Europe Doesn’t Get It

by Peter Tchir
of TF Market Advisors
Posted December 7, 2011 

I STILL THINK THE MOST LIKELY SCENARIO IS THAT SOME AGREEMENT TO AGREE IS MADE AT THE SUMMIT, which is then followed up by increased printing from the ECB, coupled with new Fed policies and fresh IMF money.  Although that still seems the most likely, I am getting concerned that Europe is once again missing the point.

Many EU leaders seem to actually believe that the Treaty changes are important.  The reality is the market could care less about treaty changes.  The market cares about only one thing, that the ECB will announce new, bigger, more aggressive sovereign purchases.  That’s all the market cares about.  The market believes that the treaty changes provide an excuse for the ECB and IMF to ramp up their efforts.  The EU can do all the treaty changes it wants, but if it is not followed up with aggressive new printing policies, the markets will sell-off.

Not only are politicians acting as though the treaty changes mean much, there is even talk about being able to implement changes without national votes. That idea horrifies me on a personal level as it is yet again trashing any sense of democracy, but it is bad for the markets.  I have been assuming that the meeting will result in another agreement to agree. That is relatively easy to pull together. Since it doesn’t really mean much, any countries that aren’t really on board, can be cajoled into holding hands for the photo op and pretending they agree long enough for the ECB and IMF to throw more money at the problem.

Agreement is far less likely if real permanent changes are being implemented. It is one thing to agree to the plan on the condition that you have to go back and get approval. It is much more risky for someone to agree to permanent changes implemented using some backdoor legal technique. Talk of actually implementing policy action this week is actually a negative as it makes it less likely that they can announce a “successful” summit.

On a side note, my favorite part of the proposal is the fines for going over the approved limits. So countries that have the biggest deficits will be fined, adding to those deficits? Debtor’s prison never worked very well, so why this would accomplish much is beyond me and would likely be waived any time it could be used. But no one on Wall Street has bothered to read the treaty proposals because no one cares, all anyone cares about is that the ECB uses it as an excuse to print.

Yesterday’s FT rumor of ESM and EFSF working together was yet another reason to be afraid that Europe doesn’t get it. Not only would implementing both at the same time place the AAA rated countries at greater risk of downgrade, it ignores the fact that EFSF has been a total failure. I thought Europe had moved beyond floating yet another iteration of something that hasn’t worked. The fact that they haven’t is a potential indication that the printing presses aren’t going to be turned on as soon as the market would like.

Finally, there is more and more talk about what the national central banks can do. People are acting as though they were cleaning the living room, and found some money when they lifted up the cushions on the couch.  This is not “found” money. Participants and lenders are well aware of these reserves.  They can be used for example to fund loans to the IMF to lend back to some countries, though I don’t fully understand why they can’t just lend to the countries directly, but I assume there is some law that lending to the IMF lets them circumvent. But there will be a cost to these actions. There will be a consequence, and although it will later be viewed as “unintended” the consequences are actually foreseeable. The countries with large reserves at the national central bank level have a reduced cost of funds because of those reserves. Lenders are not always totally stupid. There is value that is being realized from having those reserves. Using them to create loans for the IMF will impact that country’s ability to borrow. Plain and simple.

The fact that many pundits are treating this as newfound money that can be used any which way, without consequences is absurd and is yet another example of why so many ideas have failed. Any plan that raids the national central banks for money for the PIIGS needs to be thought through more carefully and the potential costs need to be addressed. The cost/benefit analysis may be worth the risk, but I suspect serious analysis would show that it is a bad idea. The cost/benefit should be about zero since it is just shifting money from one place to another. There really is no obvious reason to believe that this is a net positive. In the real world it is likely negative because as we have seen time and again, these changes break the existing model and that causes confusion which more than offsets any potential benefit (not triggering CDS is a shining example).

So while we limp along towards the most likely outcome, the risk of disappointment or even outright failure continues to grow. The inability to hold yesterday’s rumor rally is a signal that the market has moved well past the short squeeze phase and is now trading long.

All the world’s a stage

by Peter Tchir
of TF Market Advisors, 
Posted December 5, 2011

I CAN’T HELP BUT FEEL THAT WE ARE WATCHING A PERFORMANCE THIS WEEK. It feels like the actions, the meetings, and the statements are all very scripted. It seems reasonably clear which ending they are going for, but many of their actions also fit the “alternative” ending so it remains imperative to be cautious.

Roles for “bit” players have been cut

Last week, for the first time, the EU seemed to be able to muzzle the minor players and even limit the lines of the big players. The Finance minister summit was a failure. Nothing useful came out of it. EFSF was a total flop. The bank backstop plans are at a national level and revolve around the idea of getting banks to borrow even more in the short term and not extend their maturities.

In spite of the obvious failure, there were relatively few comments. Rather than getting headlines of disputes, or even headlines of bigger and better ways to leverage, they seemed to let it die a relatively calm death and move on. This was a chance for every finance minister to get their quotations in the news, but they seemed reasonably constrained. There were far fewer comments about the ECB or even from ECB members. To me, it seems that the big players (Merkozy and Draghi) have taken control of the play and are trying to get it to the ending they want.

The “Script”

Germany took great pains last week to distance themselves from ECB decisions. The speeches made it clear that the ECB should be “independent”.  This has been taken as a sign that Germany is relenting on letting the ECB print. By affirming the ECB’s independence, Germany can, in theory, explain that it wasn’t responsible for the printing. There is also a chance that this is a way to take the blame off of Germany if the ECB decides not to print.  That seems less likely, but not everyone, especially at the ECB, believes printing is a solution, so this could be a way for them to take the focus off of Germany’s “nein”.

According to the script, Merkel and Sarkozy will become the Merkozy again tonight so that they can ride into this week’s summit with a “renewed joint focus”, blah, blah, blah. There is no way that they don’t act as though they have some agreement (even if they don’t). We won’t know what is discussed, we won’t know how much time is spent working out plans for a summit failure, all we will get is another handholding moment meant to encourage the market. I suspect that more time “off screen” will be spent discussing preparations for a failed summit, but all we will see is smiling confident faces.

At this point, I will give the politicians some credit. For the first time in months they seem to be writing the script. They aren’t just taking whatever script Wall Street hands them, and trying to act that out. The Wall Street scripts haven’t worked and have been unbelievable. The  politicians are finally taking control and trying to develop their own plan, and selling Wall Street on how viable it is. Since they are politicians, they are actually trained at figuring out what can get done and selling it to the people.  It probably won’t work, but at least they are doing what they are good at, and it would be hard to do worse than listening to another round of self-serving Wall Street advice.  On a refreshing note, at least we have agreement on something, Wall Street and politicians now both think the other group doesn’t understand anything and has no sense of timing.

The “puppets” are pushing through austerity in Italy and Greece. They can be held up as shining examples to other countries of what needs to be done. They aren’t the heroes of the story, but are there so that the Merkozy can point them out and show that i) it can be done, and ii) when it is done, the EU and IMF will come through with additional funds.  The “it” they got done won’t be well defined (but this is a movie, not the real world anyways) but the reward those good countries receive will be highlighted.

