this is a fictional viewpoint of a band of raiders, this is what you will be dealing with after shtf, pay close attention, you life will depend on these points in the future.
Retreat Security: I Am Your Worst Nightmare, by Jeff T.
http://www.survivalblog.com/2009/10/retreat_security_i_am_your_wor.html
a really great read.
Saturday, January 30, 2010
Friday, January 29, 2010
This Time is Different
http://news.goldseek.com/MillenniumWaveAdvisors/1264365981.php
"But highly leveraged economies, particularly those in which continual rollover of short-term debt is sustained only by confidence in relatively illiquid underlying assets, seldom survive forever, particularly if leverage continues to grow unchecked." - Carmen M. Reinhart and Kenneth Rogoff from their new book, This Time is Different.
I am reading (on my new Kindle as I travel through Europe) a very important book, which I will be referring to a lot in the future. Reinhart and Rogoff have catalogued over 250 financial crises in 66 countries over 800 years and then analyzed them for differences and similarities. This is a VERY sobering book. It does not augur well for the developed world to blithely exit from our woes. The book gives evidence to my adamant statement that we have a lot of pain to experience because of the bad choices we have made. This is the entire developed world, and the emerging world will suffer, too, as we go through it. It is not a matter of pain or no pain. There is no way to avoid it. It is simply a matter of when and over how long a period.
In fact, Reinhart and Rogoff's research suggests that the longer we try to put off the pain, the worse the total pain will be. We have simply overleveraged ourselves, and the deleveraging process is not fun, whether on a personal or a country basis.
Let's look at part of their conclusion, which I think eloquently sums up the problems we face:
"The lesson of history, then, is that even as institutions and policy makers improve, there will always be a temptation to stretch the limits. Just as an individual can go bankrupt no matter how rich she starts out, a financial system can collapse under the pressure of greed, politics, and profits no matter how well regulated it seems to be. Technology has changed, the height of humans has changed, and fashions have changed.
"Yet the ability of governments and investors to delude themselves, giving rise to periodic bouts of euphoria that usually end in tears, seems to have remained a constant. No careful reader of Friedman and Schwartz will be surprised by this lesson about the ability of governments to mismanage financial markets, a key theme of their analysis.
"As for financial markets, we have come full circle to the concept of financial fragility in economies with massive indebtedness. All too often, periods of heavy borrowing can take place in a bubble and last for a surprisingly long time.
"This time may seem different, but all too often a deeper look shows it is not. Encouragingly, history does point to warning signs that policy makers can look at to assess risk - if only they do not become too drunk with their credit bubble - fueled success and say, as their predecessors have for centuries, "This time is different."
"But highly leveraged economies, particularly those in which continual rollover of short-term debt is sustained only by confidence in relatively illiquid underlying assets, seldom survive forever, particularly if leverage continues to grow unchecked." - Carmen M. Reinhart and Kenneth Rogoff from their new book, This Time is Different.
I am reading (on my new Kindle as I travel through Europe) a very important book, which I will be referring to a lot in the future. Reinhart and Rogoff have catalogued over 250 financial crises in 66 countries over 800 years and then analyzed them for differences and similarities. This is a VERY sobering book. It does not augur well for the developed world to blithely exit from our woes. The book gives evidence to my adamant statement that we have a lot of pain to experience because of the bad choices we have made. This is the entire developed world, and the emerging world will suffer, too, as we go through it. It is not a matter of pain or no pain. There is no way to avoid it. It is simply a matter of when and over how long a period.
In fact, Reinhart and Rogoff's research suggests that the longer we try to put off the pain, the worse the total pain will be. We have simply overleveraged ourselves, and the deleveraging process is not fun, whether on a personal or a country basis.
Let's look at part of their conclusion, which I think eloquently sums up the problems we face:
"The lesson of history, then, is that even as institutions and policy makers improve, there will always be a temptation to stretch the limits. Just as an individual can go bankrupt no matter how rich she starts out, a financial system can collapse under the pressure of greed, politics, and profits no matter how well regulated it seems to be. Technology has changed, the height of humans has changed, and fashions have changed.
"Yet the ability of governments and investors to delude themselves, giving rise to periodic bouts of euphoria that usually end in tears, seems to have remained a constant. No careful reader of Friedman and Schwartz will be surprised by this lesson about the ability of governments to mismanage financial markets, a key theme of their analysis.
"As for financial markets, we have come full circle to the concept of financial fragility in economies with massive indebtedness. All too often, periods of heavy borrowing can take place in a bubble and last for a surprisingly long time.
"This time may seem different, but all too often a deeper look shows it is not. Encouragingly, history does point to warning signs that policy makers can look at to assess risk - if only they do not become too drunk with their credit bubble - fueled success and say, as their predecessors have for centuries, "This time is different."
Hyperinflation History: La Terreur
by John Rubino on January 12, 2010
A while back a reviewer dismissed the idea of a dollar collapse by asking “Collapse against what?” His argument was that the other major currencies are a mess too, so in relative terms the dollar will be fine.
This of course misses the point, but in a useful way because it illustrates how words that seem clear to a field’s insiders (in this case gold bugs and other gloom-and-doomers) can be confusing to normal people.
After all, “collapses” do happen all the time. The stock market craters once a decade at least, and oil and houses have seen epic bear markets in just the past couple of years. It’s bad if you own this stuff, but life goes on, so what’s the big deal? And since, as the reviewer said, the dollar is valued in relation to other currencies that also seem shaky, why would it have to collapse at all?
Reasonable questions.
Taking the second one first, it’s true that the dollar is quoted in terms of its exchange rate versus the euro, yen, and pound.
But its value lies in the amount of stuff it can buy. It is thus possible to for the dollar buy a lot less oil, wheat, and land (that is, to collapse) while maintaining a stable exchange rate, if the euro and yen are falling just as fast.
But the first question is the big one: Is a currency collapse different from oil going from $150 to $40 or the NASDAQ falling by 80%, and if so, how?
The answer is that it’s very different, because money is more than just another commodity. It’s the glue that holds a society together. Savers work in order to store value for later in life. In the U.S. their savings take the form of dollars, and the effort they expend today depends in part on how much they expect their dollars to be worth tomorrow.
Borrowers, meanwhile, calculate their obligations in currency, and moderate their borrowing based on their sense of how much the currency they’ve promised to pay back in the future will be worth. In other words, all that’s holding them back is fear of having to repay their loans. So when you devalue a currency and you hurt the ants and enbolden the grasshoppers.
Historically — and there’s a lot of history on which to draw — when a country’s currency is trashed, so is its national character. The relationships between work, savings, debt and more generally honesty and fair play, are all perverted when money ceases to function as a store of value.
Governments, meanwhile, can only do their thing if they can pay for it, and as the value of their monetary reserves and tax revenue falls, they go absolutely crazy. Frequently, hyperinflation equals dictatorship.
Because there hasn’t been a full-on, end-of-the-world currency collapse in living (U.S.) memory, most people have no idea how destructive an uncontrolled printing press can be. But it takes just a few real-world examples to make the point.
So here — the first in a series — is a brief look at what happened after the French Revolution in 1789, excerpted from the Mises Institute’s Inflation and the French Revolution: The Story of a Monetary Catastrophe.
A while back a reviewer dismissed the idea of a dollar collapse by asking “Collapse against what?” His argument was that the other major currencies are a mess too, so in relative terms the dollar will be fine.
This of course misses the point, but in a useful way because it illustrates how words that seem clear to a field’s insiders (in this case gold bugs and other gloom-and-doomers) can be confusing to normal people.
After all, “collapses” do happen all the time. The stock market craters once a decade at least, and oil and houses have seen epic bear markets in just the past couple of years. It’s bad if you own this stuff, but life goes on, so what’s the big deal? And since, as the reviewer said, the dollar is valued in relation to other currencies that also seem shaky, why would it have to collapse at all?
Reasonable questions.
Taking the second one first, it’s true that the dollar is quoted in terms of its exchange rate versus the euro, yen, and pound.
But its value lies in the amount of stuff it can buy. It is thus possible to for the dollar buy a lot less oil, wheat, and land (that is, to collapse) while maintaining a stable exchange rate, if the euro and yen are falling just as fast.
But the first question is the big one: Is a currency collapse different from oil going from $150 to $40 or the NASDAQ falling by 80%, and if so, how?
The answer is that it’s very different, because money is more than just another commodity. It’s the glue that holds a society together. Savers work in order to store value for later in life. In the U.S. their savings take the form of dollars, and the effort they expend today depends in part on how much they expect their dollars to be worth tomorrow.
Borrowers, meanwhile, calculate their obligations in currency, and moderate their borrowing based on their sense of how much the currency they’ve promised to pay back in the future will be worth. In other words, all that’s holding them back is fear of having to repay their loans. So when you devalue a currency and you hurt the ants and enbolden the grasshoppers.
Historically — and there’s a lot of history on which to draw — when a country’s currency is trashed, so is its national character. The relationships between work, savings, debt and more generally honesty and fair play, are all perverted when money ceases to function as a store of value.
Governments, meanwhile, can only do their thing if they can pay for it, and as the value of their monetary reserves and tax revenue falls, they go absolutely crazy. Frequently, hyperinflation equals dictatorship.
Because there hasn’t been a full-on, end-of-the-world currency collapse in living (U.S.) memory, most people have no idea how destructive an uncontrolled printing press can be. But it takes just a few real-world examples to make the point.
So here — the first in a series — is a brief look at what happened after the French Revolution in 1789, excerpted from the Mises Institute’s Inflation and the French Revolution: The Story of a Monetary Catastrophe.
The tale begins with the newly-formed National Assembly wresting power from
the French monarchy. Inheriting a financial mess, and worried about invasion
from ticked-off neighboring monarchies, it responds as governments tend to do,
with a military buildup and massive public spending on bread and buildings. To
pay its bills, the Assembly expropriates the lands and estates of the French
church and tries to monetize them.
But…
It was not long before the Assembly realized that the sale of
church lands alone would not be the fiscal bonanza they had envisioned. For one
thing, throwing all those properties on the market would diminish their selling
price. Second, there was just not enough floating capital (i.e. specie) in
France to make large scale purchases.
What to do? It was time for “the last remedy” for fiscal
insolvency—government fiat paper currency. In March 1790, the Assembly
authorized the printing of 400 million livres of paper assignats of denomination
of 200, 300, and 1,000 livres, bearing three percent interest, and receivable
for taxes and the purchase of the national properties.
Supporters argued that the assignats would furnish payments to the state
creditors, provide a means for the people to purchase lands and properties, draw
specie out of hiding, and stimulate commerce and industry.
Many delegates opposed the measure on economical principles. They
argued that the new currency would depreciate, that it would be followed by
additional emissions, further depreciation, and that the calamities of John
Law’s Mississippi Bubble (1717–20) would be re-enacted across republican France.
Their objections and warnings were brushed aside. The enthusiasts
essentially argued that economic laws did not apply to France, that she had
learned from John Law’s failed experiment never to overdo paper money, that a
republican government could more safely inflate than a monarchical one (the
precise opposite of the truth), and that the immense landed wealth of France
provided solid security.
Even though the issue was relatively moderate, the assignats promptly
depreciated five, and later seven, percent, as measured against gold.
By late summer, the government was again short of funds, so they
naturally turned to a second issue of assignats. However, this time they doubled
the dose to 800 million, dropped the interest payment, and made them legal
tender for all purchases and debts across France. When the economists again
remonstrated, paper advocates replied that the backing of the state would guard
against depreciation, that assignats paid into the treasury would be destroyed,
and that this would be the last emission.
The consequences of the second issue were just as the unpopular
economists had foretold: depreciation in their value, rising prices, feverish
speculation, complaints about a shortage of money, calls for more assignats, the
prostration of commerce and industry, inordinate consumption, and declining
savings. Economic calculation became impossible, but speculation quite
profitable (or ruinous).
In June 1791, the Assembly issued another 600 million assignats (the
previous promise not to issue more was conveniently and predictably forgotten),
and in December an additional 300 million. By the end of the year, its market
value had fallen to 66 percent of its face value. In 1792, they issued 600
million more.
In April of the same year, they confiscated the estates of the
émigrés (those who fled France to avoid being arrested or murdered) and added
them to the national properties. Then came 1793—Year One; the year of la
Terreur. Having tried inflation and legal coercion, they would try terrorizing
the population into accepting the plunging assignat at par, and producing and
selling at a patriotic loss.
In March, the National Convention created the Orwellian-named Committee
of Public Safety (another unfortunate American precedent), which was a kind of
committee of terror, dedicated to expropriating and murdering those deemed to be
“traitors” to France or enemies of la Revolution.
In May, they passed le Maximum, imposing price ceilings on grain. It
worsened the grain shortage. In June, they passed the Forced Loan, a progressive
income tax, whose progressivity was progressively lowered to reach more and more
citizens.
They also passed increasingly draconian and deadly laws designed to force
people to accept the assignats at par and forbidding them from exchanging them
for anything less than their face value. In July, the Convention repudiated the
first issue of interest-bearing assignats.
In August, trading (i.e. buying or selling) specie was prohibited. In
September, the Convention passed the General Maximum, extending price ceilings
to all foodstuffs, as well as firewood, coal, and other essentials.
In that month, despite the deadly coercion, the assignat fell 30 percent
against gold. During 1793, the Convention issued 1,200 million assignats; in
1794, 3,000 million. Next came the deluge.
In 1795, 33,000 million were printed, and in October, when a new
government—the Directory—assumed power, the assignats’ purchasing power had
fallen to almost nothing.
On the black market, 600 francs of assignats traded for one gold
franc.
The Directory was done with the assignat, but it was not done with
inflation. In February 1796, it issued a new paper currency, the mandat, and
made it exchangeable for assignats at the rate of 30 to 1.
By August, after 2,500 million had been issued, the mandat had fallen to
three percent of its face value. In 1796, the Directory had had enough, finally,
and it withdrew the legal tender character of both the assignat and the mandat.
Thereupon, their remaining meager exchangeable value disappeared
altogether.
It took Napoleon to restore hard money to France.
Hyperinflation History: The Continental
by John Rubino on January 29, 2010
The Framers of the Constitution had clear ideas about what was and was not money. As they put it in Article 1, Section 10, “No state shall…coin money; emit bills of credit; make any thing but gold and silver coin a tender in payment of debts…”. This belief that a sound country required a sound currency — one based on something rare and enduring like gold rather than common and infinitely replicable paper — wasn’t just theoretical. They had first-hand experience with paper money and an uncontrolled printing press thanks to the Continental, the first and shortest-lived U.S. currency.
The year is 1775, and the American Revolution has begun. A rag-tag “army” of farm boys (the Colonies were mostly agrarian back then) is about to defy the world’s most powerful empire, and has to be fed and equipped if it is to stand a chance. Levying taxes would, then as now, be complicated and upsetting to a lot of people, so the newly-formed Congress decides to simply print what it needs.
As the Founders and Patriots of America website recounts the story:
On the 10th of May, 1775, the first issue of Continental Currency was circulated. The bills were printed by Hall & Sellers in Philadelphia. They were designed with intricate patterns to make counterfeiting difficult and bore a variety of patriotic mottos in Latin on their obverse.
A special paper was used and the image of a real leaf from one of the local trees was imprinted on the reverse; it was felt that no counterfeiter could duplicate the pattern of God’s handiwork. The bill claimed that the bearer was entitled to the designated amount of Spanish milled dollars (the most common coin then in circulation in the colonies) or the value thereof in gold or silver. It didn’t explain how one was to collect the hard money thus promised — there being no hard money in the treasury. There were a variety of denominations and one could come up with an eight dollar bill, a seven dollar bill or even the proverbial three dollar bill.
Hard Money DisappearsAt first, the bills were accepted at face value. After all, they were issued by Patriots for Patriots. One ominous result, however, was that almost immediately all hard money disappeared. It was a case of Gresham’s law, which states that bad money will drive out good money.
Who wants to spend their guineas when paper is just as acceptable? The trouble was, of course, that paper wasn’t as acceptable and many merchants preferred real money to paper. In fact, this became so frequently the case that Congress had to pass a resolution in January. 1776 that “whoever should refuse to receive in payment Continental bills, should be declared and treated as an enemy of his country and be excluded from inter-course with its inhabitants”.
The sad tale of the Continental Currency thereafter was one of more and more rapid depreciation. As the value of the Continentals dropped, Congress had to print more of them — and as more money flooded the countryside, its value dropped even more rapidly. In November of 1776, $19 million had been issued and one could still buy$1.00 worth of goods for $1.00 in paper. By November of 1778, $31 million had been issued, and it took $6.00 in paper to buy the same amount.
By November, 1779 $226 million was in circulation and it took $40.00 in paper to buy $1.00 in goods. After that, it was all down hill. In April 1779, George Washington complained, “A wagon load of money will scarcely purchase a wagon load of provisions”.
Congress tried desperately to stop this depreciation — with disastrous results. Several laws were passed, requiring citizens to accept the paper money on a par with gold or silver. This attempt at price control had the effect of eliminating goods from the market. Who would offer goods of real value in exchange for near-valueless paper?
It was just at that time that George Washington and his men were suffering at Valley Forge — suffering, in great part, because no one had any food to sell to his quartermaster — for paper money. Price controls nearly destroyed our army and might have, but for the heroism of the Continental soldiers.
Taxation AvoidedWhy did Congress go on printing money for so long a time rather than attempt some sort of taxation? Just as today, there was a mindset among politicians which made them want to avoid the unpleasant.
One member of the Continental Congress was quoted as saying: “Do you think, gentlemen, that I will consent to load my constituents with taxes, when we can send to our printer and get a wagon load of money, one quire of which will pay for the whole?”.
