NYSE embraces a Ruinous Idea

NYSE Embraces a Ruinous Idea

BY RICK ACKERMAN ON JULY 31, 2009 12:01 AM GMT · 1 COMMENT

Sadly, another venerable American institution has lost its way: the New York Stock Exchange. We read the other day that the Exchange is building a fast-trade hub in northern New Jersey that supposedly will help secure its future in an increasingly electronic world. But raising capital for companies that could conceivably help Build a Better Tomorrow is nowhere on their agenda. In fact, “fast trading” will be about as helpful in achieving that goal as placing five hundred slot machines in the NYSE’s lobby. Instead of one-armed bandits, however, the Exchange will be installing in its new Mahwah facility some very sophisticated computing equipment that will allow hedge funds and other firms to engage in high-frequency trading.

This type of trading is all the rage these days, and the firms that do it will be trying to get the jump on other traders who lack the hardware to execute scores or even hundreds of transactions in mere seconds. Firms on the cutting edge will be better able to exploit order flow in ways that traders could not have imagined even five years ago. Our guess is that fast trading was invented by the same geeks who gave us program trading. Who’d have imagined they could one-up themselves with yet a new game to further destabilize the markets? The NYSE will say that more efficient markets will better serve the public. Having worked on an exchange floor ourselves for a dozen years, we think fast trading will better serve white collar criminals whose tactics have yet to be imagined by the regulators.

Stick to ‘Gambling’ and ‘Prostitution’

It would be bad enough if the NYSE viewed fast trading as just another profit center. Unfortunately, the Exchange sees it as its bread and butter. “When people talk about the New York Stock Exchange, this is it,” NYSE Euronext co-CIO Stanley Young told a reporter. “This is our future.” We suspect that Mr. Young will be proven wrong, and in a big way. For one, we see fast trading as so far-removed from the Exchange’s core mission that it cannot possibly come to any good. Like Vito Corleone, the NYSE should stick to its brand of gambling and prostitution, passing up the hard-core “drug” of high-frequency executions. Moreover, we have our doubts that trading is a growth industry. Until recently, trading in financial derivatives alone created a paper market aggregating into the hundreds of trillions of dollars.  How can this be when all the goods and services produced on the planet are valued at only $60 trillion or so? Clearly, this game cannot continue. Nor will it. It is in fact the reason why deflation is wringing out the global financial system, bringing speculation back into line with real economic activity. The process has a long way to go, and we doubt it will long abide the feather merchants’ latest scheme, fast trading.

by Rick Ackerman
Posted July 31, 2009
http://www.rickackerman.com/

SADLY, ANOTHER VENERABLE American institution has lost its way: the New York Stock Exchange. We read the other day that the Exchange is building a fast-trade hub in northern New Jersey that supposedly will help secure its future in an increasingly electronic world. But raising capital for companies that could conceivably help Build a Better Tomorrow is nowhere on their agenda. In fact, “fast trading” will be about as helpful in achieving that goal as placing five hundred slot machines in the NYSE’s lobby. Instead of one-armed bandits, however, the Exchange will be installing in its new Mahwah facility some very sophisticated computing equipment that will allow hedge funds and other firms to engage in high-frequency trading.

This type of trading is all the rage these days, and the firms that do it will be trying to get the jump on other traders who lack the hardware to execute scores or even hundreds of transactions in mere seconds. Firms on the cutting edge will be better able to exploit order flow in ways that traders could not have imagined even five years ago. Our guess is that fast trading was invented by the same geeks who gave us program trading. Who’d have imagined they could one-up themselves with yet a new game to further destabilize the markets?

Obama’s Bix Fix

June 19 – 21, 2009

Placating the Bankers, Again

Obama’s Bix Fix

By CARL GINSBURG

The administration’s financial fix-it plan was laid out this week and it was, underwhelming, to say the least. The New York Times dubbed it, “back to business as usual..” not a phrase commonly seen in the paper of record which, by the way, essentially managed to miss the true source of the country’s crisis — Underpaid America —  for two generations.

None of this comes as a surprise given the top priority Mr. Obama set early on to fund banks and financial institutions.  Everybody else should hang in there and brace yourselves for the Great Marginalization.  So, aid to banks stays in place; derivatives are to remain a critical part of the finance system; there’ll be enhanced protection for accredited consumers who can still borrow money and invest. In other words, the protection of existing pools of money and investment is the goal of this government.

That is fine unless, of course, you have little or none of that money. That would be the millions of Americans who helped raise America’s productivity to new heights and got no rewards for the effort, for whom a pension system has fallen away and for whom there are now mounting health care and energy costs. Let’s keep in mind that the average consumer debt of an American family is $10,000. Let’s not kid ourselves: that’s an amount that served to augment low wages (much like food stamps for the working poor) and did not fund extravagant lifestyles, a popular obfuscation in the media embrace of Obama’s sociology.

Low wage America slammed people and NOTHING the Obama administration has on the table now or in the pipeline will address that fundamental dynamic this year, next … ever. Meanwhile, profits are up.  Business Week reports: “Bank Reap Handsome Profits Cashing Out of Chinese Banks.” Those winners include Goldman Sachs, the investment firm that received $20 billion via our government bailout of insurance giant AIG.  That’s called “restoring confidence”.

We are to continue life in one of the most economically stratified countries in the industrial world…as speculators swoop in buying up foreclosed properties, adults compete with high school kids for summer jobs, the price of gas goes back over $3 a gallon, and the stock market goes up, trumpeting “labor savings” as key to profit growth, the same labor savings that triggered the credit crunch.  That simple and obvious construct — low wages triggered the crisis — seems to elude the so-called progressive pundits at MSNBC.
  
The crisis we face is Mr. Obama’s cold indifference to the fact that growing numbers of American families cannot get by this year.  He seems entirely disconnected from the economic realities of working Americans.   If President Obama wants to get something done he is going to have to, in the words of one financial columnist, “make some bankers mad”. Fat chance.

Carl Ginsburg is a tv producer and journalist based in New York. He can be reached at carlginsburg@gmail.com

By Carl Ginsburg
Posted June 19 – 21, 2009

Placating the Bankers, Again
THE ADMINISTRATION’S FINANCIAL fix-it plan was laid out this week and it was, underwhelming, to say the least. The New York Times dubbed it, “back to business as usual..” not a phrase commonly seen in the paper of record which, by the way, essentially managed to miss the true source of the country’s crisis – Underpaid America –  for two generations.

None of this comes as a surprise given the top priority Mr. Obama set early on to fund banks and financial institutions. Everybody else should hang in there and brace yourselves for the Great Marginalization. So, aid to banks stays in place; derivatives are to remain a critical part of the finance system; there’ll be enhanced protection for accredited consumers who can still borrow money and invest. In other words, the protection of existing pools of money and investment is the goal of this government.

That is fine unless, of course, you have little or none of that money. That would be the millions of Americans who helped raise America’s productivity to new heights and got no rewards for the effort, for whom a pension system has fallen away and for whom there are now mounting health care and energy costs. Let’s keep in mind that the average consumer debt of an American family is $10,000. Let’s not kid ourselves: that’s an amount that served to augment low wages (much like food stamps for the working poor) and did not fund extravagant lifestyles, a popular obfuscation in the media embrace of Obama’s sociology.

