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Nearly one-third of middle class suffer downward mobility
By Tami Luhby | CNNMoney.com – 13 hours ago
Nearly one third of Americans who were raised in the middle class dropped down the economic ladder as adults -- and that's before the Great Recession hit.
"Being raised in the middle class is not a guarantee that you'll have that same status as an adult," said Erin Currier, project manager at Pew's Economic Mobility Project. "With all the economic turmoil in the past four years, there's good reason to think that downward mobility is more severe."
Pew looked at children born in the early- to mid-1960s and assessed their economic status roughly 40 years later.
Being middle class in the parents' generation meant a household income of roughly $33,000 to $64,000 in 1979. But their children had to earn between $54,000 and $111,000 to maintain their relative standing in society in the mid-2000s. (These figures are adjusted for inflation.)
The middle class is defined as those between the 30th and 70th income percentile.
Marital status and educational attainment had a great bearing on whether people were able to remain in the middle class, Pew found. Race and gender were also factors.
Those who are divorced, widowed or separated are more likely to fall out of the middle class, particularly if they are women. And Americans who don't attend college are also more likely to slip.
One's foothold on the middle class is more secure if you are a white man. Thirty percent of white women and 38% of black men drop out of the middle class, while only 21% of white men do.
Things have only gotten worse in recent years. The Great Recession has likely made it harder for many people to remain in the middle class, experts said.
Why I still believe in the American Dream
Long-term unemployment has devastated the ranks of the middle class, with many people losing their homes and forced to turn to food banks and government aid after they run through their savings. It takes nearly 41 weeks, on average, for the jobless to find new work. Also, the steep decline in home values has hurt many in the middle class.
Recovering from a huge drop in income is not easy, a separate Pew study found. Half of people who lost more than 25% of their income in 1994 had not recovered four years later. And a third did not regain their economic footing after 10 years.
While it remains to be seen how quickly Americans will recover from the current economic downturn, Currier suspects it could take even longer.
Young adults may find it particularly difficult to hold onto their parents' middle class status. That's because they are having a much harder time landing jobs, particularly well-paying positions in their field. The unemployment rate for 20- to 24-year-olds was 14.4% in December, compared to the national 8.5% rate.
This could hurt their earning potential for decades to come, which has earned them the nickname "The Lost Generation."
"Entering your career in a down economy has lifelong ramifications," said Scott Winship, economic studies fellow at Brookings Institution.
View this article on CNNMoney
Pensions apartheid: get ready to work until you are 75 as State Ponzi scheme unravels
By Ian Cowie Your Money Last updated: November 30th, 2011
http://blogs.telegraph.co.uk/finance/ianmcowie/100013523/get-ready-to-work-until-you-are-75-as-state-ponzi-scheme-unravels/
Experts say the increase in State Pension Age announced by Chancellor George Osborne in his Autumn Statement yesterday will not be the last and millions of younger people should prepare to work until they are 70 or even 75.
No wonder public sector workers are striking today to protect taxpayer-subsidised schemes that enable many to retire two decades earlier than what looks like the new norm for those in the private sector. Mr Osborne's proposals yesterday to end national pay bargaining and cut jobs in the public sector can only have thrown petrol on the fire of their indignation.
Ed Wilson, a director at PricewaterhouseCoopers (PwC), said: “The Government brought forward the increase in the state pension age to age 67 by nearly 10 years so that it will be place by 2026. There is a clear direction of travel that means that many of today’s younger employees can expect to be working well into their 70s.
“People hoping to retire at a particular age are having to revise their plans and are facing a stark choice between working longer, saving more or retiring poorer. Based on the principle the Government had previously set out of increasing State Pension age in line with improvements in longevity, we calculate that the State Pension age could be set to rise to age 70 by 2050.”
That would catch everyone aged less than 31 today. The increase in State pension age to 67 will affect everyone born after 1960. None of these changes should come as a surprise, as increased pension ages have been predicted in this space and elsewhere many times over the years.
State pensions are a form of Ponzi scheme where the funds available are insufficient to honour promises issued and so new payments into the fund are urgently required to avoid collapse. National Insurance Contributions (NICs) collected this week are used to pay next week’s State pensions.
Thank heavens I contracted out of the State Earnings Related Pension Scheme (SERPS) – now known as the State Second Pension (S2P) – more than 20 years ago and used the rebated NICs to build up self invested personal pensions (SIPPs), from which I took tax-free profits two years ago. That provided nearly half the cash I used to pay off my mortgage last December.
Never mind the actuarial complexities about rising life expectancy and falling investment returns. Outside the public sector bubble, savers face a stark but simple choice. Would you rather have an ill-defined share in an unfunded scheme or a pot of private property with your name on it? Do you want a DIY pension or to put your faith in politicians?
Joanne Segars, chief executive of the National Association of Pension Funds emphasised the inevitability of pension age increases: “Longer lives do mean more time at work, so it is understandable that the rise to 67 will start earlier. The Government has learned from its recent mistake and is giving people sufficient notice this time.”
John Richardson at independent financial advisers Towry urged people to save for themselves: “Ever increasing longevity mean this is unlikely to be the end of this upward trend. It is therefore essential that individuals ensure they make adequate private pension provision to meet their future retirement plans.”
Even so, there must be plenty of people aged 51 or less now that dutifully paid their NICs and other taxes for decades who now feel swizzed by a Government moving the goal posts against them; not to mention those aged 31 or less who will have to wait even longer.
This is pensions apartheid or the gap between a public sector clinging to contractual rights the country can no longer afford and private sector pensions in crisis. Today's strike will highlight these problems but perhaps not in a way the trade unions intend.
Just a few years ago, I asked who was running the biggest Ponzi scheme; Bernard Madoff or the British Government? Well, we can all see the answer now. Without wishing to be unduly gloomy, it is only fair to point out that six years ago I reported the president of the Institute of Actuaries predicting that new graduates will have to work until 75.
Protesting Against Indefinite Detention May Get You Detained
http://www.zerohedge.com/contributed/tyranny-even-pointing-out-fact-tyranny-grounds-harassment
Greek Crisis Has Pharmacists Pleading for Aspirin; Bailout Money Used for Military Spending http://www.siliconinvestor.com/readmsg.aspx?msgid=27873817
The Greek economy is now totally and completely dysfunctional. The government has resorted to price controls on goods to contain costs. However, price controls do nothing but cause shortages.
...........
Bailout money first goes to French and German banks. What is left over goes for weapons systems.
Meanwhile, price controls and fraud have made aspirin hard or impossible to get. To top it off, Germany and France want still more tax hikes and austerity measures.
Greece will default soon. It's all over. Nothing is left but a corrupt hollow shell.
Transcendental Market Truths:
The Market
http://www.siliconinvestor.com/readmsg.aspx?msgid=27874022
The stock market has now entered the opening date of the likely topping window, which runs from Tuesday through Thursday. And, it entered it with a big gap to the upside, moving over the October 27th high, but giving back much of the gains by the closing bell. Since the market has not yet reached the center of this expected topping zone and breadth remains strong, further probes to the top of the range - and higher highs - remain possibilities.
I should be seeing bearish divergence here if the market were about to plunge. It may still appear in the next few days, or it may not. It's best to be patient.
Overall, the market is still moving under the influence of the January Effect, which is an annual positive seasonal.
The market is also reacting to the Shanghai Exchange, which is bouncing just as I expected it would.
It's not always the case that the US market pays so much attention to China. However, since China is likely to be hitting a hard landing, any sign of hope from Shanghai reassures American investors and could hold the US market above the abyss on a temporary basis.
If SPX can build a base in the current price area, there are some higher prices which could be achieved. If the current leg stands in a 61.8% relationship to its prior leg, 1307 would be a potential target. Beyond that, 1332 would be the price at which the current leg would equal the prior leg.
A key commodity to watch is March Copper, which is trying to break out of the contracting triangle it has been contained within. If it does, it would point toward temporary strength in the economy - and equities - until the second week of February.
Important Alert: Online banking has just become a lot less attrachtttive:
http://www.siliconinvestor.com/readmsg.aspx?msgid=27866425
http://redtape.msnbc.msn.com/_news/2012/01/06/9986119-new-virus-raids-your-bank-account-but-you-wont-notice
<New virus raids your bank account - but you won't notice
The best way to protect yourself from an online financial scam is to diligently check your bank accounts. At least, until now.
Israeli-based Security firm Trusteer has found an elaborate new computer virus that not only helps fraudsters steal money from bank accounts -- it also covers its tracks.
Think of a crime plot involving a spy who plans to break into a high-security building and begins by swapping out security camera video so guards don't notice anything is amiss. Known as a surveillance camera hack, the technique has been used in dozens of movies.
A new version of the widely prevalent SpyEye Trojan horse works much the same way, only it swaps out banking Web pages rather than video, preventing account holders from noticing that their money is gone.
The Trojan horse employs a powerful two-step process to commit the electronic crime. First, the virus lies in wait until a customer with an infected computer visits an online banking site, steals their login credentials and tricks the victim into divulging additional personal information such as debit card information. Then, after the stolen card number is used for a fraudulent purchase, the virus intercepts any further visits to the victim's banking site and scrubs transaction records clean of any fraud. That prevents -- or at least delays -- consumers from discovering fraud and reporting it to the bank, buying the fraudster critical extra time to complete the crime.
Trusteer calls it a "post transaction" attack, because much of the virus' effectiveness is attributable to its ability to control what victims see after fraudulent transactions occur. Amit Klein, chief technology officer for Trusteer, said he believes criminals have used the technique for a few months, and it has infected real consumers.
"I predict that the use of post transaction attack technology will significantly increase as it enables criminals to maximize the amount of fraud they can commit using their initial investment in malware toolkits and infection mechanisms," Klein said.
The new SpyEye came to Trusteer's attention when a large retail bank in the United States spotted it and shared with the firm, he said.
'A very scary tactic'
The virus' evidence-covering techniques are elaborate. First, it keeps track of all fraud committed by the criminal, and makes sure to remove those line items from online transaction lists. It also edits balance amounts to prevent consumers from getting suspicious.
"This is a very scary tactic," said Avivah Litan, a financial fraud analyst at consulting firm Gartner. "Everybody thinks all they have to do is check their transactions and their balances. That's not true anymore."
The new virus technique ups the ante in the cat-and-mouse game between security companies and the computer criminals who try to steal consumers' money. Consumer reports of fraud are still a very important part of fraud-fighting techniques, Litan said.
"Most banks 'let the first transaction through,' because if they stopped everything that was potentially fraud, consumers would get annoyed," she said. In some cases, fraud-checking tools kick in only after initial reports, so this version of SpyEye could buy criminals important time as they try to turn stolen data into cash.
"Usually they only need one day more to get the money, to push the fraud through," she said. "They always want to keep the security guys running after them."
Such cover-your-tracks techniques have been used before by virus writers, Klein said. In a simpler version, criminals who raided online bank accounts and wired money out of them would try to hide the transaction from victims using the same Web page interception trick. But this new flavor has more potential for success, because it involves stolen debit card numbers used at third-party merchants, creating complex transactions involving multiple banks and multiple security systems.
Victim account holders who check their balance at an ATM -- or even at a second uninfected computer -- would be able to spot the fraudulent transactions. The virus doesn’t impact bank systems, merely the characters that are displayed within the infected system's Web browser. That means paper statements would reveal the fraud, too.
Of course, consumers who rely on paper statements could be a full 30 days behind when it comes to spotting fraudulent transactions.
While Klein is worried about the "post transaction" attack, he said consumers who have vulnerable Web browsers are bound to be victims of one fraudster or another.
"My take is that if your computer is infected with financial malware, it's game over anyway," he said. "My takeaway is you need to prevent getting infected with financial malware in the first place.">
Logging back off.
Cheers,
Isopatch
<<"Warren Pollock and Ann Barnhardt Discuss MF Global and a Possible Bank Holiday ">>
We've been warned...
...get ready for the worst.
Doctors in America are harboring an embarrassing secret: Many of them are going broke.
This quiet reality, which is spreading nationwide, is claiming a wide range of casualties, including family physicians, cardiologists and oncologists.
Industry watchers say the trend is worrisome. Half of all doctors in the nation operate a private practice. So if a cash crunch forces the death of an independent practice, it robs a community of a vital health care resource.
"A lot of independent practices are starting to see serious financial issues," said Marc Lion, CEO of Lion & Company CPAs, LLC, which advises independent doctor practices about their finances.
Doctors list shrinking insurance reimbursements, changing regulations, rising business and drug costs among the factors preventing them from keeping their practices afloat. But some experts counter that doctors' lack of business acumen is also to blame.
Loans to make payroll: Dr. William Pentz, 47, a cardiologist with a Philadelphia private practice, and his partners had to tap into their personal assets to make payroll for employees last year. "And we still barely made payroll last paycheck," he said. "Many of us are also skimping on our own pay."
Pentz said recent steep 35% to 40% cuts in Medicare reimbursements for key cardiovascular services, such as stress tests and echocardiograms, have taken a substantial toll on revenue. "Our total revenue was down about 9% last year compared to 2010," he said.
"These cuts have destabilized private cardiology practices," he said. "A third of our patients are on Medicare. So these Medicare cuts are by far the biggest factor. Private insurers follow Medicare rates. So those reimbursements are going down as well."
12 entrepreneurs reinventing health care
Pentz is thinking about an out. "If this continues, I might seriously consider leaving medicine," he said. "I can't keep working this way."
Also on his mind, the impending 27.4% Medicare pay cut for doctors. "If that goes through, it will put us under," he said.
Federal law requires that Medicare reimbursement rates be adjusted annually based on a formula tied to the health of the economy. That law says rates should be cut every year to keep Medicare financially sound.
Although Congress has blocked those cuts from happening 13 times over the past decade, most recently on Dec. 23 with a two-month temporary "patch," this dilemma continues to haunt doctors every year.
Beau Donegan, senior executive with a hospital cancer center in Newport Beach, Calif., is well aware of physicians' financial woes.
"Many are too proud to admit that they are on the verge of bankruptcy," she said. "These physicians see no way out of the downward spiral of reimbursement, escalating costs of treating patients and insurance companies deciding when and how much they will pay them."
Donegan knows an oncologist "with a stellar reputation in the community" who hasn't taken a salary from his private practice in over a year. He owes drug companies $1.6 million, which he wasn't reimbursed for.
Dr. Neil Barth is that oncologist. He has been in the top 10% of oncologists in his region, according to U.S. News Top Doctors' ranking. Still, he is contemplating personal bankruptcy.
That move could shutter his 31-year-old clinical practice and force 6,000 cancer patients to look for a new doctor.
Changes in drug reimbursements have hurt him badly. Until the mid-2000's, drugs sales were big profit generators for oncologists.
In oncology, doctors were allowed to profit from drug sales. So doctors would buy expensive cancer drugs at bulk prices from drugmakers and then sell them at much higher prices to their patients.
"I grew up in that system. I was spending $1.5 million a month on buying treatment drugs," he said. In 2005, Medicare revised the reimbursement guidelines for cancer drugs, which effectively made reimbursements for many expensive cancer drugs fall to less than the actual cost of the drugs.
"Our reimbursements plummeted," Barth said.