One recurring theme of currency crises is coercion. When people stop trusting a currency, the issuing government starts to insist. Here’s more on the subject from the Ludwig von Mises Institute:
It is surely some kind of sociological law that the state always blames actors other than itself for the unpleasant consequences of its own activities. In some situations it even goes so far as to stigmatize people for not wanting to enter into transactions that would make them poorer — as when, for instance, they are expected to accept payment for their goods and services in severely depreciated currency.
“Persons who refused to sell their lands, houses, or merchandise for nearly worthless paper were stigmatized as misers, traitors, forestallers, and enemies of liberty,” wrote Charles Bullock in 1900, “but prices continued to rise, as the inflation of the currency proceeded apace.” George Washington condemned “the monopolizers, forestallers, and engrossers,” who he said should be hunted down as “pests of society” and “hanged upon a gallows.”
In May 1776 Virginia alleged that the depreciation was attributable to people’s refusal to accept the notes, or to the insistence on higher prices in terms of paper money than in coin, or by “other devices”; the following year the Virginia assembly blamed the depreciation on “the pernicious artifices of the enemies of American liberty, to impair the credit of the said bills, by raising the nominal value” of coin.
The Massachusetts General Court spoke of “the avaricious conduct of many persons, by daily adding to the now exorbitant price of every necessary and convenient article of life.”
The Connecticut government likewise blamed this phenomenon on “monopolizers, the great pest of society.” It went on to note that “some evil-minded persons, inimical to the liberties of the United States of America, have endeavored to depreciate the bills of credit of this and the said United States,” and that many of its citizens “are so abandoned and lost to all the feelings of humanity as to prey upon the bowels of their country.”
According to the legislature of Pennsylvania, “the prices of goods and merchandise are greatly enhanced by the practices and combinations of evil and designing men.”
As the continental depreciated, the states came under pressure to make it legal tender and thus force people to accept it in exchange for goods and services and in payment for debts. The states complied with this request.
Rhode Island declared that anyone who would not accept the paper money would “incur the displeasure of the General Assembly; and ought to be held and esteemed as an enemy to its credit, reputation and happiness; and totally destitute of that regard and obligation he is under to his country and the cause of liberty…. [T]he good people of this colony and America ought to withdraw all communication from such person or persons.”
The law varied across the states, but in Virginia, for example, refusal to accept the notes amounted to a cancellation of the debt you were owed; other penalties of varying severity were enacted elsewhere. In North Carolina, if you so much as spoke disrespectfully of the paper you were “treated as an enemy to [your] country.”
Naturally, the depreciating continental also led to calls for economic controls in order to contain the upward pressure that the inflation was having on wages and prices. The New England states approved price-control statutes in 1776 and early 1777. The price controls had all the predictable effects, including massive shortages, disruption of the division of labor, and more government moralizing — it was bad people, you see, rather than stupid policy, that was responsible for the economic chaos.
A June 1777 letter from Boston read, “We are all starving here. [P]eople will not bring in provision, & we cannot procure the common necessaries of life.” Two years later, the same person wrote: “We are likely to be starved thro’out Boston. Never such a scarcity of provisions.”
Meanwhile, Continental Congress had repeatedly assured anyone who would listen that the continental currency would one day be redeemed at its face value, and that it was “derogatory” to the Congress’s honor that anyone would spread rumors to the contrary.
In March 1780, Congress announced a plan for redeeming the currency at one-fortieth of its face value.
After 1780 the value of the remaining continentals plummeted still further. By early the following year it had reached a ratio of 100 to 1, and in some places it tumbled to 1,000 to 1 — at which point, recalled the New York Herald in 1863, “it expired … without a groan.”
The Framers of the Constitution had clear ideas about what was and was not money. As they put it in Article 1, Section 10, “No state shall…coin money; emit bills of credit; make any thing but gold and silver coin a tender in payment of debts…”. This belief that a sound country required a sound currency — one based on something rare and enduring like gold rather than common and infinitely replicable paper — wasn’t just theoretical. They had first-hand experience with paper money and an uncontrolled printing press thanks to the Continental, the first and shortest-lived U.S. currency.
The year is 1775, and the American Revolution has begun. A rag-tag “army” of farm boys (the Colonies were mostly agrarian back then) is about to defy the world’s most powerful empire, and has to be fed and equipped if it is to stand a chance. Levying taxes would, then as now, be complicated and upsetting to a lot of people, so the newly-formed Congress decides to simply print what it needs.
As the Founders and Patriots of America website recounts the story:
On the 10th of May, 1775, the first issue of Continental Currency was circulated. The bills were printed by Hall & Sellers in Philadelphia. They were designed with intricate patterns to make counterfeiting difficult and bore a variety of patriotic mottos in Latin on their obverse.
A special paper was used and the image of a real leaf from one of the local trees was imprinted on the reverse; it was felt that no counterfeiter could duplicate the pattern of God’s handiwork. The bill claimed that the bearer was entitled to the designated amount of Spanish milled dollars (the most common coin then in circulation in the colonies) or the value thereof in gold or silver. It didn’t explain how one was to collect the hard money thus promised — there being no hard money in the treasury. There were a variety of denominations and one could come up with an eight dollar bill, a seven dollar bill or even the proverbial three dollar bill.
Hard Money DisappearsAt first, the bills were accepted at face value. After all, they were issued by Patriots for Patriots. One ominous result, however, was that almost immediately all hard money disappeared. It was a case of Gresham’s law, which states that bad money will drive out good money.
Who wants to spend their guineas when paper is just as acceptable? The trouble was, of course, that paper wasn’t as acceptable and many merchants preferred real money to paper. In fact, this became so frequently the case that Congress had to pass a resolution in January. 1776 that “whoever should refuse to receive in payment Continental bills, should be declared and treated as an enemy of his country and be excluded from inter-course with its inhabitants”.
The sad tale of the Continental Currency thereafter was one of more and more rapid depreciation. As the value of the Continentals dropped, Congress had to print more of them — and as more money flooded the countryside, its value dropped even more rapidly. In November of 1776, $19 million had been issued and one could still buy$1.00 worth of goods for $1.00 in paper. By November of 1778, $31 million had been issued, and it took $6.00 in paper to buy the same amount.
By November, 1779 $226 million was in circulation and it took $40.00 in paper to buy $1.00 in goods. After that, it was all down hill. In April 1779, George Washington complained, “A wagon load of money will scarcely purchase a wagon load of provisions”.
Congress tried desperately to stop this depreciation — with disastrous results. Several laws were passed, requiring citizens to accept the paper money on a par with gold or silver. This attempt at price control had the effect of eliminating goods from the market. Who would offer goods of real value in exchange for near-valueless paper?
It was just at that time that George Washington and his men were suffering at Valley Forge — suffering, in great part, because no one had any food to sell to his quartermaster — for paper money. Price controls nearly destroyed our army and might have, but for the heroism of the Continental soldiers.
Taxation AvoidedWhy did Congress go on printing money for so long a time rather than attempt some sort of taxation? Just as today, there was a mindset among politicians which made them want to avoid the unpleasant.
One member of the Continental Congress was quoted as saying: “Do you think, gentlemen, that I will consent to load my constituents with taxes, when we can send to our printer and get a wagon load of money, one quire of which will pay for the whole?”.
One recurring theme of currency crises is coercion. When people stop trusting a currency, the issuing government starts to insist. Here’s more on the subject from the Ludwig von Mises Institute:
It is surely some kind of sociological law that the state always blames actors other than itself for the unpleasant consequences of its own activities. In some situations it even goes so far as to stigmatize people for not wanting to enter into transactions that would make them poorer — as when, for instance, they are expected to accept payment for their goods and services in severely depreciated currency.
“Persons who refused to sell their lands, houses, or merchandise for nearly worthless paper were stigmatized as misers, traitors, forestallers, and enemies of liberty,” wrote Charles Bullock in 1900, “but prices continued to rise, as the inflation of the currency proceeded apace.” George Washington condemned “the monopolizers, forestallers, and engrossers,” who he said should be hunted down as “pests of society” and “hanged upon a gallows.”
In May 1776 Virginia alleged that the depreciation was attributable to people’s refusal to accept the notes, or to the insistence on higher prices in terms of paper money than in coin, or by “other devices”; the following year the Virginia assembly blamed the depreciation on “the pernicious artifices of the enemies of American liberty, to impair the credit of the said bills, by raising the nominal value” of coin.
The Massachusetts General Court spoke of “the avaricious conduct of many persons, by daily adding to the now exorbitant price of every necessary and convenient article of life.”
The Connecticut government likewise blamed this phenomenon on “monopolizers, the great pest of society.” It went on to note that “some evil-minded persons, inimical to the liberties of the United States of America, have endeavored to depreciate the bills of credit of this and the said United States,” and that many of its citizens “are so abandoned and lost to all the feelings of humanity as to prey upon the bowels of their country.”
According to the legislature of Pennsylvania, “the prices of goods and merchandise are greatly enhanced by the practices and combinations of evil and designing men.”
As the continental depreciated, the states came under pressure to make it legal tender and thus force people to accept it in exchange for goods and services and in payment for debts. The states complied with this request.
Rhode Island declared that anyone who would not accept the paper money would “incur the displeasure of the General Assembly; and ought to be held and esteemed as an enemy to its credit, reputation and happiness; and totally destitute of that regard and obligation he is under to his country and the cause of liberty…. [T]he good people of this colony and America ought to withdraw all communication from such person or persons.”
The law varied across the states, but in Virginia, for example, refusal to accept the notes amounted to a cancellation of the debt you were owed; other penalties of varying severity were enacted elsewhere. In North Carolina, if you so much as spoke disrespectfully of the paper you were “treated as an enemy to [your] country.”
Naturally, the depreciating continental also led to calls for economic controls in order to contain the upward pressure that the inflation was having on wages and prices. The New England states approved price-control statutes in 1776 and early 1777. The price controls had all the predictable effects, including massive shortages, disruption of the division of labor, and more government moralizing — it was bad people, you see, rather than stupid policy, that was responsible for the economic chaos.
A June 1777 letter from Boston read, “We are all starving here. [P]eople will not bring in provision, & we cannot procure the common necessaries of life.” Two years later, the same person wrote: “We are likely to be starved thro’out Boston. Never such a scarcity of provisions.”
Meanwhile, Continental Congress had repeatedly assured anyone who would listen that the continental currency would one day be redeemed at its face value, and that it was “derogatory” to the Congress’s honor that anyone would spread rumors to the contrary.
In March 1780, Congress announced a plan for redeeming the currency at one-fortieth of its face value.
After 1780 the value of the remaining continentals plummeted still further. By early the following year it had reached a ratio of 100 to 1, and in some places it tumbled to 1,000 to 1 — at which point, recalled the New York Herald in 1863, “it expired … without a groan.”
Are We In An Economic Depression Part 2
Releasing its first global economic forecasts since June, the World Bank was more upbeat about this year's outlook, with the rate of recovery expected to reach 2.7% instead of 2%.
The contraction in 2009 was also estimated to be more modest than expected, a drop of 2.2% instead of 2.9%. The 2011 forecast was left unchanged at 3.2%.
But the bank painted a more sobering picture for next year and beyond, as credit conditions remain tight and governments start to withdraw extraordinary support measures.
"If the private sector continues to save in order to restore balance sheets, a double-dip recession, characterized by a further slowing of growth in 2011, is entirely possible--especially as the growth impact of fiscal stimulus wanes," the bank said. Goldman Sachs Group Inc. responded to intense criticism of big Wall Street paychecks by putting less money into its bonus pool, a move that helped it earn a record $4.79 billion fourth-quarter profit.
The big bank said yesterday that it rewarded employees with $16.2 billion in salaries and bonuses for 2009. That’s up 47 percent from the previous year but much lower than many expected. In all, compensation accounted for 36 percent of Goldman’s $45.17 billion in 2009 revenue, the lowest annual ratio since the company went public in 1999. In 2008, Goldman set aside 48 percent of its revenue to pay employees.
The company is also shifting more pay into deferred stock, allowing it to hold off recording compensation costs for years.The pay restructuring helped the bank easily top analysts’ earnings estimates. Goldman earned $8.20 a share in the last three months of the year, well above the $5.20 a share expected by analysts surveyed by Thomson Reuters.The $4.79 billion profit was the biggest quarterly gain ever for the New York-based bank. The previous record was $3.16 billion in the fourth quarter of 2007, as the bull market on Wall Street was peaking.Trading of fixed income, commodities, and currencies buoyed Goldman’s profits for the third straight quarter.
The bank also reported higher fees from underwriting stock and debt offerings.Berkshire Hathaway reinsurer General Re agreed to pay almost $100 million to settle several charges and a lawsuit related to its involvement in accounting frauds by American International Group and Prudential Financial, the Securities and Exchange Commission said Wednesday.Gen Re agreed to pay $12.2 million to settle SEC charges that it helped AIG (AIG 28.01, +0.05, +0.18%) and Prudential (PRU 53.70, +0.08, +0.15%) manipulate and falsify their financial statements, the regulator said.
Gen Re will also pay $19.5 million to the U.S. Postal Inspection Service Consumer Fraud Fund as part of a nonprosecution agreement unveiled by the Department of Justice, the SEC said. That was related to a criminal investigation into Gen Re's transactions with AIG.Gen Re also agreed to pay $60.5 million to settle a class-action lawsuit on behalf of injured AIG shareholders. Gen Re also forfeited to the government roughly $5 million in fees it got from helping AIG falsify its financial statements, the SEC said.Berkshire (BRK.A 104,500, +300.00, +0.29%) (BRK.B 3,492, +15.99, +0.46%) bought Gen Re in 1998. The acquisition has been one of Chairman Warren Buffett's most troubled deals. Read about Gen Re and Berkshire.
The settlements stem from an accounting scandal that erupted at AIG during the previous decade, before the insurance giant almost collapsed and had to be bailed out by the government.
The controversy led to the departure of longtime AIG Chief Executive Maurice "Hank" Greenberg.The SEC alleges that a foreign subsidiary of Gen Re entered into two "sham" reinsurance transactions with AIG in 2000. The contracts allowed AIG to falsely report rising loss reserves and premiums written, the regulator claimed. AIG paid more than $800 million to settle the charges.Gen Re also arranged a series of "sham" reinsurance contracts with Prudential's property and casualty division from 1997 to 2002.
The deals helped Prudential improperly recognize more than $200 million in revenue in 2000, 2001 and 2002, the SEC said. Prudential was separately charged with securities law violations in 2008, the regulator noted. [As you can see, members of the illuminati never go to jail; they just buy their way out. Warren Buffett and Maurice Greenberg are both crooks. If you or I did what they did we’d be doing 10 years in the slammer. This is a national disgrace that these people can get away with this.
It is simply horrifying. Bob]California is poised to become the first state to set time limits for doctors to see patients, the Department of Managed Health Care said.Regulations to be announced today require family practitioners in health maintenance organizations to see patients seeking an appointment within 10 business days.The deadline for specialists is 15 days.A patient seeking urgent care that does not require prior authorization must see a doctor within 48 hours.However, doctors can extend the waiting period if they determine it will not harm the patient’s health.
The rules, set to take effect in January 2011, “set reasonable expectations about when care should be provided,’’ said Cindy Ehnes, Department of Managed Health Care director.The regulations follow years of negotiations among state officials, doctors, hospitals, HMOs, and consumer and health care activists. A 2002 state law mandated more timely access to medical care but didn’t provide specifics.The rules could be an important change for the 21 million Californians who subscribe to HMO plans, state officials said.
The gap in productivity growth between the United States and Europe widened sharply as US businesses were more aggressive in laying off workers and pushing their remaining employees to be more efficient, according to a business research group. Growth in productivity is the key factor in rising living standards.
In a new report, the Conference Board estimated that productivity - the amount of output per hour of work - rose in the United States by 2.5 percent in 2009 while productivity was falling by 1 percent on average in the euro area, the 16 European nations that use the euro currency.
The Conference Board said in a report to be released today that the gap would narrow in the current year but the United States would still outperform much of the euro area.The Federal Housing Administration plans to increase the amount of up-front cash paid by all new borrowers and to require higher down payments from those with the poorest credit, according to agency officials.
These policy changes, scheduled to be announced on Wednesday, are part of the agency's effort to beef up its ailing finances, which have been eroded by rising defaults in its increasingly popular flagship mortgage insurance program. The FHA currently backs about 30 percent of all loans for home purchases and 20 percent of refinanced loans.
Under this plan, the agency would increase the up-front insurance premium that borrowers pay at the closing table from 1.75 percent to 2.25 percent of the loan's value starting this spring.While most FHA borrowers can continue to make down payments of as little as 3.5 percent when they take out a loan, those with a credit score of less than 580 will have to make a down payment of at least 10 percent, possibly starting in the early summer.The agency also plans to propose limits on the amount of money sellers can kick in, including by paying closing costs or giving free upgrades.
The agency will reduce seller concessions from 6 percent to 3 percent of the home's value, in line with the industry norm, this summer.EVER SINCE his inauguration a year ago, President Obama has tried to motivate Congress with a strong ultimatum: Pass climate-change legislation, or the Environmental Protection Agency (EPA) will use its authority under the Clean Air Act to curb carbon emissions without your input.Instead of accepting this as a prod toward useful action, Sen. Lisa Murkowski (R-Alaska) apparently wants to disarm the administration.
This week she is set to offer a measure, perhaps as an amendment to a bill raising the federal debt ceiling, that would, one way or another, strip the EPA of its power to regulate carbon emissions as pollutants, perhaps for a year, perhaps forever. We aren't fans of the EPA-only route.
The country would be better off if Congress established market-based, economy-wide emissions curbs. But hobbling the agency isn't the right course, either.If Congress fails to act, carefully administered EPA regulation of carbon emissions could ensure that America makes some real reductions, if not necessarily in an optimally efficient manner.
