Archive for February 2011
by Mike Krieger, of KAM LP
Originally posted Feb 24, 2011
SOCIETY IN EVERY STATE IS A BLESSING, but government even in its best state is but a necessary evil in its worst state an intolerable one; for when we suffer, or are exposed to the same miseries by a government, which we might expect in a country without government, our calamities are heightened by reflecting that we furnish the means by which we suffer! Government, like dress, is the badge of lost innocence; the palaces of kings are built on the ruins of the bowers of paradise. For were the impulses of conscience clear, uniform, and irresistibly obeyed, man would need no other lawgiver; but that not being the case, he finds it necessary to surrender up a part of his property to furnish means for the protection of the rest; and this he is induced to do by the same prudence which in every other case advises him out of two evils to choose the least. Wherefore, security being the true design and end of government, it unanswerably follows that whatever form thereof appears most likely to ensure it to us, with the least expense and greatest benefit, is preferable to all others.
–Thomas Paine, Common Sense (1776)
Back to the future: The “Stimulus” Act of early 2008
Let’s all take a trip back to February 13th, 2008. Our war mongering 43rd President, George W. Bush, freaked out by the impact of the subprime crisis on the U.S. economy announced the now almost forgotten “Stimulus Act of 2008.” A big part of this typical Keynesian stimulus (remember Keynesianism is not a partisan thing, it is a economic religion handed down by the Fed to both the Republican and Democratic establishment) was simply writing checks to people.
At the time, I criticized it harshly and said it would lead to massive inflation. Guess what? Oil was trading at about $93/b and five months later it topped out at $147/b for a monster gain of 58%. Then all hell broke loose.
George W. Bush should actually be a hero for most of the fake liberals and fake progressives out there that just spout meaningless drivel about how things should be without ever bothering to look into and understand how the global financial system actually works. That would be too much work. It’s much easier to just be ignorant and support “your guy” as they county goes down in flames. The reason the fake liberals and progressives should love W so much is that at least he just wrote checks to average people.
Obama is the biggest puppet of the banking oligarchs in American history. I mean, this guy’s entire administration so far has revolved around printing money and handing it out, but rather than hand it out to the people, he gave it all to the banks that cratered your children’s futures in the first place. Of course, in order to give away trillions to the financial oligarchs that should be in prison as opposed to the petty dealers caught with dime bags that fill the prison, you need to give the money away in secret.
In comes the Federal Reserve. To make matters worse, after the Fed and Obama bailed out the banksters the next way to hand out money was defined in Jackson Hole Wyoming in August of last year where Banana Ben Bernanke laid out his plan for QE2. The unstated yet stated purpose of this policy was to juice the stock market. He has succeeded wildly in this manipulation until now.
Again, it isn’t the 44 million (a new record every time the data is updated) Americans on food stamps that benefit from this policy, it is the financial oligarchs that game the system and push the stock market up until the point that retail investors finally buy the stocks from them and then they are permitted to crash. Don’t play their crooked game, don’t buy stocks, buy physical gold and silver and take this nation back from the sociopathic financial control freaks running it now.
Written by aurick
28/02/2011 at 8:21 pm
Tagged with Ben Bernanke, currency debasement, debt, debt default, debt slavery, depression, doing God’s work, Eastern Europe, economic collapse, economic crisis, Federal Reserve, financial crisis, financial oligarchs, Goldman Sachs, Great Depression, Keynesian Stimulus, Keynesianism, public debt, Quantitative easing, Saudi Arabia, sovereign debt crisis, sovereign default, Too big to fail
First peaceful European revolt, as Irish tsunami ends 60 years of Fianna Fail rule following banker bailout fury
by Tyler Durden
Originally posted Zero Hedge Feb 26, 2011
Angela Merkel is carefully observing what can only be classified as a peaceful revolution in Ireland, where a stunning amount, over 70% by some estimates, of voters turned out to punish the ruling Fianna Fail party for its betrayal of the Irish people and for the latest (and what some say last) broad banker bailout.
