Almost Daily Rant

Food Inc. Trailer

If you haven't seen the documentary Food Inc. you should. This is the story of why cheap food is actually very expensive in health, societal and environmental terms. Instead of simply villainizing the multi-national food corporations, the take-away message is that you vote with your actions and your pocket books.

If you want healthy, whole foods, then in the words of a close friend of mine, actions speak louder than criticism of Monsanto, Hormel and Tyson. It should also be clear that our food production and distribution system is as fragile is it is centralized. You pull the diesel and natural gas plug anywhere along the energy-intensive food chain, the machine stops and the 3-day food supply at your local Mammoth-Mart disappears overnight.

Top 10 List of Things to Worry About in a Bad Economy

Early this week, I listed a few leading indicators to keep watch for as economic and societal conditions continue to worsen. As a follow-up, I linked to an article by Linda Brady Traynhamat over a Whiskey and Gunpowder on the top ten things to worry about surviving in a bad economy, or at least in the opening chapters.

Things are on pace to become very 3rd world like in the US and things that "can't happen here" due to widely-held convictions of entitlement due to decades of American exceptionalism and post WWII prosperity, seem more and more likely to become the new normals.

I staked out my position on the Doom & Gloom side back in 1992 when I was shocked by the problem I discuss first. What should you be concerned about? Start with the basics: what do you think you might have to survive? No point in making plans if you aren’t worried about something. Here are the top ten contenders:

1. At the current rate of taxation, even if nothing deteriorates, how much money does your wife need to live on after you are gone? The classic rule is “80% of your highest income plus a paid for house.” Right. If you make $100,000/year, you need to accumulate through savings or insurance $1.6M in capital at 5% interest. Problems: inheritance taxes are due to cut back in, and Uncle definitely wants a chunk of $1.6. Worse, the interest will be taxed as income and she isn’t going to find 5% interest. Let us suppose that she has $1000/mo in Social Security—a little over the average, but you’ve got a good job. A loving government will take roughly 10% of that away from her immediately too pay for Medicare and has already announced a 20% increase in fees over the next three years…with no increase in COLA, or the “Cost Of Living Allowance.” According to the Feds there is no inflation, hence her costs will not rise. We would love to know where those who make such pronouncements buy groceries, gasoline, socks, and tires. Supposing naively that she pays no income tax, if she puts the $250,000 in insurance you may have arranged for her in a CD at 1.5%, at the end of the first year she will have $3,750 in interest plus the theoretical $11,100 in Social Insecurity, for a total income of $14,850. Social Security probably won’t cover the house note you almost certainly have, and houses aren’t selling well. Her alternatives are to find a job or live on what she has for three years and hope she can find husband. That is certainly neither a safe nor a dignified plan, although it may make more sense than buying lottery tickets. The worst part is, that’s the best I can foresee for her.

2. The Greater Depression arrives, as it almost certainly will. It doesn’t matter whether you’re married or single, how safe is your job? 26,000,000 of the things have disappeared already in this century, and unless you are among the 40% of the populace which works for some governmental entity or a CEO you night want to do a little worrying. Japan is on the twenthieth year of their last depression, with a brand new government devoted to the project of becoming an economic block with India, and a few sprats such as Hong Kong, Taiwan, hunks of Indonesia, and so forth. Yup, our little island nation friend is going to grow up, leave the nest, and devote itself to destroying the dollar. What they plan to do with the two trillion or so they hold I have no idea, but if they knock the dollar out as the reserve currency they have some notions. The ironic part is that those dollars have little value at present and are under pressure from all sides, from Bernanke and Geithner’s government-sanctioned counterfeiting and money-laundering (swooshing the new cash around through Treasuries and the market, for example), to cheerful plots in the Middle East and BRIC. It’s coming, get ready for it.

3. The stock market takes a 40% thud at the year’s end, the bond market crashes, the ARM supply has 80% set to re-arm, commercial real estate looks like a yeast vat it bubbles so freely, and a lot more banks are set to fail. Some may even be “set up” to fail. These government-made disasters are pretty much set in stone and will coincide with your other choices (Read Full article).

Audit the Fed Under Attack

Leading Indicators of New Normals

The stock market indices while center stage as economic barometers are clearly less reflective of what the man on the street sees in the real economy and more a function of an unlimited 0% line of credit for large financial institutions by the Fed, the moral hazard which has the public holding the bag for huge loses and forced speculation due to the USD replacing the Yen as the new carry trade currency. In a carry trade, the big money centers effectively borrow the carry currency (the USD) 0% then earn a profit by putting that money in anything else.

Remember, even in Zimbabwe, the ultimate economic basket case, the stock market had run up over 50,000% in one of the last months of trade as hyperinflation set in and people desperately threw their money into anything other than bank accounts to keep their money from going up into smoke.

So I've put together a short list of some leading indicators we can keep lookout for in the real economy as we cross into each "new normal".

1. Executive Orders are put in place to restrict capital outflows and artificially maintain the value of the USD by force, cheered on by a public as a patriotic act against “evil speculators” who bet against the Dollar and “evil Chinese” who won’t devalue the Yuan.
2. The Cash-for-Gold trend reverses and the public realizes they need to stop exchanging Grandma’s trinkets for paper.
3. Former middle-class feuding with migrants for day labor work.
4. Public schools move to a 4- then 3-day week to cut costs.
5. Increase of 3rd world like ‘shock doctrine’ asset sell-off and privatization by bankrupted state and local governments.
6. Appearance of articles about 3 generations of former middle class families living together becoming the norm.
7. Commodity arbitrage of actual shipped and freighted cargo by big money centers disrupts supply lines.
8. Communities that once cried not in my backyard, begin to court private security companies and building contracts for internment centers for jobs.
9. Increase of small-scale feudal living arrangements between a landowner and several ex-middle class families.
10. Increased military presence at the nation’s strategic assets (Natural gas hubs, shipping ports, cattle yards etc.) and the nation’s biggest liability…the 12 Fed Reserve Banking centers.

Peak Oil Never Left

One of today's biggest ironies is that the current chaotic economic and political conditions, since oil hit $150 a barrel a couple years ago, have disguised one of our biggest reckonings: Our Faustian arrangement that based an entire society on the premise of cheap and readily-availible black heroin oozing out of the ground. 

It is very hard for the average person in the street to come to a sensible conclusion on peak oil. It's a subject that prompts a passionate polarisation of views. The peak oilists sometimes sound like those extraordinary Christians with sandwich boards proclaiming that the end of the world is nigh. In contrast, the the international economic establishment – including the International Energy Agency (IEA) – has one very clear purpose in mind at all times: don't panic. Their mission seems to be focused on keeping jittery markets calm.

Faced with these options the majority of people shrug their shoulders in confusion and ignore the trickle of whistleblowers, industry insiders and careful analysts who have been warning of the imminent decline in oil for over a decade now (Full Article).

Paul Craig Roberts - US Joins Ranks of Failed States

Paul Craig Roberts, former Assistant Secretary of the US Treasury, pulls no punches.

The US has every characteristic of a failed state.

The US government’s current operating budget is dependent on foreign financing and money creation.

Too politically weak to be able to advance its interests through diplomacy, the US relies on terrorismand military aggression.

Costs are out of control, and priorities are skewed in the interest of rich organized interest groups at the expense of the vast majority of citizens. For example, war at all cost, which enriches the armaments industry, the officer corps and the financial firms that handle the war’s financing, takes precedence over the needs of American citizens. There is no money to provide the uninsured with health care, but Pentagon officials have told the Defense Appropriations Subcommittee in the House that every gallon of gasoline delivered to US troops in Afghanistan costs American taxpayers $400. (Read Full Article) 

The Lives of Others

With the advent of fusion centers, which allow the military to share information with civilian agencies along with private contractors, the US once a model for an open society, is increasingly becoming a surveillance society. Even as economic conditions worsen, there will continue to be plenty of money for tracking and monitoring the activities of the population.  "The Lives of Others", which portrayed the silencing of a population in East Germany under the watchful eye of the Stasi, was a privacy paradise compared to what we're facing with the technology at hand.

 

Speaking at San Francisco's Commonwealth Club September 15, Director of National Intelligence Admiral Dennis C. Blair, disclosedthat the current annual budget for the 16 agency U.S. "Intelligence Community" (IC) clocks-in at $75 billion and employs some 200,000 operatives world-wide, including private contractors.

In unveiling an unclassified version of the National Intelligence Strategy (NIS), Blair asserts he is seeking to break down "this old distinction between military and nonmilitary intelligence," stating that the "traditional fault line" separating secretive military programs from overall intelligence activities "is no longer relevant."

As if to emphasize the sweeping nature of Blair's remarks, Federal Computer Week reportedSeptember 17 that "some non-federal officials with the necessary clearances who work at intelligence fusion centers around the country will soon have limited access to classified terrorism-related information that resides in the Defense Department's classified network." According to the publication:

Under the program, authorized state, local or tribal officials will be able to access pre-approved data on the Secret Internet Protocol Router Network. However, they won't have the ability to upload data or edit existing content, officials said. They also will not have access to all classified information, only the information that federal officials make available to them.

The non-federal officials will get access via the Homeland Security department's secret-level Homeland Security Data Network. That network is currently deployed at 27 of the more than 70 fusion centers located around the country, according to DHS. Officials from different levels of government share homeland security-related information through the fusion centers. (Ben Bain, "DOD opens some classified information to non-federal officials," Federal Computer Week, September 17, 2009) (Continue - Read Full Article)

The Real Role of Bailouts

Professor Chossudovsky describes the role of the mother-of-all-bailouts in the on-going global economic strip mining operation. In the latest chapter of economic shock doctrine played out many times in 3^rd world countries, government extorts funds from the public to deliver funds to private interests under the guise of “for the public good” and banner of "too big to fail", who in turn buy up assets on the cheap and then sell rights to use those assets back to the government and in turn the public.

In this playbook, government helps banks finance their own debt and uses public money to help a private oligarchy swallow up huge sections of the economy at fire sale prices.

Tipping Point?

Peter Bernholz is an expert on national hyperinflations and has studied all the major cases of hyperinflation since 1980. Bernholz concluded that the tipping point occurs when a government’s deficit exceeds 40% of its expenditures.

 

"There have been 28 episodes of hyperinflation of national economies in the 20th century, with 20 occurring after 1980. Peter Bernholz (Professor Emeritus of Economics in the Center for Economics and Business (WWZ) at the University of Basel, Switzerland) has spent his career examining the intertwined worlds of politics and economics with special attention given to money. In his most recent book, Monetary Regimes and Inflation: History, Economic and Political Relationships, Bernholz analyzes the 12 largest episodes of hyperinflations – all of which were caused by financing huge public budget deficits through money creation. His conclusion: the tipping point for hyperinflation occurs when the government’s deficit exceed 40% of its expenditures."

The 2009 US deficit will be about 42% this year.

For now the Fed and parent banks are holding down the bond market which still prices deflation. No secret there when you can steal from the taxpayers through the veil of monetary inflation and have an infinite window to borrow at 0% then turn around and get 3% from monetizing the debt. Meanwhile it is no mystery how the BigBoys at Goldman can turn record profits at the expense of everyone else. How long this game can continue only the wind knows.

A Review of Full Spectrum Dominance

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together." Dwight D. Eisenhower, Farewell Address, 1961

"We have about 50% of the world’s wealth but only 6.3% of its population. This disparity is particularly great as between ourselves and the peoples of Asia. In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security. To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives. We need not deceive ourselves that we can afford today the luxury of altruism and world-benefaction." George F. Kennan, US State Department Policy Memorandum, 1948

 

Full Spectrum Dominance, Totalitarian Democracy by William Engdahl gives clear insight into the geopolitics of the post Cold War world, and its roots while detailing the escalation of the military-industrial complex and intervention in every corner of the globe. While I’ll attempt to give a short summary, I’ll say up front that I suggest you read the book which is highly detailed and sourced with numerous references at the end of each chapter.

 

 

I’ll also say up front to those who consider criticism of US foreign policy in a time of war as unpatriotic, I can think of nothing more patriotic than helping defend our nation, through increased awareness by the average citizen, against the unchecked power of corporate and transnational forces of the military-industrial-financial complex which uses the US military to achieve goals which are not in the long-term interests of the nation under the false pretense of “spreading democracy”, “fighting terrorism” and “humanitarian intervention”. These forces if left unchecked, will not only bankrupt our country and destroy the goodwill of the rest of the world, but could easily escalate to nothing less than a nuclear world war. On the trilateralist side of the equation, the quest towards increased coerced, global governance and a “world without boundaries” can only be achieved through destabilization and economic crisis. Both outcomes are undesirable for those who value sovereignty, liberty and peace.

 

 

Engdalhs picks up where John Perkins leaves off. Perkins’ Confessions of an Economic Hitman and Secret History of the American Empire gives boots on the ground narratives of regime change and coercion of social and economic policies friendly to Western corporate interests in Guatemala, Bolivia, Iran, Egypt and Indonesia.

 

 

In the updated playbook, Non-government Organizations (NGOs) and think tanks have taken the place of the CIA as the tip of the sphere. Information wars are the cleanest path to conquest and regime change is as much a function of manipulating spin and crowds as military tactics.

 

 

The military policy of Full Spectrum Dominance shifted into high gear with 911 as a pretense for global war without boundaries, without an endpoint and without a well-defined enemy. The war in Afghanistan, fought under the pretense of “The War on Terror” is more about gaining control of a key pivot point of power in Eurasia, encirclement of Russia and control of its pipeline flows (and opium fields). The current war is a continuation of similar moves by the British to buffer the Russian threat and secure its crown jewel India over a century ago, chronicled in The Great Game.

 

 

US geo strategy, with key architects Henry Kissinger and Zbigniew Brzezinski, of the Rockefeller faction, can be traced to those of the British Empire directed by Sir Halford Mackinder. Mackinder’s strategy was based on preventing a “cohesive Eurasian pivot point centered on Russia and capable of challenging British global hegemony.” Russian containment in Eurasia is a center piece in Brezezski’s book The Grand Chessboard. Henry Kissinger has been integral to US foreign policy for decades, including his role in preparing Nixon’s policy change toward China in 1972. Brezezski is currently Obama’s foreign policy advisor but has had major roles in both Democratic and Republican administrations for decades.

 

 

The lineage from Mackinder in US politics grew out of Brooks Adams, who deeply influenced Theodore Roosevelt and Woodrow Wilson, and found its way into the heart of American political power in the Council of Foreign Relations and The Rockefeller Foundation. Mackinder described the guiding principles during the 1919 Paris Peace Talks.

 

 

    Who rules East Europe commands the Heartland.

    Who rules the Heartland commands the World-Island.

    Who rules the World-Island commands the world.

 

 

In Mackinder’s eyes, the ‘Heartland’ was the core of Eurasia – Russia and Ukraine and Mackinder’s perspective shaped Britain’s entry into WWI, WWI, Churchill’s baiting of the Soviets into a Cold War.

 

 

The Color revolutions in the former Soviet Bloc countries, overthrow of Fernando Marcos of the Philippines and Tiananmen Square destabilization were orchestrated by NGOs, ultimately backed by the state department, such as National Endowment of Democracy, George Soros’ Open Society Institute, Freedom House and Gene Sharp’s Albert Einstein Institution. The first acting president of the NED, Allen Weinstein, commented to the Washington Post that, “A lot of what we (the NED) do today was done covertly 25 years ago by the CIA.”

 

 

The marketing, propaganda and crowd swarming techniques developed by RAND through the Pentagon allowed the ‘democratic’ removal of a political opponent while seen through the lens of cable news as genuine outbursts of freedom. The swarming tactic employed agent provocateurs which used Internet chat rooms, blog sites and cell texting for crowd movements guided by GPS satellite images and CNN prepositioned to catch the "protesters". The Color Revolutions showed that the relatively non-violent civilian application of information wars was more effective than the violent military versions in Iraq and Afghanistan.

 

 

During the Orange Revolution in the Ukraine, Washington backed used a PR firm called Rock Creek Creative and backed Viktor Yushchenko, former Governor of Ukraine’s Central Bank. Yushchenko’s wife is an American citizen who was an official in the Reagan and G.W. Bush administrations. The Georgian Revolution that installed US-trained Mikheil Saakashvili also played a major part in the grand strategy to be able to cut off at any time Russia’s export pipelines to the European Union – a source of 60% of Russia’s export earnings. Similarly, control of ancient Asian trade routes with US military bases throughout Uzbekistan, Kazakhstan and Kyrgystan would not only encircle Russia, but also enable the US to cut China off from oil and gas from the Caspian Sea region.

 

 

The new doctrine is a far cry from the crude CIA-backed overthrow of Mossadegh in Iran and Arbenez in Guatemala in the 1950’s.

 

 

US policy towards China has been based on “soft power” asserting “democracy” and “human rights” in Myanmar, Tibet and Darfur. In Darfur, humanitarianism became the rallying cry for regime change. What is usually not mentioned in the mainstream press is that large oil and gas deposits were discovered in Darfur by Chevron in the 1970’s and the US has had a major role in destabilizing the region through Chad in part to counter China’s ambitions in Africa. The Saffron Revolution in 2007 if viewed objectively could be seen as nothing other than the control of strategic sea lanes from the Persian Gulf to the South China Sea since over 80% of China’s oil imports pass through the Malacca Strait. The revolution came on the heels of a Memorandum of Understanding with PetroChina to supply large amounts of natural gas for 30-years.

 

 

The Pentagon document 2008 Army Modernization Strategy is a call for full spectrum dominance that envisions the US, “for thirty to forty years” would be engaged in continuous wards to control raw materials with clear references to China and Russia as “near peers”. There is a strong parallel with Henry Kissinger’s National Security Strategic Memorandum-200 during the Ford administration which stated one of the key missions was control of population growth in raw material rich countries.  

 

 

As NATO continues its aggressive expansion through a combination of civilian and military applications of warfare, the more Russia is threatened and likely to respond as was the case in the Georgia in 2008. With the added stress of the missile “defense” system in Eastern Europe which ensures nuclear first strike capability if Russia can’t counter, the threat of a nuclear conflict looms larger now than ever. The doctrine of Mutual Assured Destruction (MAD) which maintained nuclear peace during the first cold war goes out the window when either the US or Russia has nuclear dominance forcing the other side to get more defensive and take preventive action which could result in the outbreak of a major war between the US and Russia.

 

 

The more each citizen understands the broader geopolitical perspective of those of profit from war, the more chance we have in preventing the worst-case scenario. Real patriotism is not cheering on unjust wars at the behest of CorpGov that have destabilized the world in spite of cheerleading from both “left” and “right”.

  

Continental Congress 2009

Preparing Americans for Hyperinflation

Crowd Swarming

The arrests of two men accused of using cell phones and Twitter to direct movements of protesters during the G20 Summit in Pittsburgh brings up a number of major 1st Amendment issues, but the killer irony is how the same alternative media techniques were used in US-backed coups the past decade in Serbia, Georgia and Ukraine during the Color Revolutions.

When the shoe is on the other foot, it is perfectly OK to use RAND think tank style information wars where agent provocateurs use Internet chat rooms, blog sites and cell texting for crowd swarming, with movements guided by GPS satellite images and CNN prepositioned to catch the "protesters".

A New York-based anarchist has been arrested by the FBIand charged with hindering prosecution after he allegedly used the social networkingsite Twitter to help protesters at the G20summit in Pittsburgh evade the police.

Elliot Madison, 41, from Queens, had his home raided and was put on $30,000 (£19,000) bail after he and Michael Wallschlaeger, 46, were tracked to the Carefree Inn motel in Pittsburgh during the summit on 24 and 25 September.

The pair were found sitting in front of a bank of laptops and emergency frequency radio scanners. They were wearing headphones and microphones and had many maps and contact numbers in the room.(Full Article)

Free Speech has no Place in Transnationalism

This is what free speech looks like under transnational totalitarianism. Clearly the well-spoken man with the bull horn and peacefully-assembling protesters are threats and must be put down.

What would our founding fathers think of the military policing and ear-piercing crowd dispersion tools such as LRAD? Contrary to what you think you know about your rights, you have the right to assemble in free speech zones if you have a permit, pay taxes, do as the G20 dictates and be quiet.

Stepping back to the Paris Peace Talks in 1919, what sunk Woodrow Wilson's grand designs for the League of Nations, a precursor to the UN with an analogy to the current G20 push, is the pesky Constitution which required 2/3rds Senate approval for any foreign treaty as spelled out in Article II, Section II.

I wonder how effective our Senate will be in checking the "new economic order" where participating nations agreed to support "counter-cyclical stimulus" (Read: continuing to try and sustain what is economically unsustainable at the behest of international oligarchs and financial cartels) and other measures that arise out of G20 meetings?

As we know, it is not the formal treaties that move the earth in these transnational forums, but the informal backroom agreements, born from think tanks and NGOs, that impose agendas of their sponsors without any oversight of the people’s representatives of each sovereign nation. There are no checks and balances between the G20 agreements and the unchecked powers of the major central banks and other transnational institutions that flank Congress, Parliament and other representative bodies alike.

Smells Like 2002

“The public will believe anything, so long as it is not founded on truth.“
-Edith Sitwell

As the media continues to beat the war drum for Iran, remember that Iran signed the Nuclear Proliferation Treaty (NPT) but Israel and India, which both actually have nuclear weapons have not.  

In exchange, the US is working a nuclear deal with India. The Neocons should be happy to see that Obama is picking up where Bush left off as steward of the War Party.

Obama’s Hell-Ride to War on Iran

Posted by Daniel McAdamson September 25, 2009 10:42 PM Faced with the uncomfortable and politically unacceptable reality that there exists no evidencethat Iran is pursuing a nuclear weapon, confirmed by his own intelligence community, President Obama has taken a page from the book of his predecessors FDR, LBJ, GWB, and so on: he simply made something really scary-sounding up to justify his push toward war.

This time it is the artificially manufactured hype around an Iranian uranium enrichment facility that is under construction. Keep in mind that as a signatory to the Nuclear Non-Proliferation Treaty (NPT) Iran, under Article IVof said treaty, has every right to enrich uranium to its heart’s content.  The treaty clearly states: “Nothing in this Treaty shall be interpreted as affecting the inalienable right of all the Parties to the Treaty to develop research, production and use of nuclear energy for peaceful purposes without discrimination and in conformity with Articles I and II of this Treaty.”

Iran has, dutifully and ahead of required schedule, notified the International Atomic Energy Agency, tasked with monitoring adherence to the NPT, of its intent to bring this enrichment facility online in approximately 18 months. But where there is no smoking gun, lighter fluid must be ignited: to undercut the Five Plus One talks with Iran scheduled to begin on October first, the Obama administration has invented indignation over discovery of this plant while at the same time holding to the story that the US Intelligence Community has known about this facility, which Obama saysis “inconsistent with a peaceful (nuclear) program,” since 2006. As one administration official stated regarding the upcoming talks in light of his “discovery”: “Everybody’s been asking, ‘Where’s our leverage?’ Well, now we just got that leverage.” And right in the nick of time!

But hang on a minute: the US Intelligence Community has known since 2006 that Iran is building a facility to manufacture nuclear weapons but still in 2007 allowed a National Intelligence Estimateon Iran to conclude with “high confidence” that Iran was not pursuing a nuclear weapons program? Considering the discrepancy, one could be forgiven for concluding that either deception or incompetence is the order of the day in our enormously expensive Intelligence Community.

It is 2002 all over again, but worse: this time a good chunk of the antiwar movement will have been sidelined over its fatally wrong-headed decision to sign on with the pied pipers of the war party over the Iranian elections in June. By “going Green” (going pro-opposition instead of remaining neutral) much of the antiwar movement has been effectively silenced, its side-taking giving voice to one of the war party’s most critical claims: “any government that will cheat as horrifically as it did on these elections will certainly cheat on its IAEA reporting obligations.” No further proof needed. It is a refrain we have heard time and time again since June: “you mean you are going to believe them about their nuclear program? A regime that would cheat like that in its elections?” Antiwar movement: largely silenced. Credible proof of outcome-changing fraud: none. Coming cost in death and destruction: priceless (Original Article).