Still, Barth continued to push ahead with innovative research, treating patients with cutting-edge expensive therapies, accepting patients who were underinsured only to realize later that insurers would not pay him back for much of his care.
"I was $3.2 million in debt by mid 2010," said Barth. "It was a sickening feeling. I could no longer care for patients with catastrophic illnesses without scrutinizing every penny first."
He's since halved his debt and taken on a second job as a consultant to hospitals. But he's still struggling and considering closing his practice in the next six months.
"The economics of providing health care in this country need to change. It's too expensive for doctors," he said. "I love medicine. I will find a way to refinance my debt and not lose my home or my practice."
If he does declare bankruptcy, he loses all of it and has to find a way to start over at 60. Until then, he's turning away new patients whose care he can no longer subsidize.
"I recently got a call from a divorced woman with two kids who is unemployed, house in foreclosure with advanced breast cancer," he said. "The moment has come to this that you now say, 'sorry, we don't have the capacity to care for you.' "
Small business 101: A private practice is like a small business. "The only thing different is that a third party, and not the customer, is paying for the service," said Lion.
"Many times I shake my head," he said. "Doctors are trained in medicine but not how to run a business." His biggest challenge is getting doctors to realize where and how their profits are leaking.
"On average, there's a 10% to 15% profit leak in a private practice," he said. Much of that is tied to money owed to the practice by patients or insurers. "This is also why they are seeing a cash crunch."
My biggest tax nightmare!
Dr. Mike Gorman, a family physician in Loganvale, Nev., recently took out an SBA loan to keep his practice running and pay his five employees.
"It is embarrassing," he said. "Doctors don't want to talk about being in debt." But he's planning a new strategy to deal with his rising business expenses and falling reimbursements.
"I will see more patients, but I won't check all of their complaints at one time," he explained. "If I do, insurance will bundle my reimbursement into one payment." Patients will have to make repeat visits -- an arrangement that he acknowledges is "inconvenient."
"This system pits doctor against patient," he said. "But it's the only way to beat the system and get paid."
--- Are you a doctor who has made financial decisions you came to regret? E-mail Parija Kavilanzand you could be part of an upcoming article. Click here for CNNMoney.com comment policy.
View this article on CNNMoney
Your Economy today...
http://www.siliconinvestor.com/readmsg.aspx?msgid=27864108
To: Smiling Bob who wrote (55801) 1/6/2012 4:32:40 AM
From: Mike Johnston 12 Recommendations Read Replies (3) of 55928
Savers being defrauded out of their savings - decades of hard work, integrity and discipline being diluted with a press of a button by a bureaucrat in DC.
Retirees are being defrauded on their pensions. Sharply higher prices in grocery stores. Collapsing standard of living for the Middle Class.
10% (and increasing) inflation. 0% interest rates.
People getting ripped off in broad daylight by Fedgov. Inflationary conditions caused by bailouts and money printing are a breeding ground for corruption, fraud and grand theft.
First receivers (bankers) are swimming in the ocean of free money, while a growing part of population is struggling to survive.
All this so that useless paper shufflers can keep their jobs and their million dollar bonuses. And so that Greenspan's Real Estate Bubble is deflated with 30 years of painful stagflation instead of dumping in the unemployment line those that created it and benefited from it.
Where is the anger ?
What should be a punishment for stealing trillions from millions of people ?
2012 Forecast: Bang and Whimper
By James Howard Kunstler
on January 2, 2012 7:28 AM
http://kunstler.com/blog/2012/01/2012-forecast-bang-and-whimper.html
There's a lot to be nervous about, even if you don't subscribe to the undercooked Mayan apocalypse lore moving through the gut of the Internet like a Staphylococcus-infected tamale. The casual observer might say that nothing seemed to give on the world scene in 2011 despite the Fukushima meltdown, the Arab Spring uproars, the train wreck of European finance, the disappearing act at MF Global, and the assorted injuries done to the Kardashian brand by the giant walking dildo Kris Humphries.
I demur. On close examination, the industrial world underwent complete zombification in 2011. Its member states and their institutions are now lurching across the stage of history like so many walking dead. Whole European nations are dead, their citizens squirming around the ruined bones of failed speculative condo projects, housing estates, and luxury hotels like botfly larvae. The USA lies in complete moral ruin despite the exertions of ten thousand evangelical preachers in dusty back-road tilt-up chapels from Texas to Carolina, several new museums of Creation Science, and the shining example of former Senator Rick Santorum. Just look at how we behave, from the cloakrooms of Congress to the piercing parlors of West Hollywood to the 7-Elevens of suburban Maryland: a nation of thieves, racketeers, reality TV sluts, wannabe road warriors, light-fingered gangsta-boyz, and crybabies living in an anomie-drenched decrepitating demolition derby landscape of failure. When everybody is a zombie, whose brains are left to eat? Echo answers.... On to the predictions for 2012 then.
The biggest political shock awaiting us is the massive disruption of the major party nominating conventions next summer, when thousands of angry citizens descend on Tampa and Charlotte demanding a reality test. The parties will attempt to go about their ritual business, ignoring the mischief outside the convention centers, and both parties will make the mistake of siccing the cops on the protestors. The result will be a much bigger mess than the one I personally witnessed on the streets of Chicago, 1968, when the party hacks anointed the grinning sell-out Hubert Humphrey to run against Ole Debbil Nixie. Just before getting tear-gassed on Michigan Avenue that night, I saw some kid hoisting a sign that depicted the nominee with a Hitler mustache over the epithet: Mein Humph! It made my night, despite the subsequent retching in the gutter.
The two major parties are completely bankrupt zombie organizations and this election may be their last stand - if they even survive the conventions. Neither of them can come to grips with the reality-based issues of the day: epochal financial and economic contraction, peak energy (and many other resources), climate change, the absence of the rule of law in banking, and generational grievance - or, perhaps more to the point, the manifestations of these giant trends as presented in unemployment, debt slavery, foreclosure, bankruptcy, homelessness, hunger, and X-million family tragedies. Both parties can only promise the return to a bygone status quo that is largely mythical.
President Obama, the putative "progressive" - spokesman of the Ivy League, Silicon Valley, Lower Manhattan, and all the other precincts where "folks" imagine themselves to be advanced thinkers - can't even wrap his mind around the simple fact that we will never be "energy independent" if we think that means running 260 million cars and trucks, no matter how many algae farms we pretend to invest in. Here is man who ought to know better and either doesn't, or is lying about it. He has other failures to answer for, too. Why, following the Citizens United decision in the Supreme Court, did Mr. Obama not prompt his party to sponsor federal legislation (or a constitutional amendment) that would redefine a corporation as not identical in "personhood" to a human being? Why does he still employ an Attorney General who has not started one prosecution for financial misconduct amid a panorama of arrant swindling and fraud? (Ditto: heads of the SEC, CFTC, etc.) And why did he not object loudly to the provision in the latest defense appropriations bill that allows for the capricious arrests and indefinite detention of anyone in the USA on suspicion of "terrorism?" Does this graduate of Harvard Law remember what habeas corpus means?
A lot of voters projected on Mr. Obama some notion of supernatural brilliance - our Hollywood fantasies are rife with wishes to be saved, and therefore redeemed, by our former victims - but he turned out to have a pedestrian mind. Could he possibly believe we have "a hundred years of natural gas" in the ground? Or that we're in a position to ramp up another cycle of industrial economic "growth?" Or that we can continue the web of cruel rackets that passes for medical care in this country? When the Democratic Party re-nominates Obama, it will be sealing its death warrant, and it will be on its way to the same cosmic vacuum where the memory of the Whigs lingers on.
Meanwhile, the Republicans labor to convert themselves into the party of corn-pone Nazism with all their unconcealed lust to push everybody around under the plastic eagle rubrics of "Freedom" and "Liberty." Look at the dismal lineup of morons, hypocrites, and religious fanatics arrayed for the Iowa caucus: a doctor who is also a creationist!? A leveraged buyout artist! A grifter fresh from K Street! A lady Christian theocrat wholly owned by the "dominionist" New Apostolic Reformation cult! A George W. Bush imitator showing symptoms of early onset senility! The whole posse is preoccupied with things supernatural. And being so dedicated to things unreal, they're the prime representatives of the suburban clusterfuck, who will do anything to keep that obsolete machine running, even if it means national suicide, because they lack the brains to understand where history is taking us and what the mandates of reality are shouting at us about the urgent need to reorganize American life. They are also the vassals of corporate despotism - where the Democrats are mere footservants. They masquerade as "job creators," but they promote the off-shoring of every activity that corporate America can shed in its quest for ever-greater executive compensation. The lip-service they pay to "freedom" is belied by their intent to control everybody's personal life, commoditize the public interest, and sell out their grandchildren's future for a few extra rounds of golf.
I think this gang, too, will be sent packing by the mobs of 2012. I have a nagging intimation that some third party candidate will emerge. The two personalities I keep seeing in that role are Howard Dean and Michael Bloomberg. Both of them are imperfect, but both of them are clear-headed and action-oriented, and I have a feeling that both of them are stewing in the background over the spectacle of idiocy, inertia, and dithering they see at every political compass point. Maybe somebody else will crawl out of the woodwork. I've said before in the weekly blog that conditions could deteriorate so badly that a Pentagon general might have to step into national leadership just to keep the grocery stores supplied with basic rations - but that is an outcome in my personal asteroid belt of probabilities.
Whatever party ends up running things, and whomever fronts it, is going to be in for a helluva wild ride. The USA is diving into an economic depression that will make the 1930s look like a Busby Berkeley production number. Compressive contraction will have its way with us, whatever Ben Bernanke thinks. There will simply be less activity of the kinds we're used to - Big Box shopping sprees, hamburger sales, theme park visits, house closings, you name it - than our hypertrophic system requires to keep its own destructive momentum going. Instead, the whole thing will just topple over, inert, like a 99-cent gyroscope giving into the forces of entropy. There will be a lot of bewildered, angry, dispossessed people from sea to shining sea. Not a few of them will "act out," that is, start breaking things, stealing things, targeting easy prey, hurting bystanders, and even tangling with police. Personally, I don't believe in the internment camp meme so popular among the doomer paranoiacs, but surely a lot of people will be cooling their heels in some slammer - while many other miscreants will just get away with crimes against persons and property.
The global banking system was on death-watch all through 2011. Somehow the various doctors in the central banks and finance ministries were able to muster enough accounting legerdemain to give the appearance of a system still showing a pulse. But in a compressive debt deflation, there are only so many accounting tricks you can pull off as money (and wealth) literally disappears down a cosmic worm-hole. In Europe, the process has moved from the margins toward the center. The people of Greece, Portugal, Ireland, Spain, Italy, Belgium will have less income, fewer government services, lost wages and pensions, less comfort than they have had for a couple of generations. Meanwhile, France is drowning in bad paper and the German banks are choking on it. There is really only one plausible outcome and that is default. The reckoning of the bondholders is at hand. Everybody will get poorer simultaneously - and if not, there will be not just regime change but civil war and revolution. The fantasy of a fiscal union in Europe is impossible because it means two things: that Germany will have to issue orders to everybody else; and that Germany would have to pick up the tab for everybody else while telling them what to do. Both are intolerable and implausible. Let's just think of the Euro experiment as an interesting side effect of the peak energy era... now drawing to a close.
These professional economists with their jabber about QEs and "financial repression" and bond-term "twists" and debt-to-GDP ratios are missing the point. The advanced industrial nations will not be re-jiggered onto any "growth" runway. Rather, we're entering the rutted wagon-road of de-industrializing and un-advancing. What awaits us in a "time-out" from hyperbolic technological progress. Forget about Ray Kurzweil's nanobot nirvana. That is not in the cards. Instead, wrap your mind around life in an economy organized around farming, with a much sparser distribution of big urban centers, and far fewer people overall. Don't imagine for a moment that your grandchildren will be zinging across the landscape in electric cars sampling one theme park after another while "networking" with "friends" on cyborg social networks implanted in their brain jellies. Think of them grooming their mules in the summer twilight. Anyway, you get the picture: everything that the finance ministries and treasuries and central banks are affecting to do is mere shadow theater performed in support of wishful thinking.
The question, then, is what kind of hardship and disorder will attend our journey out of the industrial era into post-technological age we are entering. Will we just turn the world into a Michael Bay movie and blow everything up? Or will we make some graceful descent and retain what is really best about the human spirit?
2012 will be the year of internal strife in these "advanced" nations, of people fighting over the table scraps of modernity among their own, in their own backyards, a desperate sorting out of the remnants. I don't think we'll see fighting between the European nations until the internal conflicts are resolved and that will take a few years.
The hot-spots for 2012 are very likely to be in the Middle East. You already know that. What could be more obvious than the tinderbox character of that region? Islamic extremism is poised to take over governments (and armies) in Egypt, Syria, Libya, possibly Algeria, and probably Pakistan. Iran lost its mind decades ago and seems determined to dominate the region by means of a strategy that can only get it into trouble (and perhaps the whole world if it goes really badly). Saber-rattling is one thing; making an actual move something else. Block the Straits of Hormuz? Not if you don't want Teheran to turn into an ashtray. That may happen anyway if Iran rattles a nuclear saber. Germany, France, Britain, and Italy, all struggling with terrible problems at home, would breathe a sigh of relief if the mullahs were chastened. The chatter around the Web about an Israeli preemptive attack never ceases. But it is a possibility.
Oh, and don't forget Turkey. Formerly the "sick man" of Europe, Turkey has become strangely resurgent, prompting some recollections that the Ottoman Empire actually administered over much of the Middle East until 1914, and not with complete incompetence, either. They just sort of imploded from empire fatigue, which is not the worst way to go down, if history is taking you there anyway. But empires come back, too, and what passes for Turkey today is a polity that in one incarnation or another has been around since the ancient Greek days, and was, for quite a long while, Rome Release 2.0.
Don't be surprised if some hostilities break out between Turkey and Iran, since a battleground named Iraq lies between them. Iraq is a basket-case despite an immense reserve of oil under its sands, and having had the US military babysit it for eight years. The last American combat units left Iraq this fall, but there are still plenty of US soldiers there, maintaining our garrisons and keeping an eye on things. The question is: can they control what the Kurds do in the north, and whatever meddling Iran engages in around the Basra oil region in the South? These American support troops remaining in Iraq could find themselves looking like a ham-and-cheese sandwich between a lot of crusty mischief north-and-south. The Turks have already had a dustup or two with Syria lately - Syria occupies a big wedge between Turkey, Iraq and the Mediterranean Sea - and Turkey will take a dim view of that nation falling into the hands of Islamic extremists if Assad gets booted.
All bets are off in Egypt. Anything can happen there.
The dangerous position of Israel vis-à-vis all these quarreling players is probably as bad as it has been in two generations. An attack by a neighbor or getting caught in a crossfire between neighbors would stimulate a lusty response, and perhaps World War Three. As if the world needed this added aggravation. It makes my kishkas ache just to think about it. Sometimes I wonder why the whole Israeli nation doesn't just pack up and move to Nebraska.