So the meeting will have Merkozy telling the smaller and problematic countries what a great future lies ahead for the eurozone. They will talk about the sacrifices they are making to ensure the viability of the future. There will be no criticism of the plan as only “friends and family” reports will get the inside scoop, and the “trailer” will be played over and over as part of the advertising campaign. We, the audience, will suspect that all the best parts of the play are in the “trailer” but we won’t be able to dig deep enough to argue against it.

The puppets will tell the other countries how happy they are that they have finally adopted austerity with growth to move forward and that they are excited about this opportunity to be part of the renewed commitment to the eurozone. Anyone who tries to figure out how austerity and growth work together, or where the money is coming, or any other details, will be escorted from room, and will be Clockwork Oranged into reading “fringe blogging websites” until they accept that details are bad, and only vague notions and slogans can “solve” anything.

At the end of the day, any holdouts will get invited to special meetings with the Merkozy. This is where they will be asked what they want to get in order to support the agreement, and reminded, that it is only an agreement in principle so they might as well say yes now, and they can always reject it later. These dark little meetings where the bribes are given and the futility of the agreement are discussed will only be available on the director’s cut, but will make people cringe when they realize what went on.

So in the end, according to script, everyone will get a chance for a joint communiqué and photo up where they talk about their commitment to implement these progressive changes. Every person who truly thinks about it for more than a minute, will know that it is a sham. They will see what has gone on, but it won’t matter. The “critics” will fall all over themselves to proclaim the success of the summit and that we are witnessing the birth of a new and better Euro. For a few days at least, the airwaves will be filled with the excitement that the “great leadership” exhibited by the Merkozy, and the diligence of the puppets, has led to such a monumental agreement. The future will be so bright, some might even “wear shades” when they discuss what has been accomplished.  Tears wouldn’t even shock me.

Then before anyone can complain that the positive reviews were bought, or that the script is flimsy, we will see the next wave of activity. This will be like a giant publicity machine, trying to turn a horrible movie into an Oscar winner through the sheer strength of publicity and graft.

The ECB will cut rates by 50 bps. The ECB will announce further participation in the secondary markets and hint at the ability and willingness to print money. The IMF will announce some new programs. The EFSF will start participating in the primary market. Even the Fed might hint at future QE (if not actually doing anything).

Then the leaders can sit back and hope their magic works.  Hope that their story has been bought and that the markets can take off and that they won’t actually have to implement much.  Yes, I think this is the key here.  They know that the treaty agreement changes are unlikely to be implemented.  They know the ECB has limits, that the IMF is going to struggle to do what people seem to believe they can do, they just hope that this is enough to give the markets so much confidence that they don’t have to do anything.  A market that can swing 6% on a 50 bp rate cut, might be manipulated into going so high that confidence is regained, long enough to buy time.

The “alternative ending”

So far, the directors have rejected the alternative ending. They don’t think that America in particular is ready for a non Hollywood ending, but they are filming some scenes just in case.  Fortunately many of the scenes are exactly the same as in the preferred ending. In the alternative ending, Merkozy and the puppets can’t convince everyone to go along with the communiqué. They can’t convince them that it is really meaningless so there is no point to disagree. Somehow the summit ends without the decision to move forward.

U.S. Corp and the impending IMF merger

by Robert Denner
of Daily Economic Update
Posted December 1, 2011

BEEN LOTS OF TALK AROUND LATELY REGARDING THE COLLAPSE OF THE U.S. DOLLAR AND WHAT THAT WOULD MEAN FOR THE UNITED STATES OF AMERICA AND THE WORLD. There has also been a lot of talk about the Federal Reserve Bank of the United States of America and how unhappy the people of the US are getting with this largely unknown organization.

These two forces are converging together in what could be a very serious and detrimental way as it relates to the average US citizen. This article will rely heavily on flawed analogies to help the lay person understand the inner workings of both the IMF and the Federal Reserve Bank. This is not to be taken as an academic piece and I would ask that it not be judged as such. This is meant to help those people that have recently woken up to the reality that their country has been hi-jacked and those that are desperate to get up to speed as quickly as possible. So let’s jump right into the thick of it shall we? First we need to start with what I hope are simple lessons so that you can take what I am about to teach you and apply it to the real world.

There is one thing that bankers and computer people love to do and that is to use big scary acronyms to scare off the simple folk. So here is your first lesson.

IMF and the SDR

So right off the bat we are using acronyms that mean absolutely NOTHING to the lay person and yet that is an actual sentence believe it or not… IMF stands for the International Monetary Fund. The SDR is short for Special Drawing Rights and is the currency of the IMF. The International Monetary Fund is a private bank that is used to help sovereign nations engage in international commerce. Just like if you owned a company and you used bank A, and your supplier used Bank B, the IMF would be the bank that both banks A and B used to transfer payments and credits back and forth to each other. To Company A and B (using Bank A and B) it would be seamless.

But the IMF does a whole lot more for the global economy. They are the creditor of last resort for a lot of countries. For if you want to engage in international commerce in the free world (meaning the world now) you must be a part of the IMF system. Should a country that is part of this system become over leveraged because of mismanagement and debt accumulation, the IMF stands ready to come to the rescue. To understand how this relationship has worked in the past (and the present); I MUST go into some history. I will keep it brief I promise.

To understand how the global monetary/commercial world works you have to go back to the end of World War II. Following the war the United States was alone as a major industrial power. The rest of the industrial countries were in shambles. The United States was also nearly alone as a producer of oil. It is this later point that needs to be highlighted.

The United States used its vast oil reserves and coupled it with a highly trained industrial labor force and put it to work in its vast expanse of industrial capacity to re-build the rest of the world. It is this fact that is at the very center of our current monetary system some 60 years later. So I will start with my first analogy…

The US Corp could be seen as a huge company like General Motors. Following WWII US Corp was the only company left with the capacity to make things and it had the working capital and energy to do what it wanted. US Corp went out into the world and started to acquire other businesses. First was Japan Corp which US Corp had beaten into a pulp during the war. US Corp decided that it was in its own best interest to build Japan Corp back up but it needed to make sure that it never again could threaten US Corp the way it did in WWII.  Japan Corp used its own currency called the YEN and US Corp obviously used the Dollar. So to make this all work, US Corp had to make sure that the workers at Japan Corp didn’t feel like the last of their country was being taken from them. To keep them vested in the viability of their own country it was very important to let them keep their own currency and their own political structure, albeit greatly modified under the surface. We allowed Japan Corp to keep their figurehead CEO (the Emperor) and we installed a new board of directors (Democratic institutions). We linked the Bank of Japan to US Corp’s bank the Federal Reserve Bank through a new institution called the International Monetary Fund and the World Bank.

If we were to compare this to General Motors this would be like GM buying another company and bringing it under the umbrella of the GM brand. So in this case Japan is like Pontiac and they are given free rein to run their subsidiary the way they see fit, SO LONG as they abide by the parent companies rules.