Low wage America slammed people and NOTHING the Obama administration has on the table now or in the pipeline will address that fundamental dynamic this year, next… ever. Meanwhile, profits are up. Business Week reports: “Bank Reap Handsome Profits Cashing Out of Chinese Banks.” Those winners include Goldman Sachs, the investment firm that received $20 billion via our government bailout of insurance giant AIG. That’s called “restoring confidence”.

We are to continue life in one of the most economically stratified countries in the industrial world… as speculators swoop in buying up foreclosed properties, adults compete with high school kids for summer jobs, the price of gas goes back over $3 a gallon, and the stock market goes up, trumpeting “labor savings” as key to profit growth, the same labor savings that triggered the credit crunch. That simple and obvious construct – low wages triggered the crisis – seems to elude the so-called progressive pundits at MSNBC.
The crisis we face is Mr. Obama’s cold indifference to the fact that growing numbers of American families cannot get by this year.  He seems entirely disconnected from the economic realities of working Americans. If President Obama wants to get something done he is going to have to, in the words of one financial columnist, “make some bankers mad”. Fat chance.

Carl Ginsburg is a tv producer and journalist based in New York.

Mass Layoffs: The Continuing Devastation

Mass Layoffs: The Continuing Devastation

by Gary North

by Gary North
July 25, 2009
This is a short excerpt from an article of the same title, reprinted in full on sidebar, under Pages.

A MASS LAYOFF IS LIKELY to take place in one town. They would not be individual layoffs spread across several plants or regions. They are likely to hit one plant. The company shuts down a division. It finds that the entire output of a plant or a division is no longer profitable.

When this happens, the loss of income is concentrated in one geographical area. This hits housing harder than if the layoffs had been spread across several plants located in different towns.

Without warning, every fired person must scramble to get a job. The local market finds it costly to absorb all of them at once. The obvious response of employers is to offer a lower salary without fringe benefits. The job-seekers are not in a position to negotiate. They have bills to pay.

One of these bills is the monthly mortgage. It is a large share of the household budget. The family will resist skipping this payment. But, if they are facing a mortgage that is now larger than the market value of the home, they are tempted to stop paying.

If they knew how expensive it is for a lender to hire a lawyer and pursue the foreclosure in civil court in most states, a lot more families would stop paying. How much does foreclosure cost the lender? On average, $50,000. This includes the loan loss ($40,000 on a $210,000 home), lawyers’ fees, and court costs.

The lender does not want to foreclose, because the loss must be recorded. It can be delayed for as long as there is no final transfer of the house to the lender. The lender may like to threaten to foreclose, but if the family abandons the home, it becomes a high-risk asset. No money is coming in. The house is deteriorating. Vandals may hit the house. Squatters may move in.

The family finally has to throw in the towel. It either walks away from the home or is evicted. In either case, the equity is gone. The family now has a large black mark on its credit. It will be hard for the family to get a bank loan in the future. It may have to declare bankruptcy.

The threat posed by mass layoffs is terrible for a family. Yet people don’t see these layoffs coming. They stay in a doomed career, hoping that there will be some deliverance. In June, deliverance did not come for 279,231 workers.

Month after month, this process continues relentlessly. Occasionally, a television news show will cover a town that has been hit with a major mass layoff. But there is no realization that these events are taking place, month by month, in thousands of communities.

Britons will be poorer in coming decades

Britons will be poorer in coming decades

Britain’s economic crisis is still with us and is going to worsen. Some unpleasant medicine will have to be taken.

By Edmund Conway
Published: 11:38PM BST 11 Jul 2009

Chances are you are already bored to death with the endless debate on public spending and the fiscal deficit. For weeks, Labour and Conservatives have traded blows in Parliament over the extent to which the other will cut its spending plans. The next chapter is likely to concern tax rises, as the Tories lay into the Government for hiding their planned increases after the election. But, like it or not, the budget and its parlous state will remain one of the most contentious and hotly-debated topics next year.

The reason is very simple. The combined effect of the financial crisis and recession has been to generate a deficit the likes of which has not been since since the aftermath of the Second World War. Britain’s total public sector net debt will be catapulted from a level of below 40pc last year to around 80pc or perhaps 100pc and beyond.

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In part, this is due to the extra cash needed for unemployment benefits, bailing out stricken banks such as HBOS and Royal Bank of Scotland and temporary Keynesian tax cuts and spending increases. But the greater part of the black hole is due to the fact that a massive chunk of the tax revenue the Government assumed would keep flowing into its coffers has simply dried up, mainly because the golden goose that was the City is no longer so prodigious.

The economic gravity is irresistible. Whoever wins the next election will, whatever their manifestos say, have to inflict swingeing cuts on public spending or raise taxes significantly. Whereas in previous years Gordon Brown could get away with borrowing more each year to keep his Budget ticking over, this option is now under the most severe threat since the mid-1970s, when Britain was bailed out by the International Monetary Fund (IMF). Ratings agency Standard & Poor’s has warned that unless Alistair Darling finds “more ambitious” fiscal plans, it will probably cut the UK’s credit rating.

If it does so, Britain faces a slippery slope of ever-increasing interest costs on its debt, a growing struggle to raise finance from international creditors and, if matters deteriorate further, the prospect of a full-scale financing crisis.

According to Ray Barrell, chief UK economist at the National Institute for Economic and Social Research, Britons will have to come to terms with the fact that the UK will be poorer in the coming decades.

“This means there’s a strong case for cutting back on public sector investment beyond the already weak projection in the Budget,” he says. “I can’t imagine we’ll see as large a programme of public investment as people expect – which means that things like Crossrail [which is estimated to cost around £16bn] and nuclear weapons system Trident [whose replacement cost is estimated at £40bn] are under major threat, whichever political party is in power.”

However, although cutting investment projects such as these or the introduction of ID cards will help bring the total net debt figure down, a more pressing need is to bring current spending, the outflow of annual cash for existing public sector programmes, down. After all, Crossrail and Trident aside, the Government is already planning a massive cut in investment in its current Budget plans. According to John Hawksworth of PwC, the Government needs to find a further £22bn in savings or revenues by 2013-14 in order to bring the current budget back in balance by the end of the next electoral term.

To do so would involve some major sacrifices, he says: “If you did everything by cutting spending and raised no extra taxes, our estimate is that departmental spending might need to be cut by 11pc in real terms by 2013.”

The Institute for Fiscal Studies predicts a slightly more modest squeeze of 7pc but both would represent public service cuts of a type never before achieved by a UK government. Although the Thatcher government cut the size of the state, partly through privatisations, it balked at the challenge of imposing cuts such as this on its core welfare state functions.

The Sunday Telegraph has mapped out three possible paths for public spending and taxes. They underline the scale of the potential tax rises or spending cuts that would bring the budget back towards balance – and even then only within five years. The plain fiscal logic is that there is no easy way out of this.