2012 is the year that China proves to be a mortal nation and rolls over with a very bad case of the vapors. Their banking system is a sham. Their property bubble is a fiasco. Their government has no formal legitimacy and will install a new leadership group this year, while exports crash and mass factory layoffs happen. There will be a lot of pissed off people in China, and they may express themselves politically in ways that have seemed unthinkable for decades. The aura of social control looms large in China, but an aura is a light garment not recommended for stormy political weather. 2012 could be the year that China begins its journey into a "Balkanized" collection of smaller autonomous parts, which is the big fat trendline for all the nations of the world, including the USA.
It is hard to think about the bizarre case of India, a nation with one foot in the modern age and the other in a colorful hallucinatory dreamtime. Their climate-change related problems are doing heavy damage to the food supply. Their groundwater is almost gone. The troubles of the wobbling global economy will take a lot pep out of their burgeoning tech and manufacturing sectors. It wouldn't be surprising if these travails prompted distracting hostilities with its failed-state neighbor, Pakistan. Pakistan, with its inexhaustible supply of Islamic maniacs could easily start a rumble with some crazy caper like the Mumbai hotel assault of two years ago, but this time India would answer with a heavy cudgel, perhaps even a nuclear sortie designed to neutralize Pakistan's dangerous toys at a stroke. And that would be that. Like cleaning out an annoying neighborhood crack house. It's not a very appetizing scenario, but what else can you do about failed states with nuclear bombs?
Turning to Japan....That sore beset kingdom is suffering all the blowback of modern times at once: the Godzilla syndrome up in Fukushima; a demographic collapse; an imminent bond crisis; the collapse of export market partners; and a long, agonizing death spiral of its banks. I stick by a prediction I tendered back in March, after the deadly tsunami: Japan will decisively opt for a return to pre-industrial civilization. Why not? The rest of the world will be dragged kicking and screaming to the same place. Let Japan get there first and enjoy the advantage of the early adapter - back to an economy of local, hand-made stuff, rigid social hierarchy, folkloric hijinks in whispering bamboo groves, silk robes, and frequent time outs for the tea ceremony.
Russia? The big bear might have just sat out another decade and enjoyed its remaining fossil fuel supply, but the temptation to project power is a demanding habit, so they make all sorts of noises about watching Iran's back - though mutual hatred abounds - and generally rushing into the power vacuum occupied by a US with dwindling mojo. There were stirrings of political discontent just few weeks ago, after the rigged early rounds of national elections, and who knows where that will lead. Vlad Putin has held things together there impressively after the meltdown of the 1990s, but apparently the tranquil veneer is thin. Except for two big cities, the sprawling nation is broke and decrepitating, with little to offer the world but oil and gas - not an inconsiderable offering, but one with certain limits especially as they drain their oil fields for export cash. The rule of law is also pretty sketchy there. The government, as ever, is a kind of gangster affair, only this time one that allows some people to get really rich, not just connected. Their 70-year experiment with Marxian dogma has probably put them off ideology for a few centuries to come, which means less money spent on prisons for people with independent thoughts and more for call girls and home furnishings. I imagine that Putin will maintain his grip through the year. The Russians will appreciate relative order more when they see a few other countries devolve into internal conflict.
I don't see much action around South America this year. Some Americans are already fleeing to Argentina. Perhaps they'll enjoy it, but there is always the menace of property confiscation, and worse. Brazil will continue to appear vibrant while it grows more population, shoving it toward eventual ruin. They will see setbacks in the development of their deep-sea oil due to an international shortage of investment capital.
Mexico's fortunes depend on its oil industry, Pemex, which faces remorseless depletion. Revenue from oil production and (dwindling) exports can't hope to keep up with continuing population growth (and ever more poverty). These trends suggest a continued loss of control for the central government and more territorial fighting among the drug gangs and other criminal mafias. As long as all those loose heads roll on the south side of the Rio Grande the US will just tut-tut off to the side. But if the gangs get bold and start venturing cross border to make mischief we will make like Woodrow Wilson did and send the regular army down to spank them. It would be a satisfying diversion for that portion of the US demographic that enjoys Ultimate Fighting on TV, though it won't get them their job back at the Pontiac plant.
The global oil picture is not so reassuring. The fragility of our supply is simply unnoticed by commuters enjoying Lady Gaga on their iPods. Meanwhile, our politicians retail fantasies of endless domestic reserves, which is total horse shit. Global exports are in remorseless decline, apart from geopolitical fissures and strains that could just paralyze allocation cold. If a hot war breaks out in the Middle East, you'll see the American supermarket shelves empty in three days. Won't that be fun. Note, too: the manias over shale oil and shale gas will reveal themselves as just more bubbles in a long cavalcade of bubbles, and both will begin to founder on a shortage of investment capital. The shale plays will prove to have been a national self-esteem-building program, not any part of an energy policy.
The abiding question as we turn the corner into the New Year is: how come Jon Corzine is still at large? (Not to mention Angelo Mozilo, plus the entire executive floor of Goldman Sachs, and about 5000 other assorted Wall Street grifters still on the loose.) There is plenty of dire talk that the collapse of MF Global, and the shenanigans around its demise involving the evaporation of segregated accounts, has gravely and permanently damaged the entire investment industry, but especially the commodities funds, who can no longer depend on the Chicago Mercantile Exchange to honestly clear trades and regulate behavior. The whole affair, and the thundering silence from the oval office, makes Barack Obama seem not just inept but somehow complicit in the looting of America. As if he needs another mark of discredit in his record of consistent fumbling. There are signs that a lot of people who still have something resembling money invested in various funds will go to cash in the weeks ahead, including under-the-mattress style. The distrust and paranoia is palpable now, with the frenzies of Yuletide bygone for another year. After all, why trust banks, especially the TBTF monsters. Such a mass move could take the starch even out of highly manipulated equity markets.
Nemesis may have her day, though. Jamie Dimon might have just gone a swindle too far for the fates to ignore him another year. JP Morgan looks to be in a peck of trouble for its role in the confiscation of MF Global accounts, not to mention its hijinks in the precious metals markets. The impudence of these rascals! In a nation when all sorts of people are murdered every day for little more reason than being in the wrong place at the wrong time, is it not a wonder that some poor swindled Grampa with nothing left to live for has not tossed a Molotov cocktail through the window of a Wall Street watering hole known to be frequented by banking poobahs? Perhaps this sort of action awaits us in 2012.
Longtime readers of this blog know how much I love predicting the Dow Jones Industrial Average to crash down to 4000 every year. I never disappoint - though I am often disappointed. In 2011, the SP index managed the delightful trick of finishing a fraction below its previous January kickoff. The stock markets have churned in range-bound purgatory for a decade while the price of a jar of pickles has multiplied four-fold. Applying the calculus, and given the pickle-DOW differential, I'd say my call was actually pretty good. In any case, this year I change the tune slightly: I predict the DJIA will go to 4000, with the catch that the number is only a way-station to 1000, which it will hit in 2014. We may be short of snow here in the Northeastern US - thanks to La Nina - yet not short of confidence that the mills of the Gods grind slowly, but grind exceedingly fine.
Finally, look for the publication of my next book round July 2012, a non-fiction work titled Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation... from The Atlantic Monthly Press. In a week, I begin work on World Made By Hand 3.
Good luck to you in 2012, and report any suspicious characters adorned with ear-plugs, quetzel feathers, and carrying obsidian knives to your nearest office of Homeland Security.
Doug Casey Addresses Getting Out of Dodge
Submitted by Tyler Durden on 01/04/2012 19:08 -0500
http://www.zerohedge.com/news/doug-casey-addresses-getting-out-dodge
Submitted by Doug Casey of Casey Research
Doug Casey Addresses Getting Out of Dodge
L: Doug, a lot of readers have been asking for guidance on how to know when it's time to exit center stage and hunker down in some safe place. Few people want to hide from the world in a cabin in the woods while life goes on in the mainstream, but nobody wants to get caught once the gates clang shut on the police state the US is becoming. How do you know when it's time to go?
Doug: Well, the first thing to keep in mind is that it's better to be a year too early than a minute too late. David Galland recently read They Thought They Were Free: The Germans, 1933-45, by Milton Mayer. He quoted a passage in his column of last Friday. It goes a long way in explaining why Americans appear to be such whipped dogs today. They're no different from the Germans of recent memory. For those who missed it, let me quote it:
"You see," my colleague went on, "one doesn't see exactly where or how to move. Believe me, this is true. Each act, each occasion, is worse than the last, but only a little worse. You wait for the next and the next. You wait for one great shocking occasion, thinking that others, when such a shock comes, will join with you in resisting somehow. You don't want to act, or even talk, alone; you don't want to 'go out of your way to make trouble.' … In the university community, in your own community, you speak privately to your colleagues, some of whom certainly feel as you do; but what do they say? They say, 'It's not so bad' or 'You're seeing things' or 'You're an alarmist.'
"These are the beginnings, yes; but how do you know for sure when you don't know the end, and how do you know, or even surmise, the end? On the one hand, your enemies, the law, the regime, the Party, intimidate you. On the other, your colleagues pooh-pooh you as pessimistic or even neurotic… the one great shocking occasion, when tens or hundreds or thousands will join with you, never comes. That's the difficulty. If the last and worst act of the whole regime had come immediately after the first and smallest, thousands, yes, millions would have been sufficiently shocked… But of course this isn't the way it happens. In between come all the hundreds of little steps, some of them imperceptible, each of them preparing you not to be shocked by the next. Step C is not so much worse than Step B, and, if you did not make a stand at Step B, why should you at Step C?"
The fact is that the US has been on a slippery slope for decades, and it's about to go over a cliff. However, our standard of living, while declining, is still very high, both relatively and absolutely. But an American can enjoy a much higher standard of living abroad.
On the other hand, if I were some poor guy in a poverty-wracked country with few opportunities, I'd want to go where the action is, where the money is, now. Today, that means trying to get into the United States. The US is headed the wrong direction, but it's still a land of opportunity and a whole lot better than some flea-bitten village in Niger.
L: By the time things get worse than some Third-World dictatorship in the US, such a person could have remitted a whole lot of cash back home.
Doug: And you'd have a whole lot of experiences that would give you a competitive edge back where you came from, or in the next place you go to. The one-eyed man is king in the valley of the blind. People have to lose that backward, peasant mentality that ties them to the land of their birth. Sad to say, although the average American has somewhat more knowledge of the world – mainly due to television – his psychology is just as constrained as that of some serf from central Asia or some primitive village in Africa. It's all a matter of psychology.
But if you're not poor, you want to go someplace that is safe, nice – whatever that means to you – and with a lower cost of living. As most readers know, for me that's Cafayate, Argentina, but one size does not fit all. It needs to be a place you actually enjoy spending some time, with people whose company you enjoy.
L: Fair enough. But our readers want to know if your guru-sense is tingling yet, or how close you think we are to it being too late to leave – or at least too late to leave with any meaningful assets.
Doug: I'm a trend observer. This is one of the advantages of studying history, because it shows you that things like this rarely happen overnight. They are usually the result of trends that build over years and years, sometimes over generations. In the case of the US, I think the trend has been downhill, in many ways, for many years. Pick a time. You could make an argument, from a moral point of view, that things started heading downhill at the time of the Spanish-American War. That was when a previously peaceful and open country first started conquering overseas lands and staking colonies. America was still in the ascent towards its peak economically, but the seeds of its own demise were already sewn, and a libertarian watching the scene might have concluded that it was time to get out of Dodge –
L: [Laughs] That would have been a bit early…
Doug: [Chuckles] Yes, that would have been way too soon. As Adam Smith observed, there's a lot of ruin in a country.
L: On the other paw, it would have gotten you out before the War between the States, a disaster well worth avoiding.
Doug: No, the Spanish-American War was in 1898.
L: Oops! Sorry, I was thinking of what Americans call the Mexican-American War, but which Mexicans call the "American Invasion" –
Doug: [Laughs]
L: I'm not joking. That's what they called it in the history books I was given in Mexican schools when I lived there in the '70s. It has long seemed to me that that was an ominous turn for the worse for the US and a clear example of conquering a weaker neighbor purely for pillage – not just Texas, but everything from there all the way to California.
Doug: That's right. Davey Crockett and the boys, we love them, but in many ways they were the equivalent of today's Mexicans who want to recolonize the southwest and turn it back into part of Mexico, in what they call the Reconquista.
L: Indeed, but this is ancient history to most US taxpayers today – I'm reminded that it's not correct in many cases to call them Americans.
Doug: Yes, just as it was a misnomer to call the people who lived in the Roman Empire after Diocletian Romans – because Roman citizens were once free men. After about 300 AD most of them were bound to the land or their occupations as serfs. But the slide for Rome started at least 120 years earlier, after the death of Marcus Aurelius. Politically, the decline started with the accession of Julius Caesar 240 years before that. So, when did the slide – politically, economically, and socially – really start for the US? When were there no more trends going up?
L: FDR? The New Deal was really a moral, economic, and political turning point.
Doug: You could make that argument, but the US still grew economically, despite the roadblocks FDR threw in its path. US military power and global prestige continued growing from that point, although, paradoxically, the accelerating growth of the US military was directly responsible for the decline of the US economically and in terms of personal freedom. One reason for the ascendancy of the US after World War II was that we were the only major country in the world not physically devastated by the war.
L: Ah. Right.
Doug: So it seems to me that the peak of American civilization was in the 1960s. As for evidence, well, I like to put my finger on the 1959 Cadillac. Those twin bullet taillights, the opulence of it… In terms of then-current technology, things couldn't get much better.
L: "Opulence. I has it."
Doug: [Laughs – a real belly laugh] That's my favorite TV commercial! Anyway, that was the peak, in my mind. Though things continued getting better for a while, the US started to live out of capital.
L: Had to pay for guns and butter.
Doug: That's right. The Johnson administration's so-called Great Society created vast new federal bureaucracies that promised Americans free food, shelter, medical care, education, and what-have-you. Americans became true wards of the state. But the real, final nail in the coffin for America was in 1971 –
L: Nixon taking the US off the gold standard.
Doug: Nixon taking the US off the gold standard – open devaluation of the dollar, combined with wage and price controls for some months. And that was not long after the so-called Bank Secrecy Act, which abolished bank secrecy, and required the reporting of all foreign financial accounts. Nixon was, in many ways, even more of a disaster than Johnson. Republicans are usually worse than Democrats when it comes to freedom, partly because they like to couch their depredations in the rhetoric of defending the free market. While everyone understands that Democrats are socialists just under the surface, Republicans actually give capitalism a bad name. Baby Bush is a perfect, recent example.
L: But don't you worry your pretty little head about devaluation – it's just a "bugaboo" – and as long as you're not one of those unpatriotic people wanting to buy imports or vacation abroad, your dollar will be worth just as much tomorrow as it is today. The scary thing is that the Belarusian dictator Lukashenko said almost the same thing when the Belarusian ruble lost two thirds of its forex value earlier this year, asking his countrymen why they need to go on vacation in Germany or buy German cars…
Doug: You see why I like to study history? It doesn't repeat, but it sure does rhyme…
L: With a vengeance.