If Congress passes climate legislation, the EPA's role, if any, could be tailored to work with a legislated emissions-reduction regime. So removing the EPA's authority now is at least premature. The correct response to the prospect of large-scale EPA regulation is not to waste lawmakers' energy in a probably futile attempt to weaken the agency. Instead, the Senate should provide a better alternative.
That effort is already fraught. The best policies -- a simple carbon tax or cap-and-trade scheme -- aren't gaining steam. Instead, the House passed a leviathan bill, and the Senate is stalled. Majority Leader Harry M. Reid (D-Nev.) indicated last week that he fears Ms. Murkowski's measure will diminish chances of producing a bipartisan climate-change bill. Ms. Murkowski would do better by helping end the Senate's paralysis than by seeking to condemn the rest of government to the same inaction.
The International Council of Shopping Centers and Goldman Sachs Retail Chain Store Sales Index rose 2% in the week ended Saturday from the week before on a seasonally adjusted, comparable-store basis. The increase--the biggest in the past month--came as consumers "headed to discounters to fight the post-holiday blues," ICSC said. The group noted that January is a low-volume month and can be affected by small swings.
"Sales shifted towards discounters during this past week, which helped to lift the week-over-week pace," added ICSC chief economist Michael Niemira. Last week, ICSC said consumers after the holidays had tended not to purchase items unless they were on sale. Niemira also reiterated that January industrywide comparable-store sales are likely to be flat to up 1% "as lean inventories and the lack of the consumer's need to shop will keep sales moderate for the month." On a year-on-year basis, the reading rose 2.6% last week.Building permits in the U.S. unexpectedly jumped in December, signaling gains in housing will be sustained into 2010 after winter weather depressed construction at the end of last year.
Applications rose 11 percent to a 653,000 annual rate last month, the most since October 2008, the Commerce Department said today in Washington. Work began on houses at a 557,000 pace, down 4 percent from November. Wholesale prices in the U.S. rose at a slower pace in December, showing the economy is recovering without the immediate threat of inflation.
The 0.2 percent increase in prices paid to factories, farmers and other producers followed a 1.8 percent jump in November, according to Labor Department data released today in Washington. The gain was more than anticipated and reflected higher food costs. Excluding food and fuel, so-called core prices were unchanged. Senate Democrats are to seek an increase to the federal government's borrowing limit by $1.9 trillion lifting the total amount the U.S. government can owe to $14.294 trillion, several congressional aides said Wednesday.
The increase is forecast to support the federal government's borrowing needs the end of 2010, one Senate Democratic aide said.The borrowing hike comes fast on the heels of a $290 billion increase to the debt ceiling agreed to by lawmakers at the end of 2009.This is not a perfect world, and there will be no way out of the current crisis – which has been decades in the making – without even more pain. But best to suffer the pain sharply than to drag it out like the death of a thousand cuts, as will be the case if we remain on the path of perpetual spending we are now on.
Ohio's unemployment rate has edged up to 10.9 percent for December, from 10.6 percent the month before.The U.S. government's move to deepen its ties to mortgage-finance giants Fannie Mae and Freddie Mac by agreeing to absorb unlimited losses for the next three years is igniting a debate over whether it should bring the business operations of the companies onto its books.A decision on how the government treats Fannie and Freddie could have broader political implications. So far, the White House has resisted calls by Republicans to bring Fannie's and Freddie's obligations onto the government's books, a move that could boost the federal deficit by tens of billions of dollars.
At a time when the deficit is already at a postwar high, that could create added urgency for Congress and the administration to address the companies' future.The Congressional Budget Office has reiterated its support for bringing the companies onto the federal budget—and onto the government books—which would effectively mean accounting for their operations in the federal budget as if they were federal agencies.Manufacturing conditions in the Philadelphia Fed area have continued improving in January, although at at a slower pace than in December, according to the latest Business Outlook Survey by the Federal Reserve of Philadelphia.
The Philly Fed current business conditions Index has eased to 15.2 in January from 22.5 in December, somewhat below the 18.2 index forecasted by market analysts.New orders and business indexes have continued growing although also at a slower pace than in December.
New orders Index dipped to 3.2 in January from 6.5 in December, while shipments Index dropped to 11.0 from 15.3 in December.The Leading Economic Index for the US grew to 1.1% in January from 0.9% in December. This result marks the ninth consecutive month of gains in the index and is ahead of forecasts of a slight decline to 0.7%.The number of U.S. workers filing new claims for jobless benefits unexpectedly rose last week - an increase a U.S. Labor Department economist said is partly due to an administrative backlog in processing claims.
Total claims lasting more than one week, meanwhile, declined. Initial claims for jobless benefits rose by 36,000 to 482,000 in the week ended Jan. 16, according to the Labor Department's weekly report Thursday. The previous week's level was revised upward to 446,000 from 444,000. Economists surveyed by Dow Jones Newswires expected a decrease of 4,000 initial claims. The four-week moving average, which aims to smooth volatility in the data, also increased as well last week.
The Labor Department said the four-week moving average increased by 7,000 to 448,250 from the previous week's revised average of 441,250.The loan troubles of many U.S. consumers weighed down fourth-quarter results at Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp, but bank executives predicted loan losses are near a peak.The three banks hold a combined 24% of all U.S. deposits and operate more than 15,000 retail branches, making them important barometers of consumer sentiment and the health of the U.S. banking industry.
The Treasury Department asked bond dealers on Friday what, if any, impact the Federal Reserve's completion of its mortgage-related security purchases will have on bond markets, and financial markets more broadly. The Fed has said it would buy $1.425 trillion by late March.
Before each quarterly debt refunding, the department meets with its primary dealers to discuss supply issues and anything else affecting the markets. The request came in its survey of dealers before that meeting. Estimates on how much mortgage rates may rise after the purchases end, including from the last committee meeting, range as high as one percentage point.
As Goldman Sachs prepared to announce its fourth quarter earnings and employee compensation levels yesterday, the bank had bomb-sniffing dogs and police barricades on hand at its New York City headquarters, the New York Post reports.The decision to boost security as its offices was apparently driven by growing fervor over the bank's huge profits and bonuses.
Yesterday, the bank announced that it earned $13.4 billion for the year, and set aside $16 billion for employee compensation. Goldman was widely expected to set aside approximately $20 billion for employee pay, but CFO David Viniar suggested yesterday in a call with reporters that the bank wasn't blind to the "pain and suffering in the world" and "wasn't deaf to the calls for restraint."Viniar's remarks indicate an abrupt change in tone among Goldman Sachs execs.
In November, CEO Lloyd Blankfein -- who had previously bragged that the bank was doing "God's work" -- said the following at an industry conference:I often hear references to higher compensation at Goldman. What people fail to mention is that net income generated per head is a multiple of our peer average. The people of Goldman Sachs are among the most productive in the world.
"Despite what seems to be a new concern among the firm's leaders about the PR implications of Goldman's banner year, the bank's announcement of the pay packages that individual executives receive will be closely scrutinized. Dealbook spoke to one Goldman insider, who suggested Blankfein's bonus will be a measuring stick for employees who may see their pay cut. (Blankfein earned $68 million in 2007, but didn't receive a bonus last year.)
Here's Dealbook:"It all depends on what Lloyd gets," said one midlevel Goldman employee, referring to Lloyd C. Blankfein, Goldman's chairman and chief executive. He said Mr. Blankfein's bonus had become a popular water-cooler topic. "If Lloyd takes home a big bonus, even if it's all stock, and everyone else receives less, there will be some concern," he said.
The contraction in 2009 was also estimated to be more modest than expected, a drop of 2.2% instead of 2.9%. The 2011 forecast was left unchanged at 3.2%.
But the bank painted a more sobering picture for next year and beyond, as credit conditions remain tight and governments start to withdraw extraordinary support measures.
"If the private sector continues to save in order to restore balance sheets, a double-dip recession, characterized by a further slowing of growth in 2011, is entirely possible--especially as the growth impact of fiscal stimulus wanes," the bank said. Goldman Sachs Group Inc. responded to intense criticism of big Wall Street paychecks by putting less money into its bonus pool, a move that helped it earn a record $4.79 billion fourth-quarter profit.
The big bank said yesterday that it rewarded employees with $16.2 billion in salaries and bonuses for 2009. That’s up 47 percent from the previous year but much lower than many expected. In all, compensation accounted for 36 percent of Goldman’s $45.17 billion in 2009 revenue, the lowest annual ratio since the company went public in 1999. In 2008, Goldman set aside 48 percent of its revenue to pay employees.
The company is also shifting more pay into deferred stock, allowing it to hold off recording compensation costs for years.The pay restructuring helped the bank easily top analysts’ earnings estimates. Goldman earned $8.20 a share in the last three months of the year, well above the $5.20 a share expected by analysts surveyed by Thomson Reuters.The $4.79 billion profit was the biggest quarterly gain ever for the New York-based bank. The previous record was $3.16 billion in the fourth quarter of 2007, as the bull market on Wall Street was peaking.Trading of fixed income, commodities, and currencies buoyed Goldman’s profits for the third straight quarter.
The bank also reported higher fees from underwriting stock and debt offerings.Berkshire Hathaway reinsurer General Re agreed to pay almost $100 million to settle several charges and a lawsuit related to its involvement in accounting frauds by American International Group and Prudential Financial, the Securities and Exchange Commission said Wednesday.Gen Re agreed to pay $12.2 million to settle SEC charges that it helped AIG (AIG 28.01, +0.05, +0.18%) and Prudential (PRU 53.70, +0.08, +0.15%) manipulate and falsify their financial statements, the regulator said.
Gen Re will also pay $19.5 million to the U.S. Postal Inspection Service Consumer Fraud Fund as part of a nonprosecution agreement unveiled by the Department of Justice, the SEC said. That was related to a criminal investigation into Gen Re's transactions with AIG.Gen Re also agreed to pay $60.5 million to settle a class-action lawsuit on behalf of injured AIG shareholders. Gen Re also forfeited to the government roughly $5 million in fees it got from helping AIG falsify its financial statements, the SEC said.Berkshire (BRK.A 104,500, +300.00, +0.29%) (BRK.B 3,492, +15.99, +0.46%) bought Gen Re in 1998. The acquisition has been one of Chairman Warren Buffett's most troubled deals. Read about Gen Re and Berkshire.
The settlements stem from an accounting scandal that erupted at AIG during the previous decade, before the insurance giant almost collapsed and had to be bailed out by the government.
The controversy led to the departure of longtime AIG Chief Executive Maurice "Hank" Greenberg.The SEC alleges that a foreign subsidiary of Gen Re entered into two "sham" reinsurance transactions with AIG in 2000. The contracts allowed AIG to falsely report rising loss reserves and premiums written, the regulator claimed. AIG paid more than $800 million to settle the charges.Gen Re also arranged a series of "sham" reinsurance contracts with Prudential's property and casualty division from 1997 to 2002.
The deals helped Prudential improperly recognize more than $200 million in revenue in 2000, 2001 and 2002, the SEC said. Prudential was separately charged with securities law violations in 2008, the regulator noted. [As you can see, members of the illuminati never go to jail; they just buy their way out. Warren Buffett and Maurice Greenberg are both crooks. If you or I did what they did we’d be doing 10 years in the slammer. This is a national disgrace that these people can get away with this.
It is simply horrifying. Bob]California is poised to become the first state to set time limits for doctors to see patients, the Department of Managed Health Care said.Regulations to be announced today require family practitioners in health maintenance organizations to see patients seeking an appointment within 10 business days.The deadline for specialists is 15 days.A patient seeking urgent care that does not require prior authorization must see a doctor within 48 hours.However, doctors can extend the waiting period if they determine it will not harm the patient’s health.
The rules, set to take effect in January 2011, “set reasonable expectations about when care should be provided,’’ said Cindy Ehnes, Department of Managed Health Care director.The regulations follow years of negotiations among state officials, doctors, hospitals, HMOs, and consumer and health care activists. A 2002 state law mandated more timely access to medical care but didn’t provide specifics.The rules could be an important change for the 21 million Californians who subscribe to HMO plans, state officials said.
The gap in productivity growth between the United States and Europe widened sharply as US businesses were more aggressive in laying off workers and pushing their remaining employees to be more efficient, according to a business research group. Growth in productivity is the key factor in rising living standards.
In a new report, the Conference Board estimated that productivity - the amount of output per hour of work - rose in the United States by 2.5 percent in 2009 while productivity was falling by 1 percent on average in the euro area, the 16 European nations that use the euro currency.
The Conference Board said in a report to be released today that the gap would narrow in the current year but the United States would still outperform much of the euro area.The Federal Housing Administration plans to increase the amount of up-front cash paid by all new borrowers and to require higher down payments from those with the poorest credit, according to agency officials.
These policy changes, scheduled to be announced on Wednesday, are part of the agency's effort to beef up its ailing finances, which have been eroded by rising defaults in its increasingly popular flagship mortgage insurance program. The FHA currently backs about 30 percent of all loans for home purchases and 20 percent of refinanced loans.
Under this plan, the agency would increase the up-front insurance premium that borrowers pay at the closing table from 1.75 percent to 2.25 percent of the loan's value starting this spring.While most FHA borrowers can continue to make down payments of as little as 3.5 percent when they take out a loan, those with a credit score of less than 580 will have to make a down payment of at least 10 percent, possibly starting in the early summer.The agency also plans to propose limits on the amount of money sellers can kick in, including by paying closing costs or giving free upgrades.
The agency will reduce seller concessions from 6 percent to 3 percent of the home's value, in line with the industry norm, this summer.EVER SINCE his inauguration a year ago, President Obama has tried to motivate Congress with a strong ultimatum: Pass climate-change legislation, or the Environmental Protection Agency (EPA) will use its authority under the Clean Air Act to curb carbon emissions without your input.Instead of accepting this as a prod toward useful action, Sen. Lisa Murkowski (R-Alaska) apparently wants to disarm the administration.
This week she is set to offer a measure, perhaps as an amendment to a bill raising the federal debt ceiling, that would, one way or another, strip the EPA of its power to regulate carbon emissions as pollutants, perhaps for a year, perhaps forever. We aren't fans of the EPA-only route.
The country would be better off if Congress established market-based, economy-wide emissions curbs. But hobbling the agency isn't the right course, either.If Congress fails to act, carefully administered EPA regulation of carbon emissions could ensure that America makes some real reductions, if not necessarily in an optimally efficient manner.
If Congress passes climate legislation, the EPA's role, if any, could be tailored to work with a legislated emissions-reduction regime. So removing the EPA's authority now is at least premature. The correct response to the prospect of large-scale EPA regulation is not to waste lawmakers' energy in a probably futile attempt to weaken the agency. Instead, the Senate should provide a better alternative.
That effort is already fraught. The best policies -- a simple carbon tax or cap-and-trade scheme -- aren't gaining steam. Instead, the House passed a leviathan bill, and the Senate is stalled. Majority Leader Harry M. Reid (D-Nev.) indicated last week that he fears Ms. Murkowski's measure will diminish chances of producing a bipartisan climate-change bill. Ms. Murkowski would do better by helping end the Senate's paralysis than by seeking to condemn the rest of government to the same inaction.
The International Council of Shopping Centers and Goldman Sachs Retail Chain Store Sales Index rose 2% in the week ended Saturday from the week before on a seasonally adjusted, comparable-store basis. The increase--the biggest in the past month--came as consumers "headed to discounters to fight the post-holiday blues," ICSC said. The group noted that January is a low-volume month and can be affected by small swings.
"Sales shifted towards discounters during this past week, which helped to lift the week-over-week pace," added ICSC chief economist Michael Niemira. Last week, ICSC said consumers after the holidays had tended not to purchase items unless they were on sale. Niemira also reiterated that January industrywide comparable-store sales are likely to be flat to up 1% "as lean inventories and the lack of the consumer's need to shop will keep sales moderate for the month." On a year-on-year basis, the reading rose 2.6% last week.Building permits in the U.S. unexpectedly jumped in December, signaling gains in housing will be sustained into 2010 after winter weather depressed construction at the end of last year.
Applications rose 11 percent to a 653,000 annual rate last month, the most since October 2008, the Commerce Department said today in Washington. Work began on houses at a 557,000 pace, down 4 percent from November. Wholesale prices in the U.S. rose at a slower pace in December, showing the economy is recovering without the immediate threat of inflation.
The 0.2 percent increase in prices paid to factories, farmers and other producers followed a 1.8 percent jump in November, according to Labor Department data released today in Washington. The gain was more than anticipated and reflected higher food costs. Excluding food and fuel, so-called core prices were unchanged. Senate Democrats are to seek an increase to the federal government's borrowing limit by $1.9 trillion lifting the total amount the U.S. government can owe to $14.294 trillion, several congressional aides said Wednesday.
The increase is forecast to support the federal government's borrowing needs the end of 2010, one Senate Democratic aide said.The borrowing hike comes fast on the heels of a $290 billion increase to the debt ceiling agreed to by lawmakers at the end of 2009.This is not a perfect world, and there will be no way out of the current crisis – which has been decades in the making – without even more pain. But best to suffer the pain sharply than to drag it out like the death of a thousand cuts, as will be the case if we remain on the path of perpetual spending we are now on.
Ohio's unemployment rate has edged up to 10.9 percent for December, from 10.6 percent the month before.The U.S. government's move to deepen its ties to mortgage-finance giants Fannie Mae and Freddie Mac by agreeing to absorb unlimited losses for the next three years is igniting a debate over whether it should bring the business operations of the companies onto its books.A decision on how the government treats Fannie and Freddie could have broader political implications. So far, the White House has resisted calls by Republicans to bring Fannie's and Freddie's obligations onto the government's books, a move that could boost the federal deficit by tens of billions of dollars.