The History and Pillars of Global Government

“Power is not a means, it is an end. One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish the dictatorship. The object of persecution is persecution. The object of torture is torture. The object of power is power.” George Orwell

 

 

The 5-part article linked below is written to describe the evolution and future prospects for global governance. Some of you won’t like the neo-Marxist overtones, but the author ultimately describes the struggle between a free-thinking individual and the collectivity and control imposed by a global cartel.

The article takes a look back-forward from the establishment of the Bank of England, the Morgan-Rockefeller oil connection in the Bolshevik Revolution, financial bankrolling of both sides of European wars, growth of increased global institutions with WWI (Council of Foreign Relations, Bank of International Settlements) and WWII (IMF, International Bank for Reconstruction and Development) and recent "global reform" efforts in the face of the on-going financial collapse.

The recipe for global governance looks something like this:

· States acting not in the best interest of the state but in the interests of the powerful interests that control the state.

· The establishment of “self-regulating” network of central banks and international financial organizations.

· Institutionalized cooperation between monopolies and government under the guise of “free markets”.

· Economic shock doctrines to dominate the 3rd world with debt bondage.

· Creation of national interdependence and the formation of regional superstates in North America, Europe, Asia and the Global South.  The European Union was originally based on free trade agreements similar to NAFTA, a precuror to similar designs for a North American Union.

· Formation of a Transnational Capitalist Class (TCC) that “controls the levers of an emergent transnational state apparatus and of global decision making.” This class has no borders, and is composed of the technocratic, media, corporate, banking, social and political elite of the world.

· Creation of transnational classes. Marx called for the workers to unite but rang hollow until Mussolini fused nationalism with socialist tendencies to unite the class. In the current plight, the middle class gets destroyed because there is no counterpart in most of the world. More importantly the middle class could replace the proletariat as the revolutionary class, due to the super gap from the super rich and threat of civil unrest from the underclass.

· Financial and environmental crises perceived to be beyond the capabilities of the nation state result in transnational governmental bodies and reforms which serve to consolidate power.

o   “well established democracies,” such as those in Western Europe and North America, will, through successive crises (climate, finance, war), erode and replace their democratic systems of government with totalitarian structures that are able to “take the bold actions necessary” to deal with “transnational challenges”.

· Expanding domestic security forces, surveillance capabilities, and the employment of special operations-type forces ostensibly to counter terrorism erode individual liberties, while at the same time a borderless world leaves no refuge from global totalitarianism.

· Destruction of national state sovereignty in transition to a system of private power of transnational elites.

· State outsourcing of intelligence gathering, war, prisons and information brokerage.

· Global wars as a solution to economic crises and depopulation.

· Erosion of organic civic society as a barrier to power consolidation.

 

Part 1: Global Power and Global Government: Evolution and Revolution of the Central Banking System
Part 2: Origins of the American Empire: Revolution, World Wars and World Order
Part 3: Controlling the Global Economy: Bilderberg, the Trilateral Commission and the Federal Reserve
Part 4: Forging a “New World Order” Under a One World Government

   Part 5: Global War and Dying Democracy: The Revolution of the Elites

 

Ron Paul's "End the Fed"

Martial Law in Response to Swine Flu

According to the CDC, Massachusetts, Florida, Iowa, North Carolina and Washington have  have implemented legal actions in response to the H1N1 virus.

A "pandemic response bill" currently making its way through the Massachusetts state legislature would allow authorities to forcefully quarantine citizens in the event of a health emergency, compel health providers to vaccinate citizens, authorize forceful entry into private dwellings and destruction of citizen property and impose fines on citizens for noncompliance.

If citizens refuse to comply with isolation or quarantine orders in the event of a health emergency, they may be imprisoned for up to 30 days and fined $1,000 per day that the violation continues...(Full Article).

CyberTyranny Act Take 2

Shelly Roche dissects the modified Cyber Tyranny Act, another offensive in the War on Internet.

A Guide for Avoiding GMO Food

Since the U.S. does not require genetically modified foods be labeled, The Center for Food Safety published a handy Non-GMO shopping guide that you can print out for reference.

Chris Martenson on the Great Shell Game

Chris Martenson describes the elaborate check kiting shell game played by foreign central banks and the Federal Reserve to disguise the fact that the Fed is printing money to buy US Treasuries. Full Article

Have you ever seen a sidewalk magician run the shell game, where a pea under a shell is magically shuffled around - now you see it under this shell, now you see it under that shell, now it disappears completely - or does it?  The more it moves around, the more confused you get.  If you can only figure out which shell the pea is hidden under, you win!   But where is the pea?  The point of the game, from the perspective of the street hustler, is to use complexity of motion to confuse the mark.

These are the three critical points to remember as you read further:

1. The US government has record amounts of Treasuries to sell.
2. Foreign central banks, which have a big pile of agency bonds in their custody account, would like to help but want to keep things somewhat under the radar to avoid scaring the debt markets.
3. The Federal Reserve does not want to be seen directly buying US government debt at auctions (and in fact is not permitted to, but many rules have been 'bent' worse during this crisis), because that could upset the whole illusion that there is unlimited demand for US government paper, but it also desperately wants to avoid a failed auction.

For various reasons, the Federal Reserve cannot just up and start buying all the Treasury paper that becomes available in record amounts, week after week, month after month. 

Instead, it uses this three-step shell game to hide what it is doing under a layer of complexity:

Shell #1:  Foreign central banks sell agency debt out of the custody account.

Shell #2:  The Federal Reserve buys those agency bonds with money created out of thin air.

Shell #3:  Foreign central banks use that very same money to buy Treasuries at the next government auction.

 

Shuffle, shuffle, shuffle, shuffle, shuffle, SHUFFLE, shuffle! Confused yet?

Don't be.  If we remove the extraneous motion from this strange act, we find that the Federal Reserve is effectively buying government debt at auction.  This is exactly, precisely what Zimbabwe did, but with one more step involved, introducing just enough complexity to keep the entire game mostly, but not completely, hidden from sight.  They can scramble the shells all they want, but the pea is still there somewhere - the pea being the fact that the Fed is creating money to fund the purchase of US debt.

The Fed's Parent-Child Relationship

Just as a parent tells a child that the child cannot be told for the child’s safety, the privately-owned Federal Reserve continues to tell its tired tale that transparency is dangerous to the public good.

The logic follows that the global financial system can only be kept from plunging into a black hole as long as the public maintains its part of the deal: Quiet acceptance of deception and outright lies. 

And so the guns come out blazing. The Clearing House Association, another name for all the banks that were bailed out over the past year with the generous contributions from all of you, dear taxpayers, are now threatening with another instance of complete systemic collapse if Bloomberg's lawsuit is allowed to proceed unchallenged, let alone if any of the "Audit The Fed" measures are actually implemented.

As a reminder, The Clearing House Association consists of ABN Amro, Bank Of America, The Bank Of New York, Deutsche Bank, HSBC, JP Morgan Chase, US Bank and Wells Fargo.

In a declaration filed in the Bloomberg Case (08-CV-9595, Southern District of New York), the banks demonstrate no shame in attempting to perpetuate the status quo with regard to the Federal Reserve and demand that the wool over the eyes of the general population remain firmly planted in perpetuity. (Continued...) 

Mike Whitney "It's a Planned Demolition"

"Recovery" loosely translated means continued destruction of the working, middle and small business classes, debt serfdom and using financial weapons of mass destruction to ensure the casinos can continue to pillage and plunder at the expense of everyone else. 

It's a Planned Demolition - There is No Recession By MIKE WHITNEY

Credit is not flowing. In fact, credit is contracting. When credit contracts in a consumer-driven economy, bad things happen. Business investment drops, unemployment soars, earnings plunge, and GDP shrinks. The Fed has spent more than a trillion dollars trying to get consumers to start borrowing again, but without success. The country's credit engines are slowing to a crawl.

Fed chairman Ben Bernanke has increased excess reserves in the banking system by $800 billion, but lending is still slow. The banks are hoarding capital in order to deal with the losses from toxic assets, non performing loans, and a $3.5 trillion commercial real estate bubble that's following housing into the toilet. That's why the rate of bank failures is accelerating. 2010 will be even worse; the list is growing. It's a bloodbath.

The standards for conventional loans have gotten tougher while the pool of qualified credit-worthy borrowers has shrunk. That means less credit flowing into the system. The shadow banking system has been hobbled by the freeze in securitization and only provides a trifling portion of the credit needed to grow the economy. Bernanke's initiatives haven't made a bit of difference.  Credit continues to shrivel.

The S&P 500 is up 50 per cent from its March lows. The financials, retail, materials and industrials are leading the pack. It's a "Green Shoots" bear market rally fueled by the Fed's Quantitative Easing (QE) which is forcing liquidity into the financial system and lifting equities. The same thing happened during the Great Depression. Stocks surged after 1929. Then the prevailing trend took hold and dragged the Dow down 89 per cent from its earlier highs. The S&P's March lows will be tested before the recession is over. Systemwide deleveraging is ongoing. The economy is resetting at a lower rate of activity.

No one is fooled by the fireworks on Wall Street. Consumer confidence is still falling. Everyone knows things are bad. Everyone knows the mainstream press is lying. The restaurants and malls are empty, the homeless shelters are bulging, and even the big-box stores have stopped hiring. The only "green shoots" are on Wall Street where everyone gets a handout from Uncle Sugar. 

Bernanke has pulled out all the stops. He's lowered interest rates to zero, backstopped the entire financial system with $13 trillion, propped up insolvent financial institutions and monetized $1 trillion in mortgage-backed securities and US sovereign debt. Nothing has worked. Wages are falling, banks are cutting lines of credit, retirement savings have been slashed in half, and home equity losses continue to mount. Living standards can no longer be bandaged together with VISA or Diners Club cards. Household spending has to fit within one's salary. That's why retail, travel, home improvement, luxury items and hotels are all down double-digits. The money has dried up (continue reading...)

Corrilito

An anonymous correspondent wrote an excellent article that compares the events that lead to horrific inflation in Argentina with the current financial sitution. Notice how massive inflation ultimately works to the benefit of the biggest stakeholders.

Here's what happened in Argentina: the political leaders are dysfunctional and infighting, paying out to their home provinces, uncaring of the enormous debt and with no reason to care so long as foreign money could be borrowed. Meanwhile the economy began to rest more and more on bubbles and speculation funded by this foreign borrowing. When the balloon went up, the insiders saw which way it was headed and got their money offshore, something like Cheney and Halliburton did the other year. Then as things devolved, ever-increasing capital controls were put in place, just like now with the US investigating “off-shore havens” and profits one might have made overseas using the premise of money laundering to chain the firedoors shut one by one.

Finally, they enforced the official “corrilito”, and soon after had an extended Bank Holiday for the 5 months it took to devalue the Peso by 73%--far faster than anyone not forewarned could adjust and react. Once every exit was chained tight, they firebombed the casino, trapping everyone inside. Even if you had thousands in stocks, bonds, and savings accounts, with the market frozen and the monthly bank withdrawal limit set at $300/mo, the little people could not pay rent or even eat, becoming “Cartoneros” garbage-picking architects and engineers, wandering the streets with their children at midnight as the nation devolved into a chaos that did not topple the ruling class.

Once all the assets in the country had been discounted a minimum of 73%, the insiders then repatriated their money and bought their neighbor's fortunes for pennies on the dollar, finding cheap, hungry, competitive labor, ready to compete with even 3^rd world wages. The prudent, hard-working, and savers (the wrong people) were wiped out, and the money was transferred to the speculators and insiders (the right people). Massive capital like land and factories can not be expatriated, but are always worth their USE value and did not fall as much, or even rose afterwards as with falling debt ratios and low wages these working assets became competitive again. It's not so much a “collapse” as a redistribution, from the middle class and the working to the capital class and the connected. ...And the genius is, they could blame it all on foreigners, “incompetent” leaders, and careless, debt-happy citizens themselves.

Now I'm no genius here, but couldn't the United States do the very same thing?

What you need to do is--and bear with me here--send your best Wall St. salesmen and diplomats to China and sell them a bill of goods about how they can “modernize” with our help. The Cold War is over. Capitalism reins. You know us Wall St. types! It's all about the dollar! Have the radio scream the President sold out and sign them up to the WTO as you suck Asia into massive overcapacity and a deep, unbreakable reliance on the US and G-8 as customers while paving over the national independence of their life-giving water and farmland. Then, once they've tasted freedom and affluence, once they're unable to support themselves independently, you pull the plug not on them but YOURSELF. Implode your own middle class as above. Kill the bond markets, cause a run on your own currency, and default on the debts you owe them. Hey, it's the only thing you could do, right? Americans are just stupid, right? Wall Street is just greedy. It's all an accident, an act of God really. No one's to blame. It's classic Judo.

In a single stroke you:

a) lose the burden of external debt

b) by devaluation lose your internal debt

c) make the nation competitive as a manufacturing power.

d) scare the people back into compliance, even exultation with their low wages.

e) with the renewal of manufacturing, re-cast the power that your military rests on

f) during a time of Peak Oil, radically reduce unnecessary consumption while insuring strategic (military) supply.

g) by doing that, suck in the oil powers of Russia, Iran, and Venezuela enough to knock them off-base, first with high prices, then low prices.

h) club China into submission to the G-8 money powers again

and best of all:

i) enrich insiders beyond their wildest dreams, insuring their dominance for a generation to come.

All the right people win, all the wrong people lose.

Bernanke on the Ropes

The Audit the Federal Reserve House bill HR 1207 has 282 cosponsors and Senate counterpart S.604 has 20 cosponsors, but Barney Frank has manged to keep the House bill bottled up in committee.

Meanwhile, Bernanke continues to squirm hoping Americans will continue to ignore the man behind the curtain and not ask the 2 most inconvenient questions: So where does our money come from? And where does it go?

Bernanke video: He stutters; he stammers; he is in visible panic mode over Ron Paul's bill to audit the Federal Reserve. Watch it. You'll love it! Then send it to your friends.

Usually, when Ben Bernanke is interviewed, he has the demeanor of a college professor in the presence of freshman students. Of course, as a full professor, he did not have to teach freshmen. That is for untenured assistant professors to do. Stammering and stuttering are therefore a real departure for him. There is a reason for this.

For the first time since 1914, there is a public debate in Congress over the Federal Reserve's power. Never before has a majority of the House of Representatives called for what should always have existed: Congressional scrutiny over the FED's money. Bernanke says that Ron Paul's bill to audit the Federal Reserve is a bill to audit Federal Reserve policy. Yet the bill says nothing about auditing policy. So, what is he talking about?

Bernanke says that Congress can have access to an audit at any time. Sure it can – an audit vetted and sanitized by the FED, where no one knows which banks got what bailout money. This is an audit in the way a CIA audit is an audit. The main differences are these: (1) the CIA legally operates only outside the borders of the United States; (2) the CIA can assassinate any uncooperative Congressman who insists on a full audit. The FED does not have the second power, but it is not limited by the first restriction.

What has Bernanke panicked is this: the Federal Reserve has bailed out the biggest banks and has let almost 100 little ones die. This is crony capitalism at its most notorious (cont...)

H1N1 Motives

An objective person can only come to a handful of conclusions given the rampant fear mongering over the swine flu ranging from pharmaceutical profiteering to more sinister motives.

Every year, garden variety flu kills between 250,000 to 500,000 people worldwide and 36,000 people in the US so the numbers attributed to H1N1 so do not justify the response.

As it stands, NORTHCOM is preparing for a fully militarized vaccination campaign which is nothing less than a condition of martial law (Full Article Here and collection of related articles here).

According to CNN, the Pentagon is "to establish regional teams of military personnel to assist civilian authorities in the event of a significant outbreak of the H1N1 virus this fall, according to Defense Department officials."

"The proposal is awaiting final approval from Defense Secretary Robert Gates. The officials would not be identified because the proposal from U.S. Northern Command's Gen. Victor Renuart has not been approved by the secretary.

The plan calls for military task forces to work in conjunction with the Federal Emergency Management Agency. There is no final decision on how the military effort would be manned, but one source said it would likely include personnel from all branches of the military.

…

The implications are far-reaching. The decision points towards the militarization of civilian institutions, including law enforcement and public health. A nationwide vaccination program is already planned for the Fall. The pharmaceutical industry is slated to deliver 160 million vaccine doses by the Fall, enough doses to vaccinate more than half of America's population. 

The Pentagon is already planning on the number of troops to be deployed,. with a view to supporting a mass vaccinaiton program. It is worth noting that this involvement of the military is not being decided by the President, but by the Secretary of Defense, which suggests that the Pentagon is, in a key issue of of national interest, overriding the President and Commander in Chief. The US Congress has not been consulted on the issue. 

…

Much of the groundwork for the intervention of the military has already been established. There are indications that these "regional teams" have already been established under USNORTHCOM, which has been involved in preparedness training and planning in the case of a flu pandemic.

Within the broader framework of "Disaster Relief", Northern Command has, in the course of the last two years, defined a mandate in the eventuality of a public health emergency or a flu pandemic. The emphasis is on the militarization of public health whereby NORTHCOM would oversee the activities of civilian institutions involved in health related services.

One of the obvious questions is whether or not the vaccines will be mandatory.

With your safety clearly in mind, the US government has given flu vaccine companies legal immunity. Little surprise given that biotech companies are some of the most well-connected politically. The well-known case in point is Donald Rumsfeld, ex-chairman of Gilead Sciences, patent holder for Tamiflu.

                                                                  

The US Secretary of Health and Human Services, Kathleen Sebelius, has just signed a decree granting vaccine makers total legal immunity from any lawsuits that result from any new “Swine Flu” vaccine. Moreover, the $7 billion US Government fast-track program to rush vaccines onto the market in time for the Autumn flu season is being done without even normal safety testing. Is there another agenda at work in the official WHO hysteria campaign to declare so-called H1N1 a pandemic virus threat?

First and foremost, neither the WHO nor the CDC or any other scientific body has demonstrated required scientific proof for the existence of the alleged H1N1 Influenza A new virus, a proof which requires such a virus to be scientifically isolated, characterized and photographed with an electron microscope—the scientifically accepted standard procedure. Yet it is being used as the basis for declaring a global “pandemic” threat.

The current official panic campaign over alleged Swine Flu danger is rapidly taking on the dimensions of a George Orwell science fiction novel. The document signed by Sebelius grants immunity to those making a swine flu vaccine, under the provisions of a 2006 law for public health emergencies.

Consider the allegations towards Baxter which allegedly crossed bird flu with a shipment of conventional flu vaccine and the steps the US government has taken to justify forced vaccinations.

Mandatory vaccination using untested vaccines violate the principles of the Nuremburg Code and Declaration of Helsinki.

Viennese journalist Jane Burgermeister filed documents with the Vienna prosecutor’s office on April 8th, 2009 accusing vaccine producer Baxter AG, its US parent, Baxter International, and Avir Green Hills Biotechnology of intentionally contaminating a 72-kilogram shipment of conventional flu vaccine with live H5N1 (bird flu) virus.

The shipment was made in February, 2009 from Baxter’s Vienna facility to 16 laboratories in Slovenia, Czech Republic, Germany, and Austria, and the contamination was discovered by Czech sub-contractors when ferrets died under routine testing with the vaccine. Burgermeister argues that Baxter’s high level biosafety protocols makes accidental contamination of the entire shipment impossible, and accuses Baxter of bioterrorism, stating that the company intended to spark a bird flu pandemic for which its bird flu vaccine would be needed. Burgermeister’s blog, which documents her filing is located here, and a radio interview can be found here.

Burgermeister takes her accusations further, however. She accuses the Austrian Government, in particular Health Minister Alois Stoger, of colluding with the WHO and the EU by giving power, under Austria’s Influenza Pandemic Plan of 2005, to force vaccinations on Austrian citizens in the event of a bird flu pandemic. She has produced an English-language version of her documents here , with specific reference to US law. This version of the documents alleges that US state governments, through the Model State Emergency Health Powers Act, (available here), enacted in 38 states, and the US Federal Government, through the National Security Presidential Directive 51and the Homeland Security Presidential Directive 20together ( referenced here)have likewise taken on themselves the power to force vaccinations in the event of a national pandemic, among other powers.

Burgermeister raises an interesting point in her argument against this appropriation of the power to force  vaccinations. She brings up the Nuremberg Trials, and in particular, the “Doctor’s Trials”(US v. Karl Brandt, et al.)(see here ), in which Nazi doctors were convicted of war crimes, including forced administration of experimental vaccines. Burgermeister argues that forced vaccinations using vaccines of unproven safety violate the principles of the Nuremberg Codeand Declaration of Helsinki, which resulted from the Nuremberg Trials. The principles set forward in the Nuremberg Code formed the basis for US Federal regulation (45 CFR §46 )governing government and federally-funded research.

Burgermeister alleges that bird and swine flu vaccines are untested and unproven. If this is the case and these vaccines are therefore experimental, mandatory vaccination would violate the principles of the Nuremberg Code. Given this experimental nature, administration of the vaccines could be characterized as research, and if conducted using Federal employees or funding, would also be subject to informed consent requirements under 45 CFR §46.116.

So what’s in a regular flu shot?

Egg proteins: including avian contaminant viruses

Gelatin: known to cause allergic reactions and anaphylaxis are usually associated with sensitivity to egg or gelatin

Polysorbate 80 (Tween80™): can cause severe allergic reactions, including anaphylaxis

Formaldehyde: known carcinogen

Triton X100: a strong detergent

Sucrose: table sugar

Resin: known to cause allergic reactions

Gentamycin: an antibiotic

    Thimerosal: mercury is still in multidose flu shot vials

What’s in the new swine flu shot?

A new report from a WHO advisory group predicts that global production of vaccine for the novel H1N1 influenza virus could be as much as 4.9 billon doses a year, far higher than previous estimates. The report says that vaccine makers are expected to produce about 780 million doses of seasonal flu vaccine for the northern hemisphere's 2008-09 flu season for the

June 12 Announcement: The new H1N1 (swine flu) vaccine is going to be made by Novartis. It will probably be made in PER.C6 cells (human retina cells) and contain MF59, a potentially debilitating adjuvant.  MF-59 is an oil-based adjuvant primarily composed of squalene, Tween 80 and Span85. All oil adjuvants injected into rats were found toxic. All rats developed an MS-like disease that left them crippled, dragging their paralyzed hindquarters across their cages.

Squalene caused severe arthritis (3 on scale of 4). Squalene in humans at 10-20 ppb (parts per billion) lead to severe immune responses, such as autoimmune arthritis and lupus. Reference: Kenney, RT. Edleman, R. "Survey of human-use adjuvants." Expert Review of Vaccines. 2 (2003) p171. Reference: Matsumoto, Gary. Vaccine A: The Covert Government Experiment That’s Killing Our Soldiers and Why GI’s Are Only the First Victims of this Vaccine. New York: Basic Books. p54.

Federal health officials will probably recommend that most Americans get three flu shots this fall: one regular flu shot and two doses of any vaccine made against the new swine flu strain. Reference: Washington Post, Wednesday, May 6, 2009

HHS Secretary Kathleen Sebelius is talking to school superintendents around the country, urging them to spend the summer planning what to do if the government decides it needs their buildings for mass vaccinations and vaccinating kids first. Reference: CBS News, June 12, 2009.

Turn off Your TV

Every now and then when I’m felling masochistic, I turn on one of the IBNN (Info Babe News Networks) just to see just how thick the infotainers are pouring it on. It wasn’t always this bad of course. Though never completely removed from agendas, there was a time when news was a public service and there wasn’t quite as wide a gap between reality and the narrative that explained it.

The chart above shows how media ownership has consolidated over the years. Given the interests these media companies represent, is there any wonder why the news has become so cartoonish? Is there any wonder why financial "expert" analysis is a recipe for bankruptcy, political punditry a puppet show and opinions expressed outside the groupthink du jour heresy?

The 4% that Matters

Kunstler true to form, laid it out in this week's commentary. He raises one of the most important points that social influence works as a power law, or what most think of as the 80/20 rule or Pareto distribution.

You don't need a majority of people to "wake up" in order to drive significant social change as 80% of the people are simply going to go along as long as they can get along. It is the 1/5th of the 1/5th or 4% tipping point that we seem to be nearing. What that really means in the near to mid future, only the wind knows.