Doug: So, anyway, since 1971, some things have improved largely due to technological advances, but the America That Was has been fading into the past. It was a decisive turning point. You can see that in the accelerated proliferation of undeclared wars we've had since then. I don't just mean the penny-ante invasions of Granada and Panama – the US has always lorded it over Caribbean and Central American banana republics; those are just sport wars. But Iraq and Afghanistan are alien cultures on the other side of the world – apart from never posing any threat to the US. Now it looks like Iran and Pakistan are on the dance card, and they're big game. The War Against Islam has started in earnest, and it's going to end badly for the US. I explained all this at great length in the white paper, Learn to Make Terror Your Friend, that I wrote for The Casey Report last month.
Domestically, saying that the US is turning into a police state when you started this conversation was quite accurate. You can see more and more videos spreading over the Internet, not just of police brutality, but demonstrating the militarization and federalization of police, who are being inculcated with both disdain for and paranoia about ordinary citizens.
In the old days, if you were stopped for speeding, the peace officer was polite – you could get out of your car, meet the cop on neutral ground, and chat with him. You didn't have a serious problem unless you were obviously drunk or combative. Now, you don't dare make a move. You better keep your hands in plain sight on the steering wheel and be ready for a Breathalyzer test without probable cause. The law enforcement officer will stand behind you with his hand on his gun. And you're the one who'd better be polite.
L: There has been a polar reversal. The cops used to address citizens as "sir" or "ma'am." Now, the correct response in a traffic stop is: "Yes, sir! I would love to inspect the bottom of your boot, sir!"
Doug: [Laughs] That's right. My friend Marc Victor gives out magnetized business cards. People ask, "Why?" He answers that it's so clients can put them on the bottom of their cars or refrigerators, so they can see it when the cops throw them to the ground.
L: Marc's a good man. There's a handy video on Marc's website, offering advice on what to do if you're pulled over by the police in a traffic stop.
Doug: A good public service announcement. At any rate, I think there's no question that the US has turned the corner on every basis: politically, socially, morally, and now, economically…
L: Okay, but, Doug, you said that in 1979 too. The question is, how do we know when the door is going to close?
Doug: [Laughs.] Well, sometimes I feel a little like the boy who cried wolf. But Roman writers like Tacitus and Sallust saw where Rome was going before it got completely out of control. Should they have said nothing, for fear of being too early? Here in the US, it should have gone over the edge back in the 1980s, but we got lucky. There was still a lot of forward momentum, which can last for decades when you're speaking of civilizations. There was the computer productivity boom. The Soviet Union collapsed, China liberalized, and Communism was discredited everywhere except on US college campuses. The end of the Cold War opened up vast areas of the world to the global market. And most surprising of all, Volker tightened up the money supply and interest rates went high, causing people to save money and stop borrowing to consume.
L: That's not happening this time.
Doug: No. We got lucky back then. Since the '90s we've had a long and totally phony, debt-driven boom that's now come to an end. I feel very confident that there's no way out this time. There are huge distortions and misallocations of capital that have been cranked into the system for two decades. And not just in the US this time, but in Europe, China, Japan, and elsewhere.
The US is very clearly on the decline. The fact that in spite of bankrupting military expenditures to no gain for the American people, those in power are talking overtly and aggressively about attacking more countries – Iran and Pakistan in particular – is extremely grave. The fact that they attacked Libya – which, incidentally, is going to turn into a total disaster, a civil war that will last for years – shows it's not stopping. Sure, Obama brought troops home from Iraq – another disaster that's going to remain a disaster for years to come – but at the same time he put a company of combat troops in Uganda, of all places and Marines in Australia, to provoke the Chinese.
Back home, I've read reports that people are being stopped for carrying gold coins out of the US, in Houston in particular. Now we have authorization of the military to detain US citizens, on US soil, with no trail, and indefinitely, on the verge of becoming law. And Predator Drones have been used to hunt down farmers on their own ranches.
I could go on and on. This is not like spotting early signs of decay in America's expansionist wars of the 19th century or things getting worse with FDR. Most people can't see it with all the noise and confusion, but we've reached the edge of the precipice.
L: Don't worry about exactly where the edge is, just assume it's there and take appropriate action?
Doug: Yes. It really is there. It's a clear and present danger. But most Americans are as oblivious as most Germans were in the '30s. In fact, most of them support what's going on, just as most Germans supported their government in the '30s and '40s.
L: So… don't worry about figuring out exactly when the gates will shut. Assume they are shutting now?
Doug: That's right. One should be actively and vigorously looking to expatriate assets, cash, and even one's self. A prudent person will always be diversified politically and internationally.
L: What about people who have jobs they can't continue doing from abroad and who need the income?
Doug: They should still prepare, as best they can, to be ready to go on a vacation when things get hot – a vacation from which they might not return for a long time. All that needs happen, with the hysteria that's building in the US, is for a major terrorist incident – real or imagined – to occur. Homeland Security will lock the country down. I hate to admit it, but I'm almost starting to credit the stories about those FEMA camps.
Look, I know it sounds extreme, and the comparison to pre-WWII Germany has been made many times, but it bears repeating. Germany was the most literate, civilized, and even mellow, in some ways, country in Europe. It was much admired all around the world – a nation of shopkeepers, small farmers, and scholars. But the whole character of the place started changing in 1933, and it just got worse and worse. By the end of 1939, if you weren't out, you were done.
L: [Pauses] Well, not a cheerful thought. Actions to take?
Doug: Things we've said before: Set up foreign bank accounts in places you like to travel, while you can. Set up vault arrangements for physical precious metals outside the US. Buy foreign real estate that you'd like to own, because it can't be forcibly repatriated. Offshore asset protection trusts are a good idea too. Become an International Man. Let me emphasize that US taxpayers should stay within all US laws, because the consequences of breaking them are unbelievably draconian.
Generally, one simply must internationalize one's assets. The biggest danger investors face, by far, is not market risk – huge as that will be – but political risk. The only way to insulate yourself from such risk is to diversify yourself politically and geographically.
L: Right then… words to the wise. Thanks for your insight.
Doug: You're welcome. Most won't, but I just hope readers listen.
Transcendental Market Truths:
http://www.siliconinvestor.com/readmsg.aspx?msgid=27859437
The Market:
Yesterday, shares were distributed to sideline traders in exchange for cash. They kept the headline indices (Dow Industrials, prominently) up while the selling into the rally in the broad market was clearly taking place. A coordinated worldwide recession is coming, starting in Europe, spreading to the US and China and ending up in the emerging markets. No bull market can get started when the chips are stacked against the economy the way they are stacked this year. And, the leaders have no sensible plan to deal with the recession, either. Undoubtedly, the market is going to get the Fed printing more money to try to keep the economic engine turning over.
If this market follows the normal pattern, I'll see weakness in the broad market beginning to telegraph coming weakness in the blue chips. So, I'll watch the Small Caps (S&P 600 SML Index) and Mid Caps (S&P 400 MID Index) for telltale signs of weakness. That will give me a warning to get ready for the decline that's coming back to the bottom of the October-present trading range - and maybe to lower lows. Intraday yesterday, in fact, it was already evident that the broad market was not participating fully in the pop-fly rally. The MidCaps retraced much of their initial pop higher while the Dow and SPX retraced much less.
MidCaps:
Looking at the internals, it's striking how poor money flow was in the MidCaps yesterday. The initial rally was retraced to fill the gap, while money flow was actually negative on the day.
SPX:
If SPX is truly going for a test of the October high, the common stock advance-decline line is going to be a huge bearish divergence.
Bottom Line:
This rally does not have legs. It's a bull trap, setting up a big decline ahead.
So we enter Year IV of the Long Slump, the cruellest yet though not the most acute
By Ambrose Evans-Pritchard, International Business Editor
5:30PM GMT 02 Jan 2012
There will be no Chinese credit explosion this time, no real help from post-bubble India or over-stretched Brazil.
It will be a global downturn on all fronts, aborting what remains of recovery even before industrial output in the OECD bloc has regained its pre-Lehman peak.
The second wave will hit with youth unemployment already at 45pc in Greece and 49pc in Spain; and with the US labour participation rate already at depression levels of 64pc.
We will hear more about Italy's Red Brigades, Greece's Sect of Revolutionaries, and America's militia groups, and how democracies respond. Proto-fascism in Hungary is our warning.
China's surgical soft-landing will slip control, like Fed tightening in 1929 and 2007, or Japan's squeeze in 1990. Once construction has run amok, bears will have their way.
Since the purpose of New Year predictions is to stick one's neck out, let me hazard that China will devalue the yuan in 2012. It will export yet more spare capacity into a deflationary world, until the West retaliates and starts to turn its back on globalisation. Capital outflows will accelerate. The idea that China can rescue anybody will seem quaint.
The strong yen has already pushed Japan back into deflation, and fresh recession. Public debt has reached one quadrillion yen, as noted acidly by Tokyo's R&I rating agency when it stripped Japan of its AAA rating last month. That is $12.8 trillion, or Italy plus Spain times four.
There is a graveyard full of Gaijin commentators who wrote off Japan too soon. Will the dam break this year at last, with tax covering less than half of spending, public debt at 237pc of GDP, ever fewer workers, and a state pension fund now selling government bonds? Perhaps. As R&I warns, Europe's woes have brought sovereign debt into very sharp focus.
America will look resilient for a few months. The payroll tax deal has averted a fiscal shock, but that is all. Money growth (M3) has sputtered out, and velocity is falling.
Politics on Capitol Hill will restrain Ben Bernanke from launching QE3 until the Tea Party can see the eye-whites of deflation. Six-month PCE inflation was 2.9pc in August, 2.4pc in September, 1.6pc in October, and 1.2pc in November. Not there yet. Prepare for a Wall Street squall first.
Whether the scare of early 2012 turns seriously ugly depends on the nerve of policy-makers. Shock absorbers are worn thin, but not exhausted.
Central banks have the means to prevent a 1930s outcome, even with rates at zero, if willing to deploy Fisher-Friedman monetary stimulus with conviction, buying assets from non-banks and targeting nominal GDP growth of 5pc. But policy defeatism is in the air, and Austro-liquidationists are winning the popular debate.
The second leg of our Kondratieff Winter comes at an awful moment for Euroland, just as the North-South split turns deadly.
The European Central Bank has guaranteed trouble by letting M3 money contract. Fiscal tightening into the downward slide will make matters worse. A credit crunch as banks shrink loan books by €1 trillion to meet capital ratios will do the rest. All policy levers are set on deep recession, and deep recession is what Europe will get.
Monetary union is too damaged to parry these blows. The ECB's Mario Draghi will cut interest rates to 0.5pc by February, just to keep pace with passive tightening. Half-hearted purchases of Italian and Spanish bonds will drift on, doing more harm than good. By reducing existing bond-holders to junior status, the ECB will ensure a slow exodus. Draghi knows this. His hands are tied.
The Bundesbank will wage guerrilla war against money printing through the pages of Die Welt and Handelsblatt, paralyzing the ECB's Council until Angela Merkel orders Jens Weidmann to desist.
By then it will be too late, deliberately so. Contraction will play havoc with budgets in Italy, Spain, Portugal, and France. Austerity alone will seem a Sisyphean task. Club Med leaders will not be able to command popular assent for such 1930s scorched-earth strategies.
Politics will fracture further, splintering to the hard Left and Right. The Front National's Marie Le Pen's will beat Maréchal Sarkozy into the French run-off invoking 'terroir' and the ancient franc. Escalating levels of coercion will be needed to uphold the Project, with EU commissars eating alone in the administered territories of Greece and Italy.
Far from protecting credit ratings, Europe's self-defeating policies will bring a blizzard of downgrades. France's AAA will go, obviously. So will Austria's as banking woes deepen in Hungary, Ukraine, and Croatia. Vigilantes will take a closer look at Holland's household debt, off the charts at 270pc of disposable income.
The shrinking AAA core will leave Germany propping up the EFSF bail-out fund, until the weight of contingent liabilities endangers Germany itself. That will concentrate minds.
France's President Hollande will "triangulate", playing the pan-Latin card to discomfit Berlin and force a policy change. Portugal's Troika sacrifices will prove as futile as Greek efforts before. Lisbon's second bail-out will come just as Greece graduates from riots to insurrection, and Italy's Silvio Berlusconi will try to snatch power again by whipping up fury against Tedeschi. Bundestag patience will snap at such disorder everywhere.
Germany will not be able to fudge EMU any longer. It must either immolate itself, accepting a debt union and internal inflation to save a currency it never wanted and doesn't love; or opt instead to uphold fiscal sovereignty and the essence of its own democracy, and let the Project die.
The shrewd, equivocating, ice-cold Chancellor will quietly oust arch-europhile Wolfgang Schauble and let the Project die, always pretending otherwise.
Just an idle hunch. Guten Rutsch.>
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8987846/Ambrose-Evans-Pritchard-2012-could-be-the-year-Germany-lets-the-euro-die.html
A recap of the Greatest Financial Coup d'état of all time...
http://www.siliconinvestor.com/readmsg.aspx?msgid=27855560
http://www.siliconinvestor.com/readmsg.aspx?msgid=27855560
To: Road Walker who wrote (25303) 1/2/2012 8:26:40 AM
From: SliderOnTheBlack 13 Recommendations Read Replies (1) of 25320
Re: "Count your lucky stars that there were adults in the room to save your bacon."
Message # 25303 from Road Walker at 1/1/2012 12:41:00 PM
"Like it or not, the bank bailout was a model for all future financial calamities. If they had done
the same in 1929 there would have been no Great Depression. If they hadn't done it in '07/'08
we would be in the midst of a Great Depression right now, with all the human misery that that means.
We're very lucky that some very smart people were in charge, and yes that starts with the head
of the Fed, an expert on the Great Depression.
Flame away, but it's the truth.
Count your lucky stars that there were adults in the room to save your bacon."
==============================================================
What planet have you been living on? Not even the PSYOP boys at MacDill AFB
would be so naive as to write that whacky BS.
Adults in the room who saved our bacon?
How about a room full of criminal sociopaths who robbed us blind.
That has to be one of the single most naive statements I've ever read in my entire life.
You'd make Huxley proud. Talk about loving your servitude and worshiping your slave masters...
We were "lucky."
That's how you'd describe the looting of America - "lucky?"
Talk about Stockholm Syndrome.
Here's a short list on where all the money went and don't forget the $200 million dollar
non-recourse loan the "Housewives of Wall Street" got...
Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)
and many many more including banks in Belgium of all places
View the 266-page GAO audit of the Federal Reserve (July 21st, 2011):
http://www.scribd.com/doc/60553686/GAO-Fed-Investigation
Source: http://www.gao.gov/products/GAO-11-696
FULL PDF on GAO server: http://www.gao.gov/new.items/d11696.pdf
And as far as the bankster-gangster bailout being "a model for all future calamities?"
How about a squid pro quo (pun intended), bankster coup d'etat by design.
And yes, it was "by design."
What do you think the FIRE (Finance-Real Estate) bubble was really all about?
It was to disguise the in broad daylight dismantling of the American economy via the transfer of
America's industrial manufacturing base and the outsourcing of tens of millions of American jobs
to our WTO, NAFTA, and GATT globalist partners, so the banksters and the multi-nationals could
squeeze billions in additional profits out of the U.S. economy, while pre-positioning America to collapse
into an already awaiting post-sovereign, post-democratic, global governance framework.
I know, I know...
It wasn't by design, that's all a conspiracy theory.