At a time when the deficit is already at a postwar high, that could create added urgency for Congress and the administration to address the companies' future.The Congressional Budget Office has reiterated its support for bringing the companies onto the federal budget—and onto the government books—which would effectively mean accounting for their operations in the federal budget as if they were federal agencies.Manufacturing conditions in the Philadelphia Fed area have continued improving in January, although at at a slower pace than in December, according to the latest Business Outlook Survey by the Federal Reserve of Philadelphia.
The Philly Fed current business conditions Index has eased to 15.2 in January from 22.5 in December, somewhat below the 18.2 index forecasted by market analysts.New orders and business indexes have continued growing although also at a slower pace than in December.
New orders Index dipped to 3.2 in January from 6.5 in December, while shipments Index dropped to 11.0 from 15.3 in December.The Leading Economic Index for the US grew to 1.1% in January from 0.9% in December. This result marks the ninth consecutive month of gains in the index and is ahead of forecasts of a slight decline to 0.7%.The number of U.S. workers filing new claims for jobless benefits unexpectedly rose last week - an increase a U.S. Labor Department economist said is partly due to an administrative backlog in processing claims.
Total claims lasting more than one week, meanwhile, declined. Initial claims for jobless benefits rose by 36,000 to 482,000 in the week ended Jan. 16, according to the Labor Department's weekly report Thursday. The previous week's level was revised upward to 446,000 from 444,000. Economists surveyed by Dow Jones Newswires expected a decrease of 4,000 initial claims. The four-week moving average, which aims to smooth volatility in the data, also increased as well last week.
The Labor Department said the four-week moving average increased by 7,000 to 448,250 from the previous week's revised average of 441,250.The loan troubles of many U.S. consumers weighed down fourth-quarter results at Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp, but bank executives predicted loan losses are near a peak.The three banks hold a combined 24% of all U.S. deposits and operate more than 15,000 retail branches, making them important barometers of consumer sentiment and the health of the U.S. banking industry.
The Treasury Department asked bond dealers on Friday what, if any, impact the Federal Reserve's completion of its mortgage-related security purchases will have on bond markets, and financial markets more broadly. The Fed has said it would buy $1.425 trillion by late March.
Before each quarterly debt refunding, the department meets with its primary dealers to discuss supply issues and anything else affecting the markets. The request came in its survey of dealers before that meeting. Estimates on how much mortgage rates may rise after the purchases end, including from the last committee meeting, range as high as one percentage point.
As Goldman Sachs prepared to announce its fourth quarter earnings and employee compensation levels yesterday, the bank had bomb-sniffing dogs and police barricades on hand at its New York City headquarters, the New York Post reports.The decision to boost security as its offices was apparently driven by growing fervor over the bank's huge profits and bonuses.
Yesterday, the bank announced that it earned $13.4 billion for the year, and set aside $16 billion for employee compensation. Goldman was widely expected to set aside approximately $20 billion for employee pay, but CFO David Viniar suggested yesterday in a call with reporters that the bank wasn't blind to the "pain and suffering in the world" and "wasn't deaf to the calls for restraint."Viniar's remarks indicate an abrupt change in tone among Goldman Sachs execs.
In November, CEO Lloyd Blankfein -- who had previously bragged that the bank was doing "God's work" -- said the following at an industry conference:I often hear references to higher compensation at Goldman. What people fail to mention is that net income generated per head is a multiple of our peer average. The people of Goldman Sachs are among the most productive in the world.
"Despite what seems to be a new concern among the firm's leaders about the PR implications of Goldman's banner year, the bank's announcement of the pay packages that individual executives receive will be closely scrutinized. Dealbook spoke to one Goldman insider, who suggested Blankfein's bonus will be a measuring stick for employees who may see their pay cut. (Blankfein earned $68 million in 2007, but didn't receive a bonus last year.)
Here's Dealbook:"It all depends on what Lloyd gets," said one midlevel Goldman employee, referring to Lloyd C. Blankfein, Goldman's chairman and chief executive. He said Mr. Blankfein's bonus had become a popular water-cooler topic. "If Lloyd takes home a big bonus, even if it's all stock, and everyone else receives less, there will be some concern," he said.
Are We In An Economic Depression
Are We In An Economic Depression - Part 1
http://www.marketoracle.co.uk/Article16746.html
Jan 25, 2010
By: Bob_ChapmanFew professionals are yet willing to admit we have been in a depression for the last year. You have to understand the position that economists and analysts are in.
They work for corporations, insurance, Wall Street, banking and government and if they thought we were in a depression and they publicly announced that all chances for advancement would be lost or they would be squeezed out of the firm or simply fired. Under such circumstances can you ever expect that you get the truth? We don’t think so. Furthermore the depression we are enveloped in is far from over. The recession encompassed a drop in real GDP in the midst of a credit crisis.
The crisis was the result of over-extended credit, prohibitively low interest rates, massive speculation by banks, brokerage houses, insurance companies, and corporations worldwide. It just didn’t happen it was planned that way. We saw that recently in testimony before Congress when CEOs of these financial firms admitted they made a mistake in the process of enriching themselves. The worst sin was the criminal securitization of mortgages and the deliberately criminal mislabeling of their ratings.
Then making matters worse those who sold this toxic garbage to their clients such as Goldman Sachs, JP Morgan Chase and Citigroup were shorting the product that they had just sold to their best clients. What kind of monsters are these people? Unethical doesn’t go far enough. It was criminal. These are the same characters, along with the Fed, and others, who gave us the dotcom boom and collapse and then foisted the real estate boom on our economy. The result has been deflating assets and contracting credit offset by massive lending, money and credit creation by the Fed and monetization, all temporary expedient measures, which in the context of history has led to failure.
This has been in process for seven years. This second major abuse of our system in 14 years has presented a terrible dilemma and that is where we are today. Our monetary policy hasn’t worked and won’t work and there has been and presently is little fiscal control in Washington. This is no normal recession; it is a depression. We have zero funds rates and up until six months ago M3 expansion of more than 17%. The Fed has monetized trillions of dollars of Treasuries, Agencies and toxic waste and now we are told we are in recovery – the worst is over. We wish we could agree, but we can’t. We are reenacting the same mistakes of the past all over again. Unemployment is close to the depression levels of the “Great Depression” and is still expanding albeit more slowly.
Money velocity has fallen even after the massive infusion of aggregates. Liquidity is not flowing into the economy it is pouring into Wall Street to aid and abet more speculation, which has sent the Dow from 6600 to 10,700. This game cannot be played indefinitely. Wall Street cannot continue to prosper as the economy remains stagnant, and unemployment climbs higher. The market is grossly overpriced and the effect of favorable news will begin to wane. It should be noted that insiders are selling into the never-ending rally, and mutual funds have very little money flow coming into the funds. That, of course, is our government at work manipulating the market. Just last week insiders bought $18 million worth of shares and sold $419 million.
This to us is more proof that the stock market is the most overvalued since September 1987, which brought about the market collapse of 10/19/87 and resulted in August 1988 in the Executive Order, “The President’s Working Group on Financial Markets,” which has led to market manipulation and the end of free markets.That and the bailout of banks, brokerage firms and insurance companies too big to fail, those same entities carrying two sets of books as authorized by the BIS, FASD and the SEC, government purchase of stock in selective Illuminist controlled companies, and government control of the mortgage and real estate markets. This give you corporate fascism at its finest. We see intervention everywhere and that is not free markets.How can there be a recovery with 22.5% unemployment, and with the additional threat of further unemployment?
Who will buy the new housing and the tremendous inventory overhand? What will happen to the commercial inventory building up? Who has money in America to buy cars and trucks? Credits to buy housing for subprime and ALT-A buyers will end up with a 50% failure rate. Cash for clunkers was a colossal failure. Such exercises in futility only buy time, just as stimulus packages, and monetization do the same thing. The elitists behind the scenes know this just as we know this. That means the colossal deficit increase of $1.4 trillion a year will add 10% yearly to the federal debt to GDP ratio that will be over 100% by 2011. The tax liability to service this debt will be overwhelming. Government debt is rising exponentially and if further stimulus is not added the credit crisis will be renewed.
This is why the Fed cannot remove further liquidity from the financial system, especially after having taken M3 from 17 to 18% to 6%. Incidentally, England and the ECB have done the same thing, and they still see rising inflation. If further stimulation is not forthcoming, or war, or default comes, we will see inflation reverse and deflation take over and that could last for ten years or more. This deflation, if allowed to take its course, will cause losses of $12 to $15 trillion from the economy and cause unemployment to rise to 40% to 50%. That would also entail cutting extended benefits.
That would give us the scenes we saw in the 1930s. The debt we are facing knows no precedent in modern times, and there is no possible way it can be paid.Bad debt is piling up again in residential and commercial real estate as well as in personal and business debt. This in part is why lenders are not talking about it if they can help it, but they are not lending. Without further lending increases the economy cannot function efficiently because it is so dependent on credit. That means higher unemployment, fewer buyers and a slower economy. If you think foreclosed inventory is bad now wait until the second wave hits and it is going to hit. If you are under water on your mortgage you do not care anymore. You stop paying your mortgage and you live rent-free for a year or more.
There is no longer any stigma to walking away or going bankrupt. All the Mickey Mouse games being played by government to keep people in their homes are not going to work. Subprime and ALT-A loans are not the answer. They start going into default in a big way next year as the taxpayer again foots the bill.The public is catching on. You saw this in Virginia, New Jersey and this week in Massachusetts. The public, a liberal public at that is trying to tell government we have had enough and we want the truth, not more lies. How bad is it? The Tea Party has spoken,, driven by talk radio and the Internet. The moment of truth is upon us. Each passing day brings us closer to facing the music. Where does the accumulation of debt end?
For the two fiscal years ended 9/30/99, the public increased Treasury debt $5 trillion to $7.5 trillion or by 50%. The Fed has purchased 80% of Treasury debt yoy, increasing the monetary base from $850 billion to $2 trillion, which includes Agencies and MBS. Seeking cover on their announcement, they said on Christmas they would supply unlimited funds for three years to Fannie Mae and Freddie Mac. Government liabilities made in behalf of the American taxpayer since the third quarter of 2007 have jumped 61% to $3.62 trillion. It is our opinion that the inflation caused by funding and monetization over the next decade will be very disruptive and expensive to US dollar users as purchasing power falls. That translates into an additional loss in buying power of some 50%.If liquidity stays at current levels the stock market will fall as it flourishes on increasing liquidity. In addition, higher inflation rates tend to push stocks lower.
If we are correct and there is a second credit crisis ahead of us, M3 will rise again and monetization will be pushed into high gear again.Meredith Whitney, the banking analyst who forecast bank shares would fall in June of 2008, said plans to limit risk-taking at financial companies will probably be approved and may dramatically reduce trading profits.JP Morgan Chase and Goldman Sachs as a result may have to sell some private-equity business and stop investing in buyouts under a proposal by the President. He wants to prohibit banks from owning or making investments in private-equity and hedge funds.The banks make their money trading for their own accounts.
They won’t have much in the way of earnings if legislation passes, the largest manipulations in history would come to an end. The President has called for limiting the size and trading activities of financial institutions to prevent risk taking and another financial crisis. He also said there should be no proprietary trading. We are told Goldman Sachs will benefit from the President’s proposal to limit Wall Street risk by forcing deposit-taking banks to unwind trading operations.Again the commercial paper market fell by $10 billion to $1.092 trillion. Asset-backed commercial paper rose by $3.5 billion to $430.0 billion.Unsecured issuance fell by $9.9 billion versus rising $12.7 billion in the prior week.Democrats have completely lost their moorings. They want to allow government to borrow an additional $1.9 trillion to put the national debt at $14.3 trillion.
It would need 60 votes to pass.oqHoFood prices are roaring upward again as the PPI rose 0.2%. That is a 4.4% gain month-on-month.Housing starts were 575,000 and building permits rose 653,000. Starts fell 4%. How can any sane builder be building when official and bank hidden inventories are well over a year. Groundbreaking fell a record 38.8% to an all-time low of 553,000 units. Single-family starts fell 6.9% in January. New building permits rose 10.9% for all of 2009 permits fell 36.9%. A Florida builder who was going to build 5,000 units declared bankruptcy yesterday.Americans haven't been fooled by the Dow's rise.
What they see ahead are more taxes. Economists may see the recession as being over, but the man on the street does not. Roughly 60% of the public believes the recession still has a way to go, a NBC/Wall Street Journal poll reported last October.There are sound reasons for this gloom. Consumers have learned a bitter lesson. They understand that increased consumption—private and public—will have to come from income and not borrowing, and income will have to come from employment.
Today, mainstream Americans are going on a financial diet amid deteriorating family finances. By 2008, suburbs were home to the largest and fastest-growing poor population in the country. Between 2000 and 2008, suburbs in the country’s largest metro areas saw their poor population grow by 25 percent—almost five times faster than primary cities and well ahead of the growth seen in smaller metro areas and non-metropolitan communities. As a result, by 2008 large suburbs were home to 1.5 million more poor than their primary cities and housed almost one-third of the nation’s poor overall. Midwestern cities and suburbs experienced by far the largest poverty rate increases over the decade. In 2008, 91.6 million people—more than 30 percent of the nation’s population—fell below 200 percent of the federal poverty level.
The timing was political: the president spoke on the day that Goldman Sachs announced fourth-quarter earnings of $4.95bn. Those of a more populist nature than Mr. Obama – both on the left and on the right – will say that he comes late to the game Indeed, the White House and the US Treasury resisted the backlash against bankers earlier in 2009 – they opposed the punitive tax proposed in the House of Representatives. Instead of using the control they enjoyed over the banks through the troubled asset relief program in 2009, the authorities rushed to free banks from the restrictions associated with Tarp. Mr. Obama may now be ruing this lost opportunity.
The public mood has swung against Wall Street – to which Mr. Obama appears too close for comfort. Trillion-dollar bailouts for people on million-dollar salaries have infuriated Americans living in fear of losing their jobs and their homes. Sheila Bair, one of the chief regulators overseeing Bank of America’s federal rescue, took out two mortgages worth more than $1 million from the banking giant last summer during ongoing negotiations about the bank’s bailout and its repayment. In the weeks between the closings on her two mortgage loans, Bair met with Bank of America’s chief negotiator in the bailout talks.
To avoid conflicts of interest, the Federal Deposit Insurance Corp., which Bair heads, prohibits employees from participating in “any particular matter” involving a bank from which they are seeking a loan. [Is it stupidity or arrogance that induces solons to flaunt law & ethics?] In the depths of the crisis, the Fed shipped more than $500 billion overseas through arrangements with other central banks, in exchange for their currencies. Such lending is down sharply and officials expect to end the program according to plan on Feb. 1.
As of January 13, the Fed held $5.9 billion in dollar "swap" agreements with foreign central banks, down from $63 billion in early September and $583 billion in late December 2008 as the financial crisis was worsening. [This is very important. Without the swaps supporting the dollar in the Forex and buying Treasuries by foreign central banks will recede.
The dollar will fall and there will be more monetization.]The Fed balance sheet for the week ended yesterday declined $39.849B (Expiry has passed!) due to a TAF decline of $37.387B. Only $38.351B remains in TAF. The Treasury on Thursday announced auctions to sell a total of $166 billion in securities in a range of offerings next week.Brown’s victory in Massachusetts not only torpedoes Obamacare, it kills ‘cap & trade’, global warming and a host of other socialistic proposals. (You might want to reconsider your holdings of GE, GS and other cap & trade plays.).
It also kills further Wall Street bailouts and impairs CEOs that have pandered to President Obama – Yes, this means you Jamie Dimon, Jeff Immeltdown, Buffett and the Google geeks. The ginormous upset in the People’s Republic of Massachusetts – Tiananmen II – implies that the GOP could capture the House and possibly the Senate in 2010. Now that all but the safest Democratic House seats are in play, reputable GOP candidates will surface and money will pour into GOP coffers.
The same dynamic is likely to occur if the GOP takes one or both houses of government in November. First stocks will rally but then the medicine will be administered and the results will be extremely bitter. Please keep this in mind as various blowhards spew ‘start of another massive bull market’ rhetoric. The dynamic behind any GOP revolution is limited government and no more bailouts.
A new Congress will institute some degree of limited government, which might include handcuffing the Fed. The Massachusetts unemployment rate surged by nearly a point in December, driving joblessness to its highest level since the 1970s and dealing another setback to a labor market that appeared to be on the mend.The state unemployment rate leaped to 9.4 percent from 8.7 percent in November, more than reversing two previous months of significant declines, the Executive Office of Labor and Workforce Development reported.
It is the highest rate since August 1976, when the state was recovering from the energy crisis recession that began in 1973 after the Arab oil embargo.Massachusetts employers, meanwhile, slashed another 8,400 jobs, the most since September. Since the recession began in March 2008, the state has shed more than 136,000 jobs, including 66,000 in 2009.Under plan, NYC Aid Would Be Slashed By $800 Million; New Soda And Cigarette Tax Proposals Already Angering Masses Governor David Paterson said Tuesday that the days of profligate spending in Albany are over and that starting immediately lawmakers must participate in an "age of accountability”… the governor's new budget has $1 billion in new taxes and nearly $800 million in cuts for New York City.Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $1.9 trillion to pay its bills, a record increase that would permit the national debt to reach $14.3 trillion. The unpopular legislation is needed to allow the federal government to issue bonds to fund programs and prevent a first-time default on obligations.
