic fundamentals are either ignored, or no longer reflect the concrete truths they are meant to convey. That is to say, the international banking cult has NO INTEREST whatsoever in saving the current system, despite the assumptions of many market analysts. They know full well that fiat printing, bond buying, and even manipulation of stocks will not change the nature of the underlying crisis.

Their only goal has been to stave off the visible effects of the crisis until a new system is ready (psychologically justified in the public consciousness) to be put into place. I wrote extensively about the admitted plan for a disastrous “economic reset” benefiting only the global elites in my article ‘The Economic End Game Explained’.

We are beginning to see the holes in the veil placed over the eyes of the general populace, most notably in the EU, where the elites are now implementing what I believe to be the final stages of the disruption of European markets.

The prevailing illusion concerning the EU is that it is a “model” for the future the globalists wish to create, and therefore, the assumption is that they would never deliberately allow the transnational union to fail. Unfortunately, people who make this argument do not seem to realize that the EU is NOT a model for the New World Order, it is in fact a mere stepping stone.

The rising propaganda argument voiced by elites in the International Monetary Fund and the Bank For International Settlements, not to mention the ECB, is not that Europe’s troubles stem from its ludicrous surrender to a faceless bureaucratic machine. Rather, the argument from the globalists is that Europe is failing because it is not “centralized enough”. Mario Draghi, head of the ECB and member of the board of directors of the BIS, tried to sell the idea that centralization solves everything in an editorial written at the beginning of this year.

“Ultimately, economic convergence among countries cannot be only an entry criterion for monetary union, or a condition that is met some of the time. It has to be a condition that is fulfilled all of the time. And for this reason, to complete monetary union we will ultimately have to deepen our political union further: to lay down its rights and obligations in a renewed institutional order.”

Make no mistake, the rhetoric that will be used by Fabian influenced media pundits and mainstream economic snake-oil salesmen in the coming months will say that the solution to EU instability as well as global instability is a single global governing body over the fiscal life of all nations and peoples. The argument will be that the economic crisis persists because we continue to cling to the “barbaric relic” of national sovereignty.

In the meantime, internationalists are protecting the legitimacy of stimulus actions and banker led policy by diverting attention away from the failure of the central planning methodology.

Mario Draghi has recently announced the institution of Europe’s own QE bond buying program, only months after Japan initiated yet another stimulus measure of its own, and only months after the Federal Reserve ended QE with the finale of the taper.

I would point out that essentially the moment the Fed finalized the taper of QE in the U.S., we immediately began to see a return of stock volatility, as well as the current plunge in oil prices. I think it should now be crystal clear to everyone where stimulus money was really going, as well as what assumptions oblivious daytraders were operating on.

The common claim today is that the QE of Japan and now the ECB are meant to take up the slack left behind in the manipulation of markets by the Fed. I disagree. As I have been saying since the announcement of the taper, stimulus measures have a shelf life, and central banks are not capable of propping up markets for much longer, even if that is their intention (which it is not). Why? Because even though market fundamentals have been obscured by a fog of manipulation, they unquestionably still apply. Real supply and demand will ALWAYS matter – they are like gravity, and we are forced to deal with them eventually.

Beyond available supply, all trade ultimately depend on two things – savings and demand. Without these two things, the economy will inevitably collapse. Central bank stimulus does not generated jobs, it does not generated available credit, it does not generated higher wages, nor does it generated ample savings. Thus, the economic crisis continues unabated and even stock markets are beginning to waver.

As demand collapses due to a lack of strong jobs and savings, it pulls down on the central bank fiat fueled rocket ship like an increase in gravity. The rocket (in this case equities markets and government debt) hits a point of terminal altitude. The banks are forced to pour in even more fiat fuel just to keep the vessel from crashing back to Earth. No matter how much fuel they create, the gravity of crashing demand increases equally in the opposite direction. In the end, the rocket will tumble and disintegrate in a spectacular explosion, filled to capacity with fuel but unable to go anywhere.

Oil markets have expressed this reality in relentless fashion the past few months. Real demand growth in oil has been stagnant for years, yet, because of stimulus, because of the real devaluation of the dollar, and because of market exuberance, prices were unrealistically high in comparison. The crash of oil is a startling sign that the exuberance is over, and something else is taking shape…

The disconnect within banker propaganda could be best summarized by Mario Draghi’s recent statements on the ECB’s new stimulus measures. When asked if he was concerned about the possibility of European QE triggering currency devaluation and hyperinflation, Draghi had this to say:

“I think the best way to answer to this is have we seen lots of inflation since the QE program started? Have we seen that? And now it’s quite a few years that we started. You know, our experience since we have these press conferences goes back to a little more than three years. In these 3 years we’ve lowered interest rates, I don’t know how many times, 4 or 5 times, 6 times maybe. And each times someone was saying, this is going to be terrible expansionary, there will be inflation. Some people voted against lowering interest rates way back at the end of November 2013. We did OMP. We did the LTROs. We did TLTROs. And somehow this runaway inflation hasn’t come yet.

So the jury is still out, but there must be a statute of limitations. Also for the people who say that there would be inflation, yes When please. Tell me, within what?”

Firstly, if you are using “official” CPI numbers in the U.S. to gauge whether or not there has been inflation, then yes, Draghi’s claim appears sound. However, if you use the traditional method (pre-1990’s) to calculate CPI rather than the new and incomplete method, inflation over the past few years has stood at around 8%-10%, and most essential goods including most food items have risen in price by 30% or more, far above the official 0%-1% numbers presented by the Bureau of Labor Statistics.