It was sheer coincidence that just 15 months after the Long Term Capital Management blow up,
(which as we all know was caused by the reckless use of leverage), that then Goldman CEO
Hank Paulson, who served on the Long Term Capital Management bailout committee, personally
lobbied and arm-twisted the SEC into allowing Wall Street to adopt the very same leverage model
as LTCM, just as Sir Alan Greenspan unleashed an easy money-low rate punch bowl party for
Wall Street and the multi-national criminal elite, (and you wonder why Greenspan was knighted?).
Nothing to see here, just move along...
Hank Paulson's February 29, 2000 letter to the SEC:
http://banking.senate.gov/00_02hrg/022900/paulson.htm[/url]
And certainly no "squid pro quo" front running by Goldman's Paulson here...
where the Wall Street Investment banks were allowed to increase their leverage
from 10-12:1 to a LTCM-esque 40-50:1.
http://banking.senate.gov/00_02hrg/022900/paulson.htm[/url]
You want us to believe that Hank Paulson who led the committee that put together the bailout
of LTCM, was so stupid, that just 15 months after witnessing LTCM's reckless use of leverage
blow up the entire market, that he lobbied the SEC to allow Wall Street to do the exact same thing?
Do you think that maybe, just maybe, Paulson knew Alan Greenspan was about to hand them
the "Mother Of All Punch Bowls?"
I suppose it was sheer coincidence (not by design) that Brooksley Born was smeared and silenced,
while political lackeys like Phil Gramm and his bankster wife Wendy sold out America with the
Commodity Futures Modernization Act of 2000 - which by design, released the derivatives genie
out of the bottle?
http://www.villagevoice.com/2002-01-15/news/phil-gramm-s-enron-favor/[/url]
http://www.pbs.org/wgbh/pages/frontline/warning/interviews/born.html[/url]
And I suppose it was a sheer coincidence (not by design) that Treasury Secretary Robert Rubin
led the repeal of Glass-Steagall, and then immediately upon it's passage, jumped ship to Sandy Weil's
Citigroup (a prime beneficiary of the legislation), while accepting a multi-million dollar pay day
reward from Weil, just as Greenspan threw Wall Street a low rate, easy money Lootapalooza Party?
http://biggovernment.com/cgasparino/2009/11/11/robert-rubin-the-nexus-of-big-government-and-wall-str
Certainly no quid pro quo there.
Hell, even the Pentagon got in on the act, stealing $2.3 trillion dollars (that's Trillion with a "T")
from the US taxpayers.
Remember this announcement from "the day before" 911?
http://www.youtube.com/watch?v=xU4GdHLUHwU[/url]
So now the question begs to be asked:
Am I a conspiracy theorist, or are you either so naive or so greedy, that you'd sell out your own mother,
mortgage your children's future, and give up all your rights -- all for just one more prop job rally in the DOW
to bail out your 401K?
And as far as the subprime mortgage collapse and a housing bubble that no one saw coming?
Puh--leeze.
I was there...
We were discounting appraisals and LTV's in California as early as the middle 1990's because
of an unsustainable real estate bubble.
Does the name Cityscape Financial ring a bell for anyone?
Cityscape was the darling of the Franklin Fund and Fidelity Magellon's famed manager Michael Price.
And it became the posterchild for the first subprime boom to bust bubble in the 1990's...
http://www.fool.com/DTrouble/1997/DTrouble971003.htm[/url]
Turn back the clock to the mid-1990's...
Can you remember when Jim Palmer was pitching subprime loans
for "The Money Store" each morning on Good Morning America?
Do you remember who America's "Highest Paid CEO" was?
It wasn't the CEO of Exxon, or Cisco, or Goldman Sachs,
it was the CEO of subprime lender GreenTree Financial.
We had the first subprime boom to bust in the 1990's, which ended with the collapse
of LTCM and the Russian Ruble-Bond Crisis of 1998.
Cityscape went belly up, the Money Store and scores of other
subprime lenders collapsed and were snapped up for pennies on
the dollar by the regional banks (First Union and Hibernia
were both nearly brought down by subprime acquisitions), and
insurance giant Conseco was eventually bankrupted by it's
acquisition of GreenTree Financial.
In the mid-90's I was in the same room where a CEO of one of
the largest (and oldest) sub-prime lenders in America announced
his resignation/retirement, because the sharks from Wall Street had
showed up on Main Street, and had convinced board after board to
embrace the folly of "Growth At Any Cost", by originating the so-called
LIAR and high LTV subprime loans - which he said, "violated
everything we've learned about subprime risk modeling over
the last 40 years, through countless business cycles and recessions."
He said he didn't know when it would happen, but sooner, or later,
the entire industry (including Fannie & Freddie) would blow up,
and he didn't want to be part of it.
And blow up it did, as by design they turned Fannie & Freddie into
a financial Three Mile Island by dumping all their toxic mortgage
paper onto the taxpayers back, while sucking out hundreds of billions
of dollars in egregious salaries and inflated bonuses on earnings that
never existed in the real world.
And EVERYONE in the subprime industry saw it coming. Fraud was already
rampant in the mid-90's. Don't believe anyone who tries to sell you the BS that
mortgage fraud was a new phenomena discovered in the collapse of 2007-2008.
The FBI was doing MAJOR investigations nationwide into mortgage and appraisal fraud
over a decade before the collapse of 2007-2008. And those investigations were quietly
closed down and swept under a rug, because neither Congress or Wall Street wanted
the fraud stopped - and that's a fact.
Yet banker after banker and Congressman after Congressman looked you directly in the eye,
and lied to the TV cameras telling you they never saw either the subprime, or the housing bubble
coming... and dupes like you bought it hook, line, and sinker, while calling anyone who dares
speak the truth... a conspiracy theorist.
How many times can Wall Street keep raping and pillaging you people?
How soon you both forgive and forget...
From Henry Blodgett and Mary Meeker's emails mocking your buying of Wall Street's
tech & internet sock puppet IPOs, to Goldman Sachs laughing about your pension fund
buying their "shitty deal" mortgage securitizations, to the bond analysts at firms like Moody's,
Fitch and S&P, laughing about being able to put a "AAA" rating on a "cow pie" and being able
to sell it to you... as you bought their shit over and over, and over again.
If you truly believe that "we're very lucky that some very smart people were in charge," and that
we should "count our lucky stars that there were adults in the room to save our bacon," you need to
read Michael Lewis's book "LIARS POKER" and you'll have your eyes opened about how Wall Street
really works, including an inside look at the S&L scandal.
http://www.amazon.com/Liars-Poker-Michael-Lewis/dp/039333869X
Wall Street knowingly swindled the S&L's and looted America by design in the 1980's, again
in the late 90's, with their tech & internet sock puppets, and again a decade later in the 2000's
with the finance and real estate bubble. And you bought their bullshit, their sock puppets, and
their "AAA" rated cow pies each and every time.
How short can your memories possibly be people?
If you ever wondered how & why Wall Street could time and time again, turn on Main Street
and just rape, loot, pillage, and rob you blind - it's because YOU LIKE IT, and keep coming
back for more!
You've literally trained Wall Street to rob, loot and pillage you, because every time they bend
you over and ream you, your response has been...
"Thank You Sir, may I have another."
And another you shall get.
SOTB
PS: How'd that Obama veto of the NDAA bill work out for you?
You know, this one...
http://www.siliconinvestor.com/readmsg.aspx?msgid=27803283
Is there any bullshit you won't believe and buy?
Vampire Squid Watch: Trends for 2012
http://www.alternet.org/story/153604/vampire_squid_watch%3A_4_scary_economic_trends_for_2012
COMMENTARY NUMBER 410
Special Commentary, GAAP-Based 2011 U.S. Financial Data
December 28, 2011
http://www.shadowstats.com/
__________
Actual 2011 Federal Deficit Topped $5.0 Trillion
U.S. Government Debt and Obligations Top $80 Trillion
Long-Term U.S. Insolvency/Hyperinflation Remain Virtual Certainty
__________
PLEASE NOTE: The next regular Commentary is scheduled for Friday, January 6th, covering the estimates of December 2011 employment and unemployment. See Schedule for month ahead.
Best wishes to all for happy, healthy and prosperous New Year! — John Williams
SPECIAL COMMENTARY— 2011 BUDGET DEFICIT REALITY
Continuing $5 Trillion GAAP-Based Federal Deficit Remains Unsustainable, Uncontainable and Unstable. Against a headline, official quasi-cash-basis and gimmicked reporting of a $1.3 trillion federal budget deficit in 2011, GAAP-based accounting (using generally accepted accounting principles) indicates that the actual 2011 deficit ran somewhat in excess of $5 trillion for the year. The largest difference between these estimates is that the GAAP-based number includes the widening shortfall of unfunded liabilities for social insurance programs, such as Social Security and Medicare.
As shown in the accompanying table of “U.S. Government – Alternative Fiscal Deficit and Debt Numbers” (SGS Table), the various 2011 deficit estimates remained close to the same horrendous levels as estimated for 2010. Based on the 2011 Financial Report of the United States Government the 2011 cash-based federal deficit at $1.299 trillion was little changed against the $1.294 trillion estimate for 2010. The limited GAAP-based deficit (before consideration of changes in social insurance unfunded liabilities), narrowed to $1.313 trillion in 2011, from $2.080 trillion in 2010, but that was due almost entirely to one-time reporting/assumption changes in Veterans’ Benefits and U.S. government liabilities on Fannie Mae and Freddie Mac. Accordingly, the operating deficits effectively were about the same level in both 2010 and 2011.
In like manner, the indicated full GAAP-based deficits (including annual change in the net present value of social insurance programs) of $4.6 trillion in 2011 and $5.3 trillion in 2010, effectively were about $5 trillion in each of 2010 and 2011, adjusted for one-time reporting changes.
Total Federal Debts and Obligations Exceed $80 Trillion. The numbers discussed in the text here are those from the GAO-Based Alternative version of the 2011 numbers as shown in the SGS Table. Unfortunately, the government’s financial reporting has become as heavily politicized as some of its economic reporting. Unlike the economic numbers, though, the financial data are audited (where possible) by the GAO (Government Accountability Office, formerly the General Accounting Office).
In the 2010 statement, consistent year-to-year accounting was not shown, with a large, one-time reduction in reported Medicare liabilities being based on overly optimistic assumptions of the impact from the then recently enacted healthcare legislation. Referred to in the government’s statements as the Affordable Care Act (ACA), the full GAAP-based results from the ACA accounting showed an annual surplus of $7.0 trillion in 2010, but again, that was not in terms of consistent reporting, which would have been along the lines of a $5 trillion annual deficit.
The new health-care enhanced Medicare results used in the government’s statements were prepared under the auspices of the Obama Administration, but the GAO did not fully buy into the happy numbers in 2010 or again in 2011, with disclaimers of opinion. The GAO went so far as to run an “Illustrative Alternative Scenario” (pages 130 and 134, respectively of the 2010 and 2011 statements) to the government’s happy Medicare adjustments. The “Alternative” versions appear to have more realistic assumptions than the politicized data used in official ACA-based data. Unfortunately, under present accounting conditions there simply is no way of coming up with truly meaningful hard number, in terms of total government obligations.
Where the “Alternative” data used here show $80.9 trillion of U.S. government debt, obligations and the net present value of the unfunded social security liabilities, as of September 30, 2011, that likely is shy of reality. Adding estimates of government liabilities in, and exposures to Fannie Mae, Freddie Mac, the PBGC and FDIC easily could take that total into the $100 trillion range. Publicized estimates of U.S. government exposure beyond the $100 trillion mark usually included gross unfunded liabilities, which are not adjusted for net present value (NPV). NPV reflects the amount of cash needed in hand today to be able to cover a future obligation. (Text continues following the SGS Table.)
U.S. Government - Alternative Fiscal Deficit and Debt Numbers
Reported by U.S. Treasury
[edit TJ: data table removed due to format]
(1) Fiscal year ended September 30th; the numbers are subject to rounding differences.
(2) Includes gross federal debt, not just “public” debt. While the non-public debt is debt the government owes to itself for Social Security, etc., the obligations there are counted as “funded” and as such are part of total government obligations.
(3) Fiscal years 2011 and 2010 are broken out into “Alternative” and “Official” measures necessitated by “Official” 2010 reporting including a large, one-time reduction in the estimated net present value of unfunded Medicare liabilities, due to unrealistically favorable assumptions tied to the passage of the Affordable Care Act (ACA) healthcare legislation. With consistent accounting, SGS estimates the GAAP shortfall with Social Security and Medicare for 2010 to be roughly $5 trillion. The “GAO-Alternative” numbers here are being used as a placeholder until such time as better accounting estimates are available, and reflect results using the “Illustrative Alternative Scenario” on Medicare costs shown on page 130 of the 2010 report and on page 134 of the 2011 report.
(4) The 2009 data predate December 2009 guarantees of Fannie Mae and Freddie Mac (GSEs) and do not reflect PBGC or FDIC liabilities. Even so, accounting for neither 2010 nor 2011 reflected what might be considered direct, full faith and credit guarantees of the U.S. government in those areas. Please note that mid-year 2009 accounting redefinitions for TARP knocked off roughly $500 billion from the reported formal cash-based estimate and contributed to a TARP “profit” in the GAAP numbers. Accordingly, post-2008 reporting may understate annual operating shortfalls and federal debt obligations by significant amounts.
(5) On a consistent reporting basis, net of one-time changes in assumptions (actuarial and otherwise) and accounting, SGS estimates that the GAAP-based deficit for 2011 topped $5 trillion. In like manner, SGS estimates that the GAAP-based deficit for 2007 topped $4 trillion, with negative net worth of $57.1 trillion and total obligations of $59.8. So as to maintain consistency with the official GAAP statements, the “official” numbers are shown.
(6) SGS estimates a $3.4 trillion 2004 deficit, excluding one-time unfunded setup costs of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (enacted December 2003). Again, in order to maintain consistency with the official GAAP statements, the “official” numbers are shown in the table for 2004. The 2011 GAAP statements were released on December 26, 2011: http://fms.treas.gov/fr/index.html.
Sources for the SGS Table Data
Fiscal Year (Column I) – All numbers are for the indicated fiscal-year (ended September 30th), in either billions or trillions of dollars as shown.
Formal Cash-Based Deficit (Column II) – headline deficit number from Table 3 on page 7 of the 2011 report, “Management’s Discussion and Analysis” (hereinafter referred to as MDA). Please note that the latest (November 2011) monthly statements from the U.S. Treasury show a 2011 deficit of $1,296.8 billion and a 2010 deficit of $1,294.2 billion.
GAAP ex-SS Etc. Deficit (Column III) – euphemistically referred to as “Net Operating Cost” in MDA (Table 3 on page 7). It excludes annual change social insurance unfunded liabilities.
GAAP with SS Etc. Deficit (Column IV) – previous number (Column III) plus year-to-year change in the net present value (NPV) of social insurance unfunded liabilities, which comes from MDA (Table 8 on page 21) line “Closed Group” under “Statement of Social Insurance,” 2011 minus 2010 (for the 2011 “Official” number). The “Closed Group” is used here for consistency, as it has been the preferred measure used by the U.S. government in its earlier statements. The “Official” closed group NPV for fiscal 2011 and 2010 respectively are $46,273 and $43,057 billion.