Moreover, the impact of the recent crisis is only one half of the issue. The UK also faces a more serious long-term crisis, thanks to its demography. The ageing of the population, in conjunction with the effect of imprudently generous pensions policies, means Britain’s national debt could rise yet further to 200pc of GDP by 2050, according to S&P calculations. NIESR’s Barrell says this means it is essential to tackle the impending black hole as soon as possible, by putting in place plans to increase the retirement age for both men and women to 70, within the next decade. Although the upshot of Lord Turner’s pensions report was that the state pension will eventually be awarded only above the age of 68, these reforms are due to come in completely only within four decades. Barrell’s proposal is to bring in the increase far faster.

“Working longer makes a lot of sense and will cut the deficit,” he says. ” Society has to decide we will all work longer. Then we will have the tax revenue to help pay off the debt. It’s not a quick solution. It raises revenue only slowly and cuts pensions costs only slowly but will ultimately bring the books back into balance.”

It also has the advantage of not imposing a potentially economically damaging tax rise as the UK emerges from recession. However, the likelihood of either political party supporting such a proposal is highly doubtful.

by Edmund Conway
Published: 11 Jul 2009

Britain’s economic crisis is still with us and is going to worsen. Some unpleasant medicine will have to be taken.

Chances are you are already bored to death with the endless debate on public spending and the fiscal deficit. For weeks, Labour and Conservatives have traded blows in Parliament over the extent to which the other will cut its spending plans. The next chapter is likely to concern tax rises, as the Tories lay into the Government for hiding their planned increases after the election. But, like it or not, the budget and its parlous state will remain one of the most contentious and hotly-debated topics next year.

The reason is very simple. The combined effect of the financial crisis and recession has been to generate a deficit the likes of which has not been since since the aftermath of the Second World War. Britain’s total public sector net debt will be catapulted from a level of below 40pc last year to around 80pc or perhaps 100pc and beyond.

In part, this is due to the extra cash needed for unemployment benefits, bailing out stricken banks such as HBOS and Royal Bank of Scotland and temporary Keynesian tax cuts and spending increases. But the greater part of the black hole is due to the fact that a massive chunk of the tax revenue the Government assumed would keep flowing into its coffers has simply dried up, mainly because the golden goose that was the City is no longer so prodigious.

Is Obama Gorbachev?

Is Obama Gorbachev?

By James Howard Kunstler for ClusterFuck Nation

The eulogy for Walter Cronkite as “the most trusted man in America” on the CBS “Sixty Minutes” show said a lot about the condition of this nation — though it did not signify what CBS thought it did.  It wasn’t about the death of one hugely esteemed individual; it was about the broad institutional failure of TV news in general and the current grievous loss of legitimacy and authority in shaping a national consensus of reality.  Watching the old clips of Cronkite delivering the evening news years ago, one couldn’t help weighing the contrast with the current spectacle of snide, combative, overbearing idiocy acted out nightly by the likes of Kudlow, Olberman, Kneale, O’Reilly, Matthews, and Dobbs as they shout down their invited guest commentators, pander to their demographic, and diss their rivals for ratings.

It was instructive to notice that the program following “Sixty Minutes” — in the supreme weekly slot of 8p.m. Sunday — was a childish and stupid “reality” show called “Big Brother.”  This said even more about the craven quality of the people currently running CBS. It was also a useful lesson in the diminishing returns of technology as applied to television, since it should now be obvious that the expansion of cable broadcasting since the heyday of the “big three” networks has led only to the mass replication of video garbage rather than a banquet of culture, as first touted.

It should remind us more generally that when a society’s operations become broadly fraudulent and unreal, authority and legitimacy wither.  This is analogous to the position Barack Obama now finds himself in.  He was elected as the politician most trusted in America to change the fraudulent and unreal operations of the US government.  Don’t bother protesting that all politics is necessarily unreal and fraudulent. If it were so, you’d have to argue that the US Constitution was wholly a fraud, as well as Madison, Jefferson, Hamilton and the rest. It only has strong tendencies in that direction. (The Declaration of Independence was itself a direct strike against the fraud and unreality of British royal governance in America.)

As president, Barack Obama is faced with the essential fraudulence and unreality of the US economy.  Notice that, as ominous as they are, the wars in iraq and Afghanistan have generated only minimal protest so far in the early Obama period, despite the fact that they are not operationally different from their conduct under Bush. There is no protest because, for now, a consensus exists that our troops are in these places for perceived reasons — to keep Mideast oil supply lines open… to keep Islamic maniacs busy in their own backyard instead of on US territory… to keep Iran in a vise… to maintain the American “empire” (take your pick). There’s something there to appeal to a broad majority of US voters. Unlike Vietnam, Iraq and Afstan are not perceived as out-and-out frauds.

But the economy is.  Since September of 2008, when Hank Paulson began shoveling bail-outs to the very banks who screwed the world on fraudulent and unreal securities, and left American society comprehensively bankrupt, the consensus has only deepened on the perception of an historic swindle. And so far, President Obama has positioned himself as chief enabler to further swindling. One need look no further than the rulings this past spring of the Financial Accounting Standards Board (FASB) as authorized by the Securities and Exchange Commission (SEC, an official government agency, created 1934), which have allowed the biggest banks to pretend that the fraudulent paper in their vaults does not have to be recorded as a loss on their books.

The US economy is now dying a slow and painful death because it had become based on activities that had nothing to do with producing real wealth. Instead, it became dependent on rackets, that is, behavior geared to getting something for nothing.  These rackets are often summarized under the acronym FIRE (for finance, insurance and real estate), a system set up to strip-mine profits from the wish commonly labeled “the American Dream” — itself largely a product of televised advertising and propaganda.  The end product of all that was the doomed economy of suburban sprawl, an infrastructure for daily life with no future in a world defined by fossil fuel scarcity. The unraveling of debt at every level now is directly related to the mis-investments made in that way of life.

By now, it’s self-evident that the “change” voted for in November’s election was too horrifying to articulate.  It still is.  The suburban sprawl economy was all we had left.  Now it’s gone and we’re stuck with all its deleveraging after-effects — the worst case of “buyer’s remorse” since the fall of Nazi Germany. Thus, the only “change” that President Obama can really work for is the health care system, which is a life-and-death matter. The sordid rackets so ostentatiously infecting the system boil down vividly to lives ruined and bankrupted, and a system more frightful to deal with than disease itself. Probably the baseline truth is that health care will end up being rationed one way or another. It’s another prime symptom of population overshoot, and a reminder that life is tragic.

As another blogger put it so nicely last week on the web (sorry, but I forget who or where), this isn’t a “recession,” it’s a collapse. The excellent Dmitry Orlov has outlined the process very nicely in his book “Reinventing Collapse” about the parallels between the demise of the Soviet Union and the prospects for demise of the US as currently constituted.  Mikhail Gorbachev presided over the Soviet collapse. He must have been a leader of very subtle abilities.  Not only did he survive to enjoy a busy second act of life with a Nobel Prize in his pocket, but he accomplished a nearly bloodless transition in a society long-conditioned to bloodletting as the primary political act.