This setup worked wonderfully and within a decade Japan Corp was back on its feet and was supplying cheap labor and products for US Corp and with every single barrel of oil Japan Corp bought on the international market it further linked them with our monetary system.  To keep the Japanese citizens from feeling that it was the US Corp in charge of everything we came up with the International Monetary Fund and the World Bank. Of course these institutions were funded initially by the United States and Great Britain and as such they were just pseudo US institutions. But it worked and the Japanese subsidiary of US Corp gladly bought oil and products from the United States in its own currency (the Yen) but it was linked via the IMF to the US Dollar. For you see US Corp linked everything that the industrial world needed to the US Dollar. All gold/oil/silver/food/etc were priced first in US Dollars and depending upon the relative “strength” of your currency to the US Dollar, this would dictate how much of your currency it would take to purchase a barrel of oil or an ounce of gold. This gave US Corp a huge advantage in the world as we produced almost everything anyways. We had most of the world’s oil supply and a very large portion of the food supply. We were the largest producer of the big complex things the world needed to rebuild. We allowed the smaller subsidiaries to produce the little stuff we needed or wanted. Japan Corp was great at the later, supplying us with small radios and other cool electronic gadgets.

US Corp built a company with dozens and dozens of subsidiaries, each one of them bringing something to the table either large or small. And as the world re-built, other countries wanted to get in on the good times and they voluntarily sold themselves to US Corp. Other countries were very reluctant to join our big happy company. Those countries fell into two groups. Either they were affiliated with Russia Corp or they wanted to stay neutral. But in a world that was moving fast towards globalization it became apparent that each country would have to choose a side lest they be shut out of the global market. For remember that the only way to gain access to US Corp’s vast array of markets and supplies is to be a part of the IMF/World Bank. It was the only way to convert your currency to other currencies (like the US Dollar to buy OIL!!).

I will end this history lesson there as I could get sucked in for hours explaining how US Corp and Russia Corp went to economic(and sometimes real) war with each other and how Russia Corp tried to have it both ways by linking themselves partially to the IMF to gain access to US Corps vast supplies and labor.

I will leave that to YOU to go out and study on your own as it is a story to rival any fictional book you have ever read. The important thing to take away here is that the International Monetary Fund and the World Bank are institutions that were created by the United States and Great Britain. It is a global system that allows countries using different currencies to exchange their goods and services with each other almost seamlessly. Remember also that the system was setup INITIALLY to allow US Corp to control the world’s most important supplies. Things like FOOD, OIL, COMMODITIES (gold,silver,etc) and the rest. At the time this system was created it was the United States that was supplying the lion’s share of these items. But as the decades have come and gone, these items have increasingly come from other parts of the world.  And a good portion of these countries are ones that were FORCED into our system either out of necessity or by direct manipulation of their country by forces outside their borders(meaning the US and the IMF).

CONFESSIONS OF AN ECONOMIC HITMAN

This next part of our story is centered on how the US has maintained its spot at the top of the economic order even in the face of massive budget deficits and seemingly unending debt loads. The title of this section is called Confessions of an Economic Hit Man, as I give a nod to a book of the same name written by a man named John Perkins. Mr. Perkins is a trained economists and his specialty was international finance. His job was to go out into the world and sell foreign leaders on US Corp and to convince them to get on board with our system. Or more importantly, it was his job to make sure that they were forever caught up in our system and that they did not attempt to leave our company.

As the world crumbles: The ECB spins, the Fed smirks, and US banks pillage

by Nomi Prins
Posted November 21, 2011

OFTEN, WHEN I TROLL AROUND WEBSITES OF ENTITIES LIKE THE ECB AND IMF, I UNCOVER LITTLE OF STARTLING NOTE. They design it that way. Plus, the pace at which the global financial system can leverage bets, eviscerate capital, and cry for bank bailouts financed through austerity measures far exceeds the reporting timeliness of these bodies.

That’s why, on the center of the ECB’s homepage, there’s a series of last week’s rates – and this relic – an interactive Inflation Game (I kid you not)  where in 22 different languages you can play the game of what happens when inflation goes up and down. If you’re feeling more adventurous, there’s also a game called Economia, where you can make up unemployment rates, growth rates and interest rates and see what happens.

What you can’t do is see what happens if you bet trillions of dollars against various countries to see how much you can break them, before the ECB, IMF, or Fed (yes, it’ll happen) swoops in to provide “emergency” loans in return for cuts to pension funds, social programs, and national ownership of public assets. You also can’t input real world scenarios, where monetary policy doesn’t mean a thing in the face of  tidal waves of derivatives’ flow. You can’t gauge say, what happens if Goldman Sachs bets $20 billion in leveraged credit default swaps against Greece, and offsets them (partially) with JPM Chase which bets $20 billion, and offsets that with Bank of America, and then MF Global (oops) and then…..you see where I’m going with this.

We’re doomed if even their board games don’t come close to mimicking the real situation in Europe, or in the US, yet they supply funds to banks torpedoing local populations with impunity. These central entities also don’t bother to examine (or notice) the intermingled effect of leveraged derivatives and debt transactions per country; which is why no amount of funding from the ECB, or any other body, will be able to stay ahead of the hot money racing in and out of various countries.  It’s not about inflation – it’s about the speed, leverage, and daring of capital flow, that has its own power to select winners and losers. It’s not the ‘inherent’ weakness of national economies that a few years ago were doing fine, that’s hurting the euro. It’s the external bets on their success, failure, or economic capitulation running the show. Similarly, the US economy was doing much better before banks starting leveraging the hell out of our subprime market through a series of toxic, fraudulent, assets.

Elsewhere in my trolling, I came across a gem of a working paper on the IMF website, written by Ashoka Mody and Damiano Sandri,  entitled ‘The Eurozone Crisis; How Banks and Sovereigns Came to be Joined at the Hip” (The paper does not ‘necessarily represent the views of the IMF or IMF policy’. )

The paper is full of mathematical formulas and statistical jargon, which may be why the media didn’t pick up on it, but hey, I got a couple of degrees in Mathematics and Statistics, so I went all out.  And it’s fascinating stuff.

Basically, it shows that between the advent of the euro in 1999, and 2007, spreads between the bonds of peripheral countries and core ones in Europe were pretty stable. In other words, the risk of any country defaulting on its debt was fairly equal, and small. But after the 2007 US subprime asset crisis, and more specifically, the advent of  Federal Reserve / Treasury Department construed bailout-economics, all hell broke loose – international capital went AWOL daring default scenarios, targeting them for future bailouts, and when money leaves a country faster than it entered, the country tends to falter economically. The cycle is set.

The US subprime crisis wasn’t so much about people defaulting on loans, but the mega-magnified effects of those defaults on a $14 trillion asset pyramid created by the banks. (Those assets were subsequently sold, and used as collateral for other borrowing and esoteric derivatives combinations, to create a global $140 trillion debt binge.) As I detail in It Takes Pillage, the biggest US banks manufactured more than 75% of those $14 trillion of assets. A significant portion was sold in Europe – to local banks, municipalities, and pension funds – as lovely AAA morsels against which more debt, or leverage, could be incurred. And even thought the assets died, the debts remained.