The “Alternative” accounting adds in the differential to the MDA line “Closed Group” and the $12.4 trillion additional net present value of excess expenditures over income for Medicare shown in the “Illustrative Alternative Scenario,” shown in the table on page 130 of the 2010 report (for the 2010 “Alternative” estimate), and the differential between the 2011 “Illustrative Alternative Scenario,” data on page 134 of the 2011 Report, and the 2010 data, to estimate the 2011 number. The resulting “Alternative” closed group NPV estimates for fiscal 2011 and 2010 respectively are $58,707 and $55,410 billion.
GAAP Federal Negative Net Worth (Column V) – “Net Position” from MDA Table 5 on page 11, plus the 2011 “Closed Group” “Official” and “Alternative” total net present value unfunded liabilities of social insurance as indicated and adjusted in Column IV.
Gross Federal Debt (Column VI) – from “Note 14. Federal Debt …” pages 90 to 92 of the 2011 report. Total held by public (p. 90) plus Total intragovernmental (p. 92).
Total Federal Obligations (Column VII) – “Total Liabilities” from the MDA Table 5 on page 11, in the 2011 report, plus the 2011 “Closed Group” “Official” and “Alternative” total net present value unfunded liabilities of social insurance as indicated and adjusted in Column IV, plus total intragovernmental debt of $4,710.9 billion from (p. 92) of the 201 report.
___________________
Annual Deficits of $5 Trillion Are Not Sustainable. Significant space was taken up in the government’s latest financial statements to assess the sustainability of the current system. Most of the material covered was overly misleading nonsense. A variety of sustainability issues for the system will be explored in the upcoming report Hyperinflation 2012. Those looking at the current $80 trillion of government debt and obligations, who think such is stable, need to consider that the circumstance is getting worse each year by at least $5 trillion. Taxes cannot be raised enough to bring the system into balance for one year, let alone for the ongoing future. Every penny of government spending—except for Social Security and Medicare—could be cut and the system still would be in annual deficit. Massive cuts have to be put in place (an absolute necessity with the social insurance), if there is to be any hope of restoring long-term solvency for the United States government.
There is no political will apparent among those currently controlling the White House and Congress to do so. Accordingly, the U.S. will be doomed to an eventual hyperinflation, as the government prints money to meet its obligations. That process already has started. There is little time. The next Fed action to help the economy (a.k.a. prop-up banking system liquidity), easily could be the one that pushes the U.S. dollar into the abyss. Much greater detail, again, will follow with the new hyperinflation report.
Week Ahead. Recognition of an intensifying double-dip recession as well as an escalating inflation problem still is sporadic. The political system would like to see the issues disappear until after the 2012 election, the media does its best to avoid publicizing unhappy economic news during the holiday shopping season, and the financial markets will do their best to avoid recognition of the problems for as long as possible, problems that have horrendous implications for the markets and for systemic stability.
Until such time as financial-market expectations move to catch up fully with underlying reality, or underlying reality catches up with the markets, reporting generally will continue to show higher-than-expected inflation and weaker-than-expected economic results in the months and year ahead. Increasingly, previously unreported economic weakness should show up in prior-period revisions.
Unemployment Rate and Payroll Employment (December 2011). Nonfarm payrolls and the unemployment rate for December 2011 are the next major economic releases due for publication, on Friday, January 6, 2012. These first major indicators of December economic activity likely will signal ongoing deterioration in broad economic conditions. A pattern of weaker-than-expected reporting remains a good bet, against a likely stronger payroll consensus expectation, and against a likely unchanged unemployment rate expectation.
Consistent with six months of contracting online help-wanted advertising, payrolls still remain at risk of showing an outright monthly contraction. Yet, as seen again with last month’s change in headline payrolls, whatever is reported likely will include a payroll contraction within the 95% statistical reporting confidence interval of +/- 129,000 for payroll change.
The headline unemployment rate dropped meaningfully (by 0.4%) in November, reflecting a large number of unemployed—unable to find jobs—abandoning active job searching, leaving the headline labor force and entering the government’s classification of a short-term discouraged worker.
Unusual seasonal-adjustment patterns, though, also were at work in the November unemployment detail, and some catch-up is likely in December or January reporting. Keep in mind that monthly changes in the unemployment rate that are within the 95% confidence interval of +/- 0.2% are not statistically meaningful.
NBC has announced the following upcoming features for the Monday, January 2nd edition of ROCK CENTER WITH BRIAN WILLIAMS:
WHAT real estate slump? While millions of American homeowners have seen the value of their property plummet, one type of U.S. real estate is BOOMING: farmland. Prices are rising so much so fast that there's even talk of a coming bubble. Harry Smith goes to Iowa where the price of farmland has risen as much as 23% just in the last year, according to the Federal Reserve Bank of Chicago. What is driving prices up, and might it have a ripple effect?
http://tv.broadwayworld.com/article/NBC-Announces-Upcoming-Features-for-ROCK-CENTER-WITH-BRIAN-WILLI...
Rising land values concern Farm Credit Administration
By Jerry Lackey
San Angelo Standard Times
Posted December 31, 2011 at 6:12 p.m.
http://www.gosanangelo.com/news/2011/dec/31/rising-land-values-concern-farm-credit/
1 in 3 homes here sell for under $100K in Tucson [The Arizona Daily Star, Tucson]
"It's 10-years-ago prices," said John Strobeck, of Bright Future Business Consultants, which tracks the local housing industry.
Some properties have sold for prices that go much further back than that. Hundreds of homes sold last year at what can only be called extreme prices: 800 homes sold for under $35,000, nearly 300 of them going for under $25,000 and 15 going for under $10,000.
Investor Gary Zimbler, of Riviera Investments, bought a beat-up manufactured home on the far west side last year for $8,000 and a south-side townhome for $10,500. He's bought several for about $25,000, prices that would have been scarce in the late 1980s and have not been widespread since the early 1970s or late 1960s.
"In '06, I can't remember any properties that were selling for under $100,000," Zimbler said. "Houses are being purchased for a third or 25 percent of their value of five years ago."
Strobeck said many of the homes priced under $25,000 are tiny, aging one- and two-bedroom houses in bad condition. But he called the idea that Tucsonans could buy houses for less than the price of a new car amazing.
"It shocks you, doesn't it?" Strobeck said. "It's a sign of the times."
Ultralow prices
The 6,400 homes that went for less than $100,000 include more than 2,300 foreclosed homes that were sold at auction to a third party or went back to the bank that made the loan on the property. Another 4,050 homes were sold through more traditional methods, mostly a homeowner selling to a new owner.
http://insurancenewsnet.com/article.aspx?id=321470
Uninsured bargain hunting Groupon for health care ...with some savings better than insurance!
http://www.dailymail.co.uk/news/article-2080704/Uninsured-bargain-hunting-Groupon-health-care--savin...
1/1/2012 -- TWO (back to back) 7.0 magnitude earthquakes in Japan -- NO tsunami warning issued
Its a heck of a way to ring in the new year -- happy 2012 everyone --
Warning:
12/31/2011 — Allentown Pennsylvania — center of town is SINKING
Ron Paul 2012 or BUST!
It took one heck of a shearing but the sheople are finally waking up. The status quo is driving humanity into the gutter and RON PAUL is the only alternative to "business as usual".
Thank God the sheep are awakening.
Remind me to PM you later Friday about a few things.
Where you been???
Glad you're back!
Did Bankers Deliberately Crash MF Global to Crash Gold and Silver Prices?
Submitted by smartknowledgeu on 12/27/2011 00:20 -0500
http://www.zerohedge.com/contributed/did-bankers-deliberately-crash-mf-global-crash-gold-and-silver-prices-0
A Run On The Global Banking System—How Close Are We? http://gonzalolira.blogspot.com/2011/12/run-on-global-banking-systemhow-close.html
Stocks up 10% — or Doomsday scenario? 10 triggers threaten capitalism as ‘Super-Rich Gap’ rivals 1929’s
By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — “Strategists predict a glowing 2012: Stocks forecast to finish the year up more than 10%.” Yes, USA Today reports that the strategists are high on holiday cheer. But is “America’s Financial Doomsday” a more likely headline for 2012, as international bank analyst Martin Weiss predicts?
Reuters
IMF Managing Director Christine Lagarde has conceded the global economy is in a precarious position.
Here’s what he sees in the near future: “An historic world-changing event is about to crush the U.S. economy and stock market.”
“Crush”? Is that word too strong? No. Even the International Monetary Fund’s chief, Christine Lagarde, echoes the warning: “The world economy is in a dangerous situation.”
Weiss Ratings was the first to downgrade U.S. debt — before the ratings agencies. Weiss has 500,000 readers because he’s been making solid market predictions for 40 years: The 1980s S&L crisis, the dot-com crash in the ’90s, the 2008 credit meltdown and now the new European bank crisis.
So listen closely (and protect your portfolio): The next crisis, according to Weiss, “will destroy the incomes, savings, investments and retirements of millions of Americans.”
Yes, destroy.
“It will plunge vast numbers of families into the nightmare of poverty … hunger … and homelessness. Only a minority of investors will survive intact.”
Get it? A new and “crushing” global meltdown. Destroying trillions. Most will lose. Only a few will “survive intact.” Are you a gambler? Bad odds. On an inflation-adjusted basis, Wall Street has lost trillions of your retirement money since 2000. Are you going to keep betting your future on winning 10%, hoping USA Today’s short-term thinking “strategists” are guessing right?
BN.com
Jacket of Martin D. Weiss's "Crash Profits," as shown on Barnes & Noble retail website.
Or will a “historic world-changing event” crush the American economy, markets … and your retirement? Ask yourself, is gambling on making 10% too risky in 2012? Before you place any bets at the Wall Street casino tables, mull over these 10 “macrotriggers,” any one of which could ignite the global “doomsday scenario” that Weiss is predicting.
Trigger 1: Doomsday’s mutant democracy. “Occupy Wall Street” and the tea party agree: Democracy is dead. “All men are created equal” is now a political fiction. The public has no voice in a nation where wealth buys votes, a naive public is easily manipulated, and elected officials have a price. Capitalism won the battle for the soul of capitalism. Vanguard’s Jack Bogle warned us: The “invisible hand” no longer serves the public welfare. Today, an insatiably greedy class of “Super-Rich,” the 1%, steers America from the shadows, obsessed with restoring the unregulated free-market ideology that loved gambling in the speculative $600 trillion global derivatives that triggered the 2008 meltdown.
Trigger 2: Doomsday’s class warfare. After our bankrupt Wall Street banks were bailed out in 2008, it became painfully obvious that Bogle’s “mutant capitalism” was self-destructing, killing democracy. Today nobody trusts Washington. Wealth rules government. Polls show the public now believes that no matter who’s elected in 2012, our descent into disaster can’t stop. Sen. Bernie Sanders of Vermont said it best: “There is a war going on in this country … the war waged by the wealthiest people in America on the disappearing and shrinking middle class of our country. The nation’s billionaires are on the warpath. They want more, more, more. Their greed has no end, and they are apparently unconcerned for the future of this country if it gets in the way of their accumulation of power and wealth.”
Trigger 3: Doomsday’s legal conspiracy. In the past generation Adam Smith’s invisible hand” was replaced by an open conspiracy among Wall Street, corporate CEOs, politicians and Forbes 400 billionaires operating with arrogance and absolute power, corrupting America’s soul. This conspiracy has no moral compass yet, ironically, is legal. Yes, “legal,” thanks to the Supreme Court. Wealth buys favorable laws, making even the most unethical, selfish, corrupt behavior “legal” by fiat: All the rewards of capitalism for a Super-Rich 1%, while the liabilities are dumped on the 99%.
Trigger 4: Doomsday’s political anarchy. Forget buzzwords like “socialism,” “oligopoly,” “plutocracy,” even “republic.“ Washington is now a pure anarchy with 261,000 high-priced lobbyists fighting for the best budget deals for their clients’ interests, not the public interest. Our Super-Rich anarchists know the only votes that count are in Congress, where lobbyists are brokering special interests, fighting for a slice of a $1.7 trillion federal budget pie, for special regulations, for tax loopholes, exemptions, loans, earmarks, access to policy makers, agency appointments, defense contracts — you name it.
Trigger 5: Doomsday’s growth economics. The principle of “growth or die,” once a given in economics and politics, is being challenged by new “growth and die” research yet relentlessly subverted by a numbers racket used by traditional economists to hide their manipulation of government, consumer and financial data to deceive investors, consumers, voters, the public. Most economists work for the “establishment”: banks, politicians, CEOs, biased think tanks or the Fed. And all economists have political agendas. They’re more like speech writers, hyping short-term policy agendas, while dismissing long-term consequences. For example, global population will increase from 7 billion to 10 billion by 2050, yet old-school economics pretends natural resources are infinite.
Trigger 6: Doomsday’s neurosciences. Back in 2002 behavioral science offered investors a level playing field: Psychologist Daniel Kahneman won the Nobel Prize in Economics, exploding Wall Street’s myth of the “rational investor.” The behavioral scientists promised to help investors understand our brains and make better decisions: Trust us, and you’ll be “less irrational”; control your brain, and be a successful investor. Wrong. Just the opposite. Why? Your brain is irrational. Always will be. You cannot win: Wall Street quants are light-years ahead of your amateur “brain rewiring.” They know you’re vulnerable, easy to manipulate. They hire the top global neuroscientists for their casinos. The house always wins.
Trigger 7: Doomsday’s casino technologies. Sophisticated new technologies, mathematical algorithms and neuroscience all guarantee Wall Street insiders’ huge margins in gambling at the global derivative casinos, by leveraging fees, commissions and deposits from Main Street’s “dumb money.” Today Wall Street is even more obsessed, grabbing for high-risk profits in the dangerous “new normal” of high volatility, increasing risks, lower returns. Sadly, average investors are no match for Wall Street’s “high-frequency traders,” who easily win by huge margins at this rigged game. Still, naïve investors keep betting, despite studies warning that the more you trade the less you earn.
Trigger 8: Doomsday’s global warfare. The Pentagon math is simple: By 2020 “warfare will define human life,” while global population is on its way toward its explosion from 7 billion to 10 billion. Commercial, political and ideological forces drive globalization, all competing for scarce resources. This is “the mother of all national security issues,” warns the Pentagon. Unrest will “create massive droughts, turning farmland into dust bowls and forests to ashes. Rather than causing gradual, centuries-spanning change, they may be pushing the climate to a tipping point. By 2020 there is little doubt that something drastic is happening. As the planet’s carrying capacity shrinks an ancient pattern re-emerges: the eruption of desperate, all-out wars over food, water and energy supplies and warfare defining human life.”
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Trigger 9: Doomsday’s cycles of history. Bubble-and-bust financial cycles have been well-documented for eight centuries. Yet humans seem never to learn the lessons of history. Euphoria blinds us in boom times. Risk is denied. Bubbles blow. Meltdowns happen. We deceive ourselves: “This time is different!” Wrong. In “Colossus: The Rise and Fall of the American Empire,” financial historian Niall Ferguson warns: “Collapse may come much more suddenly than many historians imagine. Fiscal deficits and military overstretch [suggest] that the United States may be the next empire on the precipice. Many nations in history, at the very peak of their power, affluence and glory, see leaders arise, run amok with imperial visions and sabotage themselves, their people and their nation.”