Here in the USA, where we have had over two hundred years experience with peaceful power transitions — even during the convulsions of 1860-65 — the outcome this time might not be so appetizing. It would be one of the supreme ironies of history if it turned out that the US was incapable of ending its most self-destructive rackets peacefully and bloodlessly, while the Russians shucked off its Soviet racket like an old sweater.  The way I see it, Mr. Obama just doesn’t have much time before his authority and legitimacy slough off and he is left with only his genial smile. The “hope” vested in him will end up in a Museum of Lost Hopes, along with the integrity of TV news and the rectitude of the medical profession. And funding for that museum will be cut by President Sarah Palin, representing Naziism US style — i.e. Naziism without the brains.

by James Howard Kunstler for ClusterFuck Nation

THE EULOGY FOR WALTER CRONKITE as “the most trusted man in America” on the CBS “Sixty Minutes” show said a lot about the condition of this nation – though it did not signify what CBS thought it did.  It wasn’t about the death of one hugely esteemed individual; it was about the broad institutional failure of TV news in general and the current grievous loss of legitimacy and authority in shaping a national consensus of reality. Watching the old clips of Cronkite delivering the evening news years ago, one couldn’t help weighing the contrast with the current spectacle of snide, combative, overbearing idiocy acted out nightly by the likes of Kudlow, Olberman, Kneale, O’Reilly, Matthews, and Dobbs as they shout down their invited guest commentators, pander to their demographic, and diss their rivals for ratings.

It was instructive to notice that the program following “Sixty Minutes” – in the supreme weekly slot of 8p.m. Sunday – was a childish and stupid “reality” show called “Big Brother.”  This said even more about the craven quality of the people currently running CBS. It was also a useful lesson in the diminishing returns of technology as applied to television, since it should now be obvious that the expansion of cable broadcasting since the heyday of the “big three” networks has led only to the mass replication of video garbage rather than a banquet of culture, as first touted.

The United States is in Deep Doodoo!

by Michael Rivero

Aurick says: This superb article was first written in 1998. I am posting it here not so much as to say “The author told you so”, but to point out that the long term economic future of the United States was obvious, or should have been obvious, to the people who are awarded lofty degrees and paid huge salaries to comprehend such things. Instead, the economists persisted in explaining away the visible signs of gathering troubles and earned their salaries by justifying why the policies that robbed the poor to give to the rich should continue unabated.

I should also mention that the current general public consensus regarding the economic disaster unfolding around us is that “it all began with subprime and irresponsible lending by the banks”. No, it did not. It began many years before, and had nothing to do with housing bubbles or banks.

Click on the link to go straight there, or else locate it under the sidebar Pages, on the right of the screen: https://quantumpranx.wordpress.com/the-united-states-is-in-deep-doodoo/

Avoid swine flu shots, take Vitamin D instead

Avoid Flu Shots, Take Vitamin D Instead

{ October 3, 2008 @ 10:57 am } · { Health } 
{ Tags: flu shot, flu shots, mercury, vaccine, vitamin, vitamin d, vitamins }

Another influenza season is beginning in the northern temperate zone, and our government’s Center for Disease Control and Prevention (CDC) will strongly urge Americans to get a flu shot. Health officials will say that every winter 5–20 percent of the population catches the flu, 200,000 people are hospitalized, and 36,000 people will die from it.

The CDC’s 15-member Advisory Committee on Immunization Practices (ACIP) makes recommendations each year on who should be vaccinated. Ten years ago, for the 1999–2000 season, the committee recommended that people over age 65 and children with medical conditions have a flu shot. Seventy-four million people were vaccinated. Next season (2000–01) the committee lowered the age for universal vaccination from 65 to 50 years old, adding 41 million people to the list. For the 2002–03 season, the ACIP added healthy children 6 months to 23 months old, and for 2004–05, children up to 5 years old. For the 2008–09 season the committee has advised that healthy children 6 months to 18 years old have a flu shot each year. Its recommendations for influenza vaccination now covers 256 million Americans – 84 percent of the U.S. population. Only healthy people ages 19–49 not involved in some aspect of health care remain exempt. Pharmaceutical companies have made 146 million influenza vaccines for the U.S. market this flu season.

Almost all the ACIP members who make these recommendations have financial ties to the vaccine industry. The CDC therefore must grant each member a conflict-of-interest waiver.

The CDC mounts a well-orchestrated campaign each season to generate interest and demand for flu shots. Along with posters for the public, flyers, and health care provider materials, it encourages doctors to “recommend/urge flu shots.” Medical groups, nonmedical organizations (like the YMCA), and the media trumpet CDC-released messages on influenza, notably: “Flu kills 36,000 per year,” “This could be a bad/serious flu year,” and “Flu vaccine is the best defense against flu.” The government promotes National Vaccination Week, which this year is December 8–14. This year, however, rather than uniformly following the government’s “Seven-Step Recipe” for generating demand for flu shots, the mainstream media has questioned their benefits.

The New York Times had an article in the September 2, 2008 issue titled “Doubts Grow Over Flu Vaccine in Elderly,” which says, “The influenza vaccine, which has been strongly recommended for people over 65 for more than four decades, is losing its reputation as an effective way to ward off the virus in the elderly. A growing number of immunologists and epidemiologists say the vaccine probably does not work very well for people over 70, the group that accounts for three-fourths of all flu deaths.” The article refers to a study done by the Group Health Center for Health Studies in Seattle on 3,500 people, age 65–94, to determine if flu vaccines are effective in protecting older people against developing pneumonia (Lancet 2008;372:398–405).

The National Vital Statistics Reports compiled by the CDC show that only 1,138 deaths a year occur due to influenza alone (257 in 2001, 727 in 2002, 1,792 in 2003, 1,100 in 2004, and 1,812 in 2005). Bacterial pneumonia causes some 60,000 deaths each year, mainly in the winter, when surveillance data show increased prevalence of the flu virus. Using a mathematical (Poisson) regression model, officials estimate that the flu virus triggers some of the winter-time deaths from pneumonia, along with deaths in people with cardiovascular disease and other chronic illnesses. More than 34,000 of those “36,000″ flu deaths are what officials estimate are “influenza-associated” pneumonic and cardiovascular deaths.

The Group Health study reported in the New York Times and other newspapers around the country found that flu shots do not protect elderly people against developing pneumonia. Pneumonia occurs with equal frequency in people over age 65 with or without a flu shot. Earlier studies, biased by the “healthy user effect,” over-estimated the vaccine’s effect on pneumonia because they did not adjust for the presence and severity of other diseases in unvaccinated people. As the Group Health authors point out, “The study found that people who were healthy and conscientious about staying well were the most likely to get an annual flu shot. Those who are frail may have trouble bathing or dressing on their own and are less likely to get to their doctor’s office or a clinic to receive the vaccine. They are also more likely to be closer to death.” Other investigators question that there is a mortality benefit with influenza vaccination. Vaccination coverage among the elderly increased from 15% in 1980 to 65% now, but there has been no decrease in deaths from influenza and pneumonia (Am J Respir Crit Care Med 2008;178:527–33). As one vaccine researcher puts it, “I think the evidence base [for mortality benefits from flu shots] we have leaned on is not valid” (Lancet Infect Dis 2007;7:658–66).

