The Senate’s Christmas Gift

Not so "merry christmas." If the Healthcare bill passes, the massive tax increases go into effect immediately after Obama signs the bill...and with it, booming unemployment as small businesses can't stay afloat. The real kicker? The healthcare benefits don’t start until 2014. All the taxes are designed to confiscate the wealth of Mr. and Mrs. Citizen and drive them into a public option—even as Senate Democrats say the bill doesn’t include one, yet. On Dec. 16 the president went on television and said if Congress doesn’t pass a healthcare bill the Federal government will go bankrupt. Poppycock. If a healthcare bill is passed it’s Mr. and Mrs. Citizen that go belly up.

 

December 21, 2009 by Bob Livingston

Senate Democrats are working overtime to get an Obamacare bill passed before Christmas. They no longer even pretend to be doing it to reform healthcare. Now they’re just doing whatever it takes to get a bill passed, even if it costs somewhere between $848 billion and $2.1 trillion, depending on which math you use.

Never mind that the Realclearpolitics.com average of polls shows that Americans oppose the Democrat’s healthcare bill by a 54.2 percent to 39.7 percent margin. Democrats have gone all in, as the saying goes, and nothing is going to stop them.

As an unnamed Democratic strategist told Byron York of The Washington Examiner, “Once you’ve gone this far, what is the cost of failure?”

Comparing Democrats to bank robbers—how appropriate—who have gone past the point of no return, the strategist said, “They’re in the bank, they’ve got their guns out. They can run outside with no money, or they can stick it out, go through the gunfight, and get away with the money.”

Of course, money is what it’s all about. Not saving it mind you, but stealing yours.

Sen. Dick Durbin (D.-Ill.) told The Hill that Democrats will have the 60 votes needed to pass a bill this week. They’re buying off reluctant Democrats left and right.

For Louisiana Sen. Mary Landrieu the price was $300 million in federal aid to her state. As columnist Charles Krauthammer said on Fox News, if Landrieu got $300 million, Sen. Ben Nelson (D.-Neb.)—said to be holding out for removal of a provision in the bill that allows federal funding to pay for abortions—gets a Caribbean island, or two. Or, if some news reports are correct, a threat to close a military base in his state if he doesn’t join in.

Sen. Joe Lieberman (I.-Conn.) is back on board. We don’t yet know what he got in return, aside from a lot of face time on television. In an effort to get one or more Republicans to sign on so the bill can be cast as bi-partisan, Maine Republican Senators Susan Collins and Olympia Snowe are being courted as well. Look for Maine to get a bundle of cash for snow plows or something.

Meanwhile, Joe and Jane Citizen only get dunned. If you are a family with an annual income above $88,200 and your employer doesn’t provide coverage, prepare to fork out $15,200 a year for a federally-mandated insurance fee, according to the Congressional Budget Office (CBO) as reported by CNSNews.com. And few employers are going to provide coverage for their employees once the plan kicks in.

Why? There is an incentive not to. If employers don’t pay their share of their employees’ premiums they’ll have to pay $750 per employee fine. That’s much less than the employer contribution on a complete health plan.

What’s more, there are tax increases in the bill. Lots of them. According to the Heritage Foundation, Medicare taxes increase from 2.9 percent to 3.4 percent, the top marginal tax rate goes from 35 percent to 39.6 percent and, in the House version of the bill, a surtax of 5.4 percent is put on incomes above $500,000.

Following is a list from the Heritage Foundation of other tax increases currently in either the House or Senate bill or proposed by the Barack Obama administration to “pay” for healthcare reform:

• An excise tax on high-cost "Cadillac" health insurance plans that cost more than $8,500 a year for individuals or $23,000 for families.
• An excise tax on medical devices such as wheelchairs, breast pumps and syringes used by diabetics for insulin injections.
• A cap on the exclusion of employer-provided health insurance without offsetting tax cuts.
• A limit on itemized deductions for taxpayers with a top income tax rate greater than 28 percent.
• A windfall profits tax on health insurance companies.
• A value-added tax, which would tax the value added to a product at each stage of production.
• An excise tax on sugar-sweetened beverages including non-diet soda and sports drinks.
• Higher taxes on alcoholic beverages including beer, wine and spirits.
• A limit on contributions to health savings accounts.
• An 8 percent tax on all wages paid by employers that do not provide their employees health insurance that satisfies the requirements defined by the Secretary of Health and Human Services.
• A limit on contributions to flexible spending arrangements.
• Elimination of the deduction for expenses associated with Medicare Part D subsidies.
• An increase in taxes on international businesses.
• Elimination of the tax credits paper companies take for biofuels they create in their production process—the so-called “Black Liquor credit.”
• Fees on insured and self-insured health plans.
• A limit or repeal of the itemized deduction for medical expenses.
• A limit on the Qualified Medical Expense definition.
• An increase in the payroll taxes on students.
• An extension of the Medicare payroll tax to all state and local government employees.
• An increase in taxes on hospitals.
• An increase in the estate tax.
• Increased efforts to close the mythical “tax gap.”
• A 5 percent tax on cosmetic surgery and similar procedures such as Botox treatments, tummy tucks and face lifts.
• A tax on drug companies.
• An increase in the corporate tax on providers of health insurance.
• A $500,000 deduction limitation for the compensation paid by health insurance companies to their officers, employees and directors.