But beyond real inflation numbers I find a very humorous truth within Draghi’s rather disingenuous statement; yes, QE has not yet produced hyperinflation in the U.S. (primarily because the untold trillions in fiat created still sit idle in the coffers of international banks rather than circulating freely), however, what HAS stimulus actually accomplished if not inflation? Certainly not any semblance of economic recovery.

Look at it this way; I could also claim that if international bankers lined up on a stage at Davos and danced the funky-chicken, hyperinflation would probably not result. But what is the point of dancing the funky chicken, and really, what is the point of QE? Stimulus clearly has about as much positive effect on the economy as jerking around rhythmically in tight polypropylene disco pants.

Japan and the ECB are in fact launching sizable stimulus measures exactly because the QE of the Federal Reserve achieved ABSOLUTELY NOTHING except the purchase of 5-6 years without total collapse (only gradual collapse). And what is the real cost/benefit ratio of that purchase of half a decade of fiscal purgatory? When the breakdown of debt and forex markets does occur, it will be a hundred times worse than if the Fed had done nothing at all. Which brings me to our current state of affairs in 2015, and the IMF plan to take advantage…

IMF head Christine Lagarde put out a press release this past week, one which was probably drafted for her by a team of ghouls at the BIS, mentioning the formation of what she called the “New Multilateralism”.

Lagarde begins with the same old song about accommodative monetary policy:

“Besides structural reforms, building new momentum will require pulling all possible levers that can support global demand. Accommodative monetary policy will remain essential for as long as growth remains anemic – though we must pay careful attention to potential spillovers. Fiscal policy should be focused on promoting growth and creating jobs, while maintaining medium-term credibility.”

Of course, as we have already established, monetary policy does nothing to inspire demand. So, what is a global syndicate of bankers to do? Promote maximum interdependency! Lagarde laments the impediments of the sovereign attitude:

“No economy is an island; indeed, the global economy is more integrated than ever before. Consider this: Fifty years ago, emerging markets and developing economies accounted for about a quarter of world GDP. Today, they generate half of global income, a share that will continue to rise.

But sovereign states are no longer the only actors on the scene. A global network of new stakeholders has emerged, including NGOs and citizen activists – often empowered by social media. This new reality demands a new response. We will need to update, adapt, and deepen our methods of working together.”

And here we have a more subtle insinuation of the planning and programming I have been warning about for years. Because national sovereignty is no longer “practical” in an economically interdependent world (a world forced into economic interdependency by the globalists themselves), we must now change our way of thinking to support a more globalist framework.

The first big lie is that interdependency is a natural economic state. Historically, economies are more likely to survive and thrive the LESS dependent they are on outside factors. Independent, self contained, self sustaining, decentralized economies are the natural and preferable cultural path. Multilateralism (centralization) is completely contrary and destructive to this natural state, as we have already witnessed in the kind of panic which ensues across the globe when even one small nation, like Switzerland, decides to break from the accepted pattern of interdependency.

Also, take note of Lagarde’s reference to the growing role that developing nations (BRICS) are playing in this interdependent globalized mish-mash. As I have been warning, the IMF and the international banks fully intend to bring the BRICS further into the fold of the “new multilateralism”, and the supposed conflict between the East and the West is a ridiculous farce designed only as theater for the masses.

Lagarde reiterates the IMF push for inclusion of the BRICS (new networks of influence) into the new system, as well as the IMF’s role as the arbiter of global governance:

“This can be done by building on effective institutions of cooperation that already exist. Institutions like the IMF should be made even more representative in light of the dynamic shifts taking place in the global economy. The new networks of influence should be embraced and given space in the twenty-first century architecture of global governance. This is what I have called the “new multilateralism.” I believe it is the only way to address the challenges that the global community faces.”

The IMF head finishes with my favorite line, one which should tell you all you need to know about what is about to happen in 2015. I have for some time been following the progress (or lack of progress) in the IMF reforms presented in 2010; reforms which the U.S. Congress has refused to pass. Why? I believe the reforms remain dormant because the U.S. is MEANT to lose its veto powers within the IMF, and the IMF has already made clear that lack of passage will result in just that.

“Against this backdrop, the adoption of the IMF reforms by the United States Congress would send a long-overdue signal to rapidly growing emerging economies that the world counts on their voices, and their resources, to find global solutions to global problems.

Growth, trade, development, and climate change: 2015 will be a rendezvous of important multilateral initiatives. We cannot afford to see them fail. Let us make the right choices.”

Why remove U.S. veto power? Because BRICS nations like China are about to be given far more inclusion in the IMF’s multilateralist order. In fact, 2015 is the year in which the IMF’s Special Drawing Rights conference is set to commence, with initial discussions in May, and international meetings in October. I believe U.S. veto power will probably be removed by May, making the way clear (creating the rationale) for the marginalization of the U.S. dollar in favor of the SDR basket currency system, soon to be boosted by China’s induction.

In 2015 what we really have is a sprint towards currency and market devaluation across the spectrum. India, Japan, Russia, Europe, parts of South America, have all been debased monetarily. The U.S. has as well, most Americans just don’t know it yet. The value of this for globalists is far reaching. They have at a basic level created an atmosphere of lowered economic expectations – a global reduction in living standards which will at bottom lead to third world status for everyone. The elites hope that this will be enough to condition the public to support centralized financial control as the only option for survival.