By now, everyone in that fraction of the world that pays attention to something other than American Idol and their platter of TGI Friday's loaded potato skins knows that Goldman Sachs has been caught at another racket in the stock market: front-running trades. What a clever gambit, done with the help of the markets themselves - the Nasdaq in particular - in which information on trades is held back a fraction of a second from public view, while the data is shoveled to the computers of privileged subscribers who can execute zillions of programmed micro-trades before the rest of  the herd makes a move. This allows them to vacuum up hundreds of millions of dollars by doing absolutely nothing of value.  The old-fashioned method used by brokers was called "churning," in which stocks were bought and sold incessantly (by phone) from the portfolios of inattentive clients merely to generate commissions.  In any sensible society - i.e. a society with an instinct for self-preservation - it would be against the law and the people doing it would be sent to prison.
    I'm not a lawyer, but I've got to think that the actions at the Nasdaq end - shoveling the data to the privileged subscribers a fraction of a second early - is patently illegal in the first place, since the whole purpose of an exchange is to create a fair trading space. Where both parties are concerned, it should amount to a plain vanilla criminal conspiracy to commit stock trading fraud. Maybe the larger question is: since when did we become a society lacking the instinct for self-preservation - that is, a society bent on suicide?  Or maybe the question is better put to Goldman Sachs's CEO Lloyd Blankfein.
    Since this racket was made public, there has been chatter all over the Web about how angry the American public is about Wall Street in general, and increasingly about Goldman Sachs in particular.  Nobody has summed it up better than Rolling Stone's Matt Taibbi, calling the company "...a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." And Taibbi's fierce article about Goldman Sachs came out weeks before this latest outrage. As we turn the corner toward autumn, President Obama looks increasingly like a dupe, a tool, or a co-conspirator of Goldman Sachs.  If he doesn't instruct the Justice Department to commence investigations of the company, and if he doesn't dissociate himself from their alumni hanging around the White House, the Treasury Department, and elsewhere in the government, he's going to become the object of an awful public wrath.  Obama has no other choice at this point except to clean house - to fire Larry Summers, Robert Rubin, Tim Geithner, and all other former Goldman Sachs employees in positions of power and influence around him.
     Actually, it's not necessary for the whole general public to be fed up with this situation.  According to the Pareto 80-20 rule, it only takes one-fifth of the public to set social actions in motion, and only one-fifth of that one-fifth to do the heavy lifting.  I think we've reached that point.  The sentiment is now overwhelmingly tipped against Goldman Sachs (and Wall Street generally) and the only questions are whether the President of the US ends up lumped in with them, and whether we'll see orderly prosecutions or disorderly persecutions.  At this point, it even begins to look as though Mr. Obama is taking cover behind the health care reform debate to avoid answering for his government's association with Goldman Sachs.
    The trouble is, if the thoughtful and trustworthy members of the "Pareto 20 percent" don't stir themselves into action over Goldman's behavior, then sooner or later the thoughtless and reckless will take over.  Bill Moyers hosted a fascinating report on his most recent podcast about the savagery of right-wing broadcasting and how it had led, in one instance, to the murder of a doctor who performed abortions. What bothers me is that, sooner or later, the conduct of Goldman Sachs will lead the growing ranks of the unemployed, foreclosed, disentitled, and hopeless into the hands of a savage right wing seeking mindless vengeance, for instance, against "the Jews," (as represented by Goldman Sachs), or brown-skinned people (as embodied by a vilified president).
    Readers of this blog know I'm allergic to conspiracy theories. But surveying the scene out there, it is hard to not conclude that Goldman Sachs has become the "front-runner" of a criminal syndicate defrauding US taxpayers.  This isn't the first time in American history that business veered into extremely antisocial behavior on the grand scale.  The last quarter of the 19th century was just as bad, with frauds, swindles, sociopathic trusts, and predatory corporations preying on people trying desperately to make an honest living.  Then, one summer day in 1901, a factory drone named Leon Czolgosz stepped up to President William McKinley in a reception line at the Buffalo World's Fair and plugged him twice in the abdomen. (Czolgosz liked to think of himself as an "anarchist," a then-fashionable ideology among the simmering powerless.) Eight days later, McKinley expired and Teddy Roosevelt became president - to the extreme chagrin of the Republican business establishment - "... now that damned cowboy is in the White House!" cried Republican national leader Mark Hanna of Ohio.
    He was correct to be nervous.  TR turned the corporate world upside down with reform, from dismantling monopolies to establishing the cabinet departments of Commerce and Labor, to bringing the new food industry under regulation.  This naturally leads me to wonder if or when Barack Obama will have his TR Moment, when he stands up to the large malign forces operating arrantly in the daily life of this nation.  I get volumes of email complaining about Mr. Obama.  The writers behind them seem, on the whole, crankish, cynical to an extreme, and not very trustworthy observers of the scene. But I begin to sympathize with them.
    In the meantime, the US economy gives the illusion of recovery - but to what?  Back to a "consumer" credit card shopping orgy?  Another house-buying fiesta? I don't think so.  Households are drowning in debt.  They're using their credit cards, if they still can, to buy staple foods.  Those are the lucky ones who still have lines of credit left.  Soon, many of these families won't even amount to households because they won't have a house.  There is absolutely no way we are going back to that particular bubble economy.  The only bubble left is the government debt bubble, now leading to such extravagant excess that it can only end up wrecking the government, and perhaps American society with it.  In the meantime, how much remaining wealth is Goldman Sachs and its cohorts vacuuming off the floor?
    Also meanwhile, oil is heading back to the $70 range (with the dollar shedding basis points).  That's the oil price range where the economy begins to get wrecked all over again - that is, whatever remains of the economy.  That's the price range where airlines go back to the intensive care unit and citizens have to max out their credit cards to buy gasoline.  We're moving toward a very hard landing and very soon.

War on Internet

Freedom of thought and expression through an open medium is the biggest threat to any closed society. And there is no bigger threat to the 24x7 bombardment of infotainment, pundit-speak and propaganda of the corporate media than the Internet.

The proposed Cyber Security Act of 2009, according to Section 18 of S.773 gives the President the right to, “declare a cybersecurity emergency and order the limitation or shutdown of Internet traffic to and from any compromised Federal Government or United States critical infrastructure information system or network.”

 

 

So what is a “critical infrastructure information system or network”?

 

 

The term ‘Federal Government and United States critical infrastructure information systems and networks’ includes State, local, and nongovernmental information systems and networks in the United States designated by the President as critical infrastructure information systems and networks.

 

 

In other words, any network, host, server, mobile device, website, blog, community board or forum that the President wants to unplug. Remember, this isn’t necessarily about the current Administration. Legislation or Executive Orders signed can lay dormant for years for more sinister purposes beyond the already undemocratic effects of suppressed speech.

 

 

As more applications are centralized through cloud computing and more security breaches inevitably occur, no doubt each incident will be conveniently publicized to yet again create a sense of the imminent threat or crisis that requires the government to protect us.

 

 

Making matters worse is the current push to completely neuter or spade the alternative media. Obama’s choice to head the Orwellian-sounding White House Office of Information and Regulatory Affairs should worry any advocate of free speech.

 

When it comes to the First Amendment, Team Obama believes in Global Chilling.

Cass Sunstein, a Harvard Law professor who has been appointed to a shadowy post that will grant him powers that are merely mind-boggling, explicitly supports using the courts to impose a "chilling effect" on speech that might hurt someone's feelings. He thinks that the bloggers have been rampaging out of control and that new laws need to be written to corral them.

Advance copies of Sunstein's new book, "On Rumors: How Falsehoods Spread, Why We Believe Them, What Can Be Done," have gone out to reviewers ahead of its September publication date, but considering the prominence with which Sunstein is about to be endowed, his worrying views are fair game now. Sunstein is President Obama's choice to head the White House Office of Information and Regulatory Affairs. It's the bland titles that should scare you the most (cont.).

Why I Bother and Very High Praise for CHS Survival+ EBook

A good friend of mine asked me what really motivated me to start this website in 2006, so I thought I’d take a broad swag and position the ‘why I bother’ in a form of a list of some guiding questions. It’s surely not the one thing, as the expression goes:

-How do we each best emotionally and philosophically approach the next 2-3 decades, assuming a broad transformation due to economic, social, demographic and environmental factors, as well as political reaction to those factors?

-How do you find the right balance between fatalism (we’re doomed so why bother) and complacency (things will work themselves out through politics and technology)?

-How do you avoid the spectacle of "left"-"right" cartoon politics, but guard against the loss of individual rights, death by 1000 cuts road to fascism, fighting unjust wars, theft by financial cartels, agricultural monopolies (tyranny by seed) and so on?

-How do you reconcile your vigilance over the aristocratic class (I'm not talking classic rich vs. poor claptrap, but rather the highest echelons of global power brokers) that usurps democratic process and governments with the inconvenient fact that in many cases your way of life is deeply intertwined and dependent on the structures and systems they impose? How do you take personal responsibility for your part in the deal instead of simple and pure blame?

-How do you guard against quasi government outside the supposed representative government, which brokers sweetheart deals in backrooms and ensures state-subsidized monopolies maintain an illusion of "free markets", that is more responsible to a small group of elite stakeholders than 99.9% of the population?

-How do you avoid buying into the constant stream of propaganda and Orwellian double-speak in the corporate-owned media, which is nothing more than another means of maintaining structural control by a small group of stakeholders? And again, how do you reconcile your role as someone who is probably in some way shape or form beholden to the same useful myths and outright lies?

-Even if you’ve planned for the worst and stockpiled your beans, bullets and Band-aids in preparation for the sudden plunge into a new dark age completely dominated by warlords with AR’s and AK's, how will you approach day-to-day life if the decisive all-hands-on-deck trigger event never quite comes? What if there is no EMP pulse or sudden hyperinflationary chaos due to an overnight bond market collapse, but a steady descent towards something like a 3^rd world neo feudal arrangement over years, in fits and spurts?

There are of course many others, but that’s a very broad pass which explains the diversity in points of view in authors, writers, columnists and bloggers I link.

No link ever implies, “Hey this guy has all the answers and I agree 100%”, but I respect each of their personal truths and the conviction behind their narratives. I value the free thinkers out there, most of whom have have more wisdom and personal experience than I, who dare speak their form of truth to power and have opinions that aren’t bought and paid for.

That brings me to Charles Hugh Smith’s EBook Survival+ which hits on many of the broader themes of this humble site of mine. Of course I don’t agree with absolutely everything he says in the book, but I can’t be more emphatic to take the time to read this – an excellent summary of the reasons we are where we are, and the factors that most likely shape where we’re heading.

In the end, as my friend points out, it is not what we write or say, but what we do in life.

 

Survival+:

Structuring Prosperity for Yourself and the Nation

by Charles Hugh Smith


Introduction

Since launching my blog www.oftwominds.com in May 2005, nothing seemed more important than warning readers that the unsustainably leveraged credit-mad global financial system was poised to break down. Once the system finally crashed in late 2008, my goal switched to writing a practical guide for not just surviving the coming Great Transformation but prospering: a concept I called Survival+ (Plus). This requires liberating ourselves from failed models of credit expansion, resource depletion, financial looting and a counterfeit prosperity built entirely on debt.

I immediately ran into several great difficulties. Many others had foreseen the same calamity, and their focus narrowed on individual survival: relocating to a remote/sustainable spot and preparing for societal collapse by stockpiling self-defense and food.

While prudent and practical on a short-term timeline, this response struck me as incomplete on several levels. Most importantly, stockpiling six months' supplies would not sustain anyone through a 20-year Crisis and Transformation; their own Crisis was simply being delayed a relatively short time. In other words: "what happens in month seven"?

Secondly, many "survivalist" proponents focus on individual preparation, as if a single person or household can prosper without a stable, caring community for reciprocal support. This notion ran counter not just to my own experience but to all of human history. While I understood the desire to "opt out" and become an Isolationist--a solution to general turmoil which has roots going back to the dissolution of the Roman Empire and the Warring States era in ancient China--I felt a more practical, longer-term option to Isolationism should also be presented.

The second great difficulty is that individuals, households and communities exist in larger units: city-states, counties, nations and continents. Even if nation-states were to break apart, the world would remain tightly interconnected. Events, weather, shortages and surpluses in distant places would continue to impact us all. States (by which I mean all forms of government) will continue to extend control over resources and wealth.

Trade has been a key component of security and prosperity since the dawn of civilization. Long before fossil fuels dominated the global economy, land and sea trade in both goods and innovations bound Asia, the Mideast and Europe. Thus a retreat to isolated islands of self-sufficiency, while understandable and practical on one level, does not align with what history teaches us about prosperity. Prosperity ultimately depends on stable communities, surplus production and trade. These essentials have been largely ignored in analyses of the coming Great Transformation.

Thus our individual survival and prosperity are inextricably bound up in larger contexts: we cannot just ignore community, State and trade forces as if they will cease to exist. Even as they no longer function as they did in the past, it seems wise to influence the larger Transformation rather than view ourselves in an isolation which is ultimately misleading.

That is why I subtitled this book "Structuring Prosperity for Yourself and the Nation." To believe that we can prosper individually without regard for the actions of our fellow citizens and the State (government) is simply not practical. Yes, a handful of very rugged people have the experience required to live in the deepest remains of wilderness; but the wilderness cannot support more than a handful of people, and most of us do not have the requisite skills or ruggedness to survive that splendid isolation.

This, then, is a practical book for the rest of us.

As I organized the book, another great difficulty quickly arose. I realized that the way a problem is phrased implicitly stakes out the eventual solution. As a result, the greatest challenge in understanding our plight, both as individuals and communities, is essentially conceptual. The forces which benefit most from the status quo are pouring all their prodigious resources into framing the "problems" in such a way that the "obvious solutions" leave their own power, influence and wealth intact.

Lest you wonder how this works, recall that all through the initial phase of the financial crisis in 2008, the mainstream media and standard-issue financial punditry (SIFP) blamed the entire crisis on foolish low-income homebuyers who had chosen to finance their purchases with subprime mortgages.

Framed in this way, the "problem" appeared to be caused by credulous citizens in the lower socio-economic levels. The "solution" was thus to eliminate these people from the pool of potential homebuyers, and auction off their foreclosed homes to worthier buyers.

But subsequent events revealed this framing of the problem to be highly selective: the "problem" extended far beyond feckless subprime borrowers into the top rungs of American Capitalism: the money-center and investment banks, and a politically driven absence of oversight by the very governmental agencies tasked with protecting the public.

The status quo's convenient "framing of the problem" insured that any "solutions" would leave their power, wealth and influence entirely intact; only the impoverished subprimers would suffer, not those who profited so immensely from the housing/credit bubble.

It was thus clear that a practical analysis of the crisis and coming Transformation requires a deep understanding of how "solutions" are set in the framing of the "problem." Indeed, what is "obvious" must be questioned on the deepest levels, for what is "obvious" has two powerful characteristics: it can be managed/manipulated via the mass media, and it directs "solutions" which leave the rentier-financial Power Elite (what I call the Plutocracy) intact.

The nature of propaganda in a so-called free State must then be explored in depth as well.

The last great difficulty is also conceptual. It is relatively straight-forward to present the causes of the coming global crisis: Peak Oil, disintegration of the credit bubble, demographics, etc. Many books do a fine job of outlining the nature of these interlocking crises.

The books attempting to present solutions typically focus on either individuals (along the lines of "get rich as the world falls apart") or idealized policy "fixes" based on academic understandings of large-scale structures (articles on G-20 trade policies, etc). The flaw in both approaches is that neither flows from what I call an integrated understanding of the actual problems. (Key concepts are italicized when introduced.)

Practical solutions must follow from this integrated understanding. Without such a comprehensive conceptual framework, then all proposed solutions will be ungrounded and thus dangerously misleading.

Any "solution" which ignores key elements of the problem is doomed to solve nothing. As in our example of the so-called "subprime crisis," the "solution" of limiting uncreditworthy borrowers did nothing to address the actual problems: highly profitable and highly fraudulent practices riddling every level of the mortgage/rating/securities industries, perverse incentives that created unprecedented opportunities for windfall exploitation, over-reach and looting, etc.

I cannot claim that reaching such an integrated understanding will be easy. Many of the concepts presented here may be unfamiliar and thus difficult to grasp at first. Many are so alien to status quo "explanations" that they may well strike you as the opposite of "obvious." But since I have thought about these concepts and forces for years, they seem "obvious" to me. In the language of our Declaration of Independence: I hold these truths to be self-evident.

So let us begin.

We stand on the threshold of a Great Transformation that will unfold over the next 20 years--a generation. The exact turn and sequence of events is unknown, but a clear-eyed appraisal of the forces, trends and cycles already at work will help us, collectively and as individuals, weather the challenges and turn what could be a catastrophe into a positive transformation.

To the status quo understanding of how our world works, this appraisal will be anything but "obvious." (Sorting out what is "obvious" is a big part of the analysis which follows.)

A number of other writers have addressed preparing for the Depression which has just begun. These books are, within their limited scope, practical and useful. This book aims at a different goal: once we understand the complex forces at work, then we can structure a response on all three levels: household/family, community and nation. For if there is anything we can confidently predict, it's that the nation's crumbling finances will drastically affect every family and every community (continued link)...

 

Shelly Roche on Cap&Trade

More on the Cap and Trade scam by Shelly Roche. If you're outraged, by wave on wave of fly by night legislation, but don't have the time to research each issue, you might want to bookmark her site as she does a great job of pulling together actionable information for each bill.

Ron Paul on IMF Bailouts

Here's the latest from Ron Paul on the war supplemental appropriations bill and IMF bailouts which punishes those it pretends to help through cut throat Keynesian policies.

John Maynard Keynes famously said, "in the long run we're all dead."

Perhaps he didn't realize how quickly his economic legacy would help that cause.   

Last week Congress passed the war supplemental appropriations bill. In an affront to all those who thought they voted for a peace candidate, the current president will be sending another $106 billion we don't have to continue the bloodshed in Afghanistan and Iraq, without a hint of a plan to bring our troops home.

Many of my colleagues who voted with me as I opposed every war supplemental request under the previous administration seem to have changed their tune. I maintain that a vote to fund the war is a vote in favor of the war. Congress exercises its constitutional prerogatives through the power of the purse, and as long as Congress continues to enable these dangerous interventions abroad, there is no end in sight, that is until we face total economic collapse.

From their spending habits, an economic collapse seems to be the goal of Congress and this administration. Washington spends with impunity domestically, bailing out and nationalizing everything they can get their hands on, and the foreign aid and IMF funding in this bill can rightly be called an international bailout!

As Americans struggle through the worst economic downturn since the Great Depression, this emergency supplemental appropriations bill sends $660 million to Gaza, $555 million to Israel, $310 million to Egypt, $300 million to Jordan, and $420 million to Mexico. Some $889 million will be sent to the United Nations for so-called "peacekeeping" missions. Almost one billion dollars will be sent overseas to address the global financial crisis outside our borders. Nearly $8 billion will be spent to address a "potential pandemic flu" which could result in mandatory vaccinations for no discernable reason other than to enrich the pharmaceutical companies that make the vaccine.

Perhaps most outrageous is the $108 billion loan guarantee to the International Monetary Fund. These new loan guarantees will allow that destructive organization to continue spending taxpayer money to prop up corrupt leaders and promote harmful economic policies overseas.

Not only does sending American taxpayer money to the IMF hurt citizens here, evidence shows that it even hurts those it pretends to help. Along with IMF loans comes IMF required policy changes, called Structural Adjustment Programs, which amount to forced Keynesianism. This is the very fantasy-infused economic model that has brought our own country to its knees, and IMF loans act as the Trojan Horse to inflict it on others. Perhaps most troubling is the fact that leaders in recipient nations tend to become more concerned with the wishes of international elites than the wishes and needs of their own people. Argentina and Kenya are just two examples of countries that followed IMF mandates right off a cliff. The IMF frequently recommends currency devaluation to poorer nations, which has wiped out the already impoverished over and over. There is also a long list of brutal dictators the IMF happily supported and propped up with loans that left their oppressed populace in staggering amounts of debt with no economic progress to show for it.

We are buying nothing but evil and global oppression by sending your taxdollars to the IMF. Not to mention there is no Constitutional authority to do so. Our continued presence in Iraq and Afghanistan does not make us safer at home, but in fact undermines our national security. I vehemently opposed this Supplemental Appropriations Bill and was dismayed to see it pass so easily.

Cap and Trade - Another Fraud

The Waxman-Markley American Clean Air and Security Act of 2009 (ACES), cleverly paraded as an earth-saving, energy independence bill that lowers pollution, is a draconian measure of taxation and government control.

 

The sad irony for me is that this bill will make it more difficult for the average person to transition to a lifestyle less dependent on centralized systems in order to deal with the converging crisis of our times – many of which, such as energy, food and fresh water shortages are environmental. In years to come, we face enough scarcity as it is, and the current subsidies that keep prices artificially low are unsustainable.

 

For decades government manipulation, from tax incentives to military interventions to irresponsible monetary policy has destroyed real market signals resulting in years of privatized gains and socialized costs at the expense of the average person and the environment.

 

Now we are believe that the solution is to give the EPA czar-like authority and a pollution permit allocation scheme that will continue to socialize costs through trickle down taxation.

 

Once again, in great haste the House of Representatives has scrambled to pass a bill with huge implications without having the chance to digest, analyze and summarize the 1200-page proposal, which was being revised up until the final minutes before the July 4^th break.

 

It happened with the Patriot Act, then TARP and now ACES.

 

If bills were actually good for the population, then there would be no rush to push them onto the floor. But, since an informed electorate is the worst enemy of proponents of this type of legislation, they had to act fast before Americans had a chance to absorb the huge implications under cover of a constant deluge of Michael Jackson tributes in the media.

 

I usually avoid the global warming debate because even if humans do contribute to global warming, a combination of slowing population growth in the developed world and peaking out of easily accessible oil, natural gas and coal will offset the effects. If you do want to debate the science a growing number of scientists and Americans in general dispute the impacts of manmade warming. Even if you are are an advocate of global warming, then you know that the impacts of the bill on climate in the best case are negligible.

 

The real Inconvenient Truth for those of us paying attention is that you can control, tax and subject a person to do just about anything under false hopes that doing do will save the world. 

 

For the political class, cap and trade is a wealth and power accumulation scheme. 80% of the credits go to special interests and 20% go to the Treasury, while an entirely new marketplace for flipping emission allowances, compensatory allowances and offset credits is emerging. Carbon derivatives anyone?

 

The blatant example is that Al Gore, champion of the global warming agenda, runs a carbon trading firm. He is the Chairman of Generation Investment Management, LLP and one of the principle investment areas for the firm is Carbon Markets and Climate-Related Financial Services. The political connections to other stakeholders in the Chicago Climate Exchange such as Maurice Strong are well-documented.

 

There is a wide gap between the realities of legitimate environmental concerns and a Global Warming money making and social control agenda.  

 

The $14 Trillion and Counting Swindle

The US government and Federal Reserve have spent, lent or committed just under $14 Trillion in banker bailouts as shown in the figure below from the recent FDIC report. The sucking sound you hear right now is trillions of dollars tossed into a vortex of fraud, swindle and deceit under cover of secrecy.

 

Given the momemtum of motions to audit the Federal Reserve in HR 1207 and S604, the Fed hired a lobbyist, Linda Robertson, formerly with - appropriately enough - Enron.

A lobbyist. Can you imagine a government agency - say the Department of Energy or Department of Interior - hiring a lobbyist? Isn't that what private interests do?

Yes, exactly.

And at the time when the Fed is on the defensive now that the public has the audacity to ask for some transparency into where trillions are going, the proposed financial reform act would greatly expand the Fed's powers making them, "the nation's most powerful financial overseer."

The proposal, if passed into law, would represent one of the biggest changes ever in the Fed's role. The central bank would win power to monitor risks across the financial system, and sweeping authority to examine any firm that could threaten financial stability, even if the Fed wouldn't normally supervise the institution. The nation's biggest and most interconnected firms would be subject to heightened oversight by the central bank.

President Obama said the plan would ensure "that lines of responsibility and accountability are clear" by placing authority in the Fed's hands.

I'm hard pressed to think of a more flagrant example of punishing the fox by letting it guard the henhouse, than a case where the Fed, owned by the banks, will supervise the banks...and "any firm that could threaten financial stability".

 

Rogue Waves

The latest Global European Anticipation Bulletin (GEAB) describes how high unemployment, corporate bankruptcies and the dollar crisis are converging this summer like a three sisters rogue wave. 