There is also a lack of evidence that young children benefit from flu shots. A systematic review of 51 studies involving 260,000 children age 6 to 23 months found no evidence that the flu vaccine is any more effective than a placebo (Cochrane Database Syst Rev. 2006;1:CD004879).

Randomized controlled trials are the most reliable way to determine the efficacy – and safety – of a given treatment. No randomized trials show that flu shots reduce mortality from influenza or flu-related pneumonia. Some do show that the flu vaccine is somewhat effective in preventing influenza. In one widely quoted study, 1838 volunteers age 60 and over were randomized to receive a flu shot or placebo (a shot of saline). The flu shot reduced the relative risk of contracting (serologically confirmed, clinical) influenza by a seemingly impressive 50%. The incidence of influenza in the unvaccinated people in this study was 3%. In the vaccinated group it was 2% (JAMA 1994;272:1661–5). Flu shots reduced the absolute risk of contracting influenza by a meager 1% (not 50%, as the “relative risk” portrays it). In actuality, for every 100 people that have a flu shot only one will benefit from it – this, in medical parlance, is the “number needed to treat” (NNT) in order to achieve any benefit from the treatment. A flu shot provides no benefit for the other 99 people – 2 of them will get influenza anyway – and all 100 risk being harmed by the vaccine.

Another randomized trial by Zaman and coworkers published recently (NEJM 2008;359: published online September 17, in print October 9) found that the incidence of influenza in infants whose mothers had a flu shot during their pregnancy was 4% (6/159). The incidence of flu in infants whose mothers did not have a flu shot was 10% (16/157). In this study (done in Bangladesh and funded by the Bill and Melinda Gates Foundation, Wyeth Pharmaceuticals, and others) flu shots reduced the relative risk of influenza illness in infants by a seemingly impressive 63%. But only 6 out of 100 infants benefited from the shot. The other 94 received no benefit – 4 got influenza anyway – and all are at risk from being harmed by the vaccine, particularly from the mercury, aluminum, and formaldehyde in it.

After officials select the three strains of flu virus that they think are most likely to be circulating during the next winter season (they picked the wrong ones last year), vaccine makers grow the viruses in fertilized chicken eggs, with 500,000 eggs per day (each examined by hand) for up to eight months. Formaldehyde is used to inactivate the virus. It is a known cancer-causing agent. Aluminum is added to promote an antibody response. It is a neurotoxin that may play a role in Alzheimer’s disease. Other additives and adjuvants in the flu vaccine include Triton X-100 (a detergent), Polysorbate 80, carbolic acid, ethylene glycol (antifreeze), gelatin, and various antibiotics – neomycin, streptomycin, and gentamicin – that can cause allergic reactions in some people.

Two-thirds of the vaccines made for the 2008–09 flu season, 100 million of them, contain full-dose thimerosal, an organomercury compound, which is 49% mercury by weight. (An unidentified number of the other 50 million vaccines contain either “no” or “trace” amounts of thimerosal.) It is used to disinfect the vaccine. Each one of these 100 million flu shots contain 25 micrograms of mercury, a mercury content that is 50,000 part per billion, 250 times more than the Environmental Protection Agency’s safety limit. Mercury is a neurotoxin, which has a toxicity level 1,000 times that of lead.

There is some evidence that flu shots cause Alzheimer’s disease. This most likely is a result of combining mercury with aluminum and formaldehyde, which renders them much more toxic together through a synergistic effect than each would be alone. One investigator has reported that people who received the flu vaccine each year for 3 to 5 years had a ten-fold greater chance of developing Alzheimer’s disease than people who did not have any flu shots (Int J Clin Invest 2005;1:1–4). (The brains of people with Alzheimer’s disease display three pathologic hallmarks: neurofibillary tangles, amyloid plaques, and phosphorylation of tau protein. Brain cells grown in test tubes develop these changes when exposed to nanomolar doses of mercury, doses similar to the amount of mercury a person gets from a flu shot.)

Mercury in vaccines has also been implicated as a cause of autism. Vaccine makers have now removed thimerosal from all childhood vaccines, except flu shots. For more on this subject see my article “Mercury on the Mind,” with its recommended reading list, and Evidence of Harm: Mercury in Vaccines and the Autism Epidemic: A Medical Controversy by David Kirby.

Three serious, acknowledged adverse reactions to the flu vaccine are joint inflammation and arthritis, anaphylactic shock (and other life-threatening allergic reactions), and Guillain-Barré syndrome. Guillain-Barré syndrome (GBS) is a paralytic autoimmune disease that fells people several weeks after their flu shot. One woman with post-vaccination GBS writes:

“I had a flu shot in November, and by December I became weak and continued to get weaker until I collapsed and was taken to the hospital… I was helpless, totally paralyzed with Guillain-Barré syndrome… I was in ICU for three weeks and then transferred to a rehabilitation center. Three months later I was released to come home because I could ambulate approximately 100 feet with a walker. I continued rehabilitation as an outpatient for the next three months until I could walk with hand crutches. Today, I need a cane. I was not forewarned of any possible hazard when they gave me the flu shot.”

Another:

“I have a friend, now in a wheelchair, who took the flu shot, got Guillain-Barré and now cannot walk.”

Another woman, diagnosed with GBS after a flu shot, spent 16 months in the hospital paralyzed on a ventilator and life support. After several subsequent multi-month hospitalizations she writes:

“On my last visit to my neurologist I was able to walk about 6 feet holding his hand, not much but it took years to be able to do that. I scratch my head when I hear them promoting flu shots… Most people that I come into contact with – in the hospital and out (nurses, doctors, and regular people) – after hearing my story, feel that it is better to chance the flu and not get the shot.” (These statements are in Vaccine Safety Manual for Concerned Families and Health Practitioners: Guide to Immunizations Risks and Protection by Neil Miller [no relation], pages 84–86.)

The package inserts that come with the flu vaccine note that GBS is a potential complication. There are 1 to 2 cases of GBS per 1 million vaccinated persons. (There were 10 times that many cases of GBS in 1976 with the flu vaccine used that year). Taking a flu shot is essentially the same as buying a lottery ticket for acquiring Guillain-Barré syndrome.

Seventy percent of doctors do not get a flu shot.

Flu virus exists in people year-round, and new strains seed a population during the “off-season.” In the northern and southern temperate zones, flu epidemics occur in the cold part of the year, October–March and April–September respectively. Flu epidemics occur in the tropics during the rainy season.

Explanations for why flu epidemics occur in the winter when it is cold – people being indoors in close contact, drier air dehydrating mucus and preventing the body from expelling virus particles, the virus lingering longer on exposed surfaces, like doorknobs, with colder temperatures – do not explain why flu epidemics occur in the tropics.

Something that can explain why flu epidemics also occur both in warm and cold climates is this: During a flu epidemic, wherever it may be, the atmosphere blocks ultraviolet B (UVB) radiation from the Sun. In the temperate zones above latitude 35 degrees North and South, the sun is at a low enough angle in the winter that the ozone layer in the atmosphere absorbs and blocks the short-wavelength (280–315 nanometers) UVB rays. In the tropics during the wet season, thick rain clouds block UVB rays.