It promises to be a challenging debate for Democrats, who, as the party in power, hold the responsibility for passing the legislation.A 1.2% decline in light truck prices pulled core lower. Consumer prices, an actual cost to consumers unlike an accounting entry like light trucks, increased 0.3%. Food prices jumped 1.6%. But inflation in the pipeline jumped. Intermediate goods prices (both headline & core) rose 0.5%. Crude prices jumped 1.0% headline and 5.0% core in surging commodity prices. Columbia University professor Joseph Stiglitz, a Nobel Prize-winning economist, said the U.S. should inject a second round of stimulus spending into the economy to avert a “double-dip” recession. It will be “2012 or 2013 at the earliest that we will be back to normality,” Stiglitz said in an interview today on Bloomberg Television. “This is a scenario that is putting us a little better but not much better than the Japanese malaise.”
http://www.marketoracle.co.uk/Article16746.html
Jan 25, 2010
By: Bob_ChapmanFew professionals are yet willing to admit we have been in a depression for the last year. You have to understand the position that economists and analysts are in.
They work for corporations, insurance, Wall Street, banking and government and if they thought we were in a depression and they publicly announced that all chances for advancement would be lost or they would be squeezed out of the firm or simply fired. Under such circumstances can you ever expect that you get the truth? We don’t think so. Furthermore the depression we are enveloped in is far from over. The recession encompassed a drop in real GDP in the midst of a credit crisis.
The crisis was the result of over-extended credit, prohibitively low interest rates, massive speculation by banks, brokerage houses, insurance companies, and corporations worldwide. It just didn’t happen it was planned that way. We saw that recently in testimony before Congress when CEOs of these financial firms admitted they made a mistake in the process of enriching themselves. The worst sin was the criminal securitization of mortgages and the deliberately criminal mislabeling of their ratings.
Then making matters worse those who sold this toxic garbage to their clients such as Goldman Sachs, JP Morgan Chase and Citigroup were shorting the product that they had just sold to their best clients. What kind of monsters are these people? Unethical doesn’t go far enough. It was criminal. These are the same characters, along with the Fed, and others, who gave us the dotcom boom and collapse and then foisted the real estate boom on our economy. The result has been deflating assets and contracting credit offset by massive lending, money and credit creation by the Fed and monetization, all temporary expedient measures, which in the context of history has led to failure.
This has been in process for seven years. This second major abuse of our system in 14 years has presented a terrible dilemma and that is where we are today. Our monetary policy hasn’t worked and won’t work and there has been and presently is little fiscal control in Washington. This is no normal recession; it is a depression. We have zero funds rates and up until six months ago M3 expansion of more than 17%. The Fed has monetized trillions of dollars of Treasuries, Agencies and toxic waste and now we are told we are in recovery – the worst is over. We wish we could agree, but we can’t. We are reenacting the same mistakes of the past all over again. Unemployment is close to the depression levels of the “Great Depression” and is still expanding albeit more slowly.
Money velocity has fallen even after the massive infusion of aggregates. Liquidity is not flowing into the economy it is pouring into Wall Street to aid and abet more speculation, which has sent the Dow from 6600 to 10,700. This game cannot be played indefinitely. Wall Street cannot continue to prosper as the economy remains stagnant, and unemployment climbs higher. The market is grossly overpriced and the effect of favorable news will begin to wane. It should be noted that insiders are selling into the never-ending rally, and mutual funds have very little money flow coming into the funds. That, of course, is our government at work manipulating the market. Just last week insiders bought $18 million worth of shares and sold $419 million.
This to us is more proof that the stock market is the most overvalued since September 1987, which brought about the market collapse of 10/19/87 and resulted in August 1988 in the Executive Order, “The President’s Working Group on Financial Markets,” which has led to market manipulation and the end of free markets.That and the bailout of banks, brokerage firms and insurance companies too big to fail, those same entities carrying two sets of books as authorized by the BIS, FASD and the SEC, government purchase of stock in selective Illuminist controlled companies, and government control of the mortgage and real estate markets. This give you corporate fascism at its finest. We see intervention everywhere and that is not free markets.How can there be a recovery with 22.5% unemployment, and with the additional threat of further unemployment?
Who will buy the new housing and the tremendous inventory overhand? What will happen to the commercial inventory building up? Who has money in America to buy cars and trucks? Credits to buy housing for subprime and ALT-A buyers will end up with a 50% failure rate. Cash for clunkers was a colossal failure. Such exercises in futility only buy time, just as stimulus packages, and monetization do the same thing. The elitists behind the scenes know this just as we know this. That means the colossal deficit increase of $1.4 trillion a year will add 10% yearly to the federal debt to GDP ratio that will be over 100% by 2011. The tax liability to service this debt will be overwhelming. Government debt is rising exponentially and if further stimulus is not added the credit crisis will be renewed.
This is why the Fed cannot remove further liquidity from the financial system, especially after having taken M3 from 17 to 18% to 6%. Incidentally, England and the ECB have done the same thing, and they still see rising inflation. If further stimulation is not forthcoming, or war, or default comes, we will see inflation reverse and deflation take over and that could last for ten years or more. This deflation, if allowed to take its course, will cause losses of $12 to $15 trillion from the economy and cause unemployment to rise to 40% to 50%. That would also entail cutting extended benefits.
That would give us the scenes we saw in the 1930s. The debt we are facing knows no precedent in modern times, and there is no possible way it can be paid.Bad debt is piling up again in residential and commercial real estate as well as in personal and business debt. This in part is why lenders are not talking about it if they can help it, but they are not lending. Without further lending increases the economy cannot function efficiently because it is so dependent on credit. That means higher unemployment, fewer buyers and a slower economy. If you think foreclosed inventory is bad now wait until the second wave hits and it is going to hit. If you are under water on your mortgage you do not care anymore. You stop paying your mortgage and you live rent-free for a year or more.
There is no longer any stigma to walking away or going bankrupt. All the Mickey Mouse games being played by government to keep people in their homes are not going to work. Subprime and ALT-A loans are not the answer. They start going into default in a big way next year as the taxpayer again foots the bill.The public is catching on. You saw this in Virginia, New Jersey and this week in Massachusetts. The public, a liberal public at that is trying to tell government we have had enough and we want the truth, not more lies. How bad is it? The Tea Party has spoken,, driven by talk radio and the Internet. The moment of truth is upon us. Each passing day brings us closer to facing the music. Where does the accumulation of debt end?
For the two fiscal years ended 9/30/99, the public increased Treasury debt $5 trillion to $7.5 trillion or by 50%. The Fed has purchased 80% of Treasury debt yoy, increasing the monetary base from $850 billion to $2 trillion, which includes Agencies and MBS. Seeking cover on their announcement, they said on Christmas they would supply unlimited funds for three years to Fannie Mae and Freddie Mac. Government liabilities made in behalf of the American taxpayer since the third quarter of 2007 have jumped 61% to $3.62 trillion. It is our opinion that the inflation caused by funding and monetization over the next decade will be very disruptive and expensive to US dollar users as purchasing power falls. That translates into an additional loss in buying power of some 50%.If liquidity stays at current levels the stock market will fall as it flourishes on increasing liquidity. In addition, higher inflation rates tend to push stocks lower.
If we are correct and there is a second credit crisis ahead of us, M3 will rise again and monetization will be pushed into high gear again.Meredith Whitney, the banking analyst who forecast bank shares would fall in June of 2008, said plans to limit risk-taking at financial companies will probably be approved and may dramatically reduce trading profits.JP Morgan Chase and Goldman Sachs as a result may have to sell some private-equity business and stop investing in buyouts under a proposal by the President. He wants to prohibit banks from owning or making investments in private-equity and hedge funds.The banks make their money trading for their own accounts.
They won’t have much in the way of earnings if legislation passes, the largest manipulations in history would come to an end. The President has called for limiting the size and trading activities of financial institutions to prevent risk taking and another financial crisis. He also said there should be no proprietary trading. We are told Goldman Sachs will benefit from the President’s proposal to limit Wall Street risk by forcing deposit-taking banks to unwind trading operations.Again the commercial paper market fell by $10 billion to $1.092 trillion. Asset-backed commercial paper rose by $3.5 billion to $430.0 billion.Unsecured issuance fell by $9.9 billion versus rising $12.7 billion in the prior week.Democrats have completely lost their moorings. They want to allow government to borrow an additional $1.9 trillion to put the national debt at $14.3 trillion.
It would need 60 votes to pass.oqHoFood prices are roaring upward again as the PPI rose 0.2%. That is a 4.4% gain month-on-month.Housing starts were 575,000 and building permits rose 653,000. Starts fell 4%. How can any sane builder be building when official and bank hidden inventories are well over a year. Groundbreaking fell a record 38.8% to an all-time low of 553,000 units. Single-family starts fell 6.9% in January. New building permits rose 10.9% for all of 2009 permits fell 36.9%. A Florida builder who was going to build 5,000 units declared bankruptcy yesterday.Americans haven't been fooled by the Dow's rise.
What they see ahead are more taxes. Economists may see the recession as being over, but the man on the street does not. Roughly 60% of the public believes the recession still has a way to go, a NBC/Wall Street Journal poll reported last October.There are sound reasons for this gloom. Consumers have learned a bitter lesson. They understand that increased consumption—private and public—will have to come from income and not borrowing, and income will have to come from employment.
Today, mainstream Americans are going on a financial diet amid deteriorating family finances. By 2008, suburbs were home to the largest and fastest-growing poor population in the country. Between 2000 and 2008, suburbs in the country’s largest metro areas saw their poor population grow by 25 percent—almost five times faster than primary cities and well ahead of the growth seen in smaller metro areas and non-metropolitan communities. As a result, by 2008 large suburbs were home to 1.5 million more poor than their primary cities and housed almost one-third of the nation’s poor overall. Midwestern cities and suburbs experienced by far the largest poverty rate increases over the decade. In 2008, 91.6 million people—more than 30 percent of the nation’s population—fell below 200 percent of the federal poverty level.
The timing was political: the president spoke on the day that Goldman Sachs announced fourth-quarter earnings of $4.95bn. Those of a more populist nature than Mr. Obama – both on the left and on the right – will say that he comes late to the game Indeed, the White House and the US Treasury resisted the backlash against bankers earlier in 2009 – they opposed the punitive tax proposed in the House of Representatives. Instead of using the control they enjoyed over the banks through the troubled asset relief program in 2009, the authorities rushed to free banks from the restrictions associated with Tarp. Mr. Obama may now be ruing this lost opportunity.
The public mood has swung against Wall Street – to which Mr. Obama appears too close for comfort. Trillion-dollar bailouts for people on million-dollar salaries have infuriated Americans living in fear of losing their jobs and their homes. Sheila Bair, one of the chief regulators overseeing Bank of America’s federal rescue, took out two mortgages worth more than $1 million from the banking giant last summer during ongoing negotiations about the bank’s bailout and its repayment. In the weeks between the closings on her two mortgage loans, Bair met with Bank of America’s chief negotiator in the bailout talks.
To avoid conflicts of interest, the Federal Deposit Insurance Corp., which Bair heads, prohibits employees from participating in “any particular matter” involving a bank from which they are seeking a loan. [Is it stupidity or arrogance that induces solons to flaunt law & ethics?] In the depths of the crisis, the Fed shipped more than $500 billion overseas through arrangements with other central banks, in exchange for their currencies. Such lending is down sharply and officials expect to end the program according to plan on Feb. 1.
As of January 13, the Fed held $5.9 billion in dollar "swap" agreements with foreign central banks, down from $63 billion in early September and $583 billion in late December 2008 as the financial crisis was worsening. [This is very important. Without the swaps supporting the dollar in the Forex and buying Treasuries by foreign central banks will recede.
The dollar will fall and there will be more monetization.]The Fed balance sheet for the week ended yesterday declined $39.849B (Expiry has passed!) due to a TAF decline of $37.387B. Only $38.351B remains in TAF. The Treasury on Thursday announced auctions to sell a total of $166 billion in securities in a range of offerings next week.Brown’s victory in Massachusetts not only torpedoes Obamacare, it kills ‘cap & trade’, global warming and a host of other socialistic proposals. (You might want to reconsider your holdings of GE, GS and other cap & trade plays.).
It also kills further Wall Street bailouts and impairs CEOs that have pandered to President Obama – Yes, this means you Jamie Dimon, Jeff Immeltdown, Buffett and the Google geeks. The ginormous upset in the People’s Republic of Massachusetts – Tiananmen II – implies that the GOP could capture the House and possibly the Senate in 2010. Now that all but the safest Democratic House seats are in play, reputable GOP candidates will surface and money will pour into GOP coffers.
The same dynamic is likely to occur if the GOP takes one or both houses of government in November. First stocks will rally but then the medicine will be administered and the results will be extremely bitter. Please keep this in mind as various blowhards spew ‘start of another massive bull market’ rhetoric. The dynamic behind any GOP revolution is limited government and no more bailouts.
A new Congress will institute some degree of limited government, which might include handcuffing the Fed. The Massachusetts unemployment rate surged by nearly a point in December, driving joblessness to its highest level since the 1970s and dealing another setback to a labor market that appeared to be on the mend.The state unemployment rate leaped to 9.4 percent from 8.7 percent in November, more than reversing two previous months of significant declines, the Executive Office of Labor and Workforce Development reported.
It is the highest rate since August 1976, when the state was recovering from the energy crisis recession that began in 1973 after the Arab oil embargo.Massachusetts employers, meanwhile, slashed another 8,400 jobs, the most since September. Since the recession began in March 2008, the state has shed more than 136,000 jobs, including 66,000 in 2009.Under plan, NYC Aid Would Be Slashed By $800 Million; New Soda And Cigarette Tax Proposals Already Angering Masses Governor David Paterson said Tuesday that the days of profligate spending in Albany are over and that starting immediately lawmakers must participate in an "age of accountability”… the governor's new budget has $1 billion in new taxes and nearly $800 million in cuts for New York City.Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $1.9 trillion to pay its bills, a record increase that would permit the national debt to reach $14.3 trillion. The unpopular legislation is needed to allow the federal government to issue bonds to fund programs and prevent a first-time default on obligations.
It promises to be a challenging debate for Democrats, who, as the party in power, hold the responsibility for passing the legislation.A 1.2% decline in light truck prices pulled core lower. Consumer prices, an actual cost to consumers unlike an accounting entry like light trucks, increased 0.3%. Food prices jumped 1.6%. But inflation in the pipeline jumped. Intermediate goods prices (both headline & core) rose 0.5%. Crude prices jumped 1.0% headline and 5.0% core in surging commodity prices. Columbia University professor Joseph Stiglitz, a Nobel Prize-winning economist, said the U.S. should inject a second round of stimulus spending into the economy to avert a “double-dip” recession. It will be “2012 or 2013 at the earliest that we will be back to normality,” Stiglitz said in an interview today on Bloomberg Television. “This is a scenario that is putting us a little better but not much better than the Japanese malaise.”
Central banks end US dollar emergency swap lines
Rats are bailing off the ship, they're removing emergency funds availability. You might say, "they're circling the wagons and we're on the outside", just FYI, these same banks are now under the control of the E.U.The Bank of England said Wednesday that it and other major central banks are ending emergency lending arrangements put in place with the U.S. Federal Reserve in the wake of the global credit crisis, citing improvements in financial markets.
The decision marks the first unified retraction by central banks around the world of extraordinary support measures to boost lending after credit markets seized up in late 2007, causing the global economic downturn.The Bank of England was joined by the European Central Bank, the Bank of Japan and the Swiss National Bank in announcing that the temporary reciprocal currency arrangements with the Fed would expire on Feb. 1.
"These lines, which were established to counter pressures in global funding markets, are no longer needed given the improvements in financial market functioning seen over the past year," the bank said in a statement. "Central banks will continue to cooperate as needed."The Fed announced in December 2007 that it had authorized so-called liquidity swap lines with the European Central Bank and the Swiss National Bank.
The agreement was extended to include several other central banks in April 2009.Under the arrangements, central banks around the world provided each other with foreign currency -- the Fed made U.S. dollar liquidity available elsewhere, with the ECB providing euros and the Bank of England providing sterling.
The agreements added up to hundreds of billions of dollars.The aim was to improve liquidity conditions in U.S. and foreign financial markets after banks became nervous of lending to each other amid concerns about the state of balance sheets across the industry.The stagnation in the interbank lending pushed up the premium for short-term U.S. dollar funding in particular, a currency that features widely in both asset and liability tables of banks and companies around the world. That led to a sharp rise in interbank lending rates, which flowed through to the rest of the financial system.The Bank of England said it conducted its last U.S. dollar repo operation under the arrangements on Wednesday.
http://www.businessweek.com/ap/financialnews/D9DGBJL00.htm
The decision marks the first unified retraction by central banks around the world of extraordinary support measures to boost lending after credit markets seized up in late 2007, causing the global economic downturn.The Bank of England was joined by the European Central Bank, the Bank of Japan and the Swiss National Bank in announcing that the temporary reciprocal currency arrangements with the Fed would expire on Feb. 1.
"These lines, which were established to counter pressures in global funding markets, are no longer needed given the improvements in financial market functioning seen over the past year," the bank said in a statement. "Central banks will continue to cooperate as needed."The Fed announced in December 2007 that it had authorized so-called liquidity swap lines with the European Central Bank and the Swiss National Bank.
The agreement was extended to include several other central banks in April 2009.Under the arrangements, central banks around the world provided each other with foreign currency -- the Fed made U.S. dollar liquidity available elsewhere, with the ECB providing euros and the Bank of England providing sterling.