The Telegraph reports that “Exit polls and early tallies from Ireland’s general election heralded political annihilation for Fianna Fail (FF), the party which has ruled Ireland for more than 60 years of the Irish Republic’s eight decades of independence.” Bloomberg adds: “Counting will continue today to fill the 166-seat parliament, with an exit poll giving Fine Gael and the Labour Party a combined 57 percent of the vote. Support for Fianna Fail, which has ruled for the last 14 years, dropped to 15 percent from 42 percent in the 2007 election, the poll showed.”
In other words, the Irish people have voted for a direct confrontation with the EU, and indirectly, for austerity: “Fine Gael leader Enda Kenny, likely to become prime minister, wants to re-negotiate the interest rate on the emergency loans and speed up planned spending cuts to narrow the budget gap. Labour is pushing for more tax increases.” And the reason Merkel is not going to sleep much tonight is that Germany is next.
The country, where the CDU saw a comparable annihilation in a recent Hamburg vote, faces several regional elections as early as a few weeks from now, and the political scene is expected to change drastically, as a warning to anyone who feels like putting the banking kleptocracy (again) over the interests of the taxpaying majority. But what is most troublesome for all those who think that the EURUSD at 1.38 is remotely credible, is that the European Nash Equilibrium is now completely destroyed, and the game theory defections are about to start in earnest: “Declan Ganley, the Irish businessman who led the 2008 No vote to the Lisbon Treaty, said Ireland must “have the balls” to threaten debt default and withdrawal from the single currency. “We have a hostage, it is called the euro,” he said. “The euro is insolvent. The only question is whether Ireland should be sacrificed to keep the Ponzi scheme going. We have to have a Plan B to the misnamed bailout, which is to go back to the Irish Punt.”
Funny nobody even pretends that modern economics is even a remotely viable concept. Also, the Fed’s plan of keeping the USD artificially low against most currencies is about to crash and burn mercilessly.
Written by aurick
28/02/2011 at 12:06 pm
Tagged with Angela Merkel, austerity, Declan Ganley, euro insolvent, eurozone, Federal Reserve, Fianna Fail, financial crisis, Financial Meltdown, Fine Gael, France, Germany, International Monetary Fund, Ireland, Ireland sovereign debt, lisbon treaty, Middle East, Nicolas Sarkozy, recovery, sovereign debt, sovereign default
by Mike “Mish” Shedlock
Originally posted 26 Feb 2011
Unlike the Keynesian and Monetarist academic clowns that rule US academia, German academics push for EU sovereign default plan
ALMOST 200 GERMAN ECONOMICS PROFESSORS have signed a declaration rejecting current proposals to resolve the eurozone debt crisis, instead calling for a way for distressed countries to declare bankruptcy.
More than 200 professors were invited to sign the document, and 189 did so, including prominent figures such as Manfred Neumann of the University of Bonn and Justus Haucap of the University of Duesseldorf, both in western Germany.
Instead of the collective support mechanism set up last year that could be made permanent in a modified form from 2013, the economists argued it would be better to let countries restructure their debts.
“Restructuring allows the countries concerned to reduce their debt and start over,” said the economists. The solution being mulled at present and likely to be approved by European leaders next month would amount to “a permanent guarantee” of some countries’ debt, with “very serious consequences,” they added.
The signatories also doubted the effectiveness of measures to reinforce the competitiveness of weaker eurozone countries and control members’ public finances owing to the European Union’s “limited firepower.”
The document was published as lawmakers from Chancellor Angela Merkel’s ruling coalition sent her a clear message ahead of negotiations on a permanent EU rescue plan to take place in Brussels.
The German deputies said the future European Stability Mechanism should not be allowed to buy eurozone government debt, as the European Commission and European Central Bank would like.
Those 189 academics simply want the ECB to admit that the debt owed by Greece, Ireland, Spain, Portugal, cannot possibly be paid back. What cannot be paid back, won’t, and pretending that it will just makes problems worse. It is refreshing to see a large group of academics on the right side of an economic issue.
Axel Weber, once heir apparent to ECB presidency to replace Jean-Claude Trichet, resigned as president of the German central bank over the issue of the ECB buying sovereign debt. He did not want the ECB to buy debt, most of the rest of the ECB did.
Academics in Germany are disregarded even though they make economic sense. Keynesian and Monetarist academics in the US make no sense but are revered.