One specific kind of rogue wave is called the “three sisters”, i.e. a group of three rogue waves all the more dangerous in that, even if a ship had time to react properly to the first two waves, there is no way she could be in the right position to brave the third one. According to LEAP/E2020, it is a similar phenomenon that the world is about to encounter this summer; and no country (ship) is in a favourable position to face them, even if some countries are more at risk than others, as explained in this GEAB (N°36).

One of the bigger questions is how quickly the dollar reserve unwinding will unfold. Brazil, Russia, India and China want so badly to wean themselves from the dollar seeking non-dollar currency swaps and reserve holdings in IMF SDRs, but know they must do so in such a way not to create a run on the bank that quickly destroys the value of their dollar holdings. At this point, large dollar holders are held hostage by their reserves and they must escape without drawing too much attention from the guards, in fear of starting a panic rush to dump the dollar by other countries.  

As anticipated by LEAP/E2020 as early as October 2008, on the eve of summer 2009, the question of the US and UK capacity to finance their unbridled public deficits has become the central question of international debates, thus paving the way for these two countries to default on their debt by the end of this summer.

At this stage of the global systemic crisis’ process of development, contrary to the dominant political and media stance today, the LEAP/E2020 team does not foresee any economic upsurge after summer 2009 (nor in the following 12 months) (1). On the contrary, because the origins of the crisis remain unaddressed, we estimate that the summer 2009 will be marked by the converging of three very destructive « rogue waves » (2), illustrating the aggravation of the crisis and entailing major upheaval by September/October 2009. As always since this crisis started, each region of the world will be affected neither at the same moment, nor in the same way (3). However, according to our researchers, all of them will be concerned by a significant deterioration in their situation by the end of summer 2009 (4).

This evolution is likely to catch large numbers of economic and financial players on the wrong foot who decided to believe in today’s mainstream media operation of “euphorisation”.

In this special « Summer 2009 » edition, our team describes in detail these three converging « rogue waves » and their impact, and gives a number of strategic recommendations (currencies, gold, real estate, bonds, stocks, currencies) to avoid being swept away in this deadly summer.

LEAP/E2020 believes that, instead of « green shoots » (those which international media, experts and the politicians who listen to them (5) kept perceiving in every statistical chart (6) in the past two months), what will appear on the horizon is a group of three destructive waves of the social and economic fabric expected to converge in the course of summer 2009, illustrating the aggravation of the crisis and entailing major changes by the end of summer 2009… more specifically, debt default events in the US and UK, both countries at the centre of the global system in crisis. These waves appear as follows:

1. Wave of massive unemployment: Three different dates of impact according to the countries in America, Europe, Asia, the Middle East and Africa
2. Wave of serial corporate bankruptcies: companies, banks, housing, states, counties, towns
3. Wave of terminal crisis for the US Dollar, US T-Bond and GBP, and the return of inflation

 

In fact, these three waves do not appear in quick succession like the « sisters rogue waves ». They are even more dangerous because they are simultaneous, asynchronous and non-parallel. Hence their impact on the global system accentuates the risks because they hit at various angles, at different speeds and with varying strength. The only certain thing at this stage is that the international system has never been so weak and powerless to face such a situation. The IMF and global governance institutions’ reforms announced by the London G20 are at a standstill (7). The G8 becomes more like a moribund club whose utility is increasingly questioned (8). US leadership is the shadow of what it used to be, mostly concerned by desperately trying to find purchasers for its T-Bonds (9). The global monetary system is in a process of disintegration, with the Russians and Chinese in particular accelerating their positioning in the post-Dollar era. Companies foresee no improvement in the business climate and speed up the pace of layoffs. A growing number of states falter under the weight of their accumulated debt created to “rescue banks” and are about to be faced with a welter of failings by the end of this summer (10). And, last but not least, the banks, once they have squeezed money out of naive savers thanks to the market upsurge orchestrated in the past few weeks, will be have to admit that they are still insolvent by the end of summer 2009.

In the United States and United Kingdom in particular, the colossal public financial effort made in 2008 and at the beginning of 2009 for the sole benefit of large banks became so unpopular that it was impossible to consider injecting more public money into banks in spring 2009, despite the fact that they were still insolvent (11). It then became necessary to invent a “fairy tale” to convince the average saver to inject his/her own money into the financial system. By means of the « green shoots » story, overpriced stock indices based on no real economic grounds and promises of « anticipated public funding repayment », the conditioning was achieved. Hence, while big investors from oil-producing and Asian countries (12) withdrew capital from these banks, large numbers of small individual investors returned, full of hope. Once these small investors discover that public funding repayment is only a drop in the ocean of public aid granted to these banks (to help them dispose of their toxic assets) and that, after three or four months at best (as analyzed in this GEAB N°36), these banks are again on the verge of collapse, they will realize, powerless, that their share is worth nothing once again.

Iran Hasn't Forgotten 1953

In the flurry of recent articles on the disputed elections in Iran, few dare trace the tumultuous political history back to the CIA overthrow of democratically elected Muhammad Mossadeq in 1953 and the reinstallation of the Shah to the throne of Iran.

I’ve linked an older article reminding everyone of the circumstances of Operation Ajax during the Eisenhower Administration.

Obviously, America’s relationship with Iran has been extremely hostile over the past several decades. From the perspective of most Americans, the seminal event of US-Iranian relations was the siege of the US embassy in Tehran and the subsequent holding of its staff as hostages back in the 1970s.

Although that hostage-taking was brutal and unjustified, many Americans lack a more global perspective of the history of American interactions with Persia. One of the most critical events in that relationship occurred over 50 years ago during the Eisenhower Administration. While Americans may know little about Operation Ajax, its memory still evokes intense anger from nearly every Iranian.

The brief version (for a more thorough history of the events surrounding Operation Ajax, I refer the reader to Sandra Mackey’s excellent book The Iranians) concerns the overthrow of Muhammad Mossadeq’s short-lived, democratic government by the CIA in 1953 and the reinstallation of the Shah to the throne of Iran.

In 1951, the control of Iran’s oil fields by a British company (the Anglo-Iranian Oil Company, or AIOC) became a hot political topic. The Iranian people believed, with some justification, that the existing deal between the Iranian government and AIOC unfairly benefited the company. Muhammad Mossadeq, then a member of the Iranian parliament, took the lead in demanding a renegotiation of the pact. The masses of the Iranian people rallied to his standard and quickly made him the most revered leader in the land. The Shah, who then ruled as an authoritarian monarch, lost control of events as his previously powerless parliament (the Majlis) took on a life of its own.

As Mackay notes:

With Mossadeq leading the charge against Iran’s economic master, the Majlis, on March 15, boldly nationalized the Anglo-Iranian Oil Company…On April 29, the same Majlis elected Muhammad Mossadeq prime minister. While the shah sat on the throne as a mere shadow, Muhammad Mossadeq basked in the acclaim of the vast majority of Iranians, who for the first time in decades gave their genuine respect, devotion, and loyalty to their recognized leader.

While I certainly don’t condone his socialistic tendencies or his seizure of the oilfields, it is undeniable that by the time of his elevation to prime minister, Mossadeq had the backing of the overwhelming majority of the Iranian population. For the first time in its long history, Iran had a democratically elected leader.

By 1953, Mossadeq was in an increasingly difficult situation. Oil revenues had plummeted due to a boycott of Iranian oil and the economy slumped. The Soviet-backed Iranian communist party was becoming increasingly aggressive, and Washington began to worry. Iran was a vital chess piece in the Cold War and the American oil companies had their eyes on future concessions there. Mossadeq had become an "issue" for some very powerful people.

Eventually, the decision was made in Washington that Mossadeq had to go. Brigadier General Norman Schwarzkopf (father of the Gulf War commander) and CIA guru Kermit Roosevelt (grandson of Teddy) were ordered to begin a covert operation designed to remove Mossadeq and restore the Shah to absolute authority. A complex plot, codenamed Operation Ajax, was conceived and executed from the US Embassy in Tehran.

Using CIA assets in the Iranian military and various minor political parties, an uprising was staged.

Mackey describes the climax:

For nine hours, the pro-shah army, utilizing American-style military strategy and logistics, battled pro-Mossadeq demonstrators. At least 300 people died. By nightfall, the Mossadeq partisans had drawn into a tight cordon around the premier’s palace. Inside, the aged and always ailing prime minister threw a coat over his pajamas, leaped over the garden wall, and went into hiding. Forty-eight hours later he was arrested. The brief euphoric moment when the followers of Mossadeq believed that he held Iran’s destiny in his hands evaporated.

The Shah, who had fled to Rome at the first whiff of gunpowder, rode back to power on the tip of American bayonets.

In essence, the United States had engaged in a massive covert operation designed to remove a democratically elected leader from power and reinstall an authoritarian monarch (a move which makes a mockery of our currently stated desire to "spread democracy" in the Middle East).

This affair had several disastrous ramifications for the future of American-Iranian relations. First, the Shah, from that point forward, was viewed as a creature of America. Consequently, America became an accessory to his every oppressive act during the subsequent 26 years of his rule. Second, the American embassy in Tehran was permanently marked as a "nest of spies" in the eyes of the Iranian populace. And third, Iranian democracy was strangled in its crib.

The next time the populace rose to overthrow the Shah (in the 1970s), they viewed America as their enemy and were cheering a leader who was significantly less democratic than Mossadeq. When rumors began circulating that the Americans were going to bring the Shah back via yet another covert operation, the Iranian mobs responded by seizing the US embassy in Tehran and holding its workers hostage.

If Mossadeq’s regime had been permitted to continue, it is entirely possible that Iran could have evolved into an authentic democracy. American interventionism destroyed that opportunity and set the stage for many of the tragedies currently haunting the Middle East.

If America is ever to have even remotely cordial relations with Iran, we must accept responsibility for the terrible effects of Operation Ajax and admit that we had no right to intervene in a controversy that was wholly the business of the Iranian people. That exploit was unworthy of the Land of Washington and Jefferson.

While the American public often quickly forgets the interventions and mischievous actions of its government, our overseas victims seldom do. The current climate of international terrorism should prompt the American people to take a more active interest, since these transgressions often come back to haunt us in the most unexpected ways.

George Friedman of Stratfor describes the two political camps in Iran.

 

In 1979, when we were still young and starry-eyed, a revolution took place in Iran. When I asked experts what would happen, they divided into two camps.

The first group of Iran experts argued that the Shah of Iran would certainly survive, that the unrest was simply a cyclical event readily manageable by his security, and that the Iranian people were united behind the Iranian monarch’s modernization program. These experts developed this view by talking to the same Iranian officials and businessmen they had been talking to for years — Iranians who had grown wealthy and powerful under the shah and who spoke English, since Iran experts frequently didn’t speak Farsi all that well.

The second group of Iran experts regarded the shah as a repressive brute, and saw the revolution as aimed at liberalizing the country. Their sources were the professionals and academics who supported the uprising — Iranians who knew what former Supreme Leader Ayatollah Ruholla Khomeini believed, but didn’t think he had much popular support. They thought the revolution would result in an increase in human rights and liberty. The experts in this group spoke even less Farsi than those in the first group.

Misreading Sentiment in Iran

Limited to information on Iran from English-speaking opponents of the regime, both groups of Iran experts got a very misleading vision of where the revolution was heading — because the Iranian revolution was not brought about by the people who spoke English. It was made by merchants in city bazaars, by rural peasants, by the clergy — people Americans didn’t speak to because they couldn’t. This demographic was unsure of the virtues of modernization and not at all clear on the virtues of liberalism. From the time they were born, its members knew the virtue of Islam, and that the Iranian state must be an Islamic state.

Americans and Europeans have been misreading Iran for 30 years. Even after the shah fell, the myth has survived that a mass movement of people exists demanding liberalization — a movement that if encouraged by the West eventually would form a majority and rule the country. We call this outlook “iPod liberalism,” the idea that anyone who listens to rock ‘n’ roll on an iPod, writes blogs and knows what it means to Twitter must be an enthusiastic supporter of Western liberalism. Even more significantly, this outlook fails to recognize that iPod owners represent a small minority in Iran — a country that is poor, pious and content on the whole with the revolution forged 30 years ago.

There are undoubtedly people who want to liberalize the Iranian regime. They are to be found among the professional classes in Tehran, as well as among students. Many speak English, making them accessible to the touring journalists, diplomats and intelligence people who pass through. They are the ones who can speak to Westerners, and they are the ones willing to speak to Westerners. And these people give Westerners a wildly distorted view of Iran. They can create the impression that a fantastic liberalization is at hand — but not when you realize that iPod-owning Anglophones are not exactly the majority in Iran.

Last Friday, Iranian President Mahmoud Ahmadinejad was re-elected with about two-thirds of the vote. Supporters of his opponent, both inside and outside Iran, were stunned. A poll revealed that former Iranian Prime Minister Mir Hossein Mousavi was beating Ahmadinejad. It is, of course, interesting to meditate on how you could conduct a poll in a country where phones are not universal, and making a call once you have found a phone can be a trial. A poll therefore would probably reach people who had phones and lived in Tehran and other urban areas. Among those, Mousavi probably did win. But outside Tehran, and beyond persons easy to poll, the numbers turned out quite different.

Some still charge that Ahmadinejad cheated. That is certainly a possibility, but it is difficult to see how he could have stolen the election by such a large margin. Doing so would have required the involvement of an incredible number of people, and would have risked creating numbers that quite plainly did not jibe with sentiment in each precinct. Widespread fraud would mean that Ahmadinejad manufactured numbers in Tehran without any regard for the vote. But he has many powerful enemies who would quickly have spotted this and would have called him on it. Mousavi still insists he was robbed, and we must remain open to the possibility that he was, although it is hard to see the mechanics of this.

Ahmadinejad’s Popularity

It also misses a crucial point: Ahmadinejad enjoys widespread popularity. He doesn’t speak to the issues that matter to the urban professionals, namely, the economy and liberalization. But Ahmadinejad speaks to three fundamental issuesthat accord with the rest of the country.

First, Ahmadinejad speaks of piety. Among vast swathes of Iranian society, the willingness to speak unaffectedly about religion is crucial. Though it may be difficult for Americans and Europeans to believe, there are people in the world to whom economic progress is not of the essence; people who want to maintain their communities as they are and live the way their grandparents lived. These are people who see modernization — whether from the shah or Mousavi — as unattractive. They forgive Ahmadinejad his economic failures.

Second, Ahmadinejad speaks of corruption. There is a sense in the countryside that the ayatollahs — who enjoy enormous wealth and power, and often have lifestyles that reflect this — have corrupted the Islamic Revolution. Ahmadinejad is disliked by many of the religious elite precisely because he has systematically raised the corruption issue, which resonates in the countryside.

Third, Ahmadinejad is a spokesman for Iranian national security, a tremendously popular stance. It must always be remembered that Iran fought a war with Iraq in the 1980s that lasted eight years, cost untold lives and suffering, and effectively ended in its defeat. Iranians, particularly the poor, experienced this war on an intimate level. They fought in the war, and lost husbands and sons in it. As in other countries, memories of a lost war don’t necessarily delegitimize the regime. Rather, they can generate hopes for a resurgent Iran, thus validating the sacrifices made in that war — something Ahmadinejad taps into. By arguing that Iran should not back down but become a major power, he speaks to the veterans and their families, who want something positive to emerge from all their sacrifices in the war.

Perhaps the greatest factor in Ahmadinejad’s favor is that Mousavi spoke for the better districts of Tehran — something akin to running a U.S. presidential election as a spokesman for Georgetown and the Upper East Side. Such a base will get you hammered, and Mousavi got hammered. Fraud or not, Ahmadinejad won and he won significantly. That he won is not the mystery; the mystery is why others thought he wouldn’t win.

For a time on Friday, it seemed that Mousavi might be able to call for an uprising in Tehran. But the moment passed when Ahmadinejad’s security forces on motorcycles intervened. And that leaves the West with its worst-case scenario: a democratically elected anti-liberal.

Western democracies assume that publics will elect liberals who will protect their rights. In reality, it’s a more complicated world. Hitler is the classic example of someone who came to power constitutionally, and then proceeded to gut the constitution. Similarly, Ahmadinejad’s victory is a triumph of both democracy and repression.

The Road Ahead: More of the Same

The question now is what will happen next. Internally, we can expect Ahmadinejad to consolidate his position under the cover of anti-corruption. He wants to clean up the ayatollahs, many of whom are his enemies. He will need the support of Iranian Supreme Leader Ayatollah Ali Khamenei. This election has made Ahmadinejad a powerful president, perhaps the most powerful in Iran since the revolution. Ahmadinejad does not want to challenge Khamenei, and we suspect that Khamenei will not want to challenge Ahmadinejad. A forced marriage is emerging, one which may place many other religious leaders in a difficult position.

Certainly, hopes that a new political leadership would cut back on Iran’s nuclear program have been dashed. The champion of that program has won, in part because he championed the program. We still see Iran as far from developing a deliverable nuclear weapon, but certainly the Obama administration’s hopesthat Ahmadinejad would either be replaced — or at least weakened and forced to be more conciliatory — have been crushed. Interestingly, Ahmadinejad sent congratulations to U.S. President Barack Obama on his inauguration. We would expect Obama to reciprocate under his opening policy, which U.S. Vice President Joe Biden appears to have affirmed, assuming he was speaking for Obama. Once the vote fraud issue settles, we will have a better idea of whether Obama’s policies will continue. (We expect they will.)

What we have now are two presidents in a politically secure position, something that normally forms a basis for negotiations. The problem is that it is not clear what the Iranians are prepared to negotiate on, nor is it clear what the Americans are prepared to give the Iranians to induce them to negotiate. Iran wants greater influence in Iraq and its role as a regional leader acknowledged, something the United States doesn’t want to give them. The United States wants an end to the Iranian nuclear program, which Iran doesn’t want to give.

On the surface, this would seem to open the door for an attack on Iran’s nuclear facilities. Former U.S. President George W. Bush did not — and Obama does not — have any appetite for such an attack. Both presidents blocked the Israelis from attacking, assuming the Israelis ever actually wanted to attack.

For the moment, the election appears to have frozen the status quo in place. Neither the United States nor Iran seem prepared to move significantly, and there are no third parties that want to get involved in the issue beyond the occasional European diplomatic mission or Russian threat to sell something to Iran. In the end, this shows what we have long known: This game is locked in place, and goes on.

Not your Grandfather’s Depression

Charles Hugh Smith explains point-by-point why the economic situation before us will be longer, deeper and more destructive than the Great Depression.

 

I realize the causes, similarities and differences aren't news to most of you, but I still found this to be a good hit list in the face of all the recent “green shoots” propaganda.

But the present is far more fragile and vulnerable than the U.S. economy of 1929, for the following reasons. In 1955 Galbraith could not possibly have foreseen or anticipated these current conditions:

1. A Federal government which since the "Reagan Revolution" of 1981 (e.g. don't tax and spend, just borrow and spend) has borrowed during so-called good times on a scale once reserved for rare Keynesian stimulus to combat serious recession. Thus we find ourselves at unprecedented levels of debt (comparable in terms of GDP to the entire cost of World War II) and our current Depression has barely begun.

2. A corrupt-to-the-core corporate structure riddled with bogus accounting, reliance on financial trickery for profits and misdirected/worthless regulatory oversight.

3. A banking sector of such debauchery and fraud that the excesses of the 1920s are reduced to the pranks of slighty-naughty choirboys and girls.

4. A Federal system of entitlements (Medicare, Medicaid and Social Security) which has grown far faster than the underlying economy for decades and now threatens the very solvency of the government itself, so stupendous are the future obligations.

5. A global military hegemony which costs more than all the other militaries and intelligence operations of the entire world put together. The U.S. military consumes more oil than the nation of Sweden (9 million residents).

6. An industrial, transportation and energy infrastructure that, rather than being rebuilt during the past 26 years of debt-based "prosperity," has crumbled in a long decline. Rather than invest in electrical power grids and energy-efficient transport systems, the U.S. squandered the trillions of borrowed dollars on toys, gewgaws, electronics made elsewhere, malls and commercial towers with only transient value and millions of bloated, inefficient poorly constructed homes no one needed or could afford: "assets" which were not productive at all, "assets" which are now capital traps on a scale heretofore unimaginable

7. A paucity of U.S. savings (and thus of domestic capital) with only one historical parallel: the depths of the Great Depression when unemployment was 25%.

8. A huge reliance on financial leverage, debt, borrowing and trickery for corporate profits; the U.S. exports soybeans, increasingly worthless dollars and "financial innovations" which are now exploding in economies from Ireland to India with the destructive force of superweapons. In exchange for this dubious paper, we have accepted actual tangible goods from the rest of the world.

They are now slowly waking up to the fact they've been conned on a scale few can grasp.

9. Globalization has reworked the global supply chain in an astonishingly brief period of time. As a result, the arbitrage of currencies (foreign exchange a.k.a. forex), wages, governance (less is more profitable) and environmental regulations (zero is the most profitable) have all placed advanced post-industrial economies like the U.S. at great structural disadvantages.

10. The U.S. claims to be competitive but much of this competitiveness is highly selective and thus illusory. Everything in the U.S.--labor, goods, buildings and taxes--is high-cost, overregulated (except for finance, banking and governance) and vulnerable to unpredictable lawsuits and officially sanctioned looting. Other than recent immigrants, non-U.S. employers find the workforce is often surly, unappreciative, narcissistic, entitlement-obsessed, unhealthy, poorly educated, unmotivated and more inclined to get-rich-quick schemes than actual enterprise or productivity.

The middle management labors under impossible demands to enrich stockholders next quarter and heavy turnover insures few stay in any job long enough to learn it effectively. Team cooperation is a doublespeak fraud imposed by "facilitators," creating a phony work environment where employees and managers alike pretend to care. This bogus environment breeds a looting, game-the-system mentality in which everyone is grabbing for all they can before retirement, restructuring, reassignment, resignation or getting fired.

A "quarterly profits are God" mentality reduces the workforce (even the good workers) to units of input which are pared back or hired without regard to morale or loyalty. This managerial and cultural pathology makes a mockery of worker loyalty and breeds the very qualities of distrust and "I got mine" attitude which undermines both productivity and workplace happiness.

11. Last but certainly not least, the U.S. economy is highly dependent on cheap, abundant fossil fuels--the very fuels which are in the global depletion phase, happy stories about unlimited natural gas and tar sands to the contrary.

For all these reasons, we can anticipate the Depression currently unfolding will be deeper, longer and more destructive than the Great Depression.

Let's recount the chain of events which partly parallel the Great Depression and partly diverge in meaningfully more destructive ways from that previous era:

1. The postwar income convergence (i.e the rise of the great middle class, the reduction of poverty and the relative reduction of the Plutocracy's share of national income) reverses in the early 1970s as the "true prosperity" of the postwar era ends and is replaced by income flowing increasingly to the top as stagflation, globalization and the decline of dollar gut the purchasing power of the middle class.

2. The rising productivity of the 50s and 60s slips to the flatline through the 70s and early 80s, only picking up again as computer software and hardware revolutionize the back office, sales, manufacturing, just-in-time shipping/production, etc.

3. Concurrent with this gradual return to productivity is the rise of finance as the key profit-center of corporate America. As income skews ever more heavily to the top 1%/5%, then capital (productive assets) become ever more heavily concentrated in the hands of the financial Plutocracy. The top 1% now owns some 2/3 of the nation's entire productive wealth.

4. As profits rise (from rising productivity) then the profits flow not to wages (which remain flat to down 1975-2009 for all but the top 10% professional class) but to those who own the capital.

5. As the middle class experiences a decline in their income and purchasing power (for reasons cited above: declining dollar, rising income disparity, and wages falling due to global wage arbitrage) then they turn more and more to borrowing and ever greater debt to fund what they have been brainwashed by the media to believe is "the American dream" of imported luxury goods, bloated homes, vacuous cruises, etc.

The only other mechanism available to the middle class to increase household income is for Mom/Aunt/Grandmom to enter the workforce, which she does in the tens of millions, with sociological consequences which are still unfolding.

6. This advert/media-driven desire to borrow to fund the "good life" is hugely profitable to the money-center banks, which expand rapidly into mortgage securization, derivatives and consumer credit to the point that they come to dominate corporate profits.