It is hard to say what kind of Black Swans and false flags will be conjured in the meantime, but I highly doubt the shift towards the SDR will take place without considerable geopolitical turmoil. The public will require some sizable scapegoats for the kind of pain they will feel as the banks attempt to place the global economy in a totalitarian choke hold. While certain institutions may be held up as sacrificial lambs (including possibly the Federal Reserve itself), the concept of banker governance will be promoted as the best and only solution, despite the undeniable reality that the world would be a far better place if such men and their structures of influence were to be wiped off the face of the planet entirely.

Source

12 Signs That The Economy Is Really Starting To Bleed Oil Patch Jobs

by Michael Snyder via The Economic Collapse blog,

The gravy train is over for oil workers.  All over North America, people that felt very secure about their jobs just a few weeks ago are now getting pink slips.  There are even some people that I know personally that this has happened to.  The economy is really starting to bleed oil patch jobs, and as long as the price of oil stays down at this level the job losses are going to continue.  But this is what happens when a “boom” turns into a “bust”.

Since 2003, drilling and extraction jobs in the United States have doubled.  And these jobs typically pay very well.  It is not uncommon for oil patch workers to make well over $100,000 a year, and these are precisely the types of jobs that we cannot afford to be losing.  The middle class is struggling mightily as it is. And just like we witnessed in 2008, oil industry layoffs usually come before a downturn in employment for the overall economy.  So if you think that it is tough to find a good job in America right now, you definitely will not like what comes next.

At one time, I encouraged those that were desperate for employment to check out states like North Dakota and Texas that were experiencing an oil boom.  Unfortunately, the tremendous expansion that we witnessed is now reversing…

In states like North Dakota, Oklahoma and Texas, which have reaped the benefits of a domestic oil boom, the retrenchment is beginning.

“Drilling budgets are being slashed across the board,” said Ron Ness, president of the North Dakota Petroleum Council, which represents more than 500 companies working in the state’s Bakken oil patch.

Smaller budgets and less extraction activity means less jobs.

Often, the loss of a job in this industry can come without any warning whatsoever.  Just check out the following example from a recent Bloomberg article…

The first thing oilfield geophysicist Emmanuel Osakwe noticed when he arrived back at work before 8 a.m. last month after a short vacation was all the darkened offices.

By that time of morning, the West Houston building of his oilfield services company was usually bustling with workers. A couple hours later, after a surprise call from Human Resources, Osakwe was adding to the emptiness: one of thousands of energy industry workers getting their pink slips as crude prices have plunged to less than $50 a barrel.

These jobs are not easy to replace.  If oil industry veterans go down to the local Wal-Mart to get jobs, they will end up making only a very small fraction of what they once did.  Every one of these jobs that gets lost is really going to hurt.

And at this point, the job losses in the oil industry are threatening to become an avalanche.  The following are 12 signs that the economy is really starting to bleed oil patch jobs…

#1 It is being projected that the U.S. oil rig count will decline by 15 percent in the first quarter of 2015 alone.  And when there are less rigs operating, less workers are needed so people get fired.

#2 Last week, 55 more oil rigs shut down.  That was the largest single week decline in the United States in 24 years.

#3 Oilfield services provider Baker Hughes has announced that it plans to lay off 7,000 workers.

#4 Schlumberger, a big player in the energy industry, has announced plans to get rid of 9,000 workers.

#5 Suncor Energy is eliminating 1,000 workers from their oil projects up in Canada.

#6 Halliburton’s energy industry operations have slowed down dramatically, so they gave pink slips to 1,000 workers last month.

#7 Diamondback Energy just slashed their capital expenditure budget 40 percent to just $450 million.

#8 Elevation Resources plans to cut their capital expenditure budget from $227 million to $100 million.

#9 Concho Resources says that it plans to reduce the number of rigs that it is operating from 35 to 25.

#10 Tullow Oil has reduced their exploration budget from approximately a billion dollars to about 200 million dollars.

#11 Henry Resources President Danny Campbell has announced that his company is reducing activity “by up to 40 percent“.

#12 The Federal Reserve Bank of Dallas is projecting that 140,000 jobs related to the energy industry will be lost in the state of Texas alone during 2015.

And of course it isn’t just workers that are going to suffer.

Some states are extremely dependent on oil revenues.  Just take the state of Alaska for instance.  According to one recent news report, 90 percent of the budget of Alaska comes from oil revenue…

But oil is also a revenue source in more than two dozen states, especially for about a third of them. In Alaska, where up to 90 percent of the budget is funded by oil, new Gov. Bill Walker has ordered agency heads to start identifying spending cuts.

Sadly, it looks like oil is not going to rebound any time soon.

China, the biggest user of oil in the world, just reported that economic growth expanded at the slowest pace in 24 years.  And concerns about oversupply drove the price of U.S. crude down another couple of dollars on Monday…

Oil declined about 5 percent on Tuesday after the International Monetary Fund cut its 2015 global economic forecast on lower fuel demand and key producer Iran hinted prices could drop to $25 a barrel without supportive OPEC action.

U.S. crude, also known as West Texas Intermediate or WTI, settled 4.7 percent lower at $46.39 a barrel, near its intraday bottom of $46.23.

There is only one other time in history when we have seen an oil price crash of this magnitude.

That was in 2008, just before the greatest financial crisis since the Great Depression.