The agreements added up to hundreds of billions of dollars.The aim was to improve liquidity conditions in U.S. and foreign financial markets after banks became nervous of lending to each other amid concerns about the state of balance sheets across the industry.The stagnation in the interbank lending pushed up the premium for short-term U.S. dollar funding in particular, a currency that features widely in both asset and liability tables of banks and companies around the world. That led to a sharp rise in interbank lending rates, which flowed through to the rest of the financial system.The Bank of England said it conducted its last U.S. dollar repo operation under the arrangements on Wednesday.
http://www.businessweek.com/ap/financialnews/D9DGBJL00.htm
Wednesday, January 27, 2010
The keys to your survival
What are they? The community you live in. only small rural community's stand a chance to survive intact.
But...
That's only if they are all on the same page at the start of whatever crisis happens. Meaning that every resident must be stocked with their own food and water,fuel,seeds,power,weapons,ammo, medical supply's,etc.
They need land and livestock, but most importantly, they need security and ABOVE ALL ELSE, they wont survive unless they are prepared to turn away the golden horde!!!
wtf is that? It's the refugees that will be at your town gate looking for food,water,etc. It wil be the hardest thing you will ever have to do in your life, turn your back on a fellow man,woman or child.
The sad fact is you cant save them all, and if you attempt to, your resources will be gone and yourself will starve right along with them.
If your community is not prepared to set up roadblocks and turn away refugees in 1-2 days time after shtf, then bugging out is your best option for making it thru.
2 choices, 1. bug in a rural community where everyone is on the same page or
2. bug out to a very remote spot already set up by you to hide in for 9 months to a year.
otherwise prepare to die, get picked up by us forces(the dome in new orleans ring a bell),un peacekeepers(or give up your guns), and welcome to the new world state of do what your told, you might get enough to eat.
sooner or later they will come to the community's as well, so bugging out might really be your only option, depending on if you think shtf by chance or by a plan.
Either way the government is going to let the mass die off happen, and then come in.Patriots will not have a chance with the weapons allowed us today, it seems washingtons tactics against the british in 1776 would be the best route to take if things came to that.
alot of people will see this as doom and gloom, but it dont have to be, to me this is an exciting time where i might be able to help keep freedom alive for my kids and grandkids. It's a chance to really stand up for what you believe, that is if you make it thru the die off first.
You have 2 choices after reading this now.
1. you can research what i'm talking about,prepare for it, and MAYBE live thru it or
2. you can ignore it, call me crazy, go back to your 9 to 5 and consumerism buying china crap life and 100% die in the next couple of years, cause you thought it could never happen in america(even though it has happened in every other country in the world thru out history, somehow we are immune...lol)
remember the dems and repubs byline is
drive up the deficit, default on the debt.
as always comments, thoughts, and insults go in the comments section....peace.
But...
That's only if they are all on the same page at the start of whatever crisis happens. Meaning that every resident must be stocked with their own food and water,fuel,seeds,power,weapons,ammo, medical supply's,etc.
They need land and livestock, but most importantly, they need security and ABOVE ALL ELSE, they wont survive unless they are prepared to turn away the golden horde!!!
wtf is that? It's the refugees that will be at your town gate looking for food,water,etc. It wil be the hardest thing you will ever have to do in your life, turn your back on a fellow man,woman or child.
The sad fact is you cant save them all, and if you attempt to, your resources will be gone and yourself will starve right along with them.
If your community is not prepared to set up roadblocks and turn away refugees in 1-2 days time after shtf, then bugging out is your best option for making it thru.
2 choices, 1. bug in a rural community where everyone is on the same page or
2. bug out to a very remote spot already set up by you to hide in for 9 months to a year.
otherwise prepare to die, get picked up by us forces(the dome in new orleans ring a bell),un peacekeepers(or give up your guns), and welcome to the new world state of do what your told, you might get enough to eat.
sooner or later they will come to the community's as well, so bugging out might really be your only option, depending on if you think shtf by chance or by a plan.
Either way the government is going to let the mass die off happen, and then come in.Patriots will not have a chance with the weapons allowed us today, it seems washingtons tactics against the british in 1776 would be the best route to take if things came to that.
alot of people will see this as doom and gloom, but it dont have to be, to me this is an exciting time where i might be able to help keep freedom alive for my kids and grandkids. It's a chance to really stand up for what you believe, that is if you make it thru the die off first.
You have 2 choices after reading this now.
1. you can research what i'm talking about,prepare for it, and MAYBE live thru it or
2. you can ignore it, call me crazy, go back to your 9 to 5 and consumerism buying china crap life and 100% die in the next couple of years, cause you thought it could never happen in america(even though it has happened in every other country in the world thru out history, somehow we are immune...lol)
remember the dems and repubs byline is
drive up the deficit, default on the debt.
as always comments, thoughts, and insults go in the comments section....peace.
Court Rules That Mass Surveillance of Americans is Immune From Judicial Review
wtf is going on in this country you ask? we are following a plan to debt default,martial law, and a thinning of the herd. we have been getting dumbed down in public schools since the 70's, kids today have no clue what hard work or sacrifice is anymore.
read this crap here...........
Court Rules That Mass Surveillance of Americans is Immune From Judicial Review
Electronic Frontier FoundationPress ReleasePosted Jan 26, 2010
San Francisco – A federal judge has dismissed Jewel v. NSA, a case from the Electronic Frontier Foundation (EFF) on behalf of AT&T customers challenging the National Security Agency’s mass surveillance of millions of ordinary Americans’ phone calls and emails.
“We’re deeply disappointed in the judge’s ruling,” said EFF Legal Director Cindy Cohn. “This ruling robs innocent telecom customers of their privacy rights without due process of law. Setting limits on Executive power is one of the most important elements of America’s system of government, and judicial oversight is a critical part of that.”
In the ruling, issued late Thursday, U.S. District Court Chief Judge Vaughn Walker held that the privacy harm to millions of Americans from the illegal spying dragnet was not a “particularized injury” but instead a “generalized grievance” because almost everyone in the United States has a phone and Internet service.
“The alarming upshot of the court’s decision is that so long as the government spies on all Americans, the courts have no power to review or halt such mass surveillance even when it is flatly illegal and unconstitutional,” said EFF Senior Staff Attorney Kevin Bankston. “With new revelations of illegal spying being reported practically every other week — just this week, we learned that the FBI has been unlawfully obtaining Americans’ phone records using Post-It notes rather than proper legal process — the need for judicial oversight when it comes to government surveillance has never been clearer.”
Jewel v. NSA is aimed at ending the NSA’s dragnet surveillance of millions of ordinary Americans and holding accountable the government officials who illegally authorized it. Evidence in the case includes undisputed documents provided by former AT&T telecommunications technician Mark Klein showing AT&T has routed copies of Internet traffic to a secret room in San Francisco controlled by the NSA. That same evidence is central to Hepting v. AT&T, a class-action lawsuit that’s currently under appeal in the U.S. Court of Appeals for the 9th Circuit.
For the judge’s full order: http://www.eff.org/files/filenode/jewel/jeweldismissal12110.pdf
For more on warrantless wiretapping and NSA spying:http://www.eff.org/issues/nsa-spying
read this crap here...........
Court Rules That Mass Surveillance of Americans is Immune From Judicial Review
Electronic Frontier FoundationPress ReleasePosted Jan 26, 2010
San Francisco – A federal judge has dismissed Jewel v. NSA, a case from the Electronic Frontier Foundation (EFF) on behalf of AT&T customers challenging the National Security Agency’s mass surveillance of millions of ordinary Americans’ phone calls and emails.
“We’re deeply disappointed in the judge’s ruling,” said EFF Legal Director Cindy Cohn. “This ruling robs innocent telecom customers of their privacy rights without due process of law. Setting limits on Executive power is one of the most important elements of America’s system of government, and judicial oversight is a critical part of that.”
In the ruling, issued late Thursday, U.S. District Court Chief Judge Vaughn Walker held that the privacy harm to millions of Americans from the illegal spying dragnet was not a “particularized injury” but instead a “generalized grievance” because almost everyone in the United States has a phone and Internet service.
“The alarming upshot of the court’s decision is that so long as the government spies on all Americans, the courts have no power to review or halt such mass surveillance even when it is flatly illegal and unconstitutional,” said EFF Senior Staff Attorney Kevin Bankston. “With new revelations of illegal spying being reported practically every other week — just this week, we learned that the FBI has been unlawfully obtaining Americans’ phone records using Post-It notes rather than proper legal process — the need for judicial oversight when it comes to government surveillance has never been clearer.”
Jewel v. NSA is aimed at ending the NSA’s dragnet surveillance of millions of ordinary Americans and holding accountable the government officials who illegally authorized it. Evidence in the case includes undisputed documents provided by former AT&T telecommunications technician Mark Klein showing AT&T has routed copies of Internet traffic to a secret room in San Francisco controlled by the NSA. That same evidence is central to Hepting v. AT&T, a class-action lawsuit that’s currently under appeal in the U.S. Court of Appeals for the 9th Circuit.
For the judge’s full order: http://www.eff.org/files/filenode/jewel/jeweldismissal12110.pdf
For more on warrantless wiretapping and NSA spying:http://www.eff.org/issues/nsa-spying
Tuesday, January 19, 2010
This is what i'm talking about.
In this video notice the "conspiracy theorist" or "crazy" guy peter is getting laughed at,etc.
http://www.youtube.com/watch?v=zdVP_sgCETo&feature=player_embedded
Again i'm not saying believe everything that goes against mainstream thinking, but please take the time to do your own research, and by that, i mean check and double check your sources, if your a dem, get all your info from a repub source, same if your a repub.
realize that most people do want the same thing, the elite wedge us apart with social issues like gay rights,abortion,etc. The policy's of both party's are the same, default on the loan,driving up the debt.
http://www.youtube.com/watch?v=zdVP_sgCETo&feature=player_embedded
Again i'm not saying believe everything that goes against mainstream thinking, but please take the time to do your own research, and by that, i mean check and double check your sources, if your a dem, get all your info from a repub source, same if your a repub.
realize that most people do want the same thing, the elite wedge us apart with social issues like gay rights,abortion,etc. The policy's of both party's are the same, default on the loan,driving up the debt.
Identifying Sure Signs Of The Final Economic Plunge
Giordano Bruno
Neithercorp Press - 01/12/10
Many researchers, including those here at Neithercorp, have projected that the third and final stage of the economic collapse will begin sometime in 2010. Barring some kind of financial miracle, or the complete dissolution of the Federal Reserve, a snowballing implosion should become visible by the end of this year. Data indicates that the dollar and the Dow are running on nothing but false promises and fiat bailouts, and that this game is slowly winding down. The Fed cannot sustain its current rate of liquidity injections without raising the ire of foreign nations heavily invested in U.S. debt, especially when banks have refused to loosen their lending practices as promised, thereby hoarding all bailout funds made available to them and stifling any chance of a credit market recovery.
Understandably, an important question has arisen among those people who are trying to prepare for the event; When EXACTLY will the collapse occur?
Of course, we aren’t psychic, and narrowing down the final trigger to the exact day, or even the exact month, would be extremely difficult. However, what we can do is explain what signs to look for, how to look for them, and what dangers they foretell. Economics gives the appearance of a complex and confusing science, but most economic indicators taught in business schools are really hollow background noise, designed to do nothing more than make television investment analysts seem more intelligent than they really are. All we need to know are the fundamentals, the unchangeable concrete factors that all economies operate on, and how to tell when they are beginning to falter. The following list is composed of signs anyone with a little work and a little vigilance can keep track of, giving them an even greater edge in knowing when the house of cards is really about to topple…
Gold And Dollar Decoupling
Although U.S. Treasury markets and the dollar are currently being manipulated by the Federal Reserve’s fiat purchasing of T-bonds, watching the Dollar index in comparison with gold can give a good indication of when the final drop will occur. Over the past decade, the dollar has lost around 40% of its value, while gold has increased 400% in value. Gold’s increase is due in very large part to the devaluation of the Greenback, but it also indicates a surging international interest in precious metals, especially in Asia. Traditionally, when the dollar decreases in value, gold moves up, and when the dollar increases in value, gold falls. However, over the past four months, there have been sporadic incidences in which gold’s price has increased even though the dollar gained in value. These incidences have lasted only a day or two at a time, but they show that gold is starting to move on its own accord, slowly decoupling from the dollar and even being used as a competing form of currency in some places.
The Vietnamese Government, for instance, recently threatened to shut down all gold bullion trade in the country by the end of March, because Vietnamese merchants and consumers are abandoning their own inflated currency and using gold instead. The Vietnamese have also stopped using American dollars, once considered a safe store of value:
http://www.google.com/hostednews/afp/article/ALeqM5i2CFXWwN6o8w7nn9GqYjOZ2dHNwA
Banking elites in Western nations have been short selling gold for decades in order to keep the price down, and obstruct gold from becoming a competing alternative to the Dollar. Now, we are beginning to see gold move despite banker manipulation. Just before the onset of a dollar implosion, one should watch for gold to begin jumping steeply higher regardless of the behavior of currency markets. Any reports that blocs of foreign nations are increasing the exchange of U.S. Treasuries (beyond what they have done already) and buying large stores of gold would also signal a dollar collapse. In the event that average Americans begin considering the use of gold and silver in place of the dollar, as in Vietnam, you know the final downturn has begun.
Price Inflation Of Oil
For a long time, oil has been traded on the world markets exclusively in U.S. Dollars. Oil and the dollar are therefore intimately connected. Oil will be the first commodity to reveal any inflation (or hyperinflation) in the dollar during a breakdown. Currently, oil is steadily gaining, now hovering around $80 a barrel, or nearly $3 a gallon. Some in the MSM claim this is due to harsh winter conditions around the world, while others say it is due to the weakness and distrust in the Greenback. Not too long ago, oil prices were manipulated upwards by speculators to the tune of $150 a barrel:
http://money.cnn.com/2008/07/24/markets/cftc/index.htm
I suspect that this manipulation was not just an act of greed, but part of a larger strategy by the financial elite to acclimate Americans to the idea of gas price inflation, so that when it occurs again Americans will not be as quick to react, once again blaming speculators, instead of the real cause; a dollar implosion.
Another oil price increase anywhere near the $150 mark is an implicit warning that the economy is about to falter, especially if that increase continues on through summer months.
Dollar Loses World Reserve Currency Status
An announcement by any foreign nation, especially those that hold large stores of U.S. debt, that they will be dropping the dollar and trading in a different currency is a tremendous warning. The dollar is a very weak currency. It’s only saving grace, the thread it hangs by, is the fact that it still has world reserve status, meaning, it is a trade currency accepted by all nations. If BRIC nations, or OPEC oil producers, were to announce that they will no longer trade goods using dollars, expect an immediate tanking of our currency, along with treasury markets. Those that catch this news as it starts will probably have a month or maybe two to get all their preparations in order and distance themselves from any potential danger areas. Hyperinflation has the distinct ability to bring out the worst in a society. People can handle a Dow collapse, or even deflation, but when a currency is destroyed, all possible means of self support are lost unless one was prepared. Those who are not will lose the whole of their life savings in one fell swoop.
U.S. Treasury Dump
This is a little more difficult to track, simply because most foreign creditors do not want to announce openly that they are dumping their U.S. Treasuries. Such incidences can cause war, among other things. What can be tracked easily is the amount of treasuries being sold to other countries. Currently, other nations have nearly frozen their investment in our debt:
http://market-ticker.denninger.net/archives/1730-TIC-Data-Confirms-Foreign-Appetite-Gone.html
The U.S. deficit for the fiscal year 2009 came in at a record $1.42 trillion, more than triple the record set in 2008. The total national debt (according to the government) is now at a whopping $12 trillion and climbing! This debt cannot be sustained without a constant flow of money from other countries. If these countries stop purchasing our debt, then our Treasury will become insolvent. The country will be bankrupt. The Federal Reserve is currently trying to stave off this event by purchasing U.S. debt; basically legalized currency manipulation, much like paying off one credit card bill with yet another credit card. According to reports, the Fed now accounts for 91% of all U.S. debt purchases. This is a very bad sign:
http://www.zerohedge.com/article/ultimate-shell-game-federal-reserve-funds-us-deficit
Eventually, we will hear reports that foreign holders of treasury debt have not only stopped buying new treasuries, but are also dumping the treasuries they already have because of the Fed’s extreme devaluation policies. If this happens on a large scale, a collapse is about to take place.
Simultaneous Dow / Dollar Drop
Normally, when the Dow loses value and investors pull their savings out of stocks, they tend to put those savings into dollar backed securities or treasuries as a “safe haven”. This causes the value of the dollar to increase whenever the Dow falls, but the balancing act is beginning to change. One clear indication of a collapse would be the simultaneous fall of the Dow and the Dollar over a moderate period. This would denote a loss of safe haven status in the dollar as well as uncertainty among investors in stocks. A double whammy like this could prove to be an alert of impending disintegration.
A good time to watch for this signal would be around June or July, when it is rumored the Fed will begin raising interest rates from near zero.
Jobs And Housing
As we predicted recently, job loss which was hidden by the Labor Department in November is now beginning to show in December. We expect that job loss numbers will begin to grow more aggressive from this point on, as companies that hired temporary workers for the Christmas season proceed with layoffs in February and March.
Real unemployment, counting the U-6 measurement, is around 20%. When this measurement reaches between 25% and 30% (Great Depression levels), the country may be on the edge of final collapse.
Also, watching the small and medium sized business sector will help in discovering when job markets will completely tank. Small and medium businesses support around two thirds of all U.S. jobs, but these companies are now in dire straights:
http://www.cnbc.com/id/34825943
http://finance.yahoo.com/news/Job-openings-drop-as-hiring-apf-2800514981.html?x=0&sec=topStories&pos=8&asset=&ccode=
Most of these firms say they will be cutting even more jobs in 2010, not hiring.