7. The financial Plutocracy, observing that actually producing goods is not very profitable unless you can fix prices as per ADM (Archer Daniels Midlands) or gain government subsidies and tax giveaways (oil lease depreciation, etc.) sinks its capital into the FIRE economy (finance, insurance and real estate), eschewing real-world investments as comparatively unprofitable.

Though rarely noted, this is a longstanding trait of capitalism stretching back to 1400-era Venice. When trade became less profitable than mainland farmimg, the Venetian Elite stopped funding trading and bought farms on the mainland. As a side effect, Venice ceased to be a military and trading power. But the Elite remained immensely wealthy.

8. As the tech bubble expands, middle-class investors see the Plutocracy (those with enough capital to qualify as angel investors and vulture, oops, I mean venture capital) reaping huge gains, and they enter the dot-com stock bubble buildup with a vengeance.

9. In a happy accident, the Soviet Empire collapses just as productivity begins its computer-fueled rise in the U.S. In a so-called Unipolar World in which U.S. military, political and financial influence is unrivaled, non-U.S. investors seek the relative safety and high returns (based on appreciation of the dollar) of U.S. financial instruments.

10. The dot-com bubble implodes in a speculative meltdown (dot-bomb), and retail investors (a.k.a. the middle class 401K investors) are devastated. The ephemeral wealth they once possessed, however briefly, fuels their speculative desire to get into the next get-rich-quick game, which just so happens to be "something everyone understands:" real estate and housing.

11. Having exhausted the dot-com play, Elite capital is seeking a new high-profit home. The miracles of derivatives (CDOs, credit default swaps, etc.) and securitized debt (mortgage tranches, etc.) open up vast new opportunities for leverage, off-balance sheet shenanigans and outright fraud/debauchery of credit. As chip wafer plants disappear from Silicon Valley (too dirty, too costly, etc.) then they're replaced with paper: mortgage-backed securities.

12. Sniffing gold in them thar exurban hills, the under-capitalized and over-indebted U.S. working class and middle class reach for the chalice of easy-money gold: leveraged real estate.

13. With the Federal financial regulatory agencies in a Republican/Democrat-enforced somnambulance, the coast is clear for brigands, shysters, fraudsters, con artists, liars, cheats, and assorted riff-raff in the realtor, mortgage and appraisal businesses, who all feed the ravenous maw of the money-center banks' apparently limitless appetite for real estate assets to securitize and leverage in exotic and highly profitable ways.

14. For a wonderful five years circa 2001-2006, the game is afoot and no-down-payment Jill and $100 million bonus Jack are immensely enriched. Meanwhile, the underlying real economy is becoming ever more imbalanced and ever more fragile as real production and real productivity plummet as everyone rushes to the speculative riches of exurban McMansions and malls.

15. This last best speculative leveraged bubble pops, gutting a Wall Street which had grown utterly dependent on leverage, debt, gamed/fraudulent accounting and bubbles for its rising profits.

16. Doubly devastated by the implosion of housing and their stock investments (mostly in retirement funds), the middle class faces the terrible consequences of its 26-year stupor of ever-rising debt and leverage. Alas, the Emperor's clothes are revealed as remarkably transparent.

17. Just as in the Great Depression, to its great surprise, the Elite has also suffered catastrophic losses and declines in capital and income.

18. Having borrowed and squandered trillions of dollars since 1981 on unaffordable entitlements, military misadventures and assorted worthless bridges-to-nowhere pork spending, the Federal government (The Fed and the Treasury) finds that its ability to borrow its way out of its current debt hole somewhat annoyingly limited. The rest of the world has finally caught on to the con, and Chinese university students are openly mocking Treasury Secretary Geithner's Orwellian claim of "we support a strong dollar." The miracle is that he was not pelted with tomatoes and tarred and feathered for making such absurd statements.

19. With the global media concentrated in a scant few corporate hands (less than 10), this pulling away of the curtain is deleted/excised from media coverage in a ruthless campaign of pure "green shoots" propaganda.

20. As the wheels fall off the U.S. economy and the bubbles cannot be re-inflated, fruitless attempts at holding back the tide with incantations (stop, tide, I am Obama/Geithner/Bernanke!) and loopy sand castles (the bottom is in, buy now! Green shoots are sprouting everywhere except in the real economy!) abound. Unresponsive to propaganda, the real world grinds down into a global Depression without visible end.

Reality vs. Recovery

With a growing number of jesters in the king’s court claiming the worst is behind us and the economy is recovering, let’s take a look at some of the figures.

 

•          Real unemployment in the US is about 20%. Everyone knows that the Official U3 numbers put out by the government are hugely understated. U6 is over 16% and the SGS Alternate Unemployment rate published by ShadowStats.com is over 20%.

•          Where will the good jobs come from when the US manufacturing base has been gutted by globalization, wage arbitrage and tax laws which have all but required US firms to take their business offshore?

 

  

 

    Figure Courtesy of ShadowStats.com

• Remember the old subprime resets charts from 2 years ago? They’ve been updated to show that Option Adjustable mortgage resets won’t peak until 2011 so this alone makes any housing recovery in the near future wishful thinking.

•          Government balance sheets are bending and it is only a matter of time before they break.

•          The 2009 Federal Government deficit is $1.9T. The U.S. will have to borrow 50 cents for every dollar it spends.

•          The US, Europe and Britain will have to sell $8.3T in debt in 2009-10.

•          US income tax revenue is down 44% this year at a time when government spending is soaring.

•          China’s exports are down 41% and global exports are down 30%. Where will the money come from to fund the budget deficits?

 

•          Savings surplus to buy Treasuries doesn’t exist and the Fed and other central banks will have no other choice than to continue to monetize the debt by printing the money from thin air.

•          Meanwhile, long-term interest rates are climbing  – specifically on the 10-year Treasury bond. The Fed can manipulate short-term rates, but the long term bond market has hard-hitting impacts making the debt much more expensive to service.

•          Rose-colored glasses types say this is because there is less demand for “safe” Treasury bonds because market conditions are improving. Ah – yeah.

•          Or it could be the world is expecting massive inflation because of all the funny money demanding more return for funding all the foolishness. Why do you think Chinese students were laughing at Geithner when he told them with a straight face the US was going to be financially responsible and the dollar was safe?

       Increased debt monetization by the Fed continues to erode confidence in the Dollar's reserve status. True there are no healthy currencies in the world, but that won't stop countries from weaning from their dollar dependency. Remember, the dollar system is the primary source of US strength along with its military which can only be funded by the former. No other country can run up huge trade deficits with other countries and pay the debts by printing currency.

•          China is leading the slow dollar dumping charge. They have already signed agreements with Brazil, their largest trading partner, to trade in other currencies. China and the US are in a financial shotgun wedding and to suddenly call it quits would be bad for both, but that won’t stop China from continuing the backdoor dollar dump over time.

•          The Keynesians who run the show and have for decades huckstered the general population into believing deficit spending cures all will continue push more debt into an insolvent system until it breaks.

 

 

Incestuous Pool

In the article below, Bob Chapman describes the revolving door between the chosen financial houses, the Fed and Treasury Department.

The Secrets of the Federal Reserve: The Federal Reserve Act was legislated in 1913 to end recessions, panics and depression. Over that almost 100-year period they have been eminently no more successful then their predecessors. The Fed is a private corporation, which guides US monetary policy. Its staff is from Wall Street, banking, and transnational conglomerates and occasionally from academia. Of the 12 Federal Reserve banks the New York bank is the most powerful. The staffing of the Fed at the least is incestuous, because the member banks take part in the staffing, as they filter to the Fed what actions they should take. That is done by the FOMC, The Federal Open Market Committee. As a further example the recent stress test done by the Fed was done on many of their owners. Sadly the public is unaware of this and even business majors and those with business masters degrees do not know that the Fed is privately owned or what they actually do. For those of you who would like to get a better understanding read G. Edward Griffith’s, “Creature from Jekyll Island” and the secrets of the Federal Reserve” by Eustace Mullins.

Recently we discovered that $101.4 billion was originally secretly funneled through AIG to AIG counterparties - parties that were owed these sums by AIG, which had not collateralized derivative contracts. That is like writing insurance and having no collateral reserves set aside for losing events. The Federal Reserve in their wisdom paid off AIG’s debt with what eventually will be taxpayer debt. This is wrong and it should not have been done secretly. When demanded by a Federal Judge to reveal to whom these monies were paid and under what circumstances, the Fed said it would harm their reputations and it was a “state secret.”

The biggest gun in the Fed arsenal is the New York Fed. The recently appointed Secretary of the Treasury Timothy Geithner was the NY Fed’s previous governor. Mr. Geithner had worked in government previously and was in part responsible for the Asian financial disaster in 1997-1998. He is also a Goldman Sachs alumnus. He is part of a never-ending exchange of the denizens of Wall Street and banking being appointed to government positions. In fact Wall Street and banking have been running our government for a long time. Many say for too long.

This kind of relationship makes government a tool of major financial interests and it breeds corruption, as we just witnessed in the case of Stephen Friedman, formerly of Goldman Sachs, and until he resigned last week, for having purchased some Goldman Sachs stock, was Chairman of the NY federal Reserve, the position Mr. Geithner had held before him. This raises the fundamental question of appointment and corruption. Never mind the other issues the Fed is involved in. this is America’s most powerful financial institution and it is run by corrupt and perhaps incompetent people. The NY fed has a very special position, because it is actively running markets every day via the 21 dealers it uses to manipulate and uses these markets. This is part of the program never spoken of that exists to assist the “Working Group on Financial Markets, which manipulates markets 24/7, under an Executive Order signed in August 1988 by then President Ronald Reagan. This was executed to protect against market failures such that had taken place the previous October. The order was for emergencies. The Treasury, the Fed, Wall Street and banking have distorted its original intent. The Fed also sets interest rates and regulates the issuance of money and credit. Thus the Fed holds a pivotal role in our financial well-being. They also are to insure the soundness and stability of the banking system. If our banking system breaks down it is the fault of the Fed. When that happens it should not be the province of the Fed to commit trillions of dollars of taxpayer money to bail out its own owners.

You can get an idea of the incestuous nature of the Fed and Wall Street in looking at the select committee that not that long ago picked Timothy Geithner to head the NY Fed. Hank Greenberg defrocked former Chairman of AIG, who for some reason was never criminally prosecuted in the scandal; John Whitehead a former Chairman of Goldman Sachs; Peter Peterson, a former Chairman of Lehman Bros.; and Walter Shipley, a former Chairman of Chase Manhattan, now with JP Morgan Chase. We wonder why the media never questions these kinds of connections all of which are tied together by the Council on Foreign Relations.

Then there is the composition of the NY Fed board on which six board members are public representatives. We do not see any common business people on this board. They are all very wealthy New Yorkers, who are all connected to one another. There have been occasionally members of labor and academia, but they can only be considered tokens. It is very definitely an insiders club.

This means the Fed’s real consideration is the maximizing of profits for banking, Wall Street, insurance and real estate. This goal of almost 100 years has made these individuals and their families’ mega-rich. Competent or incompetent they always win. They have information and intelligence no one else has and you can be sure their inner circle has the same privileged information. As usual they are essentially unregulated, which gives the Fed an additional advantage. The lack of banking oversight of recent years has brought our entire financial system into insolvency. We do not know how you could call it anything else when most major banks, brokerage houses, some insurance companies and other lenders are simply broke. The Fed, and particularly the NY Fed, has been complicit in banks and brokerage houses using leverage of more than 50 times assets. In some cases such as JP Morgan Chase the figures are much higher. In fractional banking 8 to 10 times is considered appropriate. This is the biggest bailout of poorly managed corrupt banks in history. This failure is far greater than the failure of the Lombard System in Venice in 1348, the year of the great bubonic plague that swept Europe and killed 50% of its inhabitants. These elitists have brought the world economy to its knees. It is ironic, but true to insider dealing, that not one CEO or senior executive has been fired, as trillions of dollars have been lost.

That said this is the perfect segway to bring to your attention a bill calling for the Comptroller General of the US to audit the private Federal Reserve. At last report 124 members of the House have joined Rep. Ron Paul’s bill HR 1207, as co-sponsors, to his Federal Reserve Transparency Act of 2009. Both the Fed’s Board of Governors and the Federal Reserve Banks would be required to report to Congress before the end of 2010. This could be the most important bill in modern American history and could lead to our financial and economic recovery. When the Congress sees what the Fed has done they might just abolish it, which is really the solution. As Rep. Paul says, “Congress should reassert its constitutional authority over monetary policy.” The Constitution gives Congress, not the private Federal Reserve, “the Authority to coin money and regulate the value of the currency.” “The Fed has presided over the near-complete destruction of the US dollar,” says Rep. Paul. “Since 1913 the dollar has lost over 95% of its purchasing power, aided and abetted by the Federal Reserve’s loose money policy.” “How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation?” Only big-spending politicians and politically favored bankers benefit from inflation,” he said. “Since its inception, the Fed has always operated in the shadows, without sufficient scrutiny or oversight of its operations.”

The Fed can enter into agreements with foreign central banks and foreign governments, and the GAO’s prohibited from auditing or even seeing these agreements. There are no enforcement powers over the Fed. The Fed’s funding facilities including the Dealer Credit Facility, Term Securities Lending Facility, and the Term Asset-Backed Securities Lending Facility should be subject to congressional oversight.

Every problem we have had in our economy from the Fed’s conception and passage can be directly traced to Federal Reserve policy.

Legislation should be passed to abolish the Fed and that the OMB, the Office of Management and Budget liquidate Fed assets to insure a quick transfer of their functions to the Treasury.

HR 1207 is now in the House Committee of Financial Reserves and has been there for 3 months.

This could be the most important legislation ever submitted due to the financial conditions in America at this time.

In the Senate, Sen. Bernard Sanders (I-VT) has submitted a similar bill, which has been in the Senate Banking, Housing, and Urban Affairs Committee for 2 months.

As Rep. Paul says, “auditing the Fed is only the first step towards exposing this antiquated insider-run creature to the powerful forces of free-market competition. Once there are viable alternatives to the monopolistic fiat dollar, the Federal Reserve will have to become honest and transparent if it wants to remain in business.

Contact everyone in Congress and let him or her know how you feel about this issue as soon as possible.

As Joseph Schummpeter argues that monetary measures do not allow policymakers to eliminate economic depression, only to delay it under penalty of more severity in the future. In a market economy, economic depressions are painful but unavoidably recurring. Counter cyclical monetary measures to provide more money and credit to keep ill-timed investment on a high level in a depression are not creative destruction, but positive destruction, and such measures will ultimately be detrimental to the general welfare. This is what we’ve been preaching for some time.

Unemployment is a natural extension for stabilizing production and consumption, and its solution cannot be implemented by holding up asset prices in a depressed market economy. Unemployment is usually reduced by deficit-financing and high wages. Today that is not easy with a $2 trillion deficit, rising interest rates, monetization and the insane creation of money and credit. Plus, how can you maintain wages, or raise them, with an army of illegal aliens working for next to nothing and offshoring and outsourcing still going at full tilt? Monetarist measures cannot hold up asset prices with today’s problems, which are the worst since the early 1870s.

Looking back Herbert Hoover was wrong in starting off the Socialist-Fascist era that began the 1930’s Great Depression. Franklin Delano Roosevelt carried out that program and it was a failure. America was saved by war at a terrible price. Andrew Mellon was right in advocating that government must keep its hands off and let the slump liquidate itself. Purge the rottenness out of the system. Mr. Mellon said liquidate labor, stocks, farmers and real estate. No more high living, people will work harder and lead a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.

The economics of monetarism are nothing more than a formula promulgated to save the financial sector and not the country, by using an elitist trickle down theory, which as recent as the 1980s had been proven unworkable. Bail out the rich on Wall Street, the bankers and insurance companies and let the poor and working poor fend for themselves. This is class economics and this is what turns the masses toward socialism. Bankers, who caused the problem, are bailed out by the masses, and the public is left to drown on their own. We are told the bankers and Wall Street must be saved or we’ll have no economy. We call this the myth of saving the criminals.

Under a Federal Reserve System the Fed has in private hands unlimited state power to create money and credit backed by the full faith and credit of the American people, which denies those people the rights of sovereignty.

Via the Fed and via Executive Order and the “Working Group on Financial Markets” we allow the Fed and the Treasury to manipulate our markets. Thus our financial elite grow richer and richer, and worse yet even professionals do not know what is going on, never mind the public. The creation of money and credit is effected in such a way that the financial sector is protected and the burden of loss of purchasing power is cast upon American workers. The capitalists do business as usual. Such pursuits have often ended in revolution. The fruits of low wages in America, a result of free trade, globalization, offshoring and outsourcing, have taken their toll. The result is more than two years of recession and now more than three months of depression. The working poor cannot afford to buy what they produce and they cannot pay the debt cast upon them by Wall Street and the banking establishment. There are no free markets. The markets are what these people want them to be. Today they feed their own debt bubble hoping, hope against hope they can bail out the system again.

These miscreatants, in what is called a shadow banking system securitized mortgages and other debt by fraud via a corrupt rating system worldwide monetizing their liabilities and buried thousands of professionals worldwide. This unpayable debt, now lost, along with derivatives present problems that are really just beginning to be addressed. All this is done with little transparency in order for these institutions, guided by the Fed, to dump their financial risks.

There you have it. A manmade disaster created by the Federal Reserve, banking and Wall Street, and these are the same corrupt group who our government has chosen to rectify the problem. Their answer is to take the funds from the public to cover their losses, be it by inflation or taxes. The answer is get rid of the Fed and purge the system once and for all.

How Governments Manipulate Markets

Blatant government manipulation is another reason that securities markets often appear to be disconnected from the realities of the economy. Catherine Fitts explains how the game is rigged.

Wall Street's mantra is that markets move randomly and reflect the collective wisdom of investors. The truth is quite opposite. The government's visible hand and insiders control markets and manipulate them up or down for profit - all of them, including stocks, bonds, commodities and currencies.

It's financial fraud or what former high-level Wall Street insider and former Assistant HUD Secretary Catherine Austin Fitts calls "pump and dump," defined as "artificially inflating the price of a stock or other security through promotion, in order to sell at the inflated price," then profit more on the downside by short-selling. "This practice is illegal under securities law, yet it is particularly common," and in today's volatile markets likely ongoing daily.

Why? Because the profits are enormous, in good and bad times, and when carried to extremes like now, Fitts calls it "pump(ing) and dump(ing) of the entire American economy," duping the public, fleecing trillions from them, and it's more than just "a process designed to wipe out the middle class. This is genocide (by other means) - a much more subtle and lethal version than ever before perpetrated by the scoundrels of our history texts."

Fitts explains that much more than market manipulation goes on. She describes a "financial coup d'etat, including fraudulent housing (and other bubbles), pump and dump schemes, naked short selling, precious metals price suppression, and active intervention in the markets by the government and central bank" along with insiders. It's a government-business partnership for enormous profits through "legislation, contracts, regulation (or lack of it), financing, (and) subsidies." More still overall by rigging the game for the powerful, while at the same time harming the public so cleverly that few understand what's happening.

Market Rigging Mechanisms - The Plunge Protection Team

On March 18, 1989, Ronald Reagan's Executive Order 12631 created the Working Group on Financial Markets (WGFM) commonly known as the Plunge Protection Team (PPT). It consisted of the following officials or their designees:

• the President;
• the Treasury Secretary as chairman;
• the Fed chairman;
• the SEC chairman; and
• the Commodity Futures Trading Commission chairman.

Under Sec. 2, its "Purposes and Functions" were stated as follows:

(2) "Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence, the Working Group shall identify and consider:

1.     the major issues raised by the numerous studies on the events (pertaining to the) October 19, 1987 (market crash and consider) recommendations that have the potential to achieve the goals noted above; and

2.     ....governmental (and other) actions under existing laws and regulations....that are appropriate to carry out these recommendations."

In August 2005, Canada-based Sprott Asset Management (SAM) principals John Embry and Andrew Hepburn headlined their report on the US government's "surreptitious" market interventions: "Move Over, Adam Smith - The Visible Hand of Uncle Sam" to prevent "destabilizing stock market declines. Comprising key government agencies, stock exchanges and large Wall Street firms," this group "is significant because the government has never admitted to private-sector membership in the Working Group," nor is it hinting that manipulation works both ways - to stop or create panic.

"Current mythology holds that (equity) prices rise and fall on the basis of market forces alone. Such sentiments appear to be seriously mistaken....And as official rhetoric continues to toe the free market line, manipulation has become increasingly apparent....with the active participation of selected investment banks and brokerage houses" - the Wall Street giants.

In 2004, Texas Hedge Report principals Steven McIntyre and Todd Stein said "Almost every floor trader on the NYSE, NYMEX, CBOT and CME will admit to having seen the PPT in action in one form or another over the years" - violating the traditional notion that markets move randomly and reflect popular sentiment.

Worse still, according to SAM principals Embry and Hepburn, "the government's unwillingness to disclose its activities has rendered it very difficult to have a debate on the merits of such a policy," if there are any.

Further, "virtually no one ever mentions government intervention publicly....Our primary concern is that what apparently started as a stopgap measure may have morphed into a serious moral hazard situation."

Worst of all, if government and Wall Street collude to pump and dump markets, individuals and small investment firms can get trampled, and that's exactly what happened in late 2008 and early 2009, with much more to come as the greatest economic crisis since the Great Depression plays out over many more months.

That said, the PPT might more aptly be called the PPDT - The Plunge Protection/Destruction Team, depending on which way it moves markets at any time. Investors beware.

Manipulating markets is commonplace and as old as investing. Only the tools are more sophisticated and amounts involved greater. In her book, "Morgan: American Financier," Jean Strouse explained his role in the Panic of 1907, the result of stock market and real estate speculation that caused a market crash, bank runs, and hysteria. To restore confidence, JP Morgan and the Treasury Secretary organized a group of financiers to transfer funds to troubled banks and buy stocks. At the time, rumors were rampant that they orchestrated the panic for speculative profits and their main goals:

• the 1908 National Monetary Commission to stabilize financial markets as a precursor to the Federal Reserve; and
• the 1910 Jekyll Island meeting where powerful financial figures met in secret for nine days and created the private banking cartel Federal Reserve System, later congressionally established on December 23, 1913 and signed into law by Woodrow Wilson.

Morgan died early that year but profited hugely from the 1907 Panic. It let him expand his steel empire by buying the Tennessee Coal and Iron Company for about $45 million, an asset thought to be worth around $700 million. Today, similar schemes are more than ever common in the wake of the global economic crisis creating opportunities to buy assets cheap by bankers flush with bailout cash. Aided by PPT market rigging, it's simpler than ever.

Wharton Professor Itay Goldstein and Said Business School and Lincoln College, Oxford University Professor Alexander Guembel discussed price manipulation in their paper titled "Manipulation and the Allocational Role of Prices." They showed how traders effect prices on the downside through "bear raids," and concluded:

"We basically describe a theory of how bear raid manipulation works....What we show here is that by selling (a stock or more effectively short-selling it), you have a real effect on the firm. The connection with real value is the new thing....This is the crucial element," but they claim the process only works on the downside, not driving shares up.

In fact, high-volume program trading, analyst recommendations, positive or negative media reports, and other devices do it both ways.

Also key is that a company's stock price and true worth can be highly divergent. In other words, healthy or sick firms may be way-over or under-valued depending on market and economic conditions and how manipulative traders wish to price them, short or longer term.

The idea that equity prices reflect true value or that markets move randomly (up or down) is rubbish. They never have and more than ever don't now.

The Exchange Stabilization Fund (ESF)

The 1934 Gold Reserve Act created the US Treasury's ESF. Section 7 of the 1944 Bretton Woods Agreements made its operations permanent. As originally established, the Treasury ran the Fund outside of congressional oversight "to keep sharp swings in the dollar's exchange rate from (disrupting) financial markets" through manipulation. Its operations now include stabilizing foreign currencies, extending credit lines to foreign governments, and last September to guaranteeing money market funds against losses for up to $50 billion.

In 1995, the Clinton administration used the fund to provide Mexico a $20 billion credit line to stabilize the peso at a time of economic crisis, and earlier administrations extended loans or credit lines to China, Brazil, Ecuador, Iceland and Liberia. The Treasury's web site also states that:

"By law, the Secretary has considerable discretion in the use of ESF resources. The legal basis of the ESF is the Gold Reserve Act of 1934. As amended in the late 1970s....the Secretary (per) approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities."