Source

How the gold price could double overnight in a major US dollar devaluation crisis

Posted on 06 October 2013

Arabian Financial News

With the US Government shutdown last week weakening the US dollar across the board in global currency markets it is only too easy to read the relatively lacklustre performance of gold wrongly. For in a major US dollar devaluation crisis, like the one that would follow a failure to raise the debt ceiling on October 17th, gold would be king.

It’s a scenario played out perfectly in the penultimate chapter of hedge fund manager Jim Rickards book, ‘Currency Wars: The Making of the Next Global Crisis’. He envisages a series of ‘black swan’ events that trigger a loss of confidence in the US dollar precipitating a rush to get out of the greenback.

Armageddon scenario

The last issue of our sister ArabianMoney investment newsletter has the full story. It ends with a ‘tsunami’ of dollar selling by traders in a mass panic and a switch to safe haven assets. Then the Fed responds with massive bond buying to force back the wave of selling.

However, the crucial difference between this crash and others is that the market then questions the Fed’s staying power and the dollar collapse continues. It is at this point that gold doubles in price overnight.

The US President is then left with no alternative but to take charge under the 1977 International Emergency Economic Powers Act. He nationalizes all gold held on US soil and suspends bond trading to halt the dollar’s fall. A bipartisan commission is appointed with 30 days to sort out what to do next.

Basically the US dollar has to be reissued and reset to a new value based on a much higher price of gold. If this all sounds far-fetched then it is. But so was the subprime mortgage crisis before it actually struck and yet it happened.

This correspondent can recall how HSBC chairman Sir John Bond saw the US economy as ‘fundamentally sound’ when I interviewed him just two years before this iceberg hit the Titanic .

Going down?

The unsinkable can sink, and so could the US dollar, just as HSBC was the biggest loser in the subprime crisis (although the bank did not sink because its compartments held and it managed to right itself without a government bailout).

Other currencies in over-indebted economies have suffered this fate in the past. However, as Jim Rickards points out in his book the US still has a final card to play in the global currency wars as it has 57 per cent of the world’s gold reserves within its boundaries and so would command any new global monetary system as it did the old. To that extent it would not be different this time around.

But the gold price would be reset permanently higher, and $7,500-10,000 an ounce in old dollars is Mr. Rickards best estimate.

Source

It’s Not a “Fiscal Cliff” … It’s the Descent Into Lawlessness

by George Washington

12/24/2012

The “fiscal cliff” is a myth.

Instead, what we are facing is a descent into lawlessness.

Wikipedia notes:

In many situations, austerity programs are imposed on countries that were previously under dictatorial regimes, leading to criticism that populations are forced to repay the debts of their oppressors.

Indeed, the IMF has already performed a complete audit of the whole US financial system, something which they have only previously done to broke third world nations.

Economist Marc Faber calls the U.S. a “failed state“.   Indeed, we no longer have a free market economy … we have fascism, communist style socialism, kleptocracy, oligarchy or banana republic style corruption.

Let’s look at some specific examples of our descent into lawlessness.

Lawless Looting and Redistribution of Wealth

The central banks’ central bank – the Bank for International Settlements– warned in 2008 that bailouts of the big banks would create sovereign debt crises … which could bankrupt nations.

That is exactly what has happened.

The big banks went bust, and so did the debtors.  But the government chose to save the big banks instead of the little guy, thus allowing the banks to continue to try to wring every penny of debt out of debtors.

Treasury Secretary Paulson shoved bailouts down Congress’ throat by threatening martial law if the bailouts weren’t passed. And the bailouts are now perpetual.

Moreover:

The bailout money is just going to line the pockets of the wealthy, instead of helping to stabilize the economy or even the companies receiving the bailouts:

• Bailout money is being used to subsidize companies run by horrible business men, allowing the bankers to receive fat bonuses, to redecorate their offices, and to buy gold toilets and prostitutes

• A lot of the bailout money is going to the failing companies’ shareholders

• Indeed, a leading progressive economist says that the true purpose of the bank rescue plans is “a massive redistribution of wealth to the bank shareholders and their top executives”

• The Treasury Department encouraged banks to use the bailout money to buy their competitors, and pushed through an amendment to the tax laws which rewards mergers in the banking industry (this has caused a lot of companies to bite off more than they can chew, destabilizing the acquiring companies)

And as the New York Times notes, “Tens of billions of [bailout] dollars have merely passed through A.I.G. to its derivatives trading partners”.

***

In other words, through a little game-playing by the Fed, taxpayer money is going straight into the pockets of investors in AIG’s credit default swaps and is not even really stabilizing AIG.

Moreover, a large percentage of the bailouts went to foreign banks (and see this). And so did a huge portion of the money from quantitative easing.  Indeed, the Fed bailed out Gaddafi’s Bank of Libya), hedge fund billionaires, and big companies, but turned its back on the little guy.

A study of 124 banking crises by the International Monetary Fund found that propping up banks which are only pretending to be solvent often leads to austerity:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.

***

All too often, central banks privilege stability over cost in the heat of the containment phase: if so, they may too liberally extend loans to an illiquid bank which is almost certain to prove insolvent anyway. Also, closure of a nonviable bank is often delayed for too long, even when there are clear signs of insolvency (Lindgren, 2003). Since bank closures face many obstacles, there is a tendency to rely instead on blanket government guarantees which, if the government’s fiscal and political position makes them credible, can work albeit at the cost of placing the burden on the budget, typically squeezing future provision of needed public services.