Trigger 10: Doomsday’s retirement investing. You need a survival strategy. Barton Biggs, the former Morgan Stanley guru and now a hedge-fund manager, warns “Super-Rich” investors: Learn survival skills. In his “Wealth, War and Wisdom,” he foresees “the possibility of a breakdown of the civilized infrastructure” — a doomsday scenario. “Think Swiss Family Robinson,” he advises. “[Y]our safe haven must be self-sufficient, capable of growing food, well-stocked with seed, fertilizer, canned food, wine, medicine, clothes. And be ready to fire a few rounds over the approaching brigands’ heads, to persuade them there are easier farms to pillage.” But that won’t work for the other 99%, the Main Street investors. Studies now show most don’t have enough saved for retirement today, let alone survival in a 2020 jungle.
Has America already passed the point of no-return? Can we change course?
We must see a paradigm shift in how our leaders think, says Jared Diamond, in “Collapse: How Societies Choose to Fail or Succeed.” America needs leaders with “the courage to practice long-term thinking, and make bold, courageous, anticipatory decisions at a time when problems have become perceptible, but before they reach crisis proportions.”
Jeremy Grantham says U.S. leaders always miss warning signs.
And that will never happen, says Jeremy Grantham, whose firm manages $100 billion: “It’s more or less guaranteed that every time we get an outlying, obscure event that has never happened before in history,” our leaders in Washington, Wall Street and corporate CEOs “are always going to miss it.” Always. Remember the 2008 meltdown? And if today’s banal political discourse about the 2012 presidential election is any indication, our leaders are guaranteed to miss the next one, too.
Bottom line: Underneath America’s endless political drama lie deep wounds that are widening the gap between the “Super-Rich” and the other 99% of America, a wealth gap that’s as wide today as before the 1929 crash.
Now, as then, we know the “Super-Rich” don’t really care about the needs of the rest of America. The greed of the “Super-Rich” is insatiable. For them, more is never enough. So without a fundamental shift in the brains of our leaders’ thinking, the 2020 timetable projected in the work of the Pentagon, Ferguson, Grantham and others will mark the final countdown, the inevitable ignition of “Doomsday Capitalism.”
Study: Fukushima Radiation Has Already Killed 14,000 Americans
http://www.zerohedge.com/contributed/study-fukushima-radiation-has-already-killed-14000-americans
Earn more, work less: 8 great jobs that escape the rat race
http://shine.yahoo.com/power-your-future/earn-more-work-less-8-great-jobs-that-escape-the-rat-race-2565190.html
A multi-trillion dollar scheme that will end in tears
A multi-trillion dollar scheme that will end in tears
BUBBLE????
Iowa farmland value up record 32.5 percent
By Jean Caspers-Simmet
AMES, Iowa — Iowa farmland values soared 32.5 percent in the past year, according to the results of the Iowa Land Value Survey conducted in November. Average Iowa farmland value is estimated to be $6,708 per acre. Survey results were released at a press conference last week in Ames.
"The 2011 land value survey covers one of the most remarkable years in Iowa land value history," said Mike Duffy, Iowa State University economics professor and Extension farm management specialist, who conducts the survey. "This is the highest percentage increase recorded by the survey, and the average land value of $6,708 per acre, when adjusted for inflation, is at an all-time high. The previous inflation adjusted high was in 1979."
http://www.agrinews.com/iowa/farmland/value/up/record/325/percent/story-4180.html
As Farmland Prices Soar, It’s Not Just Farmers Buying
http://stateimpact.npr.org/idaho/2011/12/22/as-farmland-prices-soar-it%E2%80%99s-not-just-farmers-bu...
Portland builder wary of booming apartment market
http://djcoregon.com/news/2011/12/14/portland-builder-wary-of-booming-apartment-market/
Hyper-Re-Hypothecation: Stacy Herbert & Max Keiser dissect a multi-TRILLION dollar scheme
<<"NOTE: If an end (so to speak) should occur it could happen at anytime and in my opinion will come in the form of a worldwide financial systemic breakdown.">>
Couldn't agree more. It's now just a "matter of survival" as this collapse plays out.
Hope you return soon...
...seasons greetings to all!!
<<<"This is great! Ann has taken herself out of the game and she is now calling for everyone else to go home as well. Will be interesting to see how many follow her advice. My guess is you will be able to count them on one hand.
These things she is freaking out over can and most likely will be handled by the courts but of course her excuse is that the courts are controled by the "oligarchy".
These things she speaks of pale when compared to what has gone on in the past-particularly drafting so many of us to fight the Viet Nam undeclared war. Like that situation, only a few were protesting at the start and "if" Ann is speaking the truth there will be lots of folks eventually waking up to that.
Are you planning to strike with your accounts, rogue? I'll leave mine as they are for a bit.
Merry Christmas!">>>
I've scaled back and am truly in "bunker-mode collapse mentality".
The MF Global collapse was a warning sign to me that the over-leveraged world economy will eat most innocent people up alive.
We live in a Ponzi-scheme-Maddof-like world economy and it's not going to end well.
<<"Operations like the Greek swap/short index maneuver were easy money for banks like Goldman and Chase – hell, it’s a no-lose play, like cutting a car’s brake lines and then betting on the driver to crash – but they helped create the monstrous European debt problem that this very minute is threatening to send the entire world economy into collapse, which would result in who knows what horrors. At minimum, millions might lose their jobs and benefits and homes. Millions more will be ruined financially. ">>
This doesn't surprise me at all.
Look at the job that was done to the "World Trade Center" on September 11, 2001 and where that has led us in 10 years.
These people are against humanity.
Merry Christmas.
I'M CALLING FOR A GENERAL FINANCIAL MARKET STRIKE
POSTED BY ANN BARNHARDT - DECEMBER 20, AD 2011 9:10 PM MST
I have received a few emails asking if I was still content with my decision to shut down my brokerage. Not only am I content, but after seeing the news that broke over the weekend, I am of the considered opinion that the entire financial blogging community should formally call for a general financial market strike. And I’m not kidding. A couple of things have happened regarding the MF Global mess that I don’t think got the attention they should have because they broke over the weekend. So let me fill you all in.First, all notions of personal property rights were essentially destroyed when the MF Global “trustee” began seizing customers’ gold and silver bullion held in storage if that bullion was purchased through contracts brokered by MF Global. In case you’re not following, let me restate. MF Global customers who traded in precious metals and actually took delivery and OWNED bullion, as in outright, free and clear OWNERSHIP, complete with a warehouse receipt (aka title) with SERIAL NUMBERS designating exactly which physical bars they OWNED, and were PAYING RENT to STORE their own property in a “secure” VAULT, complete with statements indicating that these storage fees were paid in full, are having THEIR PROPERTY THAT THEY OWN AND ARE PAYING RENT TO STORE CONFISCATED by the MF Global trustee in order to feed the gaping maw that is the MF Global “estate”.
This would be EXACTLY like if you rented a little storage space at one of the thousands of storage facilities that dot this nation, and stored a car there. I used to do exactly this when I had multiple cars. Imagine the owner of the storage facility went bankrupt. Now imagine that a “trustee” SEIZED YOUR CAR, sold it, and used YOUR PROPERTY to feed the storage franchise owner’s BK. Nevermind that you had an explicit RENTAL AGREEMENT and that you had receipts proving that you were paying monthly rent on said storage space, and that you could produce clear title to the car showing that you owned it, and that the VIN numbers matched.
Do you understand what is happening now? This is outright confiscation of personal property. After having their money stolen out of their accounts and being locked out of their accounts, unable to trade or even liquidate WHILE THE MARKETS CONTINUED TO TRADE, these people are now having their PERSONAL PHYSICAL PROPERTY stolen and redistributed to the MF Global estate, in order to feed Corzine’s gambling debts – MADE ILLEGALLY WITH FUNDS STOLEN OUT OF THE CUSTOMER ACCOUNTS – to repay counterparties with J.P. Morgan at the fore.
So guess what? This is now establishing the precedent that ANY property held by a third party can be seized and confiscated to feed a bankruptcy of said third party. This includes BANK DEPOSITS. Now, please consider that all of the major banks in the United States are insolvent, and insolvent MULTIPLE TIMES OVER. Bank of America, Wells Fargo, Citi, all of them. When these banks collapse – and they WILL collapse - any deposits they are holding WILL BE CONFISCATED and redistributed to their counterparties. Citation URL here at Market-Ticker.org:
http://market-ticker.org/akcs-www?post=199356
Oh, but there’s more.
Also announced over the weekend was the jaw-dropping, yet illuminating fact that the MF Global bankruptcy was fraudulently, nefariously and illegally drawn up as a Chapter 7 BK for a SECURITIES DEALER and NOT a commodity brokerage as it should have been. Look, MF Global was the second-largest non-bank FCM in the United States next to NewEdge which is the old FIMAT. If MF Global wasn’t an FCM, then there are no FCMs. Of course it was an FCM. It had $7.2 billion in customer seg funds as of August 31, 2011. And yet MF Global was immediately, from the get-go, put into Chapter 7 BK as a SECURITIES FIRM. This is fraud. MF Global’s BK should have OBVIOUSLY been established under Subchapter IV of the Chapter 7 code as a COMMODITY BROKERAGE.
Why wasn’t this done? Because in a Subchapter IV liquidation of a commodity brokerage firm, guess who is absolutely and unequivocally at the front of the line? You guessed it: the CUSTOMERS. In the Chapter 7 liquidation of a securities firm, guess who goes to the front of the line? Uh-huh. The “creditors”, aka the counterparties on the firm’s proprietary positions. As in . . . J.P. Morgan, et al.
Now we know why this unprecedented action of raping the customers has happened. It was set up that way. Now are you telling me that NO ONE at the CFTC appreciated the difference between the BK subchapters? Are you honestly telling me that Terry Duffy and NO ONE at the CME understood the difference between a securities firm liquidation and a Subchapter IV commodities firm liquidation and the massive consequences to the customers? Not a single one of them understood this massive difference? Bullshit. Of course they knew. They set it up that way from day one. And they continue to know. And this fricking charade just keeps going and going, and the rape and confiscation of the customers' property continues apace. The fix was in on the customers and J.P. Morgan was put at the front of the line willfully, intentionally and with extreme malice aforethought by all those parties concerned. Citation Hotlink here:
Click Here to read the ZeroHedge reportage.
And this is why I am now formally calling for the financial industry blogging community to officially push for and declare a general market strike. I call for all decent people of good will to withdraw ALL FUNDS from the financial markets and cease to trade in solidarity with the MF Global rape victims until such time as the MF Global BK is properly filed as a Subchapter IV commodity brokerage liquidation and their private property is FULLY RESTORED.
If this is how they’re going to play, I say let’s shut the whole damn thing down. Let’s show these rat bastards how we do things in the Civilized World. Molon Labe.
http://barnhardt.biz/index.cfm
I'M CALLING FOR A GENERAL FINANCIAL MARKET STRIKE
POSTED BY ANN BARNHARDT - DECEMBER 20, AD 2011 9:10 PM MST
I have received a few emails asking if I was still content with my decision to shut down my brokerage. Not only am I content, but after seeing the news that broke over the weekend, I am of the considered opinion that the entire financial blogging community should formally call for a general financial market strike. And I’m not kidding. A couple of things have happened regarding the MF Global mess that I don’t think got the attention they should have because they broke over the weekend. So let me fill you all in.First, all notions of personal property rights were essentially destroyed when the MF Global “trustee” began seizing customers’ gold and silver bullion held in storage if that bullion was purchased through contracts brokered by MF Global. In case you’re not following, let me restate. MF Global customers who traded in precious metals and actually took delivery and OWNED bullion, as in outright, free and clear OWNERSHIP, complete with a warehouse receipt (aka title) with SERIAL NUMBERS designating exactly which physical bars they OWNED, and were PAYING RENT to STORE their own property in a “secure” VAULT, complete with statements indicating that these storage fees were paid in full, are having THEIR PROPERTY THAT THEY OWN AND ARE PAYING RENT TO STORE CONFISCATED by the MF Global trustee in order to feed the gaping maw that is the MF Global “estate”.
This would be EXACTLY like if you rented a little storage space at one of the thousands of storage facilities that dot this nation, and stored a car there. I used to do exactly this when I had multiple cars. Imagine the owner of the storage facility went bankrupt. Now imagine that a “trustee” SEIZED YOUR CAR, sold it, and used YOUR PROPERTY to feed the storage franchise owner’s BK. Nevermind that you had an explicit RENTAL AGREEMENT and that you had receipts proving that you were paying monthly rent on said storage space, and that you could produce clear title to the car showing that you owned it, and that the VIN numbers matched.
Do you understand what is happening now? This is outright confiscation of personal property. After having their money stolen out of their accounts and being locked out of their accounts, unable to trade or even liquidate WHILE THE MARKETS CONTINUED TO TRADE, these people are now having their PERSONAL PHYSICAL PROPERTY stolen and redistributed to the MF Global estate, in order to feed Corzine’s gambling debts – MADE ILLEGALLY WITH FUNDS STOLEN OUT OF THE CUSTOMER ACCOUNTS – to repay counterparties with J.P. Morgan at the fore.
So guess what? This is now establishing the precedent that ANY property held by a third party can be seized and confiscated to feed a bankruptcy of said third party. This includes BANK DEPOSITS. Now, please consider that all of the major banks in the United States are insolvent, and insolvent MULTIPLE TIMES OVER. Bank of America, Wells Fargo, Citi, all of them. When these banks collapse – and they WILL collapse - any deposits they are holding WILL BE CONFISCATED and redistributed to their counterparties. Citation URL here at Market-Ticker.org:
http://market-ticker.org/akcs-www?post=199356
Oh, but there’s more.
Also announced over the weekend was the jaw-dropping, yet illuminating fact that the MF Global bankruptcy was fraudulently, nefariously and illegally drawn up as a Chapter 7 BK for a SECURITIES DEALER and NOT a commodity brokerage as it should have been. Look, MF Global was the second-largest non-bank FCM in the United States next to NewEdge which is the old FIMAT. If MF Global wasn’t an FCM, then there are no FCMs. Of course it was an FCM. It had $7.2 billion in customer seg funds as of August 31, 2011. And yet MF Global was immediately, from the get-go, put into Chapter 7 BK as a SECURITIES FIRM. This is fraud. MF Global’s BK should have OBVIOUSLY been established under Subchapter IV of the Chapter 7 code as a COMMODITY BROKERAGE.
Why wasn’t this done? Because in a Subchapter IV liquidation of a commodity brokerage firm, guess who is absolutely and unequivocally at the front of the line? You guessed it: the CUSTOMERS. In the Chapter 7 liquidation of a securities firm, guess who goes to the front of the line? Uh-huh. The “creditors”, aka the counterparties on the firm’s proprietary positions. As in . . . J.P. Morgan, et al.