In other words, ESF is a slush fund for whatever purposes the Treasury wishes, including ones it may not wish to disclose, such as manipulating markets, directing funds to the IMF and providing them with strings to borrowers as the Treasury's site explains:

"....Treasury has often linked the availability of ESF financing to a borrower's use of the credit facilities of the IMF, both to support the IMF's role and to strengthen assurances that there will be timely repayment of ESF financing."

The Counterparty Risk Management Policy Group (CRMPG)

Established in 1999 in the wake of the Long Term Capital Management (LTCM) crisis, it manipulates markets to benefit giant Wall Street firms and high-level insiders. According to one account, it was to curb future crises by:

• letting giant financial institutions collude through large-scale program trading to move markets up or down as they wish;
• bailing out its members in financial trouble; and
• manipulating markets short or longer-term with government approval at the expense of small investors none the wiser and often getting trampled.

In August 2008, CRMPG III issued a report titled "Containing Systemic Risk: The Road to Reform." It was deceptive on its face in stating that CRMPG "was designed to focus its primary attention on the steps that must be taken by the private sector to reduce the frequency and/or severity of future financial shocks while recognizing that such future shocks are inevitable, in part because it is literally impossible to anticipate the specific timing and triggers of such events."

In fact, the "private sector" creates "financial shocks" to open markets, remove competition, and consolidate for greater power by buying damaged assets cheap. Financial history has numerous examples of preying on the weak, crushing competition, socializing risks, privatizing profits, redistributing wealth upward to a financial oligarchy, creating "tollbooth economies" in debt bondage according to Michael Hudson, and overall getting a "free lunch" at the public's expense.

CRMPG explains financial excesses and crises this way:

"At the end of the day, (their) root cause....on both the upside and the downside of the cycle is collective human behavior: unbridled optimism on the upside and fear on the downside, all in a setting in which it is literally impossible to anticipate when optimism gives rise to fear or fear gives rise to optimism...."

"What is needed, therefore, is a form of private initiative that will complement official oversight in encouraging industry-wide practices that will help mitigate systemic risk. The recommendations of the Report have been framed with that objective in mind."

In other words, let foxes guard the henhouse to keep inventing new ways to extract gains (a "free lunch") in increasingly larger amounts - "in the interest of helping to contain systemic risk factors and promote greater stability."

Or as Orwell might have said: instability is stability, creating systemic risk is containing it, sloping playing fields are level ones, extracting the greatest profit is sharing it, and what benefits the few helps everyone.

Michel Chossudovsky explains that: "triggering market collapse(s) can be a very profitable undertaking. (Evidence suggests) that the Security and Exchange Commission (SEC) regulators have created an environment which supports speculative transactions (through) futures, options, index funds, derivative securities (and short-selling), etc. (that) make money when the stock market crumbles....foreknowledge and inside information (create golden profit opportunities for) powerful speculators" able to move markets up or down with the public none the wiser.

As a result, concentrated wealth and "financial power resulting from market manipulation is unprecedented" with small investors' savings, IRAs, pensions, 401ks, and futures being decimated from it.

Deconstructing So-Called "Green Shoots"

Daily the corporate media trumpet them to lull the unwary into believing the global economic crisis is ebbing and recovery is on the way. Not according to longtime market analyst Bob Chapman who calls green shoots "Poison Ivy" and economist Nouriel Roubini saying they're "yellow weeds" at a time there's lots more pain ahead.

For many months and in a recent commentary he refers to "the worst financial crisis, economic crisis and recession since the Great Depression....the consensus is now becoming optimistic again and says that we are going to go from minus 6 percent growth to positive growth in the second half of the year....my views are much more bearish....The problems of the financial system are severe. Many banks are still insolvent."

We're "piling public debt on top of private debt to socialize the losses; and at some point the back of (the) government('s) balance sheet is going to break, and if that happens, it's going to be a disaster." Short of that, he, Chapman, and others see the risks going forward as daunting. As for the recent stock market rise, they both call it a "sucker's rally" that will reverse as the US economy keeps contracting and the financial system suffers unexpected or manipulated shocks.

Highly respected market analyst Louise Yamada agrees. As Randall Forsyth reported in the May 25 issue of Barron's Up and Down Wall Street column:

"It is almost uncanny the degree to which 2002-08 has tracked 1932-38, 'Yamada writes in her latest note to clients.' " Her "Alternate Hypothesis" compares this structural bear market to 1929-42:

·         "the dot-com collapse parallels the Great Crash and its aftermath," followed by the 2003-07 recovery, similar to 1933-37;

·         then the late 2008 - early March 2009 collapse tracks a similar 1937-38 trajectory, after which a strong rally followed much like today;

·         then in November 1938, the market dropped 22% followed by a 26% rise and a series of further ups and downs - down 28%, up 23%, down 16%, up 13%, and a final 29% decline ending in 1942;

·         from the 1938 high ("analogous to where we are now," she says), stock prices fell 41% to a final bottom.

Are we at one today as market touts claim? No according to Yamada - top-ranked among her peers in 2001, 2002, 2003 and 2004 when she worked at Citigroup's Smith Barney division. Since 2005, she's headed her own independent research company.

She says structural bear markets typically last 13 - 16 years so this one has a long way to go before "complet(ing) the repair process." She calls the current rebound "a bungee jump," very typical of bear markets. Numerous ones occurred during the Great Depression, 8 alone from 1929 - 1932, some deceptively strong.

Expect market manipulators today to produce similar price action going forward - to enrich themselves while trampling on the unwary, well-advised to protect their dollars from becoming quarters or dimes.

Four Centuries of Tyranny

"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance."
-President James Madison

"When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes... Money has no motherland; financiers are without patriotism and without decency; their sole object is gain."
-Napoleon Bonaparte, 1815

"Whosoever controls the volume of money in any country is absolute master of all industry and commerce... And when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate."
-President James Garfield 1881

A monetary system where currency is produced from thin air by private banks, lent to governments at interest and paid by the population in the form of taxes has been deeply institutionalized for centuries. This scheme did not begin with the Federal Reserve which is for all intents and purposes a 20^th century extension of the Bank of England. The nominal torch of empire passed from Britain to the US, but the banking power base remained the same.

Nothing has been more convenient for politicians and social planners, more profitable for financiers and exploitable by warmongers than the ability to enslave future generations with debt incurred by the last. History and current events also show that a nation’s sovereignty runs counter to the interests of moneyed interests since a nation can only be sovereign if it issues its own currency.

Nothing is more precious to the global banking interests than maintaining a system of private profiteering from public debt. This basic fundamental truth is both obvious yet elusive in the consensus trance that permeates our society.

Consider the timeline of Anglo-American banking that outlines centuries of political manipulation and control:

• Medieval goldsmiths store private owners gold for a cost, realize few ever redeem their holdings so they begin to make loans in excess of the amount held paving the way for fractional reserve banking.
• The Thirty Years War and English Civil Wars left England devastated financially lead to the rise of the Bank of England who would lend the government much needed funds and burden the public taxpayer with loans created from thin air.
Britain ran up huge debts while the Colonies prospered up until the Currency Act of 1764 which made Colonial Script – non-debt based tender - illegal, required the Colonies to pay taxes to Britain in gold and silver and resulted in a depression. 
• Robert Morris’ failed Bank of North America gave way to the First Bank of the United States in 1791 bankrolled by Amshall Rothschild. After massive debt and inflation resulted, the bank’s charter was not renewed and the War of 1812 ensued.
• Napoleon may have been a lot of things, but to his credit he understood the banking scam. In 1803, choosing not to take bank loans, he opted to sell land west of the Mississippi to Jefferson in the Louisiana Purchase.
• In 1815, acting under advanced knowledge of Napoleon’s loss to the British and other European troops, Nathan Rothschild manipulated the British bond market and made a fortune.
• Rothschild backed the Second Bank of the United States in 1816 leading up to the clash with Andrew Jackson who ordered the withdrawal of deposits from the bank in 1832. Jackson said, "If the American people only understood the rank injustice of our money and banking system - there would be a revolution before morning..."
• In 1861, President Lincoln refused extremely high interest loans by the banks, which were European and which didn’t want a unified and strong United States, and issued government bills. By 1863 in order to finished funding the Civil War effort, he signed the National Banking Act which held that the money supply would be created out of debt by bankers buying US government bonds and issuing them from reserves for bank notes. Lincoln had plans for a Constitutional monetary system, but obviously didn’t have the chance to see it through. We still live under the paradox that repaying the debt means destroying the currency.
• The banker-backed Contraction Act passed in 1866, squeezed about 7/8ths of the money out of circulation resulting in a depression.
J.P. Morgan “saves the day” during the crash of 1907 and is authorized to create the funds out of thin air to prop up troubled banks. Sound familiar?

• The Federal Reserve Act of 1913 passes with 3 Senate members on the floor prior to Christmas break.

In the 1966 book entitled Tragedy and Hope, president Clinton's mentor Carroll Quigley writes about the early 20^th century plans by the banking elite:

"The powers of financial capitalism had [a] far-reaching [plan], nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.

This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences.

The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations.

Each central bank... Sought to dominate its government by its ability to control treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
Carroll Quigley, Professor, Georgetown University

• WWII results in massive U.S. and European debt load which of course is bad for everyone but banks.

• In 1944 the US approved its full participation in the IMF and the World Bank and in 1945 participation in the United Nations. The IMF issues pseudo money called Special Drawing Rights (SDR’s), which again are created out of thin air, to make loans to countries at interest. Oftentimes in a form of corporate imperialism, loans are taken by corrupt leaders for development efforts that provide no benefit to the people, who put their people and resources up for collateral in the form of taxes and concessions. Essentially, SDR’s are a global banking means of indebting and enslaving.  

I’m not affiliated with the publisher of the 3-part summary on the history of money, but they provide a pretty good write-up that expands on the points above in under 10 pages.

If you read this, you'll have a better understanding of the monetary system than most.

History of Money Part 1

History of Money Part 2

History of Money Part 3

 

 

The Trinket Dilemma

A good friend of mine said he was buckling down more these days like everyone else and decided to put off a purchase of some trinkets. But frugality is a tough balancing act with speed-warbling inflation and deflation with the looming risk of snowballing hyperinflation when “full faith and credit” doesn’t buy you much...So...

Should I buy the trinkets I need tomorrow today because I fear the money I have today will buy me much fewer trinkets tomorrow; or should I put off buying the trinkets until tomorrow because tomorrow's income is uncertain and I may need to use today’s income to buy something else, though I still risk the money I'm saving will buy me much less of anything if I wait?
 
Then the question, is the carrying cost of the trinkets – the ongoing taxes, maintenance and upkeep costs - higher than lost purchasing power should I delay the purchase? And will the other inputs I need to use the trinkets be much higher in the future due to inflation that I can’t afford to use the trinkets and they become stranded assets?

But even if I think I can delay the purchase from an inflationary standpoint, can I be sure I will have access to the trinket in the future - will there be a run on the Bank of Trinkets or will economic conditions be such that the supply chain from Trinketstan will break?

Pink Floyd was spot on with the line, "Money it's a gas..." but maybe not in the way they intended.

Bill Bonner talks about the ongoing counterfeiting operation in this weekend’s Daily Reckoning:

Illusions pile up… They’re sure to come down sooner or later

Like snow at high altitudes, the central banks’ new money is piling up. As reported last week, all the world’s major central banks have turned on their snow machines. The US Federal Reserve has been authorized to “print” $1.75 trillion worth of new money in order to buy Treasury bonds. The Bank of England has its own program – worth 75 billion pounds, so far. Even Switzerland has been printing money – so much that its money supply, as measured by M2, is growing at 30% per year. And two weeks ago, the European Central Bank announced that it too would begin creating money in order to buy corporate bonds.

“Quantitative Easing” it is called. As a refresher for readers with real lives and better things to do, QE is how central banks describe what is essentially an act of counterfeiting. They buy bonds with money created – electronically – specifically for that purpose. Abracadabra – “money” comes into being.

The feds aim to provide liquidity for the cities and farms. But so far, only a trickle is coming down. Instead, chilly weather in the upper reaches of the financial sector holds it frozen in place. Hundreds of billions comes down from central banks, but there it stays…waiting for spring.

Today, here on the back page, we ask ourselves a simple question: what will happen to it?

The feds’ counterfeit money does such a good imitation of the real thing, you can’t tell them apart. But the problem with all money is that it is as fickle and unreliable as a bad girlfriend. One minute she goes along with the flow. The next minute she turns silly and bubbly. And then, she gives you the cold shoulder.

According to theory, an increase in the supply of something leads directly to a decrease in the price of it… That is, if other things remain constant. Despite the credit crunch, the banking freeze-up, and the economic recession, the money supply in the US as measured by M1 is actually rising at 14% per year. Yet consumer prices are not keeping pace. The latest report shows them actually going down slightly over the last 60 days.

Turns out, causing inflation is not as easy as it looked; controlling it probably will be even harder. It’s not enough to manage the quantity of money; you also need to be able to control its behavior. Money can be a solid, a liquid, or a gas depending upon the temperature of the economy. At normal temperatures, money runs freely, watering the economy. And when things really get hot, it vaporizes, creating gaseous bubbles such as those of the late Bubble Period. But when the temperature falls, money shivers in wallets and bank accounts – reluctant to go out into the cold. Economists refer to the ‘velocity of money” to describe the magnifying effects of motion. When the same dollar bill appears in three different places in the same day, it is as if the money supply had been multiplied three-fold. In a freeze, on the other hand, it comes to a dead stop.

When the thaw will come, we don’t know. But the authorities are ready for it. When consumer prices begin to rise, they’ll stop adding to the money supply. Then, they’ll withdraw liquidity, as need be, to keep it under control.

They know that runaway inflation would cause problems – the collapse of the dollar…and the US Treasury bond market, for example. So, at the first signs of inflation, they will move quickly to remove excess liquidity from the system. How? Their emergency plan is simple enough. Now, they are buying bonds. When their inflation targets are met, they will begin selling them.

We thought the Bubble Epoch was the peak in claptrap and illusions. But we were only in the foothills. The feds now pretend to bail out the economy by giving money to companies that pretend to be concerned, run by people who pretend to know what they are doing. And when they run short of money, they create more of it, pretend it is real…and pretend they can tell it what to do.

What is likely is that money will have a mind of its own. First, the markets will react…and the authorities will not. They will remember their own critiques of Japanese and Roosevelt-era monetary policy. In both cases, they believe central banks removed the punch bowl too early – before the party really got rolling. In both cases, the recovery was cut off.

Then, while they are hesitating, money will turn on them. Inflation rates will rise further. The velocity of money will pick up. And investors – including foreign governments – will become eager sellers of government debt. Suddenly, it will be too late. In order to remove the monetary inflation they previously added, central banks will have to sell bonds instead of buying them, trying to re-absorb money from the economy. The extra cash would then disappear back into the central banks. But in order to bring inflation under control, the biggest bond buyers in the world must turn into the world’s biggest sellers. Bond prices, already falling as investors feared the worst, will collapse immediately. An avalanche of dollars will fall upon the world markets – as dollar holders all over the world become desperate to get rid of them.

We don’t know what day it will happen. But we have a good idea as to what time of day central bankers will realize that they are doomed. About 4 AM is our guess. That is the moment when Ben Bernanke and other central bankers begin to feel like members of the Donner Party. That is, likeimbeciles.

Audit and Abolish the Fed

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

 

“All the perplexities, confusions, and distress in America, arise, not from defects in their Constitution or Confederation, not from a want of honor or virtue, so much as downright ignorance of the nature of coin, credit and circulation.”

 

-Thomas Jefferson

 

I am happy to see that HR 1207, Federal Reserve Transparency Act of 2009 now has 165 co-sponsors. Is your Representative on the list?  

 

There’s nothing like a massive loss of faith in the financial system to motivate more people to stop and ask the question, “So where does our money come from”? The history of the Federal Reserve is a web of obfuscation and double speak which on the surface, without closer inspection, resembles legitimacy.

 

The party line is that the Federal Reserve is "within" the Federal government, but its essence is a private organization that, to borrow a line, "is no more Federal than Federal Express."

 

I can't be clearer here: The Federal Reserve is not a national central bank under direct control of the U.S. government and its people. Yes, central banks are needed to implement a country's fiscal policies, ensure the national banking system maintains sufficient assets to remain solvent and stable and performs currency transactions with other central banks. But the Federal Reserve is not a national central bank. The Federal Reserve is privately owned and can therefore only be expected to operate in the best interest of the banks that hold ownership positions and who benefit through reckless monetary policies which are harmful to the public.

 

Alan Greenspan, ex-Federal Reserve Chairman, made it clear in this video that the Fed is an independent agency and no agency of government which can overrule actions that it takes. Bill Bonner and Addison Wiggin describe the origins of the Reserve System in their book, "Empire of Debt,"

 

“They met at Jekyll Island off the coast of Georgia, in seclusion and secrecy, to discuss formation of a centralized monetary agency. Senator Nelson Aldrich met with executives of what is today known as Citibank; Morgan Bank; and Kuhn, Loeb Investment House. The so-called Aldrich Plan recommended the formation of 15 regional banks controlled by a national board. The banks would be allowed to make emergency loans to members and create a flexible currency, serving as the monetary arm of the federal government. Although the original plan was defeated in the House, the formula modeled what is now known as the Federal Reserve System. The legislation, variously called the Currency Bill and the Owens- Glass Act, emerged as the Federal Reserve Act of 1913. It created a dozen regional Reserve Banks to be coordinated by a chairman who would be appointed by the president. While the Constitution grants Congress the right to print money, under the Federal Reserve Act of 1913, Congress approved a plan to delegate this right to the Fed, which is not part of Congress. The U.S. dollar is not issued by the U.S. Treasury but by a privately owned organization, which also influences bank interest rates, the amount of money in currency in circulation, and even the levels of inflation in the United States.

 

 

When leaving office, Woodrow Wilson apologized to the American public for being seduced by bankers understanding the tragic course he set his country on.

 

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."

 

 

Back to Greenspan’s comments. Didn’t he garble something at the end that seemed to imply some sort of oversight? According to Section 714 of title 31, United States Code, the Comptroller General can audit the agency, but only if the Fed consents in writing. Imagine if the IRS used those terms with taxpayers – we can audit you, but not unless you write a letter granting us permission. How many letters of acceptance do you suppose the IRS would get?

 

Even with this full proof restriction, the Comptroller General cannot  audit:

 

Transactions for or with a foreign central bank, government or a foreign country, or nonprivate international financing organization;

 

Deliberations, decisions or actions on monetary policy matters, including discounty window operations, reserves of member banks, securities credit, interest on deposits, and open market operations;

 

Transactions made under the direction of the Federal Open Market Committee, or

 

A part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to clauses 1-3 of this subsection.

 

So no, there is no auditing and no oversight of the Federal Reserve by the people’s representatives regardless of what you are being told.

 

HR 1207 would simply require an audit and strike these ridiculous and far-reaching exclusions of an already unconstitutional and illegitimate banking cartel.

HR 1207 IH

111th CONGRESS

1st Session

H. R. 1207

To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

February 26, 2009

Mr. PAUL (for himself, Mr. KAGEN, Mrs. BACHMANN, Mr. BARTLETT, Mr. JONES, Mr. REHBERG, Mr. POSEY, Mr. BROUN of Georgia, Mr. POE of Texas, Mr. BURTON of Indiana, Mr. ABERCROMBIE, and Ms. WOOLSEY) introduced the following bill; which was referred to the Committee on Financial Services

---

A BILL

To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Federal Reserve Transparency Act of 2009’.

SEC. 2. AUDIT REFORM AND TRANSPARENCY FOR THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

(a) In General- Subsection (b) of section 714 of title 31, United States Code, is amended by striking all after ‘shall audit an agency’ and inserting a period.

(b) Audit- Section 714 of title 31, United States Code, is amended by adding at the end the following new subsection:

‘(e) Audit and Report of the Federal Reserve System-

‘(1) IN GENERAL- The audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks under subsection (b) shall be completed before the end of 2010.

‘(2) REPORT-

‘(A) REQUIRED- A report on the audit referred to in paragraph (1) shall be submitted by the Comptroller General to the Congress before the end of the 90-day period beginning on the date on which such audit is completed and made available to the Speaker of the House, the majority and minority leaders of the House of Representatives, the majority and minority leaders of the Senate, the Chairman and Ranking Member of the committee and each subcommittee of jurisdiction in the House of Representatives and the Senate, and any other Member of Congress who requests it.

‘(B) CONTENTS- The report under subparagraph (A) shall include a detailed description of the findings and conclusion of the Comptroller General with respect to the audit that is the subject of the report, together with such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate.’.

 

 

So who owns the Fed?

 

The Federal Reserve Banks of each region are owned by the member banks of the Federal Reserve Region and create ownership by issuing stock to the member banks, which are private banks.

 

The charts and text below from Staff Report, Committee on Banking, Currency and Housing, House of Representatives, 94th Congress, 2nd Session, August 1976 illustrate the stockholders list of the 12 regional Federal Reserve Banks. The ownership list is a who's who of financial corporate stakeholders.

 

This is a matter of Congressional record, not conspiracy theories.

 

Until we change the monetary system, nothing changes.

 

Federal Reserve Directors: A Study of Corporate and Banking Influence

Published 1976

Chart 1 reveals the linear connection between the Rothschilds and the Bank of England, and the London banking houses which ultimately control the Federal Reserve Banks through their stockholdings of bank stock and their subsidiary firms in New York. The two principal Rothschild representatives in New York, J. P. Morgan Co., and Kuhn,Loeb & Co. were the firms which set up the Jekyll Island Conference at which the Federal Reserve Act was drafted, who directed the subsequent successful campaign to have the plan enacted into law by Congress, and who purchased the controlling amounts of stock in the Federal Reserve Bank of New York in 1914. These firms had their principal officers appointed to the Federal Reserve Board of Governors and the Federal Advisory Council in 1914. In 1914 a few families (blood or business related) owning controlling stock in existing banks (such as in New York City) caused those banks to purchase controlling shares in the Federal Reserve regional banks. Examination of the charts and text in the House Banking Committee Staff Report of August, 1976 and the current stockholders list of the 12 regional Federal Reserve Banks show this same family control.

                                N.M. Rothschild , London - Bank of England

                                 ______________________________________

                                |                                     |

                                |                           J. Henry Schroder     

                                |                             Banking | Corp.

                                |                                     |

                          Brown, Shipley - Morgan Grenfell - Lazard - |

                           & Company        & Company       Brothers  |

                                |               |              |      |

            --------------------|        -------|              |      |

            |                   |        |      |              |      |

 Alex Brown - Brown Bros. - Lord Mantagu - Morgan et Cie -- Lazard ---| 

 & Son      |  Harriman       Norman     |    Paris          Bros     |

            |                   |        /      |            N.Y.     |

            |                   |       |       |              |      |

            |            Governor, Bank | J.P. Morgan Co -- Lazard ---| 

            |            of England    /  N.Y. Morgan       Freres    |   

            |            1924-1938    /   Guaranty Co.      Paris     |

            |                        /    Morgan Stanley Co.  |      / 

            |                       /           |              \Schroder Bank   

            |                      /            |              Hamburg/Berlin

            |                     /      Drexel & Company         /  

            |                    /       Philadelphia            / 

            |                   /                               /

            |                  /                           Lord Airlie

            |                 /                               /

            |                /     M. M. Warburg       Chmn J. Henry Schroder

            |                |      Hamburg ---------  marr. Virginia F. Ryan

            |                |         |               grand-daughter of Otto

            |                |         |                Kahn of Kuhn Loeb Co.

            |                |         |                        

            |                |         |                        

Lehman Brothers N.Y -------------- Kuhn Loeb Co. N. Y.                         

            |                |     --------------------------                     

   µ

            |                |       |                      |                     

           8

            |                |       |                      |

Lehman Brothers - Mont. Alabama   Solomon Loeb           Abraham Kuhn

            |                |     __|______________________|_________

Lehman-Stern, New Orleans   Jacob Schiff/Theresa Loeb  Nina Loeb/Paul Warburg

-------------------------    |       |                      |

             |               | Mortimer Schiff        James Paul Warburg

_____________|_______________/       |

|            |          |   |        |

Mayer Lehman |     Emmanuel Lehman    \

|            |          |              \

Herbert Lehman     Irving Lehman        \

|            |          |                \

Arthur Lehman \    Phillip Lehman     John Schiff/Edith Brevoort Baker

              /         |             Present Chairman Lehman Bros

             /  Robert Owen Lehman    Kuhn Loeb - Granddaughter of

            /           |             George F. Baker

           |           /               |

           |          /                |

           |         /           Lehman Bros Kuhn Loeb (1980)

           |        /                  |

           |       /             Thomas Fortune Ryan

           |      |                    |

           |      |                    |

      Federal Reserve Bank Of New York |

           ||||||||                    |

  ______National City Bank N. Y.       |

  |        |                           |

  |   National Bank of Commerce N.Y ---|

  |        |                            \

  |   Hanover National Bank N.Y.         \

  |        |                              \

  |   Chase National Bank N.Y.             \

  |                                        |

  |                                        |

Shareholders - National City Bank - N.Y.   | 

-----------------------------------------  |  

  |                                        /

James Stillman                            /

Elsie m. William Rockefeller             /

Isabel m.  Percy Rockefeller            / 

William Rockefeller          Shareholders - National Bank of Commerce N. Y.   