In other words, the “stimulus” to the banks blows up the budget, “squeezing” public services through austerity.

Numerous top economists say that the bank bailouts are the largest robbery and redistribution of wealth in history.

Why was this illegal?   Well, the top white collar fraud expert in the country says that the Bush and Obama administrations broke the law by failing to break up insolvent banks … instead of propping them up by bailing them out.

And the Special Inspector General of the Tarp bailout program said that the Treasury Secretary lied to Congress regarding some fundamental aspects of Tarp – like pretending that the banks were healthy, when they were totally insolvent.  The Secretary also falsely told Congress that the bailouts would be used to dispose of toxic assets … but then used the money for something else entirely.  Making false statements to a federal official is illegal, pursuant to 18 United States Code Section 1001.

So breaking the rules to bail out the big, insolvent banks, is destroying our prosperity.

Lawless Justice System

A strong rule of law is essential for a prosperous and stable economy, yet the government made it official policy not to prosecute fraud, even though criminal fraud is the main business model adopted by the giant banks.

The perpetrators of the biggest financial crime in world history, the largest insider trading scandal of all time, illegal raiding of customer accounts and blatant financing of drug cartels and terrorists have all gotten away scot-free without any jail time.

There are two systems of justice in America … one for the big banks and other fatcats, and one for everyone else.

While Iceland prosecuted its top criminal bankers, and thus quickly got through its financial problems and now has a vibrant economy, the American government has done everything it can to cover up fraud, and has been actively encouraging criminal fraud and attacking those trying to blow the whistle.

The rule of law is now as weak in the U.S. and UK as many countries which we would consider “rogue nations”.    See this, this, this, this, this, this, this, this, this, this and this.

This is a sudden change.  As famed Peruvian economist Hernando de Soto notes:

In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.

Moreover, U.S. government personnel are on the take.  They have become so corrupt that regulators are literally sleeping with industry prostitutes … while they pimp out the American people.

The corruption of government officials is staggering, and the system of government-sponsored rating agencies had at its core a model of bribery.

We’ve gone from a nation of laws to a nation of powerful men making one-sided laws to protect their own interests … in secret. Government folks are using laws to crush dissent. It’s gotten so bad that even U.S. Supreme Court justices are saying that we are descending into tyranny.

It’s not a “fiscal cliff” … it’s an attempt to rape America … just like Greece and Ireland have been plundered.

Economics professor Randall Wray writes:

Thieves … took over the whole economy and the political system lock, stock, and barrel. They didn’t just blow up finance, they oversaw the swiftest transfer of wealth to the very top the world has ever seen. They screwed workers out of their jobs, they screwed homeowners out of their houses, they screwed retirees out of their pensions, and they screwed municipalities out of their revenues and assets.

Financiers are forcing schools, parks, pools, fire departments, senior citizen centers, and libraries to shut down. They are forcing national governments to auction off their cultural heritage to the highest bidder. Everything must go in firesales at prices rigged by twenty-something traders at the biggest and most corrupt institutions the world has ever known.

Economics professor Michael Hudson agrees … saying that the banks are trying to roll back all modern laws and make us all serfs.

Professor Hudson explained in 2008:

You have to realize that what they’re trying to do is to roll back the Enlightenment, roll back the moral philosophy and social values of classical political economy and its culmination in Progressive Era legislation, as well as the New Deal institutions. They’re not trying to make the economy more equal, and they’re not trying to share power. Their greed is (as Aristotle noted) infinite. So what you find to be a violation of traditional values is a re-assertion of pre-industrial, feudal values. The economy is being set back on the road to debt peonage. The Road to Serfdom is not government sponsorship of economic progress and rising living standards, it’s the dismantling of government, the dissolution of regulatory agencies, to create a new feudal-type elite.

Indeed:

Foreign Policy magazine ran an article entitled “The Next Big Thing: Neomedievalism“, arguing that the power of nations is declining, and being replaced by corporations, wealthy individuals, the sovereign wealth funds of monarchs, and city-regions.

Indeed, this isn’t the “Great Recession”, it’s the Great Bank Robbery. The big banks have pillaged and looted the rest of the world.

A lawless justice system is ruining the economy.

Lawless Central Bank

The non-partisan Government Accountability Office calls the Fed corrupt and riddled with conflicts of interest.   Nobel prize winning economist Joseph Stiglitz agrees, saying that the World Bank would view any country which had a banking structure like the Fed as being corrupt and untrustworthy. The former vice president at the Federal Reserve Bank of Dallas said said he worried that the failure of the government to provide more information about its rescue spending could signal corruption. “Nontransparency in government programs is always associated with corruption in other countries, so I don’t see why it wouldn’t be here,” he said.

Moreover, the Fed has broken the law by withholding information from Congress, letting unemployment rise in order to keep inflation low, and otherwise exceeding its authority under the Federal Reserve Act.

Acting in a lawless and unaccountable fashion is hurting the economy.

Lawless Attack on Democracy

The ability of the people to participate in their government’s decision-making is vital for a nation’s prosperity. But we no longer have democracy or a republican form of government in America.

The big banks own Washington D.C. politicians, lock stock and barrel.  See this, this, this and this.  Two leading IMF officials, the former Vice President of the Dallas Federal Reserve, and the the head of the Federal Reserve Bank of Kansas City, Moody’s chief economist and many others have all said that the United States is controlled by an “oligarchy” or “oligopoly”, and the big banks and giant financial institutions are key players in that oligarchy.