The world is drowning in debt, and Europe laces on concrete boots

by Charles Hugh Smith
from Of Two Minds
Posted November 14, 2011 

Three metaphors describe Europe: drowning in debt, circular firing squad and trying to fool the money gods with an inept game of 3-card monte.

The world’s major economies are drowning in debt – Europe, the U.S., Japan, China. We all know the U.S. has tried to save its drowning economy by bailing out the parasite which is dragging it to Davy Jones Locker–the banking/financial sector– and by borrowing and squandering $6 trillion in new Federal debt and buying toxic debt with $2 trillion whisked into existence on the Federal Reserve’s balance sheet.

It has failed, of course, and the economy is once again slipping beneath the waves while Ben Bernanke and the politico lackeys join in a Keynesian-monetary cargo-cult chant: Humba-humba, bunga-bunga. Their hubris doesn’t allow them to confess their magic has failed, and rather than let their power be wrenched away, they will let the flailing U.S. economy drown.

Europe has managed to top this hubris-drenched cargo-cult policy – no mean feat. First, it has indebted itself to a breathtaking degree, on every level: sovereign, corporate and private:

Germany, the mighty engine which is supposed to pull the $16 trillion drowning European economy out of the water, is as indebted as the flailing U.S. Second, the euro’s handlers have already sunk staggering sums into hopelessly insolvent debtor nations, for example, Greece, which has 355 billion euros of outstanding sovereign debt and an economy with a GDP around 200 billion euros (though it’s contracting so rapidly nobody can even guess the actual size). According to BusinessWeek, the E.U. (European Union), the ECB (European Central Bank) and the IMF (International Monetary Fund) own about $127 billion of this debt.

Since the ECB is not allowed to “print money,” the amount of cash available to buy depreciating bonds is limited. The handlers now own over 35% of the official debt (recall that doesn’t include corporate or private debt), which they grandly refuse to accept is now worth less than the purchase price. (The market price of Greek bonds has cratered by 42% just since July. Isn’t hubris a wonderful foundation for policy?)

In other words, they have not just put on concrete boots, they’ve laced them up and tied a big knot. We cannot possibly drown, they proclaim; we are too big, too heavy, too powerful. We refuse to accept that all these trillions of euros in debt are now worth a pittance of their face value.

When you’re drowning in debt, the only solution is to write off the debt and drain the pool. The problem is, of course, that all this impaired debt is somebody else’s asset, and that somebody is either rich and powerful or politically powerful, for example, a union pension fund.

Third, the euro’s handlers have set up a circular firing squad. Since the entire banking sector is insolvent, the handlers are demanding that banks raise capital. Since only the ECB is insane enough to put good money after bad, the banks cannot raise capital on the private market, so their only way to raise cash is to sell assets–such as rapidly depreciating sovereign-debt bonds.

This pushes the price of those bonds even lower, as supply (sellers) completely overwhelm demand from buyers (the unflinching ECB and its proxies).

This decline in bond prices further lowers the value of the banks’ assets, which means they need to raise more capital, which means they have to sell even more bonds.

Voila, a circular firing squad, where the “bulletproof” ECB is left as the only buyer who will hold depreciating bonds longer than a few hours, and all the participants gain by selling bonds before they fall any further. This is the classic positive feedback loop, where selling lowers the value of remaining assets and that drives further selling.

EU’s unraveling destroys the meme of Democracy

from The Daily Bell
Posted November 07, 2011

Greeks await name of new coalition government PM … Greeks are keen to return to some stability after months of turmoil … Greek leaders are due to agree the name of a new prime minister to lead a unity government until fresh polls are held. The deal came after Prime Minister George Papandreou agreed to stand down. It followed days of upheaval caused by his decision – now revoked – to hold a referendum on the EU bailout plan to tackle Greece’s debt crisis. – BBC

Dominant Social Theme:
Greeks cannot wait for their new “unity” government.

Free-Market Analysis:
Parliamentary democracy is farce. That is one of many benefits provided to us by the unraveling of the EU. The Greeks – most Greeks, anyway – seem to want to leave the EU. They don’t want to be rescued. They want to be left alone.

The elites who have created the promotional elements of regulatory democracy and parliaments did so with the idea that that this meme would be an effective replacement for the Divinity of Kings meme. Both are equally inadequate in our view. God did not choose Kings – not any more than people nowadays choose their democratic leaders.

Nowhere is this more evident now than in the EU where countries regularly are denied the opportunity to vote on anything of consequence. Not that we think voting is such a big deal, but it seems to us better than the alternative, which is simply having a political ideology imposed upon you.

The Greeks therefore will know what they believe in, in aggregate. The Greeks, like the British, are to be denied the opportunity to vote on their “participation” in the EU. The Greeks are to have their democracy, but only as it affects unimportant matters.

The mask has slipped a little. We see the iron fist beneath the velvet glove. The entire mechanism of elite control is on display in Greece. We’ve watched it unfold, as you have, dear reader. The mechanism is NOT being driven by an ideology or vision of a unified Europe. It’s being driven by a merciless power elite that wants to keep Europe together as a region in order to use it and other regions to build world government.

Why do they need Europe to retain its unitary composition? Why not let it split back up? Because this would shatter the larger narrative of directed history. You see, for at least a century and perhaps a lot longer, the world has been in the grip of a PROMOTION.

In this promotion, almost every aspect of world history including wars, revolutions, technological advances and even money itself are manipulated to TELL A STORY. The story that is being told is one of the inevitability of world government.

This is why we emphasize that the elite uses dominant social themes, fear-based sub-promotions existing within the larger promotion to control the narrative leading to a one-world order. The elite cannot simply decree it. They need to work within the boundaries of what is justifiable.

This is important because the elites need to look toward the future. They cannot simply “make it up.” They need to work within rough guidelines. In the future the story will be told that forward-looking leaders created the European Union and then found it worked so well that they created a Union of the World.

For this reason, among others, they don’t want the Union to collapse. For this reason, among others, we have indicated that a collapse of the Union in our view will indicate the efficacy of the Internet Reformation which is now continually collapsing elite memes. It is a big problem. For them.

And so they muddle along. It is analogous to the Emperor With No Clothes. He, too, finally realized that he was naked for all the world to see. But he marched on, nonetheless. He kept up the pretense.

The elites, too, find it necessary to keep up the pretense for as long as possible. The promotional mechanism has been exposed. The buy-in that the elites desperately need has been shattered. And yet they continue. The rote rehearsal of an illegitimate program is more important than its credibility.

The intelligentsia has fallen away, and this too is a problem. Without an intelligentsia willingly proselytizing directed history, its imposition becomes more difficult to maintain and mold. This is one of the reasons the elites spent so much time and effort cultivating 20th century thought magazines like the Economist, the New Yorker and the New York Review of Books.

These were relatively tiny publications, but they reached the “thinking people” – the larger group that was ideologically fluent though uninvolved directly with the one-world conspiracy or its money mafia. It was this larger group of concept-adept people that the power elite especially wanted to manipulate.