J. P. Morgan                 -----------------------------------------------

M.T. Pyne                    Equitable Life - J.P. Morgan

Percy Pyne                   Mutual Life - J.P. Morgan

J.W. Sterling                H.P. Davison - J. P. Morgan

NY Trust/NY Edison           Mary W. Harriman

Shearman & Sterling          A.D. Jiullard - North British Merc. Insurance

|                            Jacob Schiff

|                            Thomas F. Ryan

|                            Paul Warburg

|                            Levi P. Morton - Guaranty Trust - J. P. Morgan

|

|

Shareholders - First National Bank of N.Y.

-------------------------------------------

J.P. Morgan

George F. Baker

George F. Baker Jr.

Edith Brevoort Baker

US Congress - 1946-64

|

|

|

|

|

Shareholders - Hanover National Bank N.Y.

------------------------------------------

James Stillman

William Rockefeller

|

|

|

|

|

Shareholders - Chase National Bank N.Y.

---------------------------------------

George F. Baker

Chart 2

Federal Reserve Directors: A Study of Corporate and Banking Influence

- Published 1983

The J. Henry Schroder Banking Company chart encompasses the entire history of the twentieth century, embracing as it does the program (Belgium Relief Commission) which provisioned Germany from 1915-1918 and dissuaded Germany from seeking peace in 1916; financing Hitler in 1933 so as to make a Second World War possible; backing the Presidential campaign of Herbert Hoover ; and even at the present time, having two of its major executives of its subsidiary firm, Bechtel Corporation serving as Secretary of Defense and Secretary of State in the Reagan Administration.

The head of the Bank of England since 1973, Sir Gordon Richardson, Governor of the Bank of England (controlled by the House of Rothschild) was chairman of J. Henry Schroder Wagg and Company of London from 1963-72, and director of J. Henry Schroder,New York and Schroder Banking Corporation,New York,as well as Lloyd's Bank of London, and Rolls Royce. He maintains a residence on Sutton Place in New York City, and as head of "The London Connection," can be said to be the single most influential banker in the world.

J. Henry Schroder

                               -----------------

                                      |

                                      |

                                      |

                          Baron Rudolph Von Schroder

                           Hamburg - 1858 - 1934

                                      |

                                      |

                                      |

                            Baron Bruno Von Schroder

                            Hamburg - 1867 - 1940

 F. C. Tiarks                         |

 1874-1952                            |

     |                                |

 marr. Emma Franziska                 |

 (Hamburg)                    Helmut B. Schroder

 J. Henry Schroder 1902               |

 Dir. Bank of England                 |

 Dir. Anglo-Iranian                   |

 Oil Company         J. Henry Schroder Banking Company N.Y.

                                      |

                                      |

                       J. Henry Schroder Trust Company N.Y.

                                      |

                                      |

                                      |

                   ___________________|____________________

                  |                                        |

            Allen Dulles                              John Foster Dulles

          Sullivan & Cromwell                        Sullivan & Cromwell

          Director - CIA                             U. S. Secretary of State

                                                     Rockefeller Foundation

 Prentiss Gray

 ------------

Belgian Relief Comm.                     Lord Airlie

Chief Marine Transportation              -----------

US Food Administration WW I          Chairman; Virgina Fortune

Manati Sugar Co. American &          Ryan daughter of Otto Kahn

British Continental Corp.            of Kuhn,Loeb Co.

       |                                    |

       |                                    |

 M. E. Rionda                               |

 ------------                               |

Pres. Cuba Cane Sugar Co.                   |

Manati Sugar Co. many other                 |

sugar companies.                     _______|       

       |                            |

       |                            |

 G. A. Zabriskie                    |

 ---------------                    |                Emile Francoui

Chmn U.S. Sugar Equalization        |                --------------

Board 1917-18; Pres Empire          |            Belgian Relief Comm. Kai

Biscuit Co., Columbia Baking        |            Ping Coal Mines, Tientsin

Co. , Southern Baking Co.           |            Railroad,Congo Copper, La

                                    |            Banque Nationale de Belgique

             Suite 2000 42 Broadway | N. Y                      |

          __________________________|___________________________|_

         |                          |                           |

         |                          |                           |

    Edgar Richard            Julius H. Barnes             Herbert Hoover

    -------------            ----------------             --------------   

Belgium Relief Comm         Belgium Relief Comm       Chmn Belgium Relief Com

Amer Relief Comm            Pres Grain Corp.           U.S. Food Admin

U.S. Food Admin             U.S. Food Admin           Sec of Commerce 1924-28

1918-24, Hazeltine Corp.    1917-18, C.B Pitney       Kaiping Coal Mines

   |                        Bowes Corp, Manati        Congo Copper, President

   |                        Sugar Corp.                  U.S. 1928-32

   |

   |

   |

John Lowery Simpson

-------------------                      

Sacramento,Calif Belgium Relief                       |

Comm. U. S. Food Administration             Baron Kurt Von Schroder

Prentiss Gray Co. J. Henry Schroder         -----------------------

Trust, Schroder-Rockefeller, Chmn         Schroder Banking Corp. J.H. Stein

Fin Comm, Bechtel International           Bankhaus (Hitler's personal bank

Co. Bechtel Co. (Casper Weinberger        account) served on board of all

Sec of Defense, George P. Schultz         German subsidiaries of ITT . Bank

Sec of State (Reagan Admin).              for International Settlements,

            |                             SS Senior Group Leader,Himmler's

            |                             Circle of Friends (Nazi Fund),

            |                             Deutsche Reichsbank,president

            |

            |

Schroder-Rockefeller & Co. , N.Y.

---------------------------------

Avery Rockefeller, J. Henry Schroder

Banking Corp., Bechtel Co., Bechtel

International Co. , Canadian Bechtel

Company.          |

                  |

                  |

                  |

         Gordon Richardson

         -----------------

Governor, Bank of England

1973-PRESENT C.B. of J. Henry Schroder N.Y.

Schroder Banking Co., New York, Lloyds Bank

Rolls Royce

Chart 3

Federal Reserve Directors: A Study of Corporate and Banking Influence

- Published 1976

The David Rockefeller chart shows the link between the Federal Reserve Bank of New York,Standard Oil of Indiana,General Motors and Allied Chemical Corportion (Eugene Meyer family) and Equitable Life (J. P. Morgan).

DAVID ROCKEFELLER

----------------------------

Chairman of the Board

Chase Manhattan Corp

      |

      |

______|_______________________

Chase Manhattan Corp.        |    

Officer & Director Interlocks|---------------------

------|-----------------------                    |

      |                                           |

Private Investment Co. for America       Allied Chemicals Corp.

      |                                           |

Firestone Tire & Rubber Company          General Motors              

      |                                           |

Orion Multinational Services Ltd.        Rockefeller Family & Associates

      |                                           |

ASARCO. Inc                              Chrysler Corp.

      |                                           |

Southern Peru Copper Corp.               Intl' Basic Economy Corp.

      |                                           |

Industrial Minerva Mexico S.A.           R.H. Macy & Co.

      |                                           |

Continental Corp.                        Selected Risk Investments S.A.

      |                                           |

Honeywell Inc.                           Omega Fund, Inc.

      |                                           |

Northwest Airlines, Inc.                 Squibb Corporation

      |                                           |

Northwestern Bell Telephone Co.          Olin Foundation  

      |                                           |

Minnesota Mining & Mfg Co (3M)           Mutual Benefit Life Ins. Co. of NJ

      |                                           |

American Express Co.                            AT & T   

      |                                           |

Hewlett Packard                          Pacific Northwestern Bell Co.

      |                                           |

FMC Corporation                          BeachviLime Ltd.

      |                                           |

Utah Intl' Inc.                          Eveleth Expansion Company

      |                                           |

Exxon Corporation                        Fidelity Union Bancorporation

      |                                           |

International Nickel/Canada              Cypress Woods Corporation

      |                                           |

Federated Capital Corporation            Intl' Minerals & Chemical Corp.

      |                                           |

Equitable Life Assurance Soc U.S.        Burlington Industries

      |                                           |

Federated Dept Stores                    Wachovia Corporation

      |                                           |

General Electric                         Jefferson Pilot Corporation

      |                                           |

Scott Paper Co.                          R. J. Reynolds Industries Inc.

      |                                           |

American Petroleum Institute             United States Steel Corp.

      |                                           |

Richardson Merril Inc.                   Metropolitan Life Insurance Co.

      |                                           |

May Department Stores Co.                Norton-Simon Inc.

      |                                           |

Sperry Rand Corporation                  Stone-Webster Inc.

      |                                           |

San Salvador Development Company         Standard Oil of Indiana

Chart 4
Federal Reserve Directors: A Study of Corporate and Banking Influence
- Published 1976 
This chart shows the interlocks between the Federal Reserve Bank of New York J. Henry Schroder Banking Corp., J. Henry Schroder Trust Co., Rockefeller Center, Inc., Equitable Life Assurance Society ( J.P. Morgan), and the Federal Reserve Bank of Boston. 

 Alan Pifer, President

Carnegie Corporation

of New York

----------------------

         |

         |

----------------------

Carnegie Corporation

Trustee Interlocks       --------------------------

----------------------                            |

         |                                        |

Rockefeller Center, Inc                 J. Henry Schroder Trust Company

         |                                        |

The Cabot Corporation                   Paul Revere Investors, Inc.

         |                                        |

Federal Reserve Bank of Boston          Qualpeco, Inc.

         |

Owens Corning Fiberglas

         |

New England Telephone Co.

         |

Fisher Scientific Company

         |

Mellon National Corporation

         |

Equitable Life Assurance Society

         |

Twentieth Century Fox Corporation

         |

J. Henry Schroder Banking Corporation

Chart 5

Federal Reserve Directors: A Study of Corporate and Banking Influence

- Published 1976 

This chart shows the link between the Federal Reserve Bank of New York, Brown Brothers Harriman,Sun Life Assurance Co. (N.M. Rothschild and Sons), and the Rockefeller Foundation.

Maurice F. Granville

Chairman of The Board

Texaco Incorporated

----------------------

        |

        |

Texaco Officer & Director Interlocks  ---------------- Liggett & Myers, Inc.

------------------------------------           |

        |                                      |

        |                                      |

 L  Arabian American Oil Company            St John d'el Ray Mining Co. Ltd.

 O      |                                      |

 N  Brown Brothers Harriman & Co.           National Steel Corporation

 D      |                                      |

 O  Brown Harriman & Intl' Banks Ltd.       Massey-Ferguson Ltd.

 N      |                                      |

    American Express                        Mutual Life Insurance Co.

        |                                      |

 N. American Express Intl' Banking Corp.    Mass Mutual Income Investors Inc.

 M.     |                                      |

    Anaconda                                United Services Life Ins. Co.

 R      |                                      |

 O  Rockefeller Foundation                  Fairchild Industries

 T      |                                      |

 H  Owens-Corning Fiberglas                 Blount, Inc.

 S      |                                      |

 C  National City Bank (Cleveland)          William Wrigley Jr. Co

 H      |                                      |

 I  Sun Life Assurance Co.                  National Blvd. Bank of Chicago

 L      |                                      |

 D  General Reinsurance                     Lykes Youngstown Corporation

        |                                      |

    General Electric (NBC)                  Inmount Corporation

Tower of Babel

So how does the financial Tower of Babel we’ve amassed managed to soldier on without toppling over? Catherine Fitts, investment advisor, former Assistant Secretary for Housing-Federal Housing Commissioner, and Solari Report publisher describes the role of derivatives at a broader level and why we’re experiencing what she calls a slow burn, instead of a sudden breakdown.

The title of my presentation is:

Derivatives 101: Useful knowledge in plain English about credit default swaps, interest rate swaps, futures and other complex financial instruments that help centralize the financial system, steal money in the trillions and make the financial news incomprehensible.

I will address why these financial tools are so important to maintaining the dollar as reserve currency and continuing the “Slow Burn.”

I coined the “Slow Burn” scenario years ago to describe a politically managed economy in which financial and economic failures would not translate into system collapse. Instead, they would translate into continued transfers of resources from political outsiders to political insiders to subsidize and manage the asset values and power of various corporate and bank interests.  Countries would be drained to feed the system, or various populations, species or places. Replenished by draining others, the system would continue to move forward.

For many years, a variety of highly capable, intelligent people have tried to persuade me that the dollar is imminently going to lose its status as the global reserve currency and collapse and that the price of gold is going to shortly increase to $2,000/oz. or more.  When these events do not come to pass and time goes by—something strange happens. We never sit down and do a “lessons learned” to determine why it did not happen. No one wants to discuss it. There is no venue to ask and answer the questions:

-Why does the dollar's performance defy economic fundamentals?

-Why is it that the U.S. trade and budget deficits don't matter?

-How can $20 trillion in global bailouts not yet trigger global hyperinflation?

It turns out that understanding the Slow Burn and the amazing strength of the U.S. dollar requires several “building blocks” of knowledge that most of us have not acquired through our formal education or media:

Shadow Governance: Our world is governed on a highly centralized basis that networks into every industry (or so-called “cartels”) and every place—whether country, region or local area. This system is not new—it has evolved organically for centuries within “the central banking-warfare model.” Much of its evolution has organized around intergenerational pools of capital, the growth of which reflect the fundamentals of economic and military warfare as they determine command of intelligence, technology, populations, natural resources and trade routes.

The U.S. Federal Credit: The U.S. economy is a highly controlled political economy, with most of the economy managed through the U.S. government budget—both the Congressionally approved budget as well as secretive black budgets run with no transparency and oversight but with the benefit of governmental powers and authority. Building literacy of how this governmental financial mechanism operates both globally, throughout financial and commodities markets, and at the federal, state, and local levels requires an understanding of the financial ecosystems of places and industries.

Suppressed Technology and Knowledge: Political control depends on suppression of knowledge. We do not have ready access to the knowledge that we need to understand our history and economy. Significant health, energy, information, military, and space technology has been suppressed, from the citizens who funded its development and management.

Advanced Surveillance Technology and Weaponry: Historically, financial leadership requires some form of military dominance and enforcement – which comes down to supremacy on land, on sea, and/or in the air. What this means is that invisible weaponry, particularly that created with new advanced technology, can have a profound influence on our world while many people can not fathom that such powers exist. The U.S. has sea and air supremacy which is critical in supporting the dollar.

Control Files and Tools: Many of us have enjoyed the movie, The Matrix, yet we fail to understand how our own incentives and behavior are manipulated. While it has become easier to see the control on a broad, national scale, we are resistant to seeing and understanding how it operates at a more intimate level—in the media and entertainment we choose, within our own family, our school, our workplace, and our community. We see the torture in Guantánamo Bay. We do not see it in our community.  Indeed, to see the control mechanisms and how to navigate them often requires that we understand the areas of knowledge described above.

One of my goals for The Solari Report is to break down these different areas, help you understand them and see the threads weave through the current news of the day. The more you are armed with this knowledge, the more powerful you become. I want us to address what is holding up the dollar and why. Understanding this is critical to understanding how to best manage our time and assets.

In this week’s Solari Report, in Money & Markets, I will discuss the extraordinary success of the Obama Administration’s first 100 days in further centralizing political and financial controls and how this is shifting popular opinion, answer your latest questions in Ask Catherine and then present Derivatives 101.

What are derivatives? Who uses them and why? Why are derivatives at the heart of the current bailouts? We will cover these questions as well as how critical derivatives are to the political management of the financial system and maintenance of the Slow Burn. Understanding derivatives is part of understanding the federal credit system—and how the Anglo-American interests maintain a strong dollar and trigger and exploit the selective collapses that subsidize it. Derivatives are at the financial heart of building Empire.

Hostile Takeover

Simon Johnson, Ex-chief Economist of the IMF details how the US government has been silently hijacked by Wall Street oligarchs in an article titled “The Quiet Coup” published in The Atlantic.

Image credit: Jim Bourg/Reuters/Corbis

Through the lens of IMF standards, the financial condition of the US has reached banana republic status. Similar to other banana republics, political arrangements made in backroom deals see to it that 1.) Debt incurred by the oligarchs is privatized by the people and 2.) Profits are privatized and losses socialized. The same basic method has been used time and again to loot and plunder the 3^rd world, consolidate wealth into a handful of elites after the Soviet Union collapsed and is now being put to bad use in the U.S.

For the record, I’m not necessarily endorsing the “reform” suggested in the article. I get nervous at grand plans beyond simply letting the banks go into bankruptcy. If you take any reform suggested by the IMF at face value, then I encourage you to research the history of how IMF loans - in particular restructured IMF loans - have worked in the past for the man on the street in the indebted nation.

We have a situation where the would be reformers – both in government and quasi-government positions - are the ones in need of reform. All too often, reform in economic chaos is a shell game that simply redirects the wealth to the same set of hands in different ways, and uses socialism to dole out the remaining crumbs in bread and circus fashion.

I’ve posted some excerpts from the article, but it’s worth a full read.

In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.

But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.”

***

From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent. Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007.

The great wealth that the financial sector created and concentrated gave bankers enormous political weight—a weight not seen in the U.S. since the era of J.P. Morgan (the man). In that period, the banking panic of 1907 could be stopped only by coordination among private-sector bankers: no government entity was able to offer an effective response. But that first age of banking oligarchs came to an end with the passage of significant banking regulation in response to the Great Depression; the reemergence of an American financial oligarchy is quite recent.

***

“Of course, the U.S. is unique. And just as we have the world’s most advanced economy, military, and technology, we also have its most advanced oligarchy.

In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts. Although lobbying and campaign contributions certainly play major roles in the American political system, old-fashioned corruption—envelopes stuffed with $100 bills—is probably a sideshow today, Jack Abramoff notwithstanding.

Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world.

One channel of influence was, of course, the flow of individuals between Wall Street and Washington. Robert Rubin, once the co-chairman of Goldman Sachs, served in Washington as Treasury secretary under Clinton, and later became chairman of Citigroup’s executive committee. Henry Paulson, CEO of Goldman Sachs during the long boom, became Treasury secretary under George W.Bush. John Snow, Paulson’s predecessor, left to become chairman of Cerberus Capital Management, a large private-equity firm that also counts Dan Quayle among its executives. Alan Greenspan, after leaving the Federal Reserve, became a consultant to Pimco, perhaps the biggest player in international bond markets.

These personal connections were multiplied many times over at the lower levels of the past three presidential administrations, strengthening the ties between Washington and Wall Street. It has become something of a tradition for Goldman Sachs employees to go into public service after they leave the firm. The flow of Goldman alumni—including Jon Corzine, now the governor of New Jersey, along with Rubin and Paulson—not only placed people with Wall Street’s worldview in the halls of power; it also helped create an image of Goldman (inside the Beltway, at least) as an institution that was itself almost a form of public service.

Wall Street is a very seductive place, imbued with an air of power. Its executives truly believe that they control the levers that make the world go round. A civil servant from Washington invited into their conference rooms, even if just for a meeting, could be forgiven for falling under their sway. Throughout my time at the IMF, I was struck by the easy access of leading financiers to the highest U.S. government officials, and the interweaving of the two career tracks. I vividly remember a meeting in early 2008—attended by top policy makers from a handful of rich countries—at which the chair casually proclaimed, to the room’s general approval, that the best preparation for becoming a central-bank governor was to work first as an investment banker.

A whole generation of policy makers has been mesmerized by Wall Street, always and utterly convinced that whatever the banks said was true. Alan Greenspan’s pronouncements in favor of unregulated financial markets are well known. Yet Greenspan was hardly alone. This is what Ben Bernanke, the man who succeeded him, said in 2006: “The management of market risk and credit risk has become increasingly sophisticated. … Banking organizations of all sizes have made substantial strides over the past two decades in their ability to measure and manage risks.”

***

From this confluence of campaign finance, personal connections, and ideology there flowed, in just the past decade, a river of deregulatory policies that is, in hindsight, astonishing:

• insistence on free movement of capital across borders;

• the repeal of Depression-era regulations separating commercial and investment banking;

• a congressional ban on the regulation of credit-default swaps;

• major increases in the amount of leverage allowed to investment banks;

• a light (dare I say invisible?) hand at the Securities and Exchange Commission in its regulatory enforcement;

• an international agreement to allow banks to measure their own riskiness;

• and an intentional failure to update regulations so as to keep up with the tremendous pace of financial innovation. “

***

“The response so far is perhaps best described as “policy by deal”: when a major financial institution gets into trouble, the Treasury Department and the Federal Reserve engineer a bailout over the weekend and announce on Monday that everything is fine. In March 2008, Bear Stearns was sold to JP Morgan Chase in what looked to many like a gift to JP Morgan. (Jamie Dimon, JP Morgan’s CEO, sits on the board of directors of the Federal Reserve Bank of New York, which, along with the Treasury Department, brokered the deal.) In September, we saw the sale of Merrill Lynch to Bank of America, the first bailout of AIG, and the takeover and immediate sale of Washington Mutual to JP Morgan—all of which were brokered by the government. In October, nine large banks were recapitalized on the same day behind closed doors in Washington. This, in turn, was followed by additional bailouts for Citigroup, AIG, Bank of America, Citigroup (again), and AIG (again).

Some of these deals may have been reasonable responses to the immediate situation. But it was never clear (and still isn’t) what combination of interests was being served, and how. Treasury and the Fed did not act according to any publicly articulated principles, but just worked out a transaction and claimed it was the best that could be done under the circumstances. This was late-night, backroom dealing, pure and simple.”

***

“In my view, the U.S. faces two plausible scenarios. The first involves complicated bank-by-bank deals and a continual drumbeat of (repeated) bailouts, like the ones we saw in February with Citigroup and AIG. The administration will try to muddle through, and confusion will reign.

Boris Fyodorov, the late finance minister of Russia, struggled for much of the past 20 years against oligarchs, corruption, and abuse of authority in all its forms. He liked to say that confusion and chaos were very much in the interests of the powerful—letting them take things, legally and illegally, with impunity. When inflation is high, who can say what a piece of property is really worth? When the credit system is supported by byzantine government arrangements and backroom deals, how do you know that you aren’t being fleeced?

Our future could be one in which continued tumult feeds the looting of the financial system, and we talk more and more about exactly how our oligarchs became bandits and how the economy just can’t seem to get into gear.

The second scenario begins more bleakly, and might end that way too. But it does provide at least some hope that we’ll be shaken out of our torpor. It goes like this: the global economy continues to deteriorate, the banking system in east-central Europe collapses, and—because eastern Europe’s banks are mostly owned by western European banks—justifiable fears of government insolvency spread throughout the Continent. Creditors take further hits and confidence falls further. The Asian economies that export manufactured goods are devastated, and the commodity producers in Latin America and Africa are not much better off. A dramatic worsening of the global environment forces the U.S. economy, already staggering, down onto both knees. The baseline growth rates used in the administration’s current budget are increasingly seen as unrealistic, and the rosy “stress scenario” that the U.S. Treasury is currently using to evaluate banks’ balance sheets becomes a source of great embarrassment.

Under this kind of pressure, and faced with the prospect of a national and global collapse, minds may become more concentrated.