Another important factor is the housing market and what are called “Option ARM Mortgages.” ARM mortgages are basically what created the housing bubble in the first place, by offering loans at artificially low interest rates which then increase after a set time period. Millions of people have home payments based on ARM mortgages, and many of these contracts are about to expire, meaning their payments will mushroom, and they will go bankrupt. California alone has hundreds of thousands of homes with ARM mortgages ready to expire in the next year:
http://www.cnbc.com/id/34729005
Watch closely for announcements of mass ARM mortgage resets, which could herald even greater losses in housing, as well as an increase in the homeless population.
Grocery Store Peculiarities
Wholesale prices of goods have recently been increasing far beyond what mainstream economists had predicted, hinting at the first steps towards inflation:
http://finance.yahoo.com/news/Spike-in-wholesale-inflation-apf-2682030532.html?x=0
Grocery store chains tend to “absorb” the extra cost of their stock in the hope that wholesale prices will soon drop again, and in order to keep from losing customers due to high prices, but this has the added effect of hiding true inflation from the public. Eventually, stores and manufacturers can no longer absorb the inflation, and either raise their prices, or diminish their volume. Keep careful note of your local grocery stores. Are items being “repackaged” by manufacturers to hold less for the same price? Is your $4, twenty ounce box of cereal now $4.50 and only fifteen ounces? Are items beginning to disappear entirely from the stores stock, especially foreign made goods? Are base goods such as rice or bread increasing in price weekly or bi-weekly? This may be due to an explosion in wholesale inflation, as well as financial weakness in the general economy.
Bank Holiday
A bank holiday is essentially the government closure of all banks and financial instruments dealing with banks for a set period of time. This means you will not be able to pull money from your account, you will not be able to make deposits, and you will not be able to use checks or debit cards, or even use an ATM. If you have no cash (or other valuables) on hand, you are in big trouble. A bank holiday is often announced in response to out of control bank closures, and is supposed to give banks time to shore up funds, as well as keep you from pulling all your money out at once. A bank holiday could also occur in the event that the FDIC is about to crumble, which is very likely. The FDIC is already broke, and is drawing on fiat currency from the Fed and the Treasury in order to continue covering the accounts of shut down banks. Over 140 banks closed last year. If this rate continues, or expands this year, then the FDIC will no longer be able to operate. If a bank holiday is announced, an announcement of Treasury insolvency is also likely.
Terror Attack / New War
The world is on the brink as it is. If a terrorist attack (false flag attack), or a new war arises, it is time to collect your gear, your family, your friends, and make for the hills (if that’s where you plan to go). Any new and extended threat of conflict in 2010 will be used as an excuse to institute martial law and subjugation of civil liberties, not to mention trigger a financial meltdown. Is the morning news reporting an attack on Iran, or the bombing of a New York subway? It’s time.
These events and triggers represent a “litmus test” for the economy that anyone can apply without spending every day in front of a computer screen tracking stock yields, hedge funds, or Federal Reserve press releases. Many people have already made extensive preparations, knowing that a breakdown is imminent, but with a little extra knowledge and effort, their edge on the collapse can be made ever sharper.
No amount of preparation will stave off the psychological shock of sudden economic implosion if one does not keep alert to the prerequisite signs. Watching the simple indicators listed above can help in affording you every opportunity, giving you the ability to see the wreck before it even happens.
Giordano Bruno
Neithercorp Press - 01/12/10
Many researchers, including those here at Neithercorp, have projected that the third and final stage of the economic collapse will begin sometime in 2010. Barring some kind of financial miracle, or the complete dissolution of the Federal Reserve, a snowballing implosion should become visible by the end of this year. Data indicates that the dollar and the Dow are running on nothing but false promises and fiat bailouts, and that this game is slowly winding down. The Fed cannot sustain its current rate of liquidity injections without raising the ire of foreign nations heavily invested in U.S. debt, especially when banks have refused to loosen their lending practices as promised, thereby hoarding all bailout funds made available to them and stifling any chance of a credit market recovery.
Understandably, an important question has arisen among those people who are trying to prepare for the event; When EXACTLY will the collapse occur?
Of course, we aren’t psychic, and narrowing down the final trigger to the exact day, or even the exact month, would be extremely difficult. However, what we can do is explain what signs to look for, how to look for them, and what dangers they foretell. Economics gives the appearance of a complex and confusing science, but most economic indicators taught in business schools are really hollow background noise, designed to do nothing more than make television investment analysts seem more intelligent than they really are. All we need to know are the fundamentals, the unchangeable concrete factors that all economies operate on, and how to tell when they are beginning to falter. The following list is composed of signs anyone with a little work and a little vigilance can keep track of, giving them an even greater edge in knowing when the house of cards is really about to topple…
Gold And Dollar Decoupling
Although U.S. Treasury markets and the dollar are currently being manipulated by the Federal Reserve’s fiat purchasing of T-bonds, watching the Dollar index in comparison with gold can give a good indication of when the final drop will occur. Over the past decade, the dollar has lost around 40% of its value, while gold has increased 400% in value. Gold’s increase is due in very large part to the devaluation of the Greenback, but it also indicates a surging international interest in precious metals, especially in Asia. Traditionally, when the dollar decreases in value, gold moves up, and when the dollar increases in value, gold falls. However, over the past four months, there have been sporadic incidences in which gold’s price has increased even though the dollar gained in value. These incidences have lasted only a day or two at a time, but they show that gold is starting to move on its own accord, slowly decoupling from the dollar and even being used as a competing form of currency in some places.
The Vietnamese Government, for instance, recently threatened to shut down all gold bullion trade in the country by the end of March, because Vietnamese merchants and consumers are abandoning their own inflated currency and using gold instead. The Vietnamese have also stopped using American dollars, once considered a safe store of value:
http://www.google.com/hostednews/afp/article/ALeqM5i2CFXWwN6o8w7nn9GqYjOZ2dHNwA
Banking elites in Western nations have been short selling gold for decades in order to keep the price down, and obstruct gold from becoming a competing alternative to the Dollar. Now, we are beginning to see gold move despite banker manipulation. Just before the onset of a dollar implosion, one should watch for gold to begin jumping steeply higher regardless of the behavior of currency markets. Any reports that blocs of foreign nations are increasing the exchange of U.S. Treasuries (beyond what they have done already) and buying large stores of gold would also signal a dollar collapse. In the event that average Americans begin considering the use of gold and silver in place of the dollar, as in Vietnam, you know the final downturn has begun.
Price Inflation Of Oil
For a long time, oil has been traded on the world markets exclusively in U.S. Dollars. Oil and the dollar are therefore intimately connected. Oil will be the first commodity to reveal any inflation (or hyperinflation) in the dollar during a breakdown. Currently, oil is steadily gaining, now hovering around $80 a barrel, or nearly $3 a gallon. Some in the MSM claim this is due to harsh winter conditions around the world, while others say it is due to the weakness and distrust in the Greenback. Not too long ago, oil prices were manipulated upwards by speculators to the tune of $150 a barrel:
http://money.cnn.com/2008/07/24/markets/cftc/index.htm
I suspect that this manipulation was not just an act of greed, but part of a larger strategy by the financial elite to acclimate Americans to the idea of gas price inflation, so that when it occurs again Americans will not be as quick to react, once again blaming speculators, instead of the real cause; a dollar implosion.
Another oil price increase anywhere near the $150 mark is an implicit warning that the economy is about to falter, especially if that increase continues on through summer months.
Dollar Loses World Reserve Currency Status
An announcement by any foreign nation, especially those that hold large stores of U.S. debt, that they will be dropping the dollar and trading in a different currency is a tremendous warning. The dollar is a very weak currency. It’s only saving grace, the thread it hangs by, is the fact that it still has world reserve status, meaning, it is a trade currency accepted by all nations. If BRIC nations, or OPEC oil producers, were to announce that they will no longer trade goods using dollars, expect an immediate tanking of our currency, along with treasury markets. Those that catch this news as it starts will probably have a month or maybe two to get all their preparations in order and distance themselves from any potential danger areas. Hyperinflation has the distinct ability to bring out the worst in a society. People can handle a Dow collapse, or even deflation, but when a currency is destroyed, all possible means of self support are lost unless one was prepared. Those who are not will lose the whole of their life savings in one fell swoop.
U.S. Treasury Dump
This is a little more difficult to track, simply because most foreign creditors do not want to announce openly that they are dumping their U.S. Treasuries. Such incidences can cause war, among other things. What can be tracked easily is the amount of treasuries being sold to other countries. Currently, other nations have nearly frozen their investment in our debt:
http://market-ticker.denninger.net/archives/1730-TIC-Data-Confirms-Foreign-Appetite-Gone.html
The U.S. deficit for the fiscal year 2009 came in at a record $1.42 trillion, more than triple the record set in 2008. The total national debt (according to the government) is now at a whopping $12 trillion and climbing! This debt cannot be sustained without a constant flow of money from other countries. If these countries stop purchasing our debt, then our Treasury will become insolvent. The country will be bankrupt. The Federal Reserve is currently trying to stave off this event by purchasing U.S. debt; basically legalized currency manipulation, much like paying off one credit card bill with yet another credit card. According to reports, the Fed now accounts for 91% of all U.S. debt purchases. This is a very bad sign:
http://www.zerohedge.com/article/ultimate-shell-game-federal-reserve-funds-us-deficit
Eventually, we will hear reports that foreign holders of treasury debt have not only stopped buying new treasuries, but are also dumping the treasuries they already have because of the Fed’s extreme devaluation policies. If this happens on a large scale, a collapse is about to take place.
Simultaneous Dow / Dollar Drop
Normally, when the Dow loses value and investors pull their savings out of stocks, they tend to put those savings into dollar backed securities or treasuries as a “safe haven”. This causes the value of the dollar to increase whenever the Dow falls, but the balancing act is beginning to change. One clear indication of a collapse would be the simultaneous fall of the Dow and the Dollar over a moderate period. This would denote a loss of safe haven status in the dollar as well as uncertainty among investors in stocks. A double whammy like this could prove to be an alert of impending disintegration.
A good time to watch for this signal would be around June or July, when it is rumored the Fed will begin raising interest rates from near zero.
Jobs And Housing
As we predicted recently, job loss which was hidden by the Labor Department in November is now beginning to show in December. We expect that job loss numbers will begin to grow more aggressive from this point on, as companies that hired temporary workers for the Christmas season proceed with layoffs in February and March.
Real unemployment, counting the U-6 measurement, is around 20%. When this measurement reaches between 25% and 30% (Great Depression levels), the country may be on the edge of final collapse.
Also, watching the small and medium sized business sector will help in discovering when job markets will completely tank. Small and medium businesses support around two thirds of all U.S. jobs, but these companies are now in dire straights:
http://www.cnbc.com/id/34825943
http://finance.yahoo.com/news/Job-openings-drop-as-hiring-apf-2800514981.html?x=0&sec=topStories&pos=8&asset=&ccode=
Most of these firms say they will be cutting even more jobs in 2010, not hiring.
Another important factor is the housing market and what are called “Option ARM Mortgages.” ARM mortgages are basically what created the housing bubble in the first place, by offering loans at artificially low interest rates which then increase after a set time period. Millions of people have home payments based on ARM mortgages, and many of these contracts are about to expire, meaning their payments will mushroom, and they will go bankrupt. California alone has hundreds of thousands of homes with ARM mortgages ready to expire in the next year:
http://www.cnbc.com/id/34729005
Watch closely for announcements of mass ARM mortgage resets, which could herald even greater losses in housing, as well as an increase in the homeless population.
Grocery Store Peculiarities
Wholesale prices of goods have recently been increasing far beyond what mainstream economists had predicted, hinting at the first steps towards inflation:
http://finance.yahoo.com/news/Spike-in-wholesale-inflation-apf-2682030532.html?x=0
Grocery store chains tend to “absorb” the extra cost of their stock in the hope that wholesale prices will soon drop again, and in order to keep from losing customers due to high prices, but this has the added effect of hiding true inflation from the public. Eventually, stores and manufacturers can no longer absorb the inflation, and either raise their prices, or diminish their volume. Keep careful note of your local grocery stores. Are items being “repackaged” by manufacturers to hold less for the same price? Is your $4, twenty ounce box of cereal now $4.50 and only fifteen ounces? Are items beginning to disappear entirely from the stores stock, especially foreign made goods? Are base goods such as rice or bread increasing in price weekly or bi-weekly? This may be due to an explosion in wholesale inflation, as well as financial weakness in the general economy.
Bank Holiday
A bank holiday is essentially the government closure of all banks and financial instruments dealing with banks for a set period of time. This means you will not be able to pull money from your account, you will not be able to make deposits, and you will not be able to use checks or debit cards, or even use an ATM. If you have no cash (or other valuables) on hand, you are in big trouble. A bank holiday is often announced in response to out of control bank closures, and is supposed to give banks time to shore up funds, as well as keep you from pulling all your money out at once. A bank holiday could also occur in the event that the FDIC is about to crumble, which is very likely. The FDIC is already broke, and is drawing on fiat currency from the Fed and the Treasury in order to continue covering the accounts of shut down banks. Over 140 banks closed last year. If this rate continues, or expands this year, then the FDIC will no longer be able to operate. If a bank holiday is announced, an announcement of Treasury insolvency is also likely.
Terror Attack / New War
The world is on the brink as it is. If a terrorist attack (false flag attack), or a new war arises, it is time to collect your gear, your family, your friends, and make for the hills (if that’s where you plan to go). Any new and extended threat of conflict in 2010 will be used as an excuse to institute martial law and subjugation of civil liberties, not to mention trigger a financial meltdown. Is the morning news reporting an attack on Iran, or the bombing of a New York subway? It’s time.
These events and triggers represent a “litmus test” for the economy that anyone can apply without spending every day in front of a computer screen tracking stock yields, hedge funds, or Federal Reserve press releases. Many people have already made extensive preparations, knowing that a breakdown is imminent, but with a little extra knowledge and effort, their edge on the collapse can be made ever sharper.
No amount of preparation will stave off the psychological shock of sudden economic implosion if one does not keep alert to the prerequisite signs. Watching the simple indicators listed above can help in affording you every opportunity, giving you the ability to see the wreck before it even happens.
Monday, January 18, 2010
Conspiracy
I found this mirrors my thoughts pretty well on the word "conspiracy"...
Conspiracy theory is a term that originally was a neutral descriptor for any claim of civil, criminal or political conspiracy. However, it has come almost exclusively to refer to any fringe theory which explains a historical or current event as the result of a secret plot by conspirators of almost superhuman power and cunning.
To conspire means "to join in a secret agreement to do an unlawful or wrongful act or to use such means to accomplish a lawful end."The term "conspiracy theory" is frequently used by scholars and in popular culture to identify secret military, banking, or political actions aimed at stealing power, money, or freedom, from "the people".
To many, conspiracy theories are just human nature.Not all people in this world are honest, hard working and forthcoming about their intentions.Certainly we can all agree on this.So how did the term “conspiracy theory” get grouped in with fiction, fantasy and folklore?Maybe that’s a conspiracy, just kidding.Or am I?
Skeptics are important in achieving an objective view of reality, however, skeptism is not the same as reinforcing the official storyline. In fact, a conspiracy theory can be argued as an alternative to the official or “mainstream” story of events. Therefore, when skeptics attempt to ridicule a conspiracy theory by using the official story as a means of proving the conspiracy wrong, in effect, they are just reinforcing the original “mainstream” view of history, and actually not being skeptical. This is not skeptism, it is just a convenient way for the establishment view of things to be seen as the correct version, all the time, every time. In fact, it is common for "hit pieces" or "debunking articles" to pick extremely fringe and not very populated conspiracy theories. This in turn makes all conspiracies on a subject matter look crazy.
Skeptics magazine and Popular Mechanics, among many others, did this with 9/11. They referred to less than 10% of the many different conspiracy theories about 9/11 and picked the less popular ones, in fact, they picked the fringe, highly improbable points that only a few people make. This was used as the "final investigation" for looking into the conspiracy theories. Convenient, huh?
In fact, if one were to look into conspiracy theories, they will largely find that thinking about a conspiracy is associated with lunacy and paranoia. Some websites suggest it as an illness. It is also not surprising to see so many people on the internet writing about conspiracy theories in a condescending tone, usually with the words "kool-aid," "crack pot," or "nut job" in their articulation. This must be obvious to anyone that emotionally writing about such serious matter insults the reader more than the conspiracy theorist because there is no need to resort to this kind of behavior. It is employed often with an "expert" who will say something along the lines of, "for these conspiracies to be true, you would need hundreds if not thousands of people to be involved. It's just not conceivable."
I find it extremely odd that the assumption is on thousands of participants in a conspiracy. I, for one, find it hard to believe any conspiracy involving more than a handful of people but the fact remains that there have been conspiracies in our world, proven and not made up, that involved many hundreds of people. It's not a matter of opinion, it's a matter of fact.
One more thing to consider, have you noticed that if the conspiracy is involving powerful interests with the ability to bribe, threaten or manipulate major institutions (like the mafia, big corporations or government) then don't you find it odd when people use one of those as the "credible" counter-argument? What I mean is, if you are discussing a conspiracy about the mafia, and someone hands you a debunking article that was written by the mafia, it doesn't seem like it would take rocket science to look at that with serious criticism and credibility. This is the case with many conspiracies. In fact, I am handed debunking pieces all the time written in many cases by the conspirators in question. Doesn't this seem odd to anybody else but me?
While intelligent cynicism certainly can be healthy, though, some of the greatest discoveries of all time were initially received (often with great vitriol) as blasphemous conspiracy theories -- think of the revelation that the earth was not the center of the universe, or that the world was not flat but actually round.
Conspiracy theory is a term that originally was a neutral descriptor for any claim of civil, criminal or political conspiracy. However, it has come almost exclusively to refer to any fringe theory which explains a historical or current event as the result of a secret plot by conspirators of almost superhuman power and cunning.