Skin contains a cholesterol derivative, 7-dehydrocholesterol. UVB radiation on skin breaks open one of the carbon rings in this molecule to form vitamin D. The activated form of vitamin D (1,25-dihydroxyvitamin D) attaches to receptors on genes that control their expression, which turn protein production on or off. Vitamin D regulates the expression of more than 1,000 genes throughout the body. They include ones in macrophages, cells in the immune system that, among other things, attack and destroy viruses. Vitamin D switches on genes in macrophages that make antimicrobial peptides, antibiotics the body produces. Like antibiotics, these peptides attack and destroy bacteria; but unlike antibiotics, they also attack and destroy viruses.

Vitamin D also expresses genes that stop macrophages from overreacting to an infection and releasing too many inflammatory agents – cytokines – that can damage infected tissue. Vitamin D, for example, down regulates genes that produce interleukin-2 and interferon gamma, two cytokines that prime macrophages and cytotoxic T cells to attack the body’s tissues. In the 1918–19 Spanish flu pandemic that killed 500,000 Americans, young healthy adults would wake up in the morning feeling well, start drowning in their own inflammation as the day wore on, and be dead by midnight, as happened to my 22-year-old grandmother and my wife’s 24-year-old grandmother. Autopsies showed complete destruction of the epithelial cells lining the respiratory tract resulting, researchers now know, from a macrophage-induced severe inflammatory reaction to the virus. In a terribly misguided way, these victims’ own immune system attacked and killed them, not the virus, something in future pandemics vitamin D, in appropriate doses, can prevent.

A creditable hypothesis that explains the seasonal nature of flu is that influenza is a vitamin D deficiency disease. Cannell and colleagues offer this hypothesis in “Epidemic Influenza and Vitamin D” (Epidemiol Infect 2006;134:1129–40). They quote Hippocrates (circa 400 B.C.), who said, “Whoever wishes to investigate medicine properly should proceed thus: in the first place to consider the seasons of the year.” Vitamin D levels in the blood fall to there lowest point during flu seasons. Unable to be protected by the body’s own antibiotics (antimicrobial peptides) that this gene-expresser engineers, a person with a low vitamin D blood level is more vulnerable to contracting colds, influenza, and other respiratory infections (e.g., respiratory syncytial virus).

Studies show that children with rickets, a vitamin D-deficient skeletal disorder, suffer from frequent respiratory infections; and children exposed to sunlight are less likely to get a cold. Given vitamin D’s wide-ranging effects on gene expression, other studies, for example, show that people diagnosed with cancer in the summer have an improved survival compared with those diagnosed in the winter (Int J Cancer 2006;119:1530–36).

A growing body of evidence indicates that rickets in children and osteomalacia in adults (both a softening of bones due to defective bone mineralization) are just the tip of a vitamin D-deficiency iceberg. Tuberculosis and various autoimmune diseases, such as multiple sclerosis, lupus, and type I diabetes have a causal association with low vitamin D blood levels. Vitamin D deficiency plays a causal role in hypertension, coronary artery disease, congestive heart failure, peripheral vascular disease, and stroke. It is also a risk factor for metabolic syndrome and type II diabetes, chronic fatigue, seasonal affective disorder, depression, cataracts, infertility, and osteoporosis. At the bottom of the vitamin D iceberg lies cancer. There is good evidence that vitamin D deficiency is a causal factor in some 15 different common cancers. (NEJM 2007;357:266–81.)

The increased number of deaths that occur in winter, largely from pneumonia and cardiovascular diseases, are much more likely due to vitamin D deficiency than to an increased prevalence of serologically-positive influenza virus (which also results from vitamin D deficiency).

Experts reckon that an optimum blood level of vitamin D (25-hydroxyvitamin D) is 50–99 ng/ml. (Children need a blood level >8 ng/ml to prevent rickets. It takes a concentration >20 to maintain parathyroid hormone levels in a normal range. A level >34 is needed for peak intestinal calcium absorption. And in elderly people neuromuscular performance steadily improves as vitamin D blood levels rise to 50 ng/ml.) The government’s recommended daily allowance (RDA) for vitamin D is 400 IU (international units) a day, an amount sufficient to prevent rickets and osteomalacia but not vitamin D’s other gene-regulating benefits. To achieve all of vitamin D’s benefits one has to take an amount ten times the government’s RDA – 4,000 to 5,000 IU a day.

A light-skinned person will synthesize 20,000 IU of vitamin D in 20 minutes sunbathing on a tropical beach, at which point vitamin D synthesis shuts down for the day (it takes a dark-skinned person 6 to 10 times longer to make this amount). Human breast milk does not contain vitamin D, since, from an evolutionary standpoint, our African ancestors’ infants, reared near the equator, could readily synthesize this gene regulator from sunlight in their skin. Food contains very little vitamin D. (The highest concentrations are in wild salmon, mackerel, sardines, and cod liver oil.) Federal regulations now require that some foods, like milk, be fortified with vitamin D. But one would have to drink 200 glasses of milk to obtain the amount of vitamin D a light-skinned person can make in 20 minutes sunbathing.

The majority of Americans are vitamin D deficient, with a 25-hydroxy D blood level <20 ng/ml, or insufficient, with a level of 20–<30 ng/ml. Cheap vitamin D supplements (D3, not D2) provide the only way most of us can maintain a year-round vitamin D blood levels greater than 50 ng/ml. That requires taking 4–5,000 IU of vitamin D a day (50,000 IU every ten days or 150,000 IU a month).

Taking vitamin D in these doses is safe, far safer than a flu shot with all the bad chemicals it contains. Concerns about vitamin D toxicity are overblown. One can take a 10,000 IU vitamin D supplement on a daily basis without any adverse effects. In healthy persons, long-term consumption of more than 40,000 IU a day is necessary to cause an elevation in the blood calcium level (hypercalcemia), the first manifestation of vitamin D toxicity (Am J Clin Nutr 2006;84:694–97). Check your vitamin D (25-hydroxy D) blood level. People with granulomatous diseases like sarcoidosis should also check their blood level of 1,25-dihydroxyvitamin D, the active form.

Can a shot (or tablets) of vitamin D prevent influenza better than a flu shot? There is good reason to believe that it can.

Doctors in India and Canada give people a once-yearly injection of 600,000 IU of vitamin D (MJA 2005;183:10–12). That would be better, and safer, than having a flu shot. Daily, weekly, or monthly vitamin D tablets work just as well. For more on this subject see my article “Vitamin D in a New Light” and visit Dr. Cannell’s Vitamin D Council website.

Investigators have completed one double-blind, randomized, placebo-controlled trial that shows vitamin D prevents colds and influenza significantly better (P <0.002) than a placebo pill (Epidemiol Infection 2007;135:1095–6). A large multi-center randomized trial conducted over multiple flu seasons comparing vitamin D to a flu shot can show conclusively which is better, and safer. But given the financial stakes underpinning flu shots, and unpatentable vitamin D, who will fund it?