The conventional wisdom among the elite is still that the current slump “cannot be as bad as the Great Depression.” This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances. If our leadership wakes up to the potential consequences, we may yet see dramatic action on the banking system and a breaking of the old elite. “

Agribusiness, Big Pharma and Flu Panics

The swine flu panic shows us that political responses and overreaction to a supposed crisis should be of more concern to the average citizen than the crises itself. Though much has been made over Rahm Emanuel’s statement to, “never let a series crisis go to waste”, one needs only look back as far as the last administration to see that practice carried out with the wholesale destruction of civil liberties in the Patriot Act after 911 created a mass fear society overnight paving the way for a homeland security complex.

 

One foreseeable outcome of the Flu Panic of 2009 is to create scapegoats out of small family farms at the benefit of agribusiness giants by imposing animal ID tagging and other punitive measures. Once again, the truth trail leads us past the left-right puppet paradigm to the corporate money power base.

Flying Pigs, Tamiflu and Factory Farms by F. William Engdahl

If we are to believe what our trusted international media report, the world is on the brink of a global pandemic outbreak of a new deadly strain of flu, H1N1 as it has been labelled, or more popularly, Swine Flu. As the story goes, the outbreak of the deadly flu was first discovered in Mexico. According to press reports, after several days, headlines reported as many as perhaps 150 deaths in Mexico were believed caused by this virulent people-killing pig virus that has spread to humans and now is allegedly being further spread from human to human. Cases were being reported hourly from Canada to Spain and beyond. The only thing wrong with this story is that it is largely based on lies, hype and coverup of possible real causes of Mexican deaths.

One website, revealingly named Swine Flu Vaccine, reports the alarming news, ‘One out of every five residents of Mexico's most populous city wore masks to protect themselves against the virus as Mexico City seems to be the epicenter of the outbreak. As many as 103 deaths have been attributed to the swine flu so far with many more feared to be on the horizon. The health department of Mexico said an additional 1,614 reported cases have been documented.’ We are told that the H1N1 ‘shares genetic material from human, avian and swine influenza viruses.’1

Airports around the world have installed passenger temperature scans to identify anyone with above normal body temperature as possible suspect for swine flu. Travel to Mexico has collapsed. Sales of flu drugs, above all Tamiflu from Roche Inc., have exploded in days. People have stopped buying pork fearing certain death. The World Health Organization has declared ‘a public health emergency of international concern,’ defined by them as ‘an occurrence or imminent threat of illness or health conditions caused by bioterrorism, epidemic or pandemic disease, or highly fatal infectious agents or toxins that pose serious risk to a significant number of people.’2

What are the symptoms of this purported Swine Flu? That’s not at all clear according to virologists and public health experts. They say Swine Flu symptoms are relatively general and nonspecific. ‘So many different things can cause these symptoms. it is a dilemma,’ says one doctor interviewed by CNN. ‘There is not a perfect test right now to let a doctor know that a person has the Swine Flu.’ It has been noted that most individuals with Swine Flu had an early onset of fever. Also it was common to see dizziness, body aches and vomiting in addition to the common sneezing, headache and other cold symptoms. These are symptoms so general as to say nothing.

The US Government’s Center for Disease Control (CDC) in Atlanta states on its official website, ‘Swine Influenza (swine flu) is a respiratory disease of pigs caused by type A influenza viruses that causes regular outbreaks in pigs. People do not normally get swine flu, but human infections can and do happen. Swine flu viruses have been reported to spread from person-to-person, but in the past, this transmission was limited and not sustained beyond three people.’ Nonetheless they add, ‘CDC has determined that this swine influenza A (H1N1) virus is contagious and is spreading from human to human. However, at this time, it is not known how easily the virus spreads between people.’3

How many media that have grabbed on the headline ‘suspected case of Swine Flu’ in recent days bother to double check with the local health authorities to ask some basic questions? For example, the number of confirmed cases of H1N1 and their location? The number of deaths confirmed to have resulted from H1N1? Dates of both? Number of suspected cases and of suspected deaths related to the Swine Flu disease?

Some known facts

According to Biosurveillance, itself part of Veratect, a US Pentagon and Government-linked epidemic reporting center, on April 6, 2009 local health officials declared a health alert due to a respiratory disease outbreak in La Gloria, Perote Municipality, Veracruz State, Mexico. 

They reported, ‘Sources characterized the event as a ‘strange’ outbreak of acute respiratory infection, which led to bronchial pneumonia in some pediatric cases. According to a local resident, symptoms included fever, severe cough, and large amounts of phlegm. Health officials recorded 400 cases that sought medical treatment in the last week in La Gloria, which has a population of 3,000; officials indicated that 60% of the town’s population (approximately 1,800 cases) has been affected. No precise timeframe was provided, but sources reported that a local official had been seeking health assistance for the town since February.’ What they later say is ‘strange’ is not the form of the illness but the time of year as most  flu cases occur in Mexico in the period October to February.

The report went on to note, ‘Residents claimed that three pediatric cases, all under two years of age, died from the outbreak. However, health officials stated that there was no direct link between the pediatric deaths and the outbreak; they stated the three fatal cases were "isolated" and "not related" to each other.’

Then, most revealingly, the aspect of the story which has been largely ignored by major media, they reported, ‘Residents believed the outbreak had been caused by contamination from pig breeding farms located in the area. They believed that the farms, operated by Granjas Carroll, polluted the atmosphere and local water bodies, which in turn led to the disease outbreak. According to residents, the company denied responsibility for the outbreak and attributed the cases to "flu." However, a municipal health official stated that preliminary investigations indicated that the disease vector was a type of fly that reproduces in pig waste and that the outbreak was linked to the pig farms.’4

Since the dawn of American ‘agribusiness,’ a project initiated with funding by the Rockefeller Foundation in the 1950s to turn farming into a pure profit maximization business, US pig or hog production has been transformed into a highly efficient, mass production industrialized enterprise from birth to slaughter. Pigs are caged in what are called Factory Farms, industrial concentrations which are run with the efficiency of a Dachau or Bergen-Belsen concentration camp. They are all conceived by artificial insemination and once born, are regularly injected with antibiotics, not because of illnesses which abound in the hyper-crowded growing pens, but in order to make them grow and add weight faster. Turn around time to slaughter is a profit factor of highest priority. The entire operation is vertically integrated from conception to slaughter to transport distribution to supermarket.

Granjas Carroll de Mexico (GCM) happens to be such a Factory Farm concentration facility for hogs. In 2008 they produced almost one million factory hogs, 950,000 according to their own statistics. GCM is a joint venture operation owned 50% by the world’s largest pig producing industrial company, Smithfield Foods of Virginia.5 The pigs are grown in a tiny rural area of Mexico, a member of the North American Free Trade Agreement, and primarily trucked across the border to supermarkets in the USA, under the Smithfields’ family of labels. Most American consumers have no idea where the meat was raised. 

Now the story becomes interesting.

Manure Lagoons and other playing fields

The Times of London interviewed the mother of 4-year-old Edgar Hernandez of La Gloria in Veracruz, the location of the giant Smithfield Foods hog production facility. Their local reporter notes, ‘Edgar Hernández plays among the dogs and goats that roam through the streets, seemingly unaware that the swine flu he contracted a few weeks ago — the first known case — has almost brought his country to a standstill and put the rest of the world on alert. ‘I feel great,’ the five-year-old boy said. ‘But I had a headache and a sore throat and a fever for a while. I had to lay down in bed.’’

The reporters add, ‘It was confirmed on Monday (April 27 2009-w.e.) that Edgar was the first known sufferer of swine flu, a revelation that has put La Gloria and its surrounding factory pig farms and ‘manure lagoons’ at the centre of a global race to find how this new and deadly strain of swine flu emerged.’ 6

That’s quite interesting. They speak of ‘La Gloria and its surrounding factory pig farms and ‘manure lagoons.’ Presumably the manure lagoons around the LaGloria factory pig farm of Smithfield Foods are the waste dumping place for the feces and urine waste from at least 950,000 pigs a year that pass through the facility. The Smithfield’s Mexico joint venture, Norson, states that alone they slaughter 2,300 pigs daily. That’s a lot. It gives an idea of the volumes of pig waste involved in the concentration facility at La Gloria.

Significantly, according to the Times reporters, ‘residents of La Gloria have been complaining since March that the odour from Granjas Carroll’s pig waste was causing severe respiratory infections. They held a demonstration this month at which they carried signs of pigs crossed with an X and marked with the word peligro (danger).’7 There have been calls to exhume the bodies of the children who died of pneumonia so that they could be tested. The state legislature of Veracruz has demanded that Smithfield’s Granjas Carroll release documents about its waste-handling practices. Smithfield Foods reportedly declined to comment on the request, saying that it would ‘not respond to rumours.’8

A research compilation by Ed Harris reported, ‘According to residents, the company denied responsibility for the outbreak and attributed the cases to ‘flu.’ However, a municipal health official stated that preliminary investigations indicated that the disease vector was a type of fly that reproduces in pig waste and that the outbreak was linked to the pig farms.’9 That would imply that the entire Swine Flu scare might have originated from the PR spin doctors of the world’s largest industrial pig factory farm operation, Smithfield Foods.

The Vera Cruz-based newspaper La Marcha blames Smithfield’s Granjos Carroll for the outbreak, highlighting inadequate treatment of massive quantities of animal waste from hog production.10

Understandably the company is perhaps more than a bit uncomfortable with the sudden attention. The company, which supplies the McDonald’s and Subway fast-food chains, was fined $12.3 million in the United States 1997 for violating the Clean Water Act. Perhaps they are in a remote tiny Mexican rural area enjoying a relatively lax regulatory climate where they need not worry about being cited for violations of any Clean Water Act.

Factory Farms as toxic concentrations

At the very least the driving force for giant industrial agribusiness outsourcing of facilities to third world sites such as Veracruz, Mexico has more to do with further cost reduction and lack of health and safety scrutiny than it does with improving the health and safety quality of the food end product. It has been widely documented and subject of US Congressional reports that large-scale indoor animal production facilities such as that of Granjos Carroll are notorious breeding grounds for toxic pathogens.

A recent report by the US Pew Foundation in cooperation with the Johns Hopkins School of Public Health notes, ‘the method of producing food animals in the United States has changed from the extensive system of small and medium-sized farms owned by a single family to a system of large, intensive operations where the animals are housed in large numbers in enclosed structures that resemble industrial buildings more than they do a traditional barn. That change has happened primarily out of view of consumers but has come at a cost to the environment and a negative impact on public health, rural communities, and the health and well-being of the animals themselves.' 11

The Pew study notes, ‘The diversified, independent, family-owned farms of 40 years ago that produced a variety of crops and a few animals are disappearing as an economic entity, replaced by much larger, and often highly leveraged, farm factories. The animals that many of these farms produce are owned by the meat packing companies from the time they are born

or hatched right through their arrival at the processing plant and from there to market.’ 12 

The study emphasizes that application of ‘untreated animal waste on cropland can contribute to excessive nutrient loading, contaminate surface waters, and stimulate bacteria and algal growth and subsequent reductions in dissolved oxygen concentrations in surface waters.’13

That is where the real investigation ought to begin, with the health and sanitary dangers of the industrial factory pig farms like the one at Perote in Veracruz. The media spread of panic-mongering reports of every person in the world who happens to contract ‘symptoms’ which vaguely resemble flu or even Swine Flu and the statements to date of authorities such as WHO or CDC are far from conducive to a rational scientific investigation..

Tamiflu and Rummy

In October 2005 the Pentagon ordered vaccination of all US military personnel worldwide against what it called Avian Flu, H5N1. Scare stories filled world media. Then, Defense Secretary Donald Rumsfeld announced he had budgeted more than $1 billion to stockpile the drug Oseltamivir, sold under the name Tamiflu. President Bush called on Congress to appropriate another $2 billion for Tamiflu stocks.

What Rumsfeld neglected to report at the time was a colossal conflict of interest. Prior to coming to Washington in January 2001, Rumsfeld had been chairman of a California pharmaceutical company, Gilead Sciences. Gilead Sciences held exclusive world patent rights to Tamiflu, a drug it had developed and whose world marketing rights were sold to the Swiss pharma giant, Roche. Rumsfeld was reportedly the largest stock holder in Gilead which got 10% of every Tamiflu dose Roche sold. 14 When it leaked out, the Pentagon issued a curt statement to the effect that Secretary Rumsfeld had decided not to sell but to retain his stock in Gilead, claiming that to sell would have indicated something to hide.’ That agonizing decision won him reported added millions as the Gilead share price soared more than 700% in weeks. 

Tamiflu is no mild candy to be taken lightly. It has heavy side effects. It contains matter that could have potentially deadly consequences for a person’s breathing and often reportedly leads to nausea, dizziness and other flu-like symptoms.

Since the outbreak of Swine Flu Panic (not Swine Flu but Swine Flu Panic) sales of Tamiflu, as well as any and every possible drug marketed as flu-related, have exploded. Wall Street firms have rushed to issue ‘buy’ recommendations for the company. ‘Gimme a shot Doc, I don’t care what it is…I don’t wanna die…’ 

Panic and fear of death was used by the Bush Administration skilfully to promote the Avian Flu fraud. With ominous echoes of the current Swine Flu scare, Avian Flu was traced back to huge chicken factory farms in Thailand and other parts of Asia whose products were shipped across the world. Instead of a serious investigation into the sanitary conditions of those chicken factory farms, the Bush Administration and WHO blamed ‘free-roaming chickens’ on small family farms, a move that had devastating economic consequences to the farmers whose chickens were being raised in the most sanitary natural conditions. Tyson Foods of Arkansas and CG Group of Thailand reportedly smiled all the way to the bank.

Now it remains to be seen if the Obama Administration will use the scare around so-called Swine Flu to repeat the same scenario, this time with ‘flying pigs’ instead of flying birds. Already Mexican authorities have reported that the number of deaths confirmed from so-called Swine Flu is 7, not the 150 or more bandied in the media, and that most other suspected cases were ordinary flu or influenza.

(To be continued) 

F. William Engdahl is author of Seeds of Destruction: The Hidden Agenda of Genetic Manipulation (Global Rersearch, 2007, see below) and A Century of War: Anglo-American Oil Politics and the New World Order (Pluto Press). His new book, Full Spectrum Dominance: Totalitarian Democracy in the New World Order (Third Millennium Press) is due out end of May. He may be contacted through his website: www.engdahl.oilgeopolitics.net.

Notes

1  Health Advisory, accessed in http://www.swine-flu-vaccine.info/.

2  Ibid.

3Centers for Disease Control, Swine Influenza and You, accessed in
http://www.cdc.gov/swineflu/swineflu_you.htm.

4Biosurveillance, Swine Flu in Mexico- Timeline of Events, April 24, 2009, accessed in
http://biosurveillance.typepad.com/biosurveillance/2009/04/swine-flu-in-mexico-timeline-of-events.html.

5Smithfield Foods website, accessed in
http://www.smithfieldfoods.com/our_company/our_family/Norson.aspx.

6[i]] Ruth Maclean in La Gloria and Chris Ayres in Mexico City, I had a headache and fever’ says boy who survived, London Times, April 28, 2009.

7[ii]] Ibid.

8 Ibid.

9Ed Harris, Bloggers Examine Environmental Role in Mexico Swine Flu Outbreak, April 27, 2009, accessed in
 http://www.planetthoughts.org/?pg=pt/Whole&qid=2870.

10 Ibid.

11 The Pew Commission on Industrial Farm Animal Production, Putting Meat on the Table: Industrial Farm

Animal Production in America, accessed in http://www.ncifap.org/_images/PCIFAPFin.pdf.

12 Ibid.

13 Ibid.

14 F. William Engdahl, Is Avian Flu another Pentagon Hoax?, GlobalResearch, October 30, 2005.

Lessons from Argentina

If you want to understand the events that lead up to the economic collapse of Argentina early this decade, watch these videos. Take good note of what political corruption and plunder by global banking institutions and multinational corporations ultimately leads to: Destruction of the middle class, societal breakdown and human suffering.

What the central banking cartel does to the homeland, the IMF does in spades to the colonized.

Fernando Feral Aquirre's site is an excellent first-hand account of the everyday realities that came to be as a result.

 

Global Political Instability

The Economist Intelligence Unit (EIU) published a special report on the economic crisis titled, “Manning the Barricades – Who’s at Risk as Deepening Economic Distress Foments Social Unrest.” You'll notice on Page 16 of the report that the US is tied with France and Iceland - not the best of company considering the riots in France and the collapse of Iceland's government. The report focuses on two scenarios – one deflationary and one hyperinflationary – and how those scenarios destabilize social and geopolitical order.

 

Underlying vulnerability indicators are: inequality; state history; corruption;ethnic fragmentation; trust in institutions; status of minorities; history of political instability; proclivity to labour unrest; level of social provision; a country’s neighbourhood; regime type (full democracy, .flawed. democracy, hybrid or authoritarian); and the interaction of regime type with political factionalism.

 

 

 

 

 

The Main Risk Scenario:

Stimulus fails, leading to continued asset price deflation and sustained contraction in the leading economies and depression persisting for some years. The stubborn decline in global economic activity is punctuated by occasional rallies that are taken as signs of recovery, but these quickly fade as the underlying downward trend reasserts itself. The prominent role of governments

in propping up banks and reviving domestic demand leads to strong political pressure for protectionism, effectively putting the process of globalisation into reverse.

 

The Alternative Risk Scenario:

Failing confidence in the dollar leads to its collapse, and the search for alternative safe-havens proves fruitless. Economic upheaval sharply raises the risk of social unrest and violent protest. A Political Instability Index covering 165 countries, developed for this report, highlights the countries particularly vulnerable to political instability as a result of economic distress. The results of the index are displayed in map form and in a ranking table in the centre pages, along with a brief methodology.

The Next 100 Years of Geopolitics

George Friedman, founder of Stratfor, published his latest book “The Next 100 Years, A Forecast of the 21st Century” which identifies the major geopolitical themes he foresees. That was such a bold undertaking that I had to pick up a copy since I’ve enjoyed his analysis for years, even though I was highly skeptical because of how badly most projects like this miss the mark.

As bad as it seems for the IOUS of A right now, with chorus cries that we’re going the way of Rome, teetering on socioeconomic collapse, going bankrupt, militarily overstretched and the idea of a Next American Century is heresy, he sees the relative power of the US actually increasing in the 21^st century.

After choking on my coffee, I started putting this into context and realized I didn’t disagree with some of the overall trends as much as my kneejerk reaction led me to believe. Was there a way to merge some of his geopolitical insight with the Panzers, Kunstlers, Bonners and Orlovs of the world? Was there a way to merge his vision with expectations that much of the developed world is tending towards 3^rd world status because of the onslaught of 21^st century crises?

Well to start with, for my money, I’ve never bought into China as being THE next superpower, doubt that market centers like the EU will act as true superpowers and suspect that Russia as a resource country will rise too high before falling again.

Then I put Friedman’s vision into the historical context of how countries can dominate other countries militarily, even while the average person within that country has a very low standard of living. The other major factor he hits on, and cites it as the most critical, is much slower global population growth which all but ensures the end of any illusions of global economic growth being the norm, which dooms some other conventional wisdom about ‘Chindia’.

As Friedman sees it, the US will continue to do what it’s done for years: Make sure no country dominates any region by backing opposing regions and intervening to ensure a balance of power. To put his predictions into the right context, it is important to consider the 5 key geopolitical goals of the US in order of increased magnitude and ambition:

·         The complete dominance of North America by the US Army.

·         The elimination of any threat to the US by any power in the Western Hemisphere.

·         Complete control of the maritime approaches to the US by the Navy in order to preclude any possibility of invasion.

·         Complete domination of the world’s oceans to further secure US physical safety and guarantee control over the international trading system.

·         The prevention of any other nation from challenging US global naval power from militarily controlling the oceans.

Western Europe will continue to lose relevance, in large part because of an aging population. The entitlement programs which bind the EU aren’t sustainable and the EU will disintegrate due to economic realities and dormant historical riffs. Power will shift from Western Europe to Eastern Europe because of demographics and US-backing of Poland as a stop-gap for Russia which has historically pushed westward in order to create a land buffer (Think of Napoleon’s failed attempt to conquer Russia) . Germany will begin to feel a threat and a strained relationship with the US will result.

For the next decade or so, Russia will continue to emerge as a strong regional power and as the jihadist wars fade, proxy wars between the US and Russia will take a more center stage. But Russia’s economy, now dependent on resource exports, will collapse again by the 20 teens.

Friedman sees China as a paper tiger. Social stability there is dependent on unsustainable economic growth and China is essentially an island, surrounded by impassible terrain and wastelands that isolate it from the rest of the world. In the 19^th century, when the Europeans forced their way into an isolationist China, a huge wealth disparity developed between the wealthy coastal regions and poor interior regions, weakening the central government’s control over the coastal regions leading to instability. A similar trend is happening today. By 2020, China will crater economically and revert back to an isolationist period, never having emerged as the dominate world player many expect.  

Turkey will become the regional power in the Middle East and Eastern Mediterranean reclaiming the Ottoman Empire’s dominance pre-WWI. Japan will be the dominant power in Asia and begin to aggressively expand its sphere of influence in a near replay of the factors which lead up to the Pearl Harbor attacks in the 20^th century. Overtime, US interests will conflict with those of Japan and Turkey eventually leading to a war in 2050 which the US will reestablish global dominance and enjoy a period of 15-20 years of postwar prosperity as it did after WWII due to the emergence of new industries.

North American, not Eurasia, will be the global center of power and the US will dominate North America until a point in time late in the century it is challenged by Mexico when a stronger economy combined with demographics that ensure that Mexicans dominate a 200 mile band north of the present border combine to produce a situation that could result in Mexico emerging as a formidable power.

OK, so there you have it.

A Lost Decade is the Best Case Scenario

A lost decade is the best case scenario when you consider the alternatives.

The "good" news, if my mind can muster any these days and purely from a how long do we have before hyperinflation standpoint, is that the world will have to monetize a lot of debt to equal 40% of the world's total wealth, measured in tens of trillions that's been lost since the (cough, cough) "recession" began - terms that even dwarf a projected $4 trillion '09-'10 deficit.

How long the dollar can tread water in a global race where central banks are competing to see who can destroy their currency the quickest is anyone's guess, but right now the dollar is the lead swimmer, which tells us how bad things really are in the rest of the world.

I know...I know...every state and city is just about bankrupt, the pensions, healthcare, and retirement systems are doomed by demographics, deleveraging, dead assets and so on...sadly tent cities are going up faster than the housing tracts a few years before...unemployment is going to pass that magic 9% mark where the credit card defaults cause more chain reactions forcing more measures to *fight* deflation...

But just like every other bubble, I'd wager on the CNBC factor: From a contrarian standpoint, the chances of either severe deflation or inflation in the near term are inversely proportional to the number of guest speakers on mainstream financial news like CNBC/Bloomberg endorsing it.

In 2005, it was clear the housing bubble was topping when you read the articles about supermodels getting into real estate. In late 2007/early 2008, when articles appeared that stores in NYC stopped accepted Euros over dollars and rappers flaunted Euros in place of Benjamins, it seemed likely the Dollar was going to rise relative to other currencies, even though the fundamentals were still terrible.

Now when your neighbor tells you he is buying US Treasury shorts as a "sure thing", the guy behind the counter at the corner store is talking hyperinflation and you see too much of Jim Rogers pimping commodities on mainstream financial news, that might mean $20/barrel oil and a strong dollar (compared to other crippled currencies) this summer...and a little more time before the Treasury Bubble reverses and commodities skyrocket. Remember, $20 dollar oil now makes $200+ oil more likely in the future because of underinvestment.

It is also interesting the number of mainstream articles appearing from "Russian Intelligence experts" claiming the US will fall apart this year or next.

We all know the doomsday scenarios, but what's at work here - really - why are these articles getting so much air time?

If I'm Russia and I've gone from superpower to failed state to resource exporting state, then this $30-40 oil business is killing me and I need to declare (indirect) dollar warfare to push the dollar down and ruble and commodities up. Nothing new there.

On the same token, when the resource countries like the Saudis don't have surplus from selling commodities because of low prices, then there are less buyers to prop up our debt especially with the state of affairs in China, and that begins to chap Uncle Sam and other concerned parties. So it seems to me, this is a mini PR effort to try and stave off a higher dollar and lower commodities in the near term - that's a place where Russian and many Western interests actually overlap.