Now we know why this unprecedented action of raping the customers has happened. It was set up that way. Now are you telling me that NO ONE at the CFTC appreciated the difference between the BK subchapters? Are you honestly telling me that Terry Duffy and NO ONE at the CME understood the difference between a securities firm liquidation and a Subchapter IV commodities firm liquidation and the massive consequences to the customers? Not a single one of them understood this massive difference? Bullshit. Of course they knew. They set it up that way from day one. And they continue to know. And this fricking charade just keeps going and going, and the rape and confiscation of the customers' property continues apace. The fix was in on the customers and J.P. Morgan was put at the front of the line willfully, intentionally and with extreme malice aforethought by all those parties concerned. Citation Hotlink here:
Click Here to read the ZeroHedge reportage.
And this is why I am now formally calling for the financial industry blogging community to officially push for and declare a general market strike. I call for all decent people of good will to withdraw ALL FUNDS from the financial markets and cease to trade in solidarity with the MF Global rape victims until such time as the MF Global BK is properly filed as a Subchapter IV commodity brokerage liquidation and their private property is FULLY RESTORED.
If this is how they’re going to play, I say let’s shut the whole damn thing down. Let’s show these rat bastards how we do things in the Civilized World. Molon Labe.
http://barnhardt.biz/index.cfm
Gerald Celente Forecast 2012, FEMA Prepares for Dollar Collapse
http://www.beaconequity.com/gerald-celente-forecast-2012-fema-prepares-for-dollar-collapse-2011-12-2...
Doug Casey on Getting Out of Dodge
Doug Casey, Chairman
http://www.caseyresearch.com/cdd/doug-casey-getting-out-dodge
(Interviewed by Louis James, Editor, International Speculator)
L: Doug, a lot of readers have been asking for guidance on how to know when it's time to exit center stage and hunker down in some safe place. Few people want to hide from the world in a cabin in the woods while life goes on in the mainstream, but nobody wants to get caught once the gates clang shut on the police state the US is becoming. How do you know when it's time to go?
Doug: Well, the first thing to keep in mind is that it's better to be a year too early than a minute too late. David Galland recently read They Thought They Were Free: The Germans, 1933-45, by Milton Mayer. He quoted a passage in his column of last Friday. It goes a long way in explaining why Americans appear to be such whipped dogs today. They're no different from the Germans of recent memory. For those who missed it, let me quote it:
"You see," my colleague went on, "one doesn't see exactly where or how to move. Believe me, this is true. Each act, each occasion, is worse than the last, but only a little worse. You wait for the next and the next. You wait for one great shocking occasion, thinking that others, when such a shock comes, will join with you in resisting somehow. You don't want to act, or even talk, alone; you don't want to 'go out of your way to make trouble.' … In the university community, in your own community, you speak privately to your colleagues, some of whom certainly feel as you do; but what do they say? They say, 'It's not so bad' or 'You're seeing things' or 'You're an alarmist.'
"These are the beginnings, yes; but how do you know for sure when you don't know the end, and how do you know, or even surmise, the end? On the one hand, your enemies, the law, the regime, the Party, intimidate you. On the other, your colleagues pooh-pooh you as pessimistic or even neurotic… the one great shocking occasion, when tens or hundreds or thousands will join with you, never comes. That's the difficulty. If the last and worst act of the whole regime had come immediately after the first and smallest, thousands, yes, millions would have been sufficiently shocked… But of course this isn't the way it happens. In between come all the hundreds of little steps, some of them imperceptible, each of them preparing you not to be shocked by the next. Step C is not so much worse than Step B, and, if you did not make a stand at Step B, why should you at Step C?"
The fact is that the US has been on a slippery slope for decades, and it's about to go over a cliff. However, our standard of living, while declining, is still very high, both relatively and absolutely. But an American can enjoy a much higher standard of living abroad.
On the other hand, if I were some poor guy in a poverty-wracked country with few opportunities, I'd want to go where the action is, where the money is, now. Today, that means trying to get into the United States. The US is headed the wrong direction, but it's still a land of opportunity and a whole lot better than some flea-bitten village in Niger.
L: By the time things get worse than some Third-World dictatorship in the US, such a person could have remitted a whole lot of cash back home.
Doug: And you'd have a whole lot of experiences that would give you a competitive edge back where you came from, or in the next place you go to. The one-eyed man is king in the valley of the blind. People have to lose that backward, peasant mentality that ties them to the land of their birth. Sad to say, although the average American has somewhat more knowledge of the world – mainly due to television – his psychology is just as constrained as that of some serf from central Asia or some primitive village in Africa. It's all a matter of psychology.
But if you're not poor, you want to go someplace that is safe, nice – whatever that means to you – and with a lower cost of living. As most readers know, for me that's Cafayate, Argentina, but one size does not fit all. It needs to be a place you actually enjoy spending some time, with people whose company you enjoy.
L: Fair enough. But our readers want to know if your guru-sense is tingling yet, or how close you think we are to it being too late to leave – or at least too late to leave with any meaningful assets.
Doug: I'm a trend observer. This is one of the advantages of studying history, because it shows you that things like this rarely happen overnight. They are usually the result of trends that build over years and years, sometimes over generations. In the case of the US, I think the trend has been downhill, in many ways, for many years. Pick a time. You could make an argument, from a moral point of view, that things started heading downhill at the time of the Spanish-American War. That was when a previously peaceful and open country first started conquering overseas lands and staking colonies. America was still in the ascent towards its peak economically, but the seeds of its own demise were already sewn, and a libertarian watching the scene might have concluded that it was time to get out of Dodge –
L: [Laughs] That would have been a bit early…
Doug: [Chuckles] Yes, that would have been way too soon. As Adam Smith observed, there's a lot of ruin in a country.
L: On the other paw, it would have gotten you out before the War between the States, a disaster well worth avoiding.
Doug: No, the Spanish-American War was in 1898.
L: Oops! Sorry, I was thinking of what Americans call the Mexican-American War, but which Mexicans call the "American Invasion" –
Doug: [Laughs]
L: I'm not joking. That's what they called it in the history books I was given in Mexican schools when I lived there in the '70s. It has long seemed to me that that was an ominous turn for the worse for the US and a clear example of conquering a weaker neighbor purely for pillage – not just Texas, but everything from there all the way to California.
Doug: That's right. Davey Crockett and the boys, we love them, but in many ways they were the equivalent of today's Mexicans who want to recolonize the southwest and turn it back into part of Mexico, in what they call the Reconquista.
L: Indeed, but this is ancient history to most US taxpayers today – I'm reminded that it's not correct in many cases to call them Americans.
Doug: Yes, just as it was a misnomer to call the people who lived in the Roman Empire after Diocletian Romans – because Roman citizens were once free men. After about 300 AD most of them were bound to the land or their occupations as serfs. But the slide for Rome started at least 120 years earlier, after the death of Marcus Aurelius. Politically, the decline started with the accession of Julius Caesar 240 years before that. So, when did the slide – politically, economically, and socially – really start for the US? When were there no more trends going up?
L: FDR? The New Deal was really a moral, economic, and political turning point.
Doug: You could make that argument, but the US still grew economically, despite the roadblocks FDR threw in its path. US military power and global prestige continued growing from that point, although, paradoxically, the accelerating growth of the US military was directly responsible for the decline of the US economically and in terms of personal freedom. One reason for the ascendancy of the US after World War II was that we were the only major country in the world not physically devastated by the war.
L: Ah. Right.
Doug: So it seems to me that the peak of American civilization was in the 1960s. As for evidence, well, I like to put my finger on the 1959 Cadillac. Those twin bullet taillights, the opulence of it… In terms of then-current technology, things couldn't get much better.
L: "Opulence. I has it."
Doug: [Laughs – a real belly laugh] That's my favorite TV commercial! Anyway, that was the peak, in my mind. Though things continued getting better for a while, the US started to live out of capital.
L: Had to pay for guns and butter.
Doug: That's right. The Johnson administration's so-called Great Society created vast new federal bureaucracies that promised Americans free food, shelter, medical care, education, and what-have-you. Americans became true wards of the state. But the real, final nail in the coffin for America was in 1971 –
L: Nixon taking the US off the gold standard.
Doug: Nixon taking the US off the gold standard – open devaluation of the dollar, combined with wage and price controls for some months. And that was not long after the so-called Bank Secrecy Act, which abolished bank secrecy, and required the reporting of all foreign financial accounts. Nixon was, in many ways, even more of a disaster than Johnson. Republicans are usually worse than Democrats when it comes to freedom, partly because they like to couch their depredations in the rhetoric of defending the free market. While everyone understands that Democrats are socialists just under the surface, Republicans actually give capitalism a bad name. Baby Bush is a perfect, recent example.
L: But don't you worry your pretty little head about devaluation – it's just a "bugaboo" – and as long as you're not one of those unpatriotic people wanting to buy imports or vacation abroad, your dollar will be worth just as much tomorrow as it is today. The scary thing is that the Belarusian dictator Lukashenko said almost the same thing when the Belarusian ruble lost two thirds of its forex value earlier this year, asking his countrymen why they need to go on vacation in Germany or buy German cars…
Doug: You see why I like to study history? It doesn't repeat, but it sure does rhyme…
L: With a vengeance.
Doug: So, anyway, since 1971, some things have improved largely due to technological advances, but the America That Was has been fading into the past. It was a decisive turning point. You can see that in the accelerated proliferation of undeclared wars we've had since then. I don't just mean the penny-ante invasions of Granada and Panama – the US has always lorded it over Caribbean and Central American banana republics; those are just sport wars. But Iraq and Afghanistan are alien cultures on the other side of the world – apart from never posing any threat to the US. Now it looks like Iran and Pakistan are on the dance card, and they're big game. The War Against Islam has started in earnest, and it's going to end badly for the US. I explained all this at great length in the white paper, Learn to Make Terror Your Friend, that I wrote for The Casey Report last month.
Domestically, saying that the US is turning into a police state when you started this conversation was quite accurate. You can see more and more videos spreading over the Internet, not just of police brutality, but demonstrating the militarization and federalization of police, who are being inculcated with both disdain for and paranoia about ordinary citizens.
In the old days, if you were stopped for speeding, the peace officer was polite – you could get out of your car, meet the cop on neutral ground, and chat with him. You didn't have a serious problem unless you were obviously drunk or combative. Now, you don't dare make a move. You better keep your hands in plain sight on the steering wheel and be ready for a Breathalyzer test without probable cause. The law enforcement officer will stand behind you with his hand on his gun. And you're the one who'd better be polite.
L: There has been a polar reversal. The cops used to address citizens as "sir" or "ma'am." Now, the correct response in a traffic stop is: "Yes, sir! I would love to inspect the bottom of your boot, sir!"
Doug: [Laughs] That's right. My friend Marc Victor gives out magnetized business cards. People ask, "Why?" He answers that it's so clients can put them on the bottom of their cars or refrigerators, so they can see it when the cops throw them to the ground.
L: Marc's a good man. There's a handy video on Marc's website, offering advice on what to do if you're pulled over by the police in a traffic stop.
Doug: A good public service announcement. At any rate, I think there's no question that the US has turned the corner on every basis: politically, socially, morally, and now, economically…
L: Okay, but, Doug, you said that in 1979 too. The question is, how do we know when the door is going to close?
Doug: [Laughs.] Well, sometimes I feel a little like the boy who cried wolf. But Roman writers like Tacitus and Sallust saw where Rome was going before it got completely out of control. Should they have said nothing, for fear of being too early? Here in the US, it should have gone over the edge back in the 1980s, but we got lucky. There was still a lot of forward momentum, which can last for decades when you're speaking of civilizations. There was the computer productivity boom. The Soviet Union collapsed, China liberalized, and Communism was discredited everywhere except on US college campuses. The end of the Cold War opened up vast areas of the world to the global market. And most surprising of all, Volker tightened up the money supply and interest rates went high, causing people to save money and stop borrowing to consume.
L: That's not happening this time.
Doug: No. We got lucky back then. Since the '90s we've had a long and totally phony, debt-driven boom that's now come to an end. I feel very confident that there's no way out this time. There are huge distortions and misallocations of capital that have been cranked into the system for two decades. And not just in the US this time, but in Europe, China, Japan, and elsewhere.
The US is very clearly on the decline. The fact that in spite of bankrupting military expenditures to no gain for the American people, those in power are talking overtly and aggressively about attacking more countries – Iran and Pakistan in particular – is extremely grave. The fact that they attacked Libya – which, incidentally, is going to turn into a total disaster, a civil war that will last for years – shows it's not stopping. Sure, Obama brought troops home from Iraq – another disaster that's going to remain a disaster for years to come – but at the same time he put a company of combat troops in Uganda, of all places and Marines in Australia, to provoke the Chinese.
Back home, I've read reports that people are being stopped for carrying gold coins out of the US, in Houston in particular. Now we have authorization of the military to detain US citizens, on US soil, with no trail, and indefinitely, on the verge of becoming law. And Predator Drones have been used to hunt down farmers on their own ranches.
I could go on and on. This is not like spotting early signs of decay in America's expansionist wars of the 19th century or things getting worse with FDR. Most people can't see it with all the noise and confusion, but we've reached the edge of the precipice.
L: Don't worry about exactly where the edge is, just assume it's there and take appropriate action?
Doug: Yes. It really is there. It's a clear and present danger. But most Americans are as oblivious as most Germans were in the '30s. In fact, most of them support what's going on, just as most Germans supported their government in the '30s and '40s.
L: So… don't worry about figuring out exactly when the gates will shut. Assume they are shutting now?
Doug: That's right. One should be actively and vigorously looking to expatriate assets, cash, and even one's self. A prudent person will always be diversified politically and internationally.
L: What about people who have jobs they can't continue doing from abroad and who need the income?
Doug: They should still prepare, as best they can, to be ready to go on a vacation when things get hot – a vacation from which they might not return for a long time. All that needs happen, with the hysteria that's building in the US, is for a major terrorist incident – real or imagined – to occur. Homeland Security will lock the country down. I hate to admit it, but I'm almost starting to credit the stories about those FEMA camps.
Look, I know it sounds extreme, and the comparison to pre-WWII Germany has been made many times, but it bears repeating. Germany was the most literate, civilized, and even mellow, in some ways, country in Europe. It was much admired all around the world – a nation of shopkeepers, small farmers, and scholars. But the whole character of the place started changing in 1933, and it just got worse and worse. By the end of 1939, if you weren't out, you were done.
L: [Pauses] Well, not a cheerful thought. Actions to take?
Doug: Things we've said before: Set up foreign bank accounts in places you like to travel, while you can. Set up vault arrangements for physical precious metals outside the US. Buy foreign real estate that you'd like to own, because it can't be forcibly repatriated. Offshore asset protection trusts are a good idea too. Become an International Man. Let me emphasize that US taxpayers should stay within all US laws, because the consequences of breaking them are unbelievably draconian.
Generally, one simply must internationalize one's assets. The biggest danger investors face, by far, is not market risk – huge as that will be – but political risk. The only way to insulate yourself from such risk is to diversify yourself politically and geographically.
L: Right then… words to the wise. Thanks for your insight.
Doug: You're welcome. Most won't, but I just hope readers listen.
[For more specific investment advice and big-picture observations from Doug – as well as insightful analyses from other Casey Research experts, including Chief Economist Bud Conrad – give The Casey Report a test drive. It is absolutely risk-free for ninety days… and will give you a solid boost in becoming a rational speculator.]
Ann Barnhardt Discusses MF Global with Peter Schiff - "There Is No Rule of Law Anymore"
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