In the meantime, considering what is most likely to be the outcome of such a trial, if it is ever conducted, I recommend that you avoid flu shots and take vitamin D instead.

Notes

Influenza virus Flu viruses are classified into types A, B, and C. Type A viruses cause most influenza epidemics. They exist, replicate, and mutate in swine and horses; seals, dolphins, and whales; migratory water birds, geese and ducks; domestic birds chicken and turkeys; and humans. Type B and C viruses exist only in humans and only type B causes (relatively mild) infections. Influenza A viruses are further categorized into subtypes on the basis of two surface antigens (proteins): hemaglutinin (H) and neuraminidase (N). There are 15 different H and 9 different N antigens. The 1918–19 Spanish flu pandemic was caused by an H1NI Type A virus. Subtypes of influenza viruses are further classified by the names of cities, states or countries, along with the year they were discovered. For the 2008–09 (northern temperate zone) season, officials predict and have directed vaccines to be made against A/Brisbane/59/2007 (H1N1), A/Brisbane/10/2007 (H3N2), and B/Florida/4/2006. In an unusual departure, they are all different from the previous season, which missed the strains that caused influenza that season. What doctors diagnose as “influenza” is often an influenza-like illness caused by a respiratory virus other than the flu. Serologic tests are necessary to prove that one’s respiratory illness is actually caused by the flu virus.

Other things to do to prevent the flu Avoid sugar. It suppresses immunity. Avoid Omega-6 vegetable oils (corn, safflower, sunflower, peanut, canola, and soybean oil). Americans consume 50 times more of these oils than are necessary for good health. In this amount they are powerful immune suppressants. Take a well-balanced multivitamin/mineral capsule on a daily basis. Eat garlic. Manage stress. Exercise. Get enough rest. And wash your hands. Viruses spread most often from touching contaminated objects, like doorknobs, phones, shared computer keyboards, and shaking hands.

http://www.lewrockwell.com/miller/miller27.html

by Donald W. Miller, Jr., MD
Posted originally October 3, 2008

ANOTHER INFLUENZA SEASON is beginning in the northern temperate zone, and our government’s Center for Disease Control and Prevention (CDC) will strongly urge Americans to get a flu shot. Health officials will say that every winter 5–20 percent of the population catches the flu, 200,000 people are hospitalized, and 36,000 people will die from it.

The CDC’s 15-member Advisory Committee on Immunization Practices (ACIP) makes recommendations each year on who should be vaccinated. Ten years ago, for the 1999–2000 season, the committee recommended that people over age 65 and children with medical conditions have a flu shot. Seventy-four million people were vaccinated. Next season (2000–01) the committee lowered the age for universal vaccination from 65 to 50 years old, adding 41 million people to the list. For the 2002–03 season, the ACIP added healthy children 6 months to 23 months old, and for 2004–05, children up to 5 years old. For the 2008–09 season the committee has advised that healthy children 6 months to 18 years old have a flu shot each year. Its recommendations for influenza vaccination now covers 256 million Americans – 84 percent of the U.S. population. Only healthy people ages 19–49 not involved in some aspect of health care remain exempt. Pharmaceutical companies have made 146 million influenza vaccines for the U.S. market this flu season.

Almost all the ACIP members who make these recommendations have financial ties to the vaccine industry. The CDC therefore must grant each member a conflict-of-interest waiver.

The CDC mounts a well-orchestrated campaign each season to generate interest and demand for flu shots. Along with posters for the public, flyers, and health care provider materials, it encourages doctors to “recommend/urge flu shots.” Medical groups, nonmedical organizations (like the YMCA), and the media trumpet CDC-released messages on influenza, notably: “Flu kills 36,000 per year,” “This could be a bad/serious flu year,” and “Flu vaccine is the best defense against flu.” The government promotes National Vaccination Week, which this year is December 8–14. This year, however, rather than uniformly following the government’s “Seven-Step Recipe” for generating demand for flu shots, the mainstream media has questioned their benefits.

Casting Blame, Part II

by Barry Ritholtz
Posted Thursday, July 16, 2009

STRUCTURED FINANCIAL products, from residential mortgage-backed securities (RMBSs) to collateralized debt obligations (CDOs), lay at the heart of the global credit and financial meltdown. The process of creating, rating, and selling this paper is complex. As we have learned after the fact, the rating agencies were not (as they claim) passive participants who just happened to underestimate the likelihood of future defaults. Rather, when they placed precious triple-A ratings on all sorts of mortgage-backed and related securities, they were active participants—collaborators, according to The Wall Street Journal.

The subprime paper that eventually collapsed found its way onto the balance sheets of many banks, funds, and other firms. Had “the securities initially received the risky ratings” they deserved (and many now carry), the various pension funds, trusts, and mutual funds that now own them “would have been barred by their own rules from buying them.”

Nobel laureate Joseph Stiglitz, economics professor at Columbia University, observed:”I view the ratings agencies as one of the key culprits. They were the party that performed that alchemy that converted the securities from F-rated to A-rated. The banks could not have done what they did without the complicity of the ratings agencies.”

There’s nothing left to recover

There’s Nothing Left to Recover

What Economy?

By PAUL CRAIG ROBERTS

There is no economy left to recover. The US manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical “New Economy.”

The “New Economy” was based on services. Its artificial life was fed by the Federal Reserve’s artificially low interest rates, which produced a real estate bubble, and by “free market” financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.

The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans’ wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.

The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.

And now suddenly Americans can’t borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America’s consumer economy, approximately 70% of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities.

Meanwhile the US government’s budget deficit has jumped from $455 billion in 2008 to $2,000 billion this year, with another $2,000 billion on the books for 2010. And President Obama has intensified America’s expensive war of aggression in Afghanistan and initiated a new war in Pakistan.

There is no way for these deficits to be financed except by printing money or by further collapse in stock markets that would drive people out of equity into bonds.

The US government’s budget is 50% in the red. That means half of every dollar the federal government spends must be borrowed or printed. Because of the worldwide debacle caused by Wall Street’s financial gangsterism, the world needs its own money and hasn’t $2 trillion annually to lend to Washington.

As dollars are printed, the growing supply adds to the pressure on the dollar’s role as reserve currency. Already America’s largest creditor, China, is admonishing Washington to protect China’s investment in US debt and lobbying for a new reserve currency to replace the dollar before it collapses. According to various reports, China is spending down its holdings of US dollars by acquiring gold and stocks of raw materials and energy.

The price of one ounce gold coins is $1,000 despite efforts of the US government to hold down the gold price. How high will this price jump when the rest of the world decides that the bankruptcy of “the world’s only superpower” is at hand?

And what will happen to America’s ability to import not only oil, but also the manufactured goods on which it is import-dependent?

When the over-supplied US dollar loses the reserve currency role, the US will no longer be able to pay for its massive imports of real goods and services with pieces of paper. Overnight, shortages will appear and Americans will be poorer.

Nothing in Presidents Bush and Obama’s economic policy addresses the real issues. Instead, Goldman Sachs was bailed out, more than once. As Eliot Spitzer said, the banks made a “bloody fortune” with US aid.