Written by aurick
27/02/2011 at 5:04 pm
from The Economic Collapse
Originally posted February 25th, 2011
Today budget cutters are on the rampage from coast to coast and often one of their first targets is public school teachers. What we have witnessed recently in Wisconsin is just one example of this. The truth is that you do not want to become a teacher if you want to have financial security in America today.
TEACHER SALARIES ARE BEING SLASHED FROM SEA TO SHINING SEA. But to a certain extent the teachers that are having their wages cut are the fortunate ones. There are thousands upon thousands of teachers that have already been laid off, and there are tens of thousands more that are about to be laid off. It is absolutely brutal out there right now. So if you are thinking about becoming a teacher you might want to think twice. Not that there are a whole lot of other jobs that are more secure right now. The truth is that there is no such thing as a “safe job” in America today.
It is very unfortunate that what is going on right now is going to scare so many young people away from becoming a teacher because the next generation could definitely use some quality teachers.
But the truth is that it is getting really hard to honestly recommend that anyone become a teacher at this point. Just consider some of the following news stories that we have seen around the nation recently…
#1 In Providence, Rhode Island the school district plans to send out dismissal notices to every single one of its 1,926 teachers.
#2 Michigan has just approved a plan to shut down nearly half of the public schools in Detroit. Under the plan, 70 schools will be closed and 72 will continue operating.
#3 In New Jersey, Governor Chris Christie has laid off thousands of teachers and he cut a billion dollars from the state education budget.
#4 Bills in Wisconsin, Ohio, Tennessee, Indiana and Idaho would either significantly alter or completely take away the collective bargaining rights of public school teachers.
#5 The eyes of the whole country are on Wisconsin right now. Teachers there are very alarmed about the $900 million in cuts to school funding over the next two years that are being proposed.
#6 Clay Robison, a spokesman for the Texas State Teachers Association, recently said that his organization is projecting that 100,000 school employees in the state of Texas could lose their jobs.
#7 The current plan is for more than 4,500 New York City school teachers to be laid off after this current school years ends. This will be the most significant teacher layoffs in New York since the 1970s.
#8 In Los Angeles, more than 5,000 teachers will be receiving preliminary layoff notices due to budget cuts.
#9 Nevada Governor Brian Sandoval is being deeply criticized for the teacher pay cuts that he is proposing.
#10 StudentsFirst.org is projecting that 161,000 teachers across the United States are in danger of losing their jobs this year alone.
So in light of the facts above, should we advise any of our young people to try to become a teacher?
Written by aurick
25/02/2011 at 8:36 pm
by Paul Mylchreest
Originally posted Feb 24, 2011
It’s getting serious, Gresham’s Law is kicking in and this isn’t any “run-of-the-mill” Gresham’s Law either – it’s “Gresham’s Law Squared”. Not only is there huge hoarding of gold and silver, but it is being compounded by the simultaneous transformation of the gold and silver markets themselves. Having been dominated by paper claims to bullion, all that matters now is ownership of the physical metal itself.
The price of gold and silver on your Bloomberg screen is actually a HYBRID price of physical bullion and a larger amount of “paper” bullion, e.g. unallocated gold and silver, exchange traded futures, OTC derivatives and some ETFs. The paper bullion price and the metal price are still the same, but this market structure (which had successfully channelled much of the demand away from physical metal) is now breaking down.
When the screen price accurately reflects the prices of physical gold and silver per se, they will need to be FAR higher than you see today. Right now, the frontline in the battle between “real” money and paper currency is in the silver market, but most remain blissfully unaware of the significance of what is taking place. The world’s financial system, as currently configured, is falling apart. The vast majority, including bankers and brokers (who should know better), don’t appreciate it – a sort of tragi-comedy really. The bubble this time is in the money, so nobody will be spared. Buying gold and silver is the fear AND greed trade!
So here we are, waiting for the “event” which triggers a loss of confidence across the system. Will it be a sovereign, a US state, a bank, QE3 or QE5, the oil price, Chinese fixed investment, a false flag event (a convenient distraction/excuse) or a revolution? When it happens, the speed at which capital will move in today’s over-liquefied world will take people’s breath away. Where will it go? This is the global end of normal (baby) so that, first and foremost, it will go into the strategic assets: gold/silver, energy, food/agriculture, rare earths, etc, (as well as the equities of the financially strongest economies).