Laws are being passed in secret, and not even Congress knows what’s going on.

In other words, not only the justice system, but the entire system of American representation has been corrupted, thus harming the economy.

Lawless Infringement of Freedom

Personal freedom and liberty – and freedom from the arbitrary exercise of government power – are strongly correlated with a healthy economy, but America is descending into tyranny.

Authoritarian actions by the government interfere with the free market, and thus harm prosperity.

U.S. News and World Report notes:

The Fraser Institute’s latest Economic Freedom of the World Annual Report is out, and the news is not good for the United States. Ranked among the five freest countries in the world from 1975 through 2002, the United States has since dropped to 18th place.

The Cato institute notes:

The United States has plummeted to 18th place in the ranked list, trailing such countries as Estonia, Taiwan, and Qatar.

***

Actually, the decline began under President George W. Bush. For 20 years the U.S. had consistently ranked as one of the world’s three freest economies, along with Hong Kong and Singapore. By the end of the Bush presidency, we were barely in the top ten.

And, as with so many disastrous legacies of the Bush era, Barack Obama took a bad thing and made it worse.

But the American government has shredded the constitution, by subjecting us to indefinite detention, taking away our due process rights, deploying drones above our heads, spying on all Americans, and otherwise acting in attacking our freedoms.

Indeed, rights won in 1215 – in the Magna Carta – are being repealed.

Economic historian Niall Ferguson notes, draconian national security laws are one of the main things undermining the rule of law:

We must pose the familiar question about how far our civil liberties have been eroded by the national security state – a process that in fact dates back almost a hundred years to the outbreak of the First World War and the passage of the 1914 Defence of the Realm Act. Recent debates about the protracted detention of terrorist suspects are in no way new. Somehow it’s always a choice between habeas corpus and hundreds of corpses.

Of course, many of this decades’ national security measures have not been taken to keep us safe in the “post-9/11 world” … indeed, many of them started before 9/11.

And America has been in a continuous declared state of national emergency since 9/11, and we are in a literally never-ending state of perpetual war. See this, this, this and this.

In fact, government has blown terrorism fears way out of proportion for political purposes, and “national security” powers have been used in many ways to exempt big Wall Street players from the rule of law rather than to do anything to protect us.

So lawlessness infringement of our liberty is destroying our prosperity.

Lawless Initiation and Prosecution of War

It is well-documented that war destroys the economy.

Top U.S. government employees lied us into war, and used illegal torture, assassinations and other crimes of war in prosecuting the wars they unnecessarily started. They were – at a minimum – criminally negligent for failing to stop 9/11 (and see this).

In the name of fighting our enemies – the U.S. has directly been supporting Al Qaeda and other terrorist groups for the last decade. See this, this, this, this and this.

Our use of torture has also created many more terrorists than it has prevented.

Security experts – including both conservatives and liberals – agree that waging war in the Middle East weakens national security and increases terrorism. See this, this, this, this, this, this, this and this.

Indefinite detention, drone-strikes on innocent civilians, occupation of foreign countries, and most of America’s other tactics in the “war on terror” increase terrorism.

Terrorism feeds the cycle of war … and is thus harming our economy. (and because terrorism spooks people, they spend less, which further harms the economy).

So lawlessness in starting and prosecuting war is destroying our prosperity.

Postscript:  We’re not facing a “fiscal cliff”.  We’re facing a descent into lawlessness.  Stopping the fraudulent schemes, endless bailouts and imperial adventures is the place to start.

Source

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Obama’s Real Second Term Plan

You won’t recognize this country after his second term — the obvious reason he’s not telling you what he has in mind for it.

By Ned Ryun on 10.26.12 @ 6:08AM

Mitt Romney said it best in the last debate when he informed the President that, “attacking me isn’t an agenda,” which prompted the Obama campaign to immediately release what they call a plan for the second term. This 20-page repackaging of speeches notwithstanding, President Obama remains perhaps the only president in history to run for reelection who not only can’t talk about his record but also can’t discuss his real agenda for a second term.

Now it’s not that he can’t because he doesn’t have any ideas about what he wants to do. He does have big plans, but his vision of the future is profoundly different from that of most Americans. The America that Obama sees when he sits on the Truman Balcony at night and dreams about the next four years is radically altered reality for everyone. It should scare every American — unless you happen to be getting Obama’s free cell phone service.

Obama would like everyone to believe that his second-term policies will address what he sees as the great inequalities and unfairness inherent in the American system. He wants to level the playing field. What he can’t tell you — and what most Americans are realizing — is that leveling out America will reduce freedom, opportunity, income, innovation, and upward mobility in favor of a government-driven economy. With a government-driven society will come statism, and collectivism follows right on the heels of statism, which will destroy America.

Here’s the stark proof, keeping in mind that this is a mere snapshot of the “remaking” Obama has in store that will affect millions of American families and businesses. The President’s proposed budget projects will have federal spending soaring to $5.820 trillion per year, making Obama the biggest government spender in the history of the world. With all the talk from the President about spending cuts to satisfy independent voters, the sum of all of Obama’s spending over the next ten years could total more than $40 trillion that we simply don’t have.

We can’t afford Washington’s spending now. Do we really think only the wealthy will foot the bill for such dramatic increases in government expenditures? The President’s proposals will drive $100 billion in tax hikes next year and more than $2 trillion in tax increases over the next 10 years hitting every American.