And the kicker is the taxes go into effect immediately after Obama signs the bill. The healthcare benefits don’t start until 2014.

All the taxes are designed to confiscate the wealth of Mr. and Mrs. Citizen and drive them into a public option—even as Senate Democrats say the bill doesn’t include one, yet.

On Dec. 16 the president went on television and said if Congress doesn’t pass a healthcare bill the Federal government will go bankrupt. Poppycock. If a healthcare bill is passed it’s Mr. and Mrs. Citizen that go belly up.

The spend-and-tax policies of Obama and the Democrats—stimulus bills, TARP bill, healthcare bill, etc.—are what is pushing us toward economic collapse.

Face it. The healthcare reform plan Democrats are ramming through is nothing more than the greatest transfer of wealth and most massive power grab in the history of the world.

Frankly, I don’t consider that much of a Christmas present.

Figures Indicate Declines In Net Worth And A Difficult Path To Recovery

Bob Chapman, The International Forecaster

real property value losses and a recovery hindered by more foreclosures and higher interest rates, employment to remain flat, figures indicate record losses, continued worries for the economy,

Congressional appropriators agreed Tuesday night to give civilian federal employees a 2 percent pay increase -- which includes a locality pay increase President Obama didn't want.

Government workers will get a 1.5 percent nationwide increase in base pay and a 0.5 percent average increase in locality pay. The final agreement goes against the wishes of Obama, who called for a flat 2 percent jump and no locality increase.

Locality pay helps address the gaps between federal pay and private sector wages in high-cost areas of the country. The Federal Salary Council estimates the current private-public gap is about 26 percent, on average. Locality increases mean a federal worker in Cincinnati might get a smaller increase than a worker in Washington, D.C., because of local costs of living. [Why aren’t Social Security recipients and disabled veterans receiving their COLA raises for the next few years as well?]

US homeowners have lost about $5.9 trillion in value since the housing market’s peak in March 2006 as mounting foreclosures and the recession weighed on prices, according to Zillow.com.

Almost half a trillion dollars was wiped out this year through November as housing headed for a third straight annual decline. New foreclosures and higher mortgage rates in 2010 may hinder a rebound, the property data service said yesterday.

“A phenomenal amount of wealth has been erased since the housing bust,’’ Stan Humphries, the chief economist for Seattle-based Zillow, said Tuesday in an interview. “For many households, most of their wealth is tied up in real estate.’’

The net worth of US households at the end of June fell 19 percent from two years earlier to $53.1 trillion, according to Federal Reserve data. Employers have cut more than 7.2 million jobs since the start of the recession in December 2007.

The slowing of property declines because of a government tax credit for first-time buyers and record-low mortgage rates will be tested as more foreclosures reach the market and borrowing costs rise, Humphries said. More than two-thirds of the 154 markets tracked by Zillow have lost value this year.

The value of US housing today is about $24.7 trillion, down 19 percent from the market’s peak, according to Zillow.

Wells Fargo & Co., the bank that gained a portfolio of option adjustable-rate mortgages when it bought Wachovia Corp. last year, cut the principal for delinquent borrowers in some loans by as much as 30 percent.

Wells Fargo has forgiven an average of $46,000 in principal, or 15 percent, for the 43,500 option-ARM loans it has modified this year through September, said Franklin Codel, chief financial officer at the bank’s home-lending unit. The San Francisco-based lender has cut as much as 30 percent off the loan principal in a few “rare exceptions,” with the ceiling typically capped at 20 percent, Codel said.

“Right away we decided we wanted to go after the highest- risk borrowers,” Codel said in an interview yesterday from Des Moines, Iowa, where Wells Fargo Home Mortgage is based. “Principal forgiveness is one of the arrows in the quiver.”

In the second-quarter, 15.2 percent of option-ARMs were seriously delinquent, almost triple the 5.3 percent rate for all home loans, according to joint figures from the Office of the Comptroller of the Currency and the Office of Thrift Supervision. As U.S. home prices declined, the Federal Deposit Insurance Corp. and the Center for Responsible Lending have called for banks to reduce the principal for borrowers who owe more than their property is worth.

Wells Fargo has modified about $15.7 billion of option-ARMs in the first three quarters, Codel said. It wrote down $2 billion in loan balances, leaving $13.7 billion in modified mortgages that no longer qualify as option-ARMs, according to a third-quarter presentation.

The U.S. Freight Transportation Index fell in October to its lowest level for October since 1996, as industry shipments decreased