Bernanke’s QE2 is nothing short of economic warfare, in the form of a wave of inflation, directed at the rest of the world and even his own population (at least anybody without a large stock market, commodities or precious metals portfolio). This inflation is not temporary, as per the false reassurances, it’s baked in. Here is Martin Armstrong recently talking about the US budget deficit:
Written by aurick
25/02/2011 at 11:35 am
Tagged with Bernanke, Budget Deficit, currency debasement, debt, economic collapse, economic crisis, economic warfare, Gold, Great Depression, Gresham’s Law, hyperinflation, Japan, Martin Armstrong, OTC, OTC derivatives, Precious Metals, QE2, Quantitative easing, Real Interest Rates, sovereign debt, unemployment, United Kingdom
by Giordano Bruno
Originally posted Feb 24, 2011
There are many different kinds of revolution; some more effective than others. Telling the difference between a successful revolution and a failed revolution can be tricky. Often, on the surface, they look exactly the same. The secret is to set aside what we would “like” to see, and be brutally honest about what was actually accomplished in the course of the dissenting action.
HAS POWER BEEN FULLY RESCINDED BY THE OFFENDING GOVERNMENT or regime to the people, or, to yet another corrupt bureaucracy with a slightly different face? Have the puppet strings of corporate globalists been severed from your country, or do they remain strong as ever? Has ANY corrupt official actually been punished for the crimes that led to the insurgency in the first place, or, did they fly off scot-free to their million dollar villas in Ecuador, drinking mojitos in wicker recliners and watching the disaster they created unfold on CNN? Who ultimately benefited from the event?
Today, the entire Middle East is on the verge of complete destabilization and possibly civil war. Tunisia, Egypt, Libya, Bahrain, Yemen, and other nations are experiencing a shockwave of unrest not seen since the 1970’s. Western media sources are calling it a “people’s revolt”, one which the Obama administration is heartily embracing like an old relative. But are we witnessing the democratization of the cradle of civilization, or something else entirely? How will we be affected by this tide of confusion?
Instead of falling into panic and fear over the growing chaos, what can discerning Americans learn from a social implosion on the other side of the world that will help us to survive a similar occurrence here? Let’s examine some of the distinct moments that have characterized the Middle East debacle, the underlying and corrupt influences that surround them, as well as certain historical facts of the region that globalist engineers would rather we forget…
Molding The Arab World
Are globalist interests involved in the breakdown of the Middle East? Most certainly. However, this much widespread resentment and pent-up collective rage is not something that can be easily fabricated. It is far more likely that anger over the feudal governing tactics of dictators in the Arab world (many of which were installed or supported by U.S. and European interests) is very real, and has been building for quite some time. So then, why are Western governments applauding the overthrow of despots they themselves placed in power?
The Mubarak regime was the second largest recipient of U.S. financial and military aid in the world. One third of ALL publicly reported U.S. foreign aid goes to Egypt and Israel. (1) Without this vast military aid from the U.S., Mubarak would not have been able to maintain his 30 year reign. This is a cold hard fact. So then, why go against a leader you already have firmly in your grasp?
When the Shah of Iran (a violent madman we anointed) was overthrown by popular revolt in 1979, the U.S. government responded with vitriol and saber rattling. When Hosni Mubarak (a violent madman we anointed) was overthrown this past month, the U.S. government responded with cheers and warm regards. What was the difference between the revolution in Iran, and the revolutions all over the Middle East today? Insurance…
Like most puppet leaders and figureheads, Mubarak was an errand boy, a conduit for implementing globalist policies in Egypt. His relinquishment of power was in reality nothing of the kind, because the power was never his to give back. It is important to take note that Mubarak’s cabinet and most of the existing government and military structure remains firmly entrenched. (2)
Field Marshal Mohamed Hussein Tantawi, who leads the ruling military council and has been defense minister for about 20 years, took “temporary” control of Egypt after Mubarak ceded authority. Tantawi retains very strong ties to Washington D.C. and an unerring loyalty to Mubarak’s policies, which is perhaps why Barack Obama seemed so jubilant about Mubarak’s departure. In the recent and controversial Wikileaks release of private diplomatic cables, Tantawi is famously referred to as “Mubarak’s Poodle”. (3)
The key here is that globalist circles support the change in Egypt exactly because nothing will change for the citizenry. The Egyptian people will not gain true influence in the politics of their own country, and they may have even less influence over their own lives if a military infrastructure remains embedded within their government. Their entire rebellion was diluted and redirected, because they naively focused on Mubarak as the source of all their ills, instead of the corrupt system he was a mere front-man for.