And manipulate them they did, with savagery and savage joy. In the mid-20th century, it had to be seen to be believed. You likely couldn’t find a major American or European city that didn’t have its cadre of youthful intellectuals sitting around in cafes, smoking cigarettes, drinking coffee and debating the “isms” – communism, socialism and fascism.

If you had suggested to these youngsters that all of these concepts were merely the construct of a tiny band of impossibly wealthy families and their enablers and associates, you would have been shunned as a nutcase. The disconnect would have been impossibly vital! Mere words would not have sufficed. Such a conspiratorial concept could not have been entertained, even. And was not.

Why? Because of the efficacy of DIRECTED HISTORY. It was that good. It was that persuasive – and pervasive. And that is the system that the elite continues to employ today – even though people see through it and it’s lost a good deal of its credibility with the ‘Net intelligentsia, which is the only intelligentsia, these days, worth considering.

The article excerpt above from a BBC report states that the Greeks are eager to “return to stability.” What a lie this is. Greeks are eager to return to a life, from what we can see, where they will not be hounded by the EU and its domestic, parliamentary harriers. Greeks, from what we understand, don’t want EU bailouts. They want to leave the EU.

The possibility of Greece leaving the euro has been raised by EU leaders, the article tells us. We highly doubt that these “leaders” want that to occur. They’ve got their claws into Greece. Grecian sovereignty is already basically abrogated. Greece as a nation does not really exist anymore, though Greece as a culture shall perpetuate itself.

Greece and Greek culture has given so much to the world. The greatest gift may be the spectacle once again of elite manipulation and the evident and obvious ruse that is parliamentary democracy. Once the elites get through with Greece it will likely be impossible to maintain that this sort of system has any legitimacy.

Conclusion:
No doubt the power elite is fomenting another meme to take its place. We’ve described it, in fact. But in this era of the Internet Reformation it is unlikely to be nearly as efficacious as the last one.

What recovery? Undemocratic and corrupt, the EU faces dis-Union

from The Daily Bell
Posted August 31, 2011

Double-dip fears across the West as confidence crumbles … The Western world is at mounting risk of a double-dip recession after key measures of confidence collapsed in both the United States and Europe, with Germany the steepest one-month fall since records began in the 1970s. The IMF has slashed its growth forecast for America and Europe, according to a leaked draft of its World Economic Outlook. – UK Telegraph

Dominant Social Theme:
Everything has been going very well, and employment and profits are picking up. So let’s not spoil a good thing, eh?

Free-Market Analysis:
This article in the UK Telegraph takes a dim view of the “recovery” that the West is supposed to be enjoying. In fact, it cites a good deal of evidence to show the West’s economic situation is about to get even worse. In doing so it all but predicts the EU itself – or at least the euro – may be only weeks away from fracturing.

This is good, of course, though perhaps (unfortunately) over-optimistic. The EU is nothing but a fascist enterprise that should be broken up as soon as possible. Astonishingly, the appendages of the EU have not been audited for years because the auditing firms will not take responsibility for an institution of such corruption.

There is an inner circle in the EU that is answerable to no one expect perhaps the great banking families of Europe and America that have created this monstrosity. It is from this tiny circle of “leaders” – all of them either coming from communist or socialist backgrounds – that EU policy is created.

The result is a mishmash of oppressive regulations and overweening ambition. The EU leaders have had ambitions to build an army and to create a fuller union of EU states that will mimic the worst federal excesses of the United States.

What is even worse is that all of this was planned long ago; even as EU member states and their populations were being assured that the EU was nothing but a large trading facility, its top executives were plotting and planning a 400 million strong, federal union. One hears echoes of that today, as academics and politicos alike call for a closer EU to counteract the implausibility of the euro’s current condition.

In fact, these days the euro itself is not a currency mechanism so much as a kind of metaphorical manacle that increasingly is keeping Europe’s Southern flank – miserable and bleeding – tied to the richer North. The result: higher taxes, resource fire-sales and the slashing of public services and retirement benefits.

Of course, we’ve long predicted that the EU, or at least the euro, is in significant trouble. This is based on the idea, generally, that there is no “recovery” – not in America and not in Europe. In fact, Europe’s Southern PIGS are bankrupt; meanwhile, the US’s unemployment refuses to go down and may even be headed up.

What’s left? The world’s economy basically hangs on the thread of China and as we’ve tried to point out in numerous articles, that’s a thin support indeed. China’s social unrest is actually quite staggering at this point, though under-reported. Its much discussed (finally) empty cities, skyscrapers and malls are symptomatic not of central planning so much as communist party desperation.

The ChiComs will do anything to meet their self-imposed growth targets. But the result has been the biggest building and buying binge the world has ever seen. It has to end sometime, and it is very possible that it will put an end to the Chinese government itself. Without China, the world will reel round like a drunk looking for a handhold.

Without support, the global economy will fail. India, Brazil and Russia shall not provide salvation. Germany will not salvage the EU, for without anyone to buy its products, Germany will participate in the upcoming worldwide “recession.”

But the UK Telegraph article tells us to expect grim times – really grim ones – even without China’s participation. In the US, we learn, the US Conference Board’s index of consumer sentiment “plunged to the lowest level since the depths of the slump in 2009, falling to 44.5 from 59.2 in July.”

Meanwhile, Christine Lagarde, new chief of the International Monetary Fund, put her wrong foot first, irritating the Germans and then the French by discussing a global crisis is entering “a new phase.” This was not welcome news to the leaders of either country, and the Germans especially do not want to be pressured into supporting a weaker euro, no matter how concerned Ms. Lagarde is.

Lagarde is actually reacting to her own research. We learn from the Telegraph that the IMF has slashed its growth forecast for America and Europe, according to a leaked draft of its World Economic Outlook. Lagarde and the IMF want American and European central banks to print more money, even though it doesn’t seem to be working. The Germans know it; the IMF does not seem to.

The Germans apparently understand that nothing can be done, at least when it comes to Spain, Portugal, Greece and Ireland. Lagarde’s IMF disagrees. Jose Vinals, the IMF’s head of capital markets, “rebuked Europe’s leaders for failing to beef up bank defences and allowing the debt crisis to fester.”

Vinals received support from Charles Dumas of Lombard Street Research, who said a further “recession” in the West is inevitable because of fiscal deflation. What should have happened? The ECB should have loosened considerably this summer; Jean-Claude Trichet, Europe’s central banker has got it all wrong, and has been behind the curve besides.

Yet can Trichet really be blamed? He’s feeling considerable heat from the Germans who have claimed that the ECB has engaged in “legally questionable” purchases of Spanish and Italian bonds. The Germans apparently feel they are losing control of the ECB, even though it is German money that drives the EU and the euro.

The rhetoric is building in Germany. The Telegraph notes that Hans-Olaf Henkel, former head of Germany’s industry federation (BDI), wrote in the Financial Times that his support for the euro had been “the biggest professional mistake I have ever made.” What’s the solution? A so-called ‘Plan C’ under which Germany, The Netherlands, Austria and Finland make their own currency, leaving the South to struggle on without the straightjacket of a German euro.