To conspire means "to join in a secret agreement to do an unlawful or wrongful act or to use such means to accomplish a lawful end."The term "conspiracy theory" is frequently used by scholars and in popular culture to identify secret military, banking, or political actions aimed at stealing power, money, or freedom, from "the people".
To many, conspiracy theories are just human nature.Not all people in this world are honest, hard working and forthcoming about their intentions.Certainly we can all agree on this.So how did the term “conspiracy theory” get grouped in with fiction, fantasy and folklore?Maybe that’s a conspiracy, just kidding.Or am I?
Skeptics are important in achieving an objective view of reality, however, skeptism is not the same as reinforcing the official storyline. In fact, a conspiracy theory can be argued as an alternative to the official or “mainstream” story of events. Therefore, when skeptics attempt to ridicule a conspiracy theory by using the official story as a means of proving the conspiracy wrong, in effect, they are just reinforcing the original “mainstream” view of history, and actually not being skeptical. This is not skeptism, it is just a convenient way for the establishment view of things to be seen as the correct version, all the time, every time. In fact, it is common for "hit pieces" or "debunking articles" to pick extremely fringe and not very populated conspiracy theories. This in turn makes all conspiracies on a subject matter look crazy.
Skeptics magazine and Popular Mechanics, among many others, did this with 9/11. They referred to less than 10% of the many different conspiracy theories about 9/11 and picked the less popular ones, in fact, they picked the fringe, highly improbable points that only a few people make. This was used as the "final investigation" for looking into the conspiracy theories. Convenient, huh?
In fact, if one were to look into conspiracy theories, they will largely find that thinking about a conspiracy is associated with lunacy and paranoia. Some websites suggest it as an illness. It is also not surprising to see so many people on the internet writing about conspiracy theories in a condescending tone, usually with the words "kool-aid," "crack pot," or "nut job" in their articulation. This must be obvious to anyone that emotionally writing about such serious matter insults the reader more than the conspiracy theorist because there is no need to resort to this kind of behavior. It is employed often with an "expert" who will say something along the lines of, "for these conspiracies to be true, you would need hundreds if not thousands of people to be involved. It's just not conceivable."
I find it extremely odd that the assumption is on thousands of participants in a conspiracy. I, for one, find it hard to believe any conspiracy involving more than a handful of people but the fact remains that there have been conspiracies in our world, proven and not made up, that involved many hundreds of people. It's not a matter of opinion, it's a matter of fact.
One more thing to consider, have you noticed that if the conspiracy is involving powerful interests with the ability to bribe, threaten or manipulate major institutions (like the mafia, big corporations or government) then don't you find it odd when people use one of those as the "credible" counter-argument? What I mean is, if you are discussing a conspiracy about the mafia, and someone hands you a debunking article that was written by the mafia, it doesn't seem like it would take rocket science to look at that with serious criticism and credibility. This is the case with many conspiracies. In fact, I am handed debunking pieces all the time written in many cases by the conspirators in question. Doesn't this seem odd to anybody else but me?
While intelligent cynicism certainly can be healthy, though, some of the greatest discoveries of all time were initially received (often with great vitriol) as blasphemous conspiracy theories -- think of the revelation that the earth was not the center of the universe, or that the world was not flat but actually round.
Consumerism and Propaganda
Ever wonder why people stood in line for hours waiting to get that new 600 dollar iPhone, when they already had a phone in their pocket? Consumerism and propaganda friends. My mother liked to call it "keeping up with the Jones family".
Alot of these posts on this blog might seem strange to you(they do to me sometimes as well), there is a reason for that, tricks used to ignore whats really going on and fill your life with useless garbage(like mtv).
I'm getting ahead of myself, let me start by saying this, humans are social creatures. We crave approval from our peers/loved ones. Any thinking or acting outside of this group(your group) will get you laughed at and maybe out casted to be alone. So we tend to go along with most mainstream thinking(an example of this would be clothes, although you might not like ed hardy/nike/fubu/etc, you don't fight against what he and others are doing).
Now what does this have to do with anything? Good question, and the answer is, that propaganda is so ingrained in our lives, that we push propaganda our self without ever knowing it.
In fact, in my opinion, peer pressure is the strongest form of propaganda, along with ideals and belief's passed down from parents to children. Now most people believe that they cant be fooled or brainwashed, or that the thoughts are their own.
I wish them a safe journey, but we already know what life has in store for them dont we? Pain and confusion, why oh why did i take out that 2nd loan on the house, man i thought my job would be here forever, and damn my stocks were wiped out.
Sadly this is none of their fault or yours or mine. we have been raised this way, to consume as much as we can, buy a big house, have kids, and then fill your house with stuff. It started back in the early 1900's and by the fifty's they had it perfected. In the early 1900's Americans bought only what they needed, today we buy every plastic thing under the sun.
Before tv was even around they were doing study's on how to influnce people thru the radio...
It has been suggested War of the Worlds was a psychological warfare experiment. In the 1999 documentary, Masters of the Universe: The Secret Birth of the Federal Reserve, writer Daniel Hopsicker claims the Rockefeller Foundation funded the broadcast, studied the panic, and compiled a report available to a few. A variation has the Radio Project and the Rockefeller Foundation as conspirators.[8] In a theatrical trailer for his film F For Fake, Welles joked about such theories, jesting that the broadcast indeed "had secret sponsors".
While Mercury Theatre had no sponsor, CBS and the Rockefeller Foundation were contracting the leading crowd psychology researchers of the time; CBS had Edward Bernays, the Rockefeller Foundation had Ivy Lee. With the involvement of Frank Stanton in the Radio Project and his position in the CBS research department, it is possible the "creative curiosity" of Orson Welles came from conversations within these business circles.
A detailed documentary on these circles and the ideas behind social manipulation was made by the BBC, called The Century of the Self
I moved that last sentence down because its so important, look for this video online, it's free to watch, so watch it.
Watch it and then come to understand why it's called tv "programs", why your always working for that next big purchase. Think about it, right now you have something in mind to spend your money on, something you need maybe, but something you want for sure.
How did we fall so far so fast? how did we go from working one job and enjoying time with our loved ones, too working two jobs, just to pay for a house 3 times too big for me, with a big phat car payment, me spending 50 hours a week on my xbox after work, and never spending time with our loved ones?
All this has been planned friends, thru the use of group think and peer pressure, backdoor deals and twisting some arms.Our country and our kids lives have been sold out from under us. Wonder why our kids are so dumb now?
According to researcher Mack White ( http://www.mackwhite.com/), "Psychologist Hadley Cantril conducted a study of the effects of the broadcast and published his findings in a book, The Invasion from Mars: A Study in the Psychology of Panic. This study explored the power of broadcast media, particularly as it relates to the suggestibility of human beings under the influence of fear. Cantril was affiliated with Princeton University's Radio Research Project, which was funded in 1937 by the Rockefeller Foundation. Also affiliated with the Project was Council on Foreign Relations (CFR) member and Columbia Broadcasting System (CBS) executive Frank Stanton, whose network had broadcast the program. Stanton would later go on to head the news division of CBS, and in time would become president of the network, as well as chairman of the board of the RAND Corporation, the influential think tank which has done groundbreaking research on, among other things, mass brainwashing. Two years later, with Rockefeller Foundation money, Cantril established the Office of Public Opinion Research (OPOR), also at Princeton. Among the studies conducted by the OPOR was an analysis of the effectiveness of "psycho-political operations" (propaganda, in plain English) of the Office of Strategic Services (OSS), the forerunner of the Central Intelligence Agency (CIA). Then, during World War II, Cantril and Rockefeller money assisted CFR member and CBS reporter Edward R. Murrow in setting up the Princeton Listening Center, the purpose of which was to study Nazi radio propaganda with the object of applying Nazi techniques to OSS propaganda. Out of this project came a new government agency, the Foreign Broadcast Intelligence Service (FBIS). The FBIS eventually became the United States Information Agency (USIA), which is the propaganda arm of the National Security Council. Thus, by the end of the 1940s, the basic research had been done and the propaganda apparatus of the national security state had been set up--just in time for the Dawn of Television."
Experiments conducted by researcher Herbert Krugman reveal that when a person watches television, brain activity switches from the left to the right hemisphere. The left hemisphere is the seat of logical thought. Here, information is broken down into its component parts and critically analyzed. The right brain, however, treats incoming data uncritically, processing information in wholes, leading to emotional, rather than logical responses. The shift from left to right brain activity also causes the release of endorphins, the body's own natural opiates--thus, it is possible to become physically addicted to watching television, a hypothesis borne out by numerous studies which have shown that very few people are able to kick the television habit. It's no longer an overstatement to note that the youth today that are raised and taught through network television are intellectually dead by their early teens.
The dumbing down of humanity is represented by another shift which occurs in the brain when we watch television. Activity in the higher brain regions (such as the neo-cortex) is diminished, while activity in the lower brain regions (such as the limbic system) increases. The latter, commonly referred to as the reptile brain, is associated with more primitive mental functions, such as the "fight or flight" response. The reptile brain is unable to distinguish between reality and the simulated reality of television. To the reptile brain, if it looks real, it is real. Thus, though we know on a conscious level it is "only a film," on a conscious level we do not--the heart beats faster, for instance, while we watch a suspenseful scene. Similarly, we know the commercial is trying to manipulate us, but on an unconscious level the commercial nonetheless succeeds in, say, making us feel inadequate until we buy whatever thing is being advertised--and the effect is all the more powerful because it is unconscious, operating on the deepest level of human response. The reptile brain makes it possible for us to survive as biological beings, but it also leaves us vulnerable to the manipulations of television programmers. This is where the manipulators use our own emotions as strings to control us. The distortions and directions we are being moved to are taking place in the subconscious, often undetected.
Propaganda techniques were first codified and applied in a scientific manner by journalist Walter Lippman and psychologist Edward Bernays (nephew of Sigmund Freud) early in the 20th century. During World War I, Lippman and Bernays were hired by then United States President, Woodrow Wilson, to participate in the Creel Commission, the mission of which was to sway popular opinion in favor of entering the war, on the side of Britain. Edward Bernays said in his 1928 book Propaganda that, "The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country."
http://www.rense.com/general69/mass.htm
And while the link might be considered by some as "conspiracy" garbage, let me remind you, the brainwashed reader, that almost everything in the world today is a conspiracy. The birth of our country was one of the biggest conspiracy's ever. George and Ben and Thomas were called crazy, to imagine they could take on the worlds biggest army and start their own country. It was such a no win conspiracy that only 3% of americans took part in the revolution.
I will do a post about conspiracy next. As always comments, insults on my intelligence,or anything else post it in comments.
Alot of these posts on this blog might seem strange to you(they do to me sometimes as well), there is a reason for that, tricks used to ignore whats really going on and fill your life with useless garbage(like mtv).
I'm getting ahead of myself, let me start by saying this, humans are social creatures. We crave approval from our peers/loved ones. Any thinking or acting outside of this group(your group) will get you laughed at and maybe out casted to be alone. So we tend to go along with most mainstream thinking(an example of this would be clothes, although you might not like ed hardy/nike/fubu/etc, you don't fight against what he and others are doing).
Now what does this have to do with anything? Good question, and the answer is, that propaganda is so ingrained in our lives, that we push propaganda our self without ever knowing it.
In fact, in my opinion, peer pressure is the strongest form of propaganda, along with ideals and belief's passed down from parents to children. Now most people believe that they cant be fooled or brainwashed, or that the thoughts are their own.
I wish them a safe journey, but we already know what life has in store for them dont we? Pain and confusion, why oh why did i take out that 2nd loan on the house, man i thought my job would be here forever, and damn my stocks were wiped out.
Sadly this is none of their fault or yours or mine. we have been raised this way, to consume as much as we can, buy a big house, have kids, and then fill your house with stuff. It started back in the early 1900's and by the fifty's they had it perfected. In the early 1900's Americans bought only what they needed, today we buy every plastic thing under the sun.
Before tv was even around they were doing study's on how to influnce people thru the radio...
It has been suggested War of the Worlds was a psychological warfare experiment. In the 1999 documentary, Masters of the Universe: The Secret Birth of the Federal Reserve, writer Daniel Hopsicker claims the Rockefeller Foundation funded the broadcast, studied the panic, and compiled a report available to a few. A variation has the Radio Project and the Rockefeller Foundation as conspirators.[8] In a theatrical trailer for his film F For Fake, Welles joked about such theories, jesting that the broadcast indeed "had secret sponsors".
While Mercury Theatre had no sponsor, CBS and the Rockefeller Foundation were contracting the leading crowd psychology researchers of the time; CBS had Edward Bernays, the Rockefeller Foundation had Ivy Lee. With the involvement of Frank Stanton in the Radio Project and his position in the CBS research department, it is possible the "creative curiosity" of Orson Welles came from conversations within these business circles.
A detailed documentary on these circles and the ideas behind social manipulation was made by the BBC, called The Century of the Self
I moved that last sentence down because its so important, look for this video online, it's free to watch, so watch it.
Watch it and then come to understand why it's called tv "programs", why your always working for that next big purchase. Think about it, right now you have something in mind to spend your money on, something you need maybe, but something you want for sure.
How did we fall so far so fast? how did we go from working one job and enjoying time with our loved ones, too working two jobs, just to pay for a house 3 times too big for me, with a big phat car payment, me spending 50 hours a week on my xbox after work, and never spending time with our loved ones?
All this has been planned friends, thru the use of group think and peer pressure, backdoor deals and twisting some arms.Our country and our kids lives have been sold out from under us. Wonder why our kids are so dumb now?
According to researcher Mack White ( http://www.mackwhite.com/), "Psychologist Hadley Cantril conducted a study of the effects of the broadcast and published his findings in a book, The Invasion from Mars: A Study in the Psychology of Panic. This study explored the power of broadcast media, particularly as it relates to the suggestibility of human beings under the influence of fear. Cantril was affiliated with Princeton University's Radio Research Project, which was funded in 1937 by the Rockefeller Foundation. Also affiliated with the Project was Council on Foreign Relations (CFR) member and Columbia Broadcasting System (CBS) executive Frank Stanton, whose network had broadcast the program. Stanton would later go on to head the news division of CBS, and in time would become president of the network, as well as chairman of the board of the RAND Corporation, the influential think tank which has done groundbreaking research on, among other things, mass brainwashing. Two years later, with Rockefeller Foundation money, Cantril established the Office of Public Opinion Research (OPOR), also at Princeton. Among the studies conducted by the OPOR was an analysis of the effectiveness of "psycho-political operations" (propaganda, in plain English) of the Office of Strategic Services (OSS), the forerunner of the Central Intelligence Agency (CIA). Then, during World War II, Cantril and Rockefeller money assisted CFR member and CBS reporter Edward R. Murrow in setting up the Princeton Listening Center, the purpose of which was to study Nazi radio propaganda with the object of applying Nazi techniques to OSS propaganda. Out of this project came a new government agency, the Foreign Broadcast Intelligence Service (FBIS). The FBIS eventually became the United States Information Agency (USIA), which is the propaganda arm of the National Security Council. Thus, by the end of the 1940s, the basic research had been done and the propaganda apparatus of the national security state had been set up--just in time for the Dawn of Television."
Experiments conducted by researcher Herbert Krugman reveal that when a person watches television, brain activity switches from the left to the right hemisphere. The left hemisphere is the seat of logical thought. Here, information is broken down into its component parts and critically analyzed. The right brain, however, treats incoming data uncritically, processing information in wholes, leading to emotional, rather than logical responses. The shift from left to right brain activity also causes the release of endorphins, the body's own natural opiates--thus, it is possible to become physically addicted to watching television, a hypothesis borne out by numerous studies which have shown that very few people are able to kick the television habit. It's no longer an overstatement to note that the youth today that are raised and taught through network television are intellectually dead by their early teens.
The dumbing down of humanity is represented by another shift which occurs in the brain when we watch television. Activity in the higher brain regions (such as the neo-cortex) is diminished, while activity in the lower brain regions (such as the limbic system) increases. The latter, commonly referred to as the reptile brain, is associated with more primitive mental functions, such as the "fight or flight" response. The reptile brain is unable to distinguish between reality and the simulated reality of television. To the reptile brain, if it looks real, it is real. Thus, though we know on a conscious level it is "only a film," on a conscious level we do not--the heart beats faster, for instance, while we watch a suspenseful scene. Similarly, we know the commercial is trying to manipulate us, but on an unconscious level the commercial nonetheless succeeds in, say, making us feel inadequate until we buy whatever thing is being advertised--and the effect is all the more powerful because it is unconscious, operating on the deepest level of human response. The reptile brain makes it possible for us to survive as biological beings, but it also leaves us vulnerable to the manipulations of television programmers. This is where the manipulators use our own emotions as strings to control us. The distortions and directions we are being moved to are taking place in the subconscious, often undetected.
Propaganda techniques were first codified and applied in a scientific manner by journalist Walter Lippman and psychologist Edward Bernays (nephew of Sigmund Freud) early in the 20th century. During World War I, Lippman and Bernays were hired by then United States President, Woodrow Wilson, to participate in the Creel Commission, the mission of which was to sway popular opinion in favor of entering the war, on the side of Britain. Edward Bernays said in his 1928 book Propaganda that, "The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country."
http://www.rense.com/general69/mass.htm
And while the link might be considered by some as "conspiracy" garbage, let me remind you, the brainwashed reader, that almost everything in the world today is a conspiracy. The birth of our country was one of the biggest conspiracy's ever. George and Ben and Thomas were called crazy, to imagine they could take on the worlds biggest army and start their own country. It was such a no win conspiracy that only 3% of americans took part in the revolution.
I will do a post about conspiracy next. As always comments, insults on my intelligence,or anything else post it in comments.
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