With more than 40 million Americans on food stamps, welfare is the fastest-growing portion of the budget under Obama. Food stamp usage is up a staggering 46% and the cost of the program has increased by 72%. Over the next four years, the President is preparing to increase spending on these programs to enable the government to increase benefits and provide for an increasing share of the population.

The slow creep of dependency will see a smaller middle class and a larger dependent class of not just the poor but individuals and families who once could afford to live without the government’s help, but due to inflation, lower wages, fewer jobs, and higher taxes must turn to the government for some form of assistance.

When it comes to crippling regulations to burden private enterprise, the Obama Administration is leading the charge to squash industry in favor of increasing government’s power and reach.

New greenhouse gas regulations will cost $300 to $400 billion per year and increase gas prices. The President’s insane “cow tax” will hit more than 37,000 farms and ranches and 90% of American livestock production. Obama’s attempt to stop hydraulic fracking for natural gas has more than a dozen federal agencies developing new, expensive regulations to prevent energy companies from drilling. His war on the coal industry will continue, costing as much as $110 billion over the next two decades and killing more than 300,000 jobs in Ohio, West Virginia, Pennsylvania, and Missouri. So much for energy independence, and so much for job creation.

Despite the President’s assurance that costs won’t go up and jobs won’t be lost over Obamacare, the 16,000 IRS workers who will administer the tax provisions of the program will be very busy hitting millions where it hurts. According to the Heritage Foundation, the Congressional Budget Office analysis found that nearly 80 percent of those who’ll face tax penalties would be making between $55,850 and $115,250. They will all see their taxes go up starting next year.

Obama will add a $123 billion surtax on investment income, and new taxes on dividends despite the fact that more than half of all Americans invest in the market in one fashion or another. The $86 billion increase in the Medicare Payroll Tax is also coming down the pike, along with a $60 billion tax increase for health insurance companies.

In another uniquely-Obama effort to allegedly reduce healthcare costs, the President is also going to increase taxes by $32 billion on people who already have comprehensive healthcare coverage — because they have coverage. Of course, people who have coverage now that’s not up to the government’s standards will find their plans eliminated and forced to purchase more expensive coverage. He’s even going to tax medical device manufacturers to the tune of $20 billion because apparently that will help make Americans healthier.

In Obama’s America, religious schools, hospitals and charities will be labeled as non-religious employers specifically because they serve the common good of society. Churches and other faith-based institutions will be forced to provide services and even hire employees based on government mandates rather than their own, deeply-held values and beliefs. If they don’t, Obama’s government will gladly step in with an expensive government backfill for the services.

Here’s the good news — we can prevent Obama’s America from becoming a reality. We can stop statism and collectivism from taking us from “one out of many” to one of the many nations whose governments’ thirst for power and control led to the decline of great societies and nations. The choice is ours November 6, and the results of the election, whichever way they go, will resonate for generations to come.

Source

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Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts

unelected.org
Sat, 01 Sep 2012 01:33 CDT

The first ever GAO (Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out.

Ben Bernanke (pictured to the right), Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning.

What was revealed in the audit was startling:

$16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious – the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is “only” $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is “only” $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.

In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion.

“This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”- Bernie Sanders (I-VT)

When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and supercorporations like Halloween candy. If the Federal Reserve and the bankers who control it believe that they can continue to devalue the savings of Americans and continue to destroy the US economy, they will have to face the realization that their trillion dollar printing presses will eventually plunder the world economy.

The list of institutions that received the most money from the Federal Reserve can be found on page 131of the GAO Audit and are as follows..

• Citigroup: $2.5 trillion ($2,500,000,000,000)
• Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
• Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
• Bank of America: $1.344 trillion ($1,344,000,000,000)
• Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
• Bear Sterns: $853 billion ($853,000,000,000)
• Goldman Sachs: $814 billion ($814,000,000,000)
• Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
• JP Morgan Chase: $391 billion ($391,000,000,000)
• Deutsche Bank (Germany): $354 billion ($354,000,000,000)
• UBS (Switzerland): $287 billion ($287,000,000,000)
• Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
• Lehman Brothers: $183 billion ($183,000,000,000)
• Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
• BNP Paribas (France): $175 billion ($175,000,000,000)

and many many more including banks in Belgium of all places

View the 266-page GAO audit of the Federal Reserve (July 21st, 2011):

Sources:
US Government Accountability Office (GAO)
FULL PDF on GAO server.
Senator Sander’s Article

Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts — Puppet Masters — Sott.net.

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Dark economic clouds gather anew over Obama campaign

By Patricia Zengerle

WASHINGTON | Tue Jul 3, 2012 7:08pm EDT

(Reuters) – After a month in which his re-election campaign picked up momentum, hard economic realities are about to hit President Barack Obama as he takes to the road on a campaign bus trip through the Rust Belt.

Poor manufacturing data earlier this week followed by a likely weak jobless report on Friday are reminding Obama that he has a lot of work to do to convince voters he is bringing the economy back to full health.

A Supreme Court victory for Obama on healthcare and a surprise expansion of immigration laws that put Republican opponent Mitt Romney on the defensive on the issue may soon fade from memory.

“By Friday, the Supreme Court will be in the rear-view mirror and everybody will be talking about the state of the economy,” said Greg Valliere, an analyst for institutional investors at Potomac Research Group.

“I think the debate on Friday will be whether the economy is still growing or whether we’ve hit a brick wall,” he said.