Stephen Jen from SLJ Macro Partners believes that the EU’s debt-ridden Southern flank may act first, as politicians revise their views on the PIGS’ unpopular austerity and propose radical solutions featuring disunion either of the EU itself or of the currency. “I think this will happen in weeks rather than months,” the Telegraph quotes him as saying.

We are not holding our collective breath. (Just today there are reports that Merkel DOES have enough votes to push through yet another EU bailout package in Germany.) But it does occur to us that the combination of an intractable sovereign debt crisis, an oncoming German recession and a court case intended to decide whether Germany’s current government is acting unconstitutionally may be enough – eventually – to crack open the union.

We have never predicted in the past what may happen to the EU, at least not in the short term. In fact. this deeply dishonest political system was meant to grow by crisis. Its top men assumed that there would come a time when the euro would not function properly. One can even make a case that the European banks were encouraged to acquire sovereign debt in order to precipitate the current crisis.

But something happened on the way to a closer union. We believe the Internet Reformation has thoroughly exposed the plans of those at the top in a way that was not anticipated. It is one thing to manipulate people who do not understand what’s occurring. It is another to move ahead with a slippery program that people understand is not in their best interests.

The EU, if it fails, becomes merely one more dysfunctional meme. It takes its place in an increasingly long line that includes the foundering war in Afghanistan, the rising tide of disbelief over the war on terror, the obloquy that global warming now attracts, the derision to which central bankers are increasingly subject, etc.

The 21st century is nothing like the 20th. The great banking families are losing control of communications and increasingly cannot configure their messaging. Mainstream media is struggling to survive. The vast fear-based promotions rolled out by Tavistock Institute are not working so well these days. The directed history that seems to have run the world for nearly 200 years is becoming undone. This world lives in interesting times. Such lack of elite control was seen last some 500 years ago during the era of the Gutenberg Press, which led to the Protestant Reformation and a wholesale shift in the way populations were controlled.

It may be that the powers-that-be have already anticipated the break-up of the EU or at least the degradation of the euro. Perhaps such an occurrence will be used to bring pressure on world leaders to create a truly global currency. But even so, this must be seen as a secondary strategy more than an original plan.

Conclusion:
Definitively, the great families and their enablers did not wish for the EU to fail, so far as one can tell. Its dissolution, were it to occur, will be no victory for them. In fact, it would be a most important and startling defeat, one that might have an extremely negative effect – not just on European unity but also on regulatory democracy and even on the central banking system. It might even signal the beginning of the end of the modern conspiracy to rule the world.

Federal Reserve policy mixed with extreme weather has put the world on a fast track to revolution and war

by David DeGraw
of AmpedStatus
Posted August 25, 2011

THERE ARE MANY FACTORS THAT CLEARLY DEMONSTRATE WHY IT WOULD BE DISASTROUS for the Federal Reserve to repeat their vicious Quantitative Easing (QE) policy. If you want to know a significant reason why they cannot get away with another round of QE, here is an equation for you:

(Quantitative Easing + Extreme Weather = Revolution + World War III)

From the very beginning we knew that the Federal Reserve’s QE program was going to cause the cost of food to rise and the dollar to decline in value, and that these intended results would lead to an increase in poverty and civil unrest.

Are food prices approaching a violent tipping point?

A provocative new study suggests the timing of the Arab uprisings is linked to global food price spikes, and that prices will soon permanently be above the level which sparks conflicts. There is a specific food price level above which riots and unrest become far more likely. That figure is 210 on the UN FAO’s price index: the index is currently at 234, due to the most recent spike in prices which started in the middle of 2010 [coinciding with QE2].

Lastly, the researchers argue that current underlying food price trends – excluding the spikes – mean the index will be permanently over the 210 threshold within a year or two. The paper concludes: “The current [food price] problem transcends the specific national political crises to represent a global concern about vulnerable populations and social order.” Big trouble, in other words. The next part of the study identifies that the serious unrest in North Africa and the Middle East also correlates very closely with [the QE2] food price spike. Bar-Yam also notes: “Several of the initial riots in North Africa were identified in news stories as food riots.” From there, the researchers make their prediction of permanently passing the 210 threshold in 12-24 months.

In other words, if the Fed engages in another round of QE, the global unrest that they have already ignited will go hyperbolic. Before getting into the details on how the Fed deliberately made these food prices spike, let’s look at another new study, which also helps demonstrate the obvious, extreme weather is linked to war:

Climate cycles linked to civil war, analysis shows

Changes in the global climate that cut food production triggered one-fifth of civil conflicts between 1950 and 2004. Cyclical climatic changes double the risk of civil wars, with analysis showing that 50 of 250 conflicts between 1950 and 2004 were triggered by the El Niño cycle, according to scientists. El Niño brings hot and dry conditions to tropical nations and cuts food production, to outbreaks of violence in countries from southern Sudan to Indonesia and Peru.

Solomon Hsiang, who led the research at Columbia University, New York, said: “We can speculate that a long-ago Egyptian dynasty was overthrown during a drought. This study shows a systematic pattern of global climate affecting conflict right now. We are still dependent on climate to a very large extent.” Mark Cane, a member of the team, said global warming would have greater climatic impacts than El Niño, making it “hard to imagine” it would not provoke conflicts. [read full report]

Put all these factors together and you have, “The Road Through 2012: Revolution [and/or] World War III.”

In summation, Ben Bernanke and the Fed’s economic central planners were clearly aware of the hostile climate and weather patterns when they engaged in QE2. The Fed’s infamous policy, as I said before, “deliberately threw gasoline all over those brush fires. QE2 was another economic napalm bomb from the global banking cartel.” They knew that they were deliberately attacking (sacrificing) tens of millions of people, but that was secondary to keeping their global Ponzi scheme going by pumping another $2.1 trillion into their fraudulent, insolvent banking system through both QE programs. This is why Ben Bernanke is guilty of crimes against humanity. Now, let’s revisit what I’ve been reporting on for the past year:

Centrally Planned Economic Repression

The IMF has a well-worn strategy that they use to conquer national economies. As I warned four months ago, we have now progressed into Step 3.5: World Wide IMF Riots. Back in October, in a TV interview with Max Keiser, we discussed leaked World Bank documents that revealed the IMF’s strategy. I stated the following:

“They have a four-step strategy for destroying national economies. We are about to enter what they would call Step Three. Step Three is when you’ve looted the economy and now food and basic necessities all of a sudden become more expensive, harder to get to. And then, Step 3.5 is when you get the riots. We are headed to, as the IMF said, and as they plan, Step 3.5: IMF Riots. That’s what’s coming…”

Fast-forward four months to today, and now we see country after country rebelling against high food prices. Since our October interview, food prices have spiked 15%. According to new World Bank data, since June 2010, “Rising food have pushed about 44 million people into poverty in developing countries.”

As Federal Reserve Chairman Ben Bernanke announced another round of Quantitative Easing (QE2), those of us paying attention knew that the trigger had been pulled and Step Three had been executed. It was a declaration of economic war, an economic death sentence for tens of millions of people – deliberately devaluing the dollar and sparking inflation in commodities/basic necessities. It was a vicious policy that would impact people from Boston to Cairo.