What about Libya? Muammar Gaddafi, the crazy bag lady of third world dictators, was the darling of the UN in 2009 when he was nominated the head of the African Union. He was just as much a monster then as he is today, and as far as I know his human rights record has remained dismal, but then again, he was helping the globalists by paying the AU dues of numerous countries with Libyan oil money and luring them towards centralization. (4)
Apparently, Gaddafi has outlived his usefulness as international bodies now fully support the rebellion in Libya.
Written by aurick
24/02/2011 at 3:47 pm
Tagged with Bahrain, Barack Obama, Cairo, Central Banks, Crude, Crude Oil, Egypt, Enemy Belligerents Act, European Union, Federal Reserve, food price inflation, food riots, food shortages, Gaddafi, Gaza Strip, Global Economy, International Energy Agency, International Monetary Fund, Iran, Israel, Italy, King Farouk, Liberty Movement, Libya, Martial Law, Middle East, Middle East oil markets, Muammar Gaddafi, Mubarak, National Debt, Ohio, OPEC, PIMCO, Quantitative easing, recovery, Reserve Currency, Reuters, Saudi Arabia, Shah of Iran, Tunisia, Yemen
by Rick Ackerman
Originally posted February 23, 2011
THE NEWS MEDIA WENT ZERO-FOR-TWO yesterday trying to explain on the one hand why stocks fell, and on the other why oil prices rose. Stocks fell not because of fears over the spread of violence in the Middle East, as the pundits asserted, but because it was time for the Mother of All Bear Rallies, now almost two years old, to keel over and die.
As for the surge in oil prices, although it was blamed on turmoil in Libya, the country exports only a paltry 1.6 million barrels a day. Moreover, our good friends the Saudis promised to make up for any Libyan shortfall by increasing their own output.
Our guess is that oil prices are headed toward $100 a barrel, and then higher, because Saudi Arabian output itself is perceived to be less than absolutely secure. It’s hard to imagine that the anti-government protestors who have rocked the Arab world will not eventually descend on the House of Saud. If so, what would the monarchy do if peaceful demonstrators ask them to step aside? It would be difficult enough for King Abdullah to put down a violent revolt with superior violence. But to refuse the demands of placard-waving thousands, who eventually would grow into placard-waving hundreds of thousands?
That would pose quite a dilemma, since the country’s rulers could hardly tell the crowds to go home, get a good night’s sleep and see how they felt in the morning. If and when the demonstrators’ elected representatives wrest power from their desert princes, it seems unlikely that a nominally democratic Saudi Arabia would be so favorably disposed as King Abdullah on the matter of selling practically limitless quantities of oil to the benefit of Great Satan.
A Laughable Explanation
Concerning the stock market’s decline on Tuesday, the biggest drop of 2011, it is laughable to attribute this drop to fears of anything. For nearly two years, the stock market has acted like a rabid animal that feared nothing. Are we now to believe that the rise of protests across the Middle East has given investors pause?
Actually, it is not even investors who have been buying stocks, but machines programmed to buy from each other, senselessly driving the averages higher in what even the clueless twits who bring us the news each day have hesitated to call a virtuous cycle.
As such, we are strongly inclined to believe the weakness is purely technical – albeit potentially fatal, since the stock market has been in inflate-or-die mode all along. If stocks are indeed finally going down for the count, so is the Grand Folly of an economic recovery that happened only in the minds of a few dull-witted economists and in the talking points of various White House spokespersons, cabinet-level poo-bahs and, of course, the ‘Nank.