U.S. manufacturing activity contracted in June for the first time in nearly three years, data showed on Monday, stark evidence of a slowing economic recovery and that Europe’s debt crisis is weighing on the U.S. economy.

And the monthly jobless figures, the most closely watched economic indicator, are expected to be lackluster.

Economists polled by Reuters expect nonfarm payrolls to have risen by only 90,000 jobs in June and the unemployment rate will stay unchanged at 8.2 percent. Employers likely increased hiring, but not enough to dispel concerns that the economy is losing steam.

The fiscal gloom allows Romney to re-energize his charge that the White House is not creating jobs quickly enough, after his nonstop economic criticism was drowned out by last week’s Supreme Court ruling that Obama’s 2010 healthcare law is constitutional.

“From day one of his administration, the president has pursued policies that have hurt job creators, hurt the manufacturing sector, and left millions of Americans struggling to find work. It’s going to be hard for the president to argue Americans should gamble on a second term while on his bus tour,” Romney campaign spokeswoman Amanda Henneberg said.

Romney also struggled recently to explain his immigration position after Obama forced the issue on to the agenda by halting possible deportations of young illegal immigrants. The immigration debate helped Obama in polls.

RUST BELT PUSH

Obama begins a two-day campaign bus tour through Ohio and western Pennsylvania on Thursday. No matter how the unemployment report comes out, he will remind voters his bailout of the U.S. auto industry helped save jobs in the area.

In a tough economic climate, polls show that Obama still comes across as likeable although he does have a problem winning over white, middle-class male voters.

“Whoever does a better job of showing empathy will have a better chance of winning in November,” Valliere said.

Obama led Romney 48 percent to 43 percent in Gallup’s daily national tracking poll on Tuesday, the sixth consecutive day in which the survey has shown the Democratic incumbent with a statistically meaningful, if small, lead.

The five-point edge was Obama’s largest lead in Gallup daily tracking since April, and his longest such streak since then.

But economic clouds could again darken his re-election chances on November 6.

“Everybody is concerned about the prospects for the economy. There are two huge issues. One is Europe and the second is our own fiscal cliff,” said Isabelle Sawhill, a budget expert at the Brookings Institution, referring to programmed cuts in the U.S. budget and rising taxes next year, unless congress acts to avoid them.

“The concerns and the fears… have already begun to undermine confidence in the economy and cause both consumers and businesses to hold back on what they are willing to spend,” she said.

Obama’s campaign points to steady, if slow, improvement in the economy since he has taken office, and says he could have done more if Republicans in Congress had not blocked his efforts to stimulate growth.

“Clearly, the economy is not functioning as well as we know that it could be. The political question is who are people going to point the finger at in doing that,” said Heather Boushey, an economist at the liberal Center for American Progress, which has close ties to the White House.

“The biggest problem in our economy is the U.S. Congress,” she said.

ROMNEY JET-SKIING

While the poor economy hurts Obama, it also holds risks for his rival.

Unrelenting Democratic attacks calling Romney a job killer during his time as a private-equity executive have helped drag down his poll numbers.

Romney is spending the week at his $10 million lakeside New Hampshire vacation estate, which features a three-vessel boat garage and where he and his wife have been photographed skidding across the lake on their personal watercraft.

That could provide fresh fodder for the Democrats’ portrayal of Romney as out of touch with ordinary Americans.

“It’s a bad headline. It can help reinforce or enforce perceptions, whatever they may be,” said Ethan Siegel, an analyst at the Washington Exchange, which tracks political developments for investors.

However, economic worries are much more prominent in voters’ minds that Romney’s vacations.

“In the end, no one’s going into the voting room, saying ‘Romney, he was in New Hampshire for the 4th of July and I’m voting no.’ It’s buzz, it’s chatter but it don’t matter,” Siegel said.

(Additional reporting by Deborah Charles; Editing by Alistair Bell and Philip Barbara)

DYLAN GRICE: The Next Crisis Will Be Born Out Of The US Treasury Market

SocGen investment strategist Dylan Grice does not think “safe-haven” assets are very safe.

In Grice’s latest note to clients, he compares the illusion of safety created by faulty regulation before the 2008 financial crisis to the new, impending wave of financial regulation on the table like Dodd-Frank in the U.S. and Basel requirements on a global scale.

Grice warns “madness is going on in the government bond markets” today, furnishing this long term chart of US Treasury yields going back to 1800:

From the note:

The regulations which told banks that AAA-rated bonds were “risk free” were designed to make markets safer. But they created an artificial demand for such bonds, which created an incentive for issuers to dress up bonds as “risk free” when they were anything but. The regulations effectively incentivized ratings agencies to rate them as “risk free” when they clearly weren’’t. And today, the same madness is going on in the government bond markets.

It’s very difficult to see how government bonds are anything other than “risk assets” (let’s face it, all assets are). Yet insurers are buying them because they’’ve been told to “take less risk” (whatever that means) by the regulators. So they are taking more risk, and they will one day suffer the consequences. Banks in the eurozone are bust because they own so much of their local sovereigns’’ debt. But they were told it was OK to do that by the regulators. So they let their guard down.

Indeed, having told banks that they were of sound balance sheet before the crises (Lehman Brothers Tier 1 risk-weighted capital ratio was 11% five days before bankruptcy), those same regulators today scratch their heads and wonder how banks became too big to fail. It’’s all embarrassing really.

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