When QE2 was announced, I warned: “Food and Gas Prices Will Skyrocket, The Federal Reserve Just Dropped An Economic Nuclear Bomb On Us.” I also wrote: “The Federal Reserve is deliberately devaluing the dollar to enrich a small group of a global bankers, which will cause significant harm to the people of the United States and severe ramifications throughout the world. The Federal Reserve’s actions are already causing the price of food and gas to increase and will cause hyperinflation on most basic necessities.”

To be clear, there are several significant factors contributing to rising food prices, such as extreme weather conditions, biofuel production and Wall Street speculation; but the Federal Reserve’s policies deliberately threw gasoline all over those brush fires. QE2 was another economic napalm bomb from the global banking cartel.

In a recent McClathy news article entitled, “Egypt’s unrest may have roots in food prices, US Fed policy”, Kevin Hall reports:

“‘The truth of the matter is that when the Federal Reserve moved on the quantitative easing, it did export inflation to a lot of these emerging markets. There’s no doubt that one of the side effects of the weak dollar and quantitative easing has been rising commodity prices. It helped create this bullish environment for commodities. This is a very delicate balancing act.’

It’s a view shared by Ed Yardeni, a veteran financial market analyst, who reached a similar conclusion in a research note to investors. He joked that Fed Chairman Ben Bernanke should be added to a list of revolutionaries, since his quantitative easing policy, unveiled last year in Wyoming, has provoked unrest and change in the developing world

‘Since he first indicated his support for such a revolutionary monetary change, the prices of corn, soybeans and wheat have risen 53 percent, 37 percent and 24.4 percent through Friday’s close,’ Yardeni noted. ‘The price of crude oil rose 19.8 percent over this period from $75.17 to $90.09 this (Monday) morning. Soaring food and fuel prices are compounding anger attributable to widespread unemployment in the countries currently experiencing riots.’”

The people throughout the Middle East and Northern Africa, on the fringe of the Neo-Liberal economic empire and most vulnerable to the Fed’s inflationary policies, are the first to rebel. The conclusion that we reach, the unfortunate reality of our current crisis: the Federal Reserve and global economic central planners have declared war on us. We are under attack. We must remove Ben Bernanke from power and hold him and the rest of the global banking cartel accountable. We must also break up the “too big to fail” banks. This a message I, along with many others who have analyzed our economic situation, have been repeating over and over for the past three years.

Hopefully, a critical mass of people will soon understand this reality and back it up with non-violent civil disobedience before riots and violence rip our society apart. For these reasons, let’s all go to Wall Street on September 17th and show these tyrants that we’ve had enough.

Central Bankers race toward global currency solution

from The Daily Bell
Posted Thursday, August 11, 2011

CENTRAL BANKERS ARE RACING to shield their economies from fiscal tightening and lopsided currency swings that threaten a new global recession. In the 72 hours after a Group of Seven conference call on Aug. 7, the Federal Reserve pledged to keep interest rates near zero through at least mid-2013, the European Central Bank intervened in bond markets and the Bank of England indicated it’s ready to add more stimulus if needed. Japan signaled renewed concern about the yen and Switzerland yesterday stepped up its fight to curb an “overvalued” franc. … While the actions aren’t as directly coordinated, the push is one of the broadest since the Fed, ECB and four other central banks cut interest rates together in October 2008 to limit fallout from Lehman Brothers Holdings Inc.‘s collapse. – Bloomberg

Dominant Social Theme:
The experts at the world’s central banks are on the job.

Free-Market Analysis:
This Bloomberg article is just another in a long line of disappointing mainstream financial reports that does nothing to address the real issues causing the crisis and, in fact, does everything to try to misinform the public into believing that the “experts” have all under control.

Well, we do not think more jaw-jaw is what people want to hear right now, or that the money magicians are capable of doing anything to stop the rapid erosion of public confidence. And based on the recent upward move in Honest Money, it is quite obvious the markets don’t want to hear it either.

Regardless of what Bloomberg wants people to believe, the world’s central banks are NOT independent banks led by teams of “experts” dedicated to establishing prudent national monetary policy. No, they are nothing of the sort and never were intended to be. They are simply a cartel-like crime syndicate that operates under the direction of the Swiss-based “super central bank,” the Bank for International Settlements. And the BIS is just one more tool in the arsenal of elite monetary control of the world.

The BIS sits like a great spider at the heart of the corrupt and ruinous central banking mechanism that the Anglo-American elite has successfully foisted upon the world. It coordinates the policies of these ruinous entities – not to any great effect – but to ensure that the Anglosphere maintains control of what it has built.

The Western elite’s banking scheme is a central part of how the Anglosphere has managed to dominate the world behind the scenes. Through central banking and the BIS, the Anglo elites have a stranglehold over economies worldwide. Even though most of the world was aligned against a presumed to be corrupt BIS after World War II, it somehow managed to escape dissolution. This is because it is a prime asset of the City of London, that mysterious one-square mile patch of real estate at the heart of London where the Bank of England itself is located.

However, today all of the elite’s poisonous machinations face an unprecedented decline in public confidence. And nowhere is the threat of total collapse more intense than on that most important elite edifice of all – the central banking system itself.

It is only the confidence of the public that enables the continuous printing of unrestrained fiat currencies – which combine to provide the base of an international Ponzi scheme. But something’s happening around the world that the money masters didn’t plan on. People are waking up.

But you wouldn’t know it by reading articles like this one, excerpted above. No, Bloomberg, a mainstream media outlet to be sure, would rather you believe that there are sweaty-browed experts working around the clock to fix the situation. So what magic tools do they have? What are the experts doing about this financial mess? Here’s more from the article:

Finance ministers and central bankers from the G-7 nations, which include the U.S., U.K. and Germany, said in a statement Aug. 7 that they will “take all necessary measures to support financial stability and growth in a spirit of close cooperation and confidence.” …

The next day, the Frankfurt-based ECB, which last week restarted its bond-purchase program after an 18-week hiatus, extended its focus to include debt of Italy and Spain, the region’s third- and fourth-largest economies.

The Fed’s decision Aug. 9 to hold its key interest rate at a record low through mid-2013 and signal it’s ready to use additional tools comes as U.S. politicians are tightening the nation’s fiscal belt and the economic stimulus enacted by President Barack Obama in 2009 comes to an end.

Bank of England Governor Mervyn King told reporters in London yesterday that headwinds buffeting the nation’s economy are intensifying “by the day” and officials can expand stimulus if the outlook for growth deteriorates further.

Bank of Japan Governor Masaaki Shirakawa said Aug. 9 that volatile exchange rates could have a “negative impact” on the economy, after the central bank last week added 10 trillion yen ($130 billion) of stimulus and the country unilaterally intervened in the currency market to weaken the yen.

Switzerland’s central bank said yesterday it will increase the supply of francs to fight the currency’s “massive overvaluation.”

That’s it? The central banksters have decided to do MORE OF THE SAME. They’re all going to work to make sure they “print-in sync” as much new money as “necessary” so that none of them face total collapse and threaten to take down the entire game? That’s the plan? And they will directly intervene in the market to create the illusion of demand/strength by buying the garbage debt from countries like Spain and Italy? This is the plan? Isn’t that called market manipulation?