It was not the millions of now homeless homeowners who were bailed out. It was not the scant remains of American manufacturing–General Motors and Chrysler–that were bailed out. It was the Wall Street Banks.

According to Bloomberg.com, Goldman Sachs’ current record earnings from their free or low cost capital supplied by broke American taxpayers has led the firm to decide to boost compensation and benefits by 33 percent. On an annual basis, this comes to compensation of $773,000 per employee.

This should tell even the most dimwitted patriot who “their” government represents.

The worst of the economic crisis has not yet hit. I don’t mean the rest of the real estate crisis that is waiting in the wings. Home prices will fall further when the foreclosed properties currently held off the market are dumped. Store and office closings are adversely impacting the ability of owners of shopping malls and office buildings to make their mortgage payments. Commercial real estate loans were also securitized and turned into derivatives.

The real crisis awaits us. It is the crisis of high unemployment, of stagnant and declining real wages confronted with rising prices from the printing of money to pay the government’s bills and from the dollar’s loss of exchange value. Suddenly, Wal-Mart prices will look like Nieman Marcus prices.

Retirees dependent on state pension systems, which cannot print money, might not be paid, or might be paid with IOUs. They will not even have depreciating money with which to try to pay their bills. Desperate tax authorities will squeeze the remaining life out of the middle class.

Nothing in Obama’s economic policy is directed at saving the US dollar as reserve currency or the livelihoods of the American people. Obama’s policy, like Bush’s before him, is keyed to the enrichment of Goldman Sachs and the armament industries.

Matt Taibbi describes Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentless jamming its blood funnel into anything that smells like money.” Look at the Goldman Sachs representatives in the Clinton, Bush and Obama administrations. This bankster firm controls the economic policy of the United States.

Little wonder that Goldman Sachs has record earnings while the rest of us grow poorer by the day.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He is coauthor of The Tyranny of Good Intentions.He can be reached at: PaulCraigRoberts@yahoo.com

by Paul Craig Roberts

WHAT ECONOMY? There is no economy left to recover. The US manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical “New Economy.”

The “New Economy” was based on services. Its artificial life was fed by the Federal Reserve’s artificially low interest rates, which produced a real estate bubble, and by “free market” financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.

The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans’ wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.

The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.

And now suddenly Americans can’t borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America’s consumer economy, approximately 70% of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities.

Meanwhile the US government’s budget deficit has jumped from $455 billion in 2008 to $2,000 billion this year, with another $2,000 billion on the books for 2010. And President Obama has intensified America’s expensive war of aggression in Afghanistan and initiated a new war in Pakistan.

There is no way for these deficits to be financed except by printing money or by further collapse in stock markets that would drive people out of equity into bonds.

On foundation of lies, recovery is impossible

On Foundation of Lies, Recovery Is Impossible

BY RICK ACKERMAN ON JULY 8, 2009 12:01 AM GMT · 3 COMMENTS

Gold continues to hang tough in the midst of oil’s nasty selloff. Although August crude has fallen more than 14%, from last Tuesday’s peak of $73.38, a Comex Gold futures contract expiring the same month lost just 2.5% of its value during the same period, falling from $947 to $924. The fact that gold has not plummeted in sympathy with oil strongly hints that it will be quite feisty when selling in the oil pits finally lets up. It was triggered by fears that the alleged global economic recovery is much weaker than had been thought. One might have expected investors to be prepared for this turn of events, but apparently not. The selling of oil began in earnest in connection with an uptick in job losses reported last week by the Department of Labor, and a 0.1 increase in the U.S. unemployment rate. But it has snowballed since, lending weight to the notion that investors really were surprised by signs of renewed weakness in the U.S. economy.

The jobs data could not have surprised anyone who has shared anecdotes about the economy with friends, neighbors or colleagues. However, it would seem that the government’s statisticians and spinmeisters are in a warp that rules out such evidence. But then, why would they even want to consider the big picture if it undermines the government’s aggressive efforts to convince us that the economy is bouncing back?  This is evidently what we are suppose to infer, based on data as ephemeral as a weekly report on California home prices. Granted, they are not falling as steeply as before; but California is itself in a state of financial and economic collapse, and that should more than suffice to quell all of the inane happy-talk.

Just Look Around You

Unfortunately, we can see no end to the nation’s economic miseries. To the contrary, the lies that we are being asked to believe about a recovery that exists only faintly in statistics can only impair the economy’s ability to right itself. Whatever the statistics, and however the Obama Administration tries to spin them, nearly all Americans recognize how grave our problems are. They have seen their retirement dreams go up in smoke, and they know that they won’t be able to borrow against home equity to put their kids through college.

They also understand that the middle class faces huge tax increases to pay for President Obama’s grandiose plans, and they know that healthcare costs are spiraling beyond the threshold of affordability – not only for individuals and employers, but for a U.S. Government that has the brazen nerve to tell us healthcare will somehow cost less when the government takes it over completely.

Until we get past all of these lies there can be no hope whatsoever for an economic resurgence.

by Rick Ackerman
July 8, 2009

GOLD CONTINUES TO HANG TOUGH in the midst of oil’s nasty selloff. Although August crude has fallen more than 14%, from last Tuesday’s peak of $73.38, a Comex Gold futures contract expiring the same month lost just 2.5% of its value during the same period, falling from $947 to $924. The fact that gold has not plummeted in sympathy with oil strongly hints that it will be quite feisty when selling in the oil pits finally lets up. It was triggered by fears that the alleged global economic recovery is much weaker than had been thought. One might have expected investors to be prepared for this turn of events, but apparently not. The selling of oil began in earnest in connection with an uptick in job losses reported last week by the Department of Labor, and a 0.1 increase in the U.S. unemployment rate. But it has snowballed since, lending weight to the notion that investors really were surprised by signs of renewed weakness in the U.S. economy.

The jobs data could not have surprised anyone who has shared anecdotes about the economy with friends, neighbors or colleagues. However, it would seem that the government’s statisticians and spinmeisters are in a warp that rules out such evidence. But then, why would they even want to consider the big picture if it undermines the government’s aggressive efforts to convince us that the economy is bouncing back?  This is evidently what we are suppose to infer, based on data as ephemeral as a weekly report on California home prices. Granted, they are not falling as steeply as before; but California is itself in a state of financial and economic collapse, and that should more than suffice to quell all of the inane happy-talk.

Just Look Around You
Unfortunately, we can see no end to the nation’s economic miseries. To the contrary, the lies that we are being asked to believe about a recovery that exists only faintly in statistics can only impair the economy’s ability to right itself. Whatever the statistics, and however the Obama Administration tries to spin them, nearly all Americans recognize how grave our problems are. They have seen their retirement dreams go up in smoke, and they know that they won’t be able to borrow against home equity to put their kids through college.

They also understand that the middle class faces huge tax increases to pay for President Obama’s grandiose plans, and they know that healthcare costs are spiraling beyond the threshold of affordability – not only for individuals and employers, but for a U.S. Government that has the brazen nerve to tell us healthcare will somehow cost less when the government takes it over completely.

Until we get past all of these lies there can be no hope whatsoever for an economic resurgence.