Wow. Well, here’s a better plan. Stop the insanity! You cannot fix a dysfunctional monetary system that is built on a fraudulent premise by simply increasing the degree of the crime. The impossibly wealthy families who desire one-world governance will stop at nothing – including the use of force – to complete their centuries-long mission. But arrogantly, they will refuse to cease their devious efforts and instead will try to use these crises to bind the masses into accepting a fear-based international monetary solution. Out of chaos… order.

In fact, just the other day one of China’s faceless mouthpieces, the Xinhua News Agency, came out in an editorial to the world and stated, “International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.”

And then there is this statement from Fed Chair Ben Bernanke, “Policy makers must respond forcefully, creatively and decisively … crises that are international in scope require an international response.”

Can’t you just see the smile on Christine Lagarde’s face as she gleefully embraces her new position as Head of the International Monetary Fund? For surely there is an IMF logo engraved on the international boot readying itself to slam down on the faces of current and future generations. But hold on a minute… will the puppets/experts running the world’s central banks – and Money Power standing behind them – be able to pull off this global manipulation?

We’re not so sure they will. And we certainly don’t wish them luck.

All across the world, the modern Internet Reformation is beginning to reshape the way people relate to power in the modern age. While it is not as obvious as during the era of the Gutenberg Press, there is formal doctrine accepted by Western societies that is beginning to shatter. That formal doctrine may be termed regulatory democracy and it has been leavened with numerous assumptions that on closer inspection turn out not to be true. Like what money is and what it is not. And it is the Internet itself that allows for information to spread that undermines the various precepts of regulatory democracy.

It is this hierarchy that promulgates regulatory democracy and its various dominant social themes – the fear-based promotions that the Western power elite uses to control the conversation and to further centralize power and authority worldwide.

And one of those fear-based promotions that the masses have been bombarded with is the “expert” theme. The public is constantly being promoted into accepting a passive position with respect to how the financial world operates. They are meant to be overwhelmed with facts and complicated economic formulas so they feel helpless, confused and generally incapable of mastering their own financial destinies. After all, how could anyone understand such a complex subject as money?

Well, all around the world people are starting to understand that the system is rigged and money really isn’t complicated at all. The Internet Reformation reveals the cartel’s synchronized efforts to manipulate public confidence so they can continue their fraudulent and manipulative wealth redistribution game.

Conclusion:
The reality of the situation is this: there are no magic monetary tools that can fix the global monetary crises hidden in the basement of the Federal Reserve, the Bank of England, or any of the others. The fiat money instruments themselves – dollars, euros, yen, etc. – ARE THE PROBLEM.

And in this alternative media-led ‘Net era, the old men hiding behind the central banking curtains are starting to look rather pathetic. The illusion is fading and people are waking up. In fact, the European Union is failing, various serial wars of conquest are not going well, and the fear-based memes of the elite are continually being debunked by an Internet that adds more to humankind’s real knowledge base every day. It will take decades if not centuries to control the damage that has already been done (from an elite standpoint), and what has been done cannot be undone.

Will the international power elite lose their destructive ability to create money out of nothing and their control over legislative power that currently prohibits private money competition? Will the elite be forced to take a step back in the face of a massive public awakening? Or will an Orwellian-style society be forcibly foisted upon us all with the UN, IMF, World Bank, BIS, NATO, WHO, ICC and all the other edifices of world government eventually control every aspect of our lives? Only time will tell, but the Internet Reformation gives one great hope that the “best laid plans will be laid to rest.”

America “makes the cut” – So what happens next?

by Brandon Smith
Posted on Alt-Market, August 7, 2011

AROUND THE WORLD, STARTING MONDAY, ALL EYES ARE ON THE MARKETS. The tension is palpable. The uncertainty is ample. And anger is heavy in the air. As predicted, the debt ceiling deal was not only NOT enough to assuage economic fears, it actually exacerbated them, triggering a flight from the Dow, and creating a decisive opportunity for ratings agency S&P to cut the once perfect U.S. credit rating from AAA to AA+.

At Alt-Market, we often talk about points of balance, and how certain moments in history become highly visible indicators of balance lost. If we pay close attention, and know what we are looking for, these moments can be recognized, allowing us time to shield ourselves from the explosion and the resulting financial shrapnel. The past two weeks have culminated into one of these defining events that tell us the tide has fully turned, and something new and dangerous is just over the horizon. The question now is; what should we expect?

The nature of the credit downgrade situation is not necessarily “unprecedented” in history, but it is surely unprecedented on the scale we see currently in the U.S. It is difficult to predict how exactly the investment world will react. Some consequences, though, are probable, if not inevitable. Let’s examine the events we are likely to see in the coming weeks as well as the coming months, as nations attempt to adjust to America’s final plunge…

1) Ratings Agencies under attack

This has already begun. Italian authorities have raided the offices of S&P and Moody’s, apparently perturbed that their credit rating is not under their control. The U.S. is accusing S&P of making “accounting mistakes” and jumping the gun on the American downgrade. The battle between insolvent governments and the ratings agencies from here on will escalate quickly. More offices will be investigated and raided. The mainstream media will try to assert that the downgrades are “not that important”, and that the U.S. will recover quite nicely without a perfect score. Eventually, as the collapse becomes more evident, ratings agencies will fill the role as the go to scapegoat / economic hitman at which all governments will point accusing fingers.

“S&P is gonna’ cut you man! S&P’s a blade-man, man!”

In my view, it’s all theater. First, let’s set aside the recent ratings cuts altogether and look at the facts. The U.S. should have been downgraded years ago, especially after the Federal Reserve decided to begin purchasing U.S. Treasury Bonds in place of dwindling foreign interest and turned to monetizing our debt to the point of rampant inflation. Italy and numerous other EU members should have been downgraded to junk status a long time ago as well. If anything, the ratings agencies over the past few years have been PROTECTING the credit reputations of many countries which in no way deserve it. The recent downgrades are long overdue…

Second, suddenly governments and MSM pundits feel it necessary to point out the large part ratings agencies played in the derivatives bubble and subsequent credit crisis? Please! They were perfectly content with S&P or Moody’s giving fraudulent top ratings for toxic garbage securities, and even defended agency actions after the bubble burst! Now, after they finally start doing their jobs by downgrading bad debt, governments want an investigation?

Third, ratings agencies were not alone in the creation of the derivatives bubble. The private Federal Reserve artificially lowered interest rates and flooded the markets with cheap fiat. International banks used this fast money to create the easy mortgage groundswell and the derivatives poison that was fed it into the system. Ratings agencies went along with the scam and graded the worthless securities as AAA. The federal government and the SEC allowed all of this to take place by purposely ignoring the crime and refusing to apply existing regulations in investigating the fraud.

The Bottom line? You CANNOT create an economic crisis like the one we face today without collusion between big business, government, regulatory bodies, and ratings agencies. The Obama Administration is well aware of this, and the attacks on S&P are nothing more than a show. S&P is not to blame for the downgrade this past weekend. They are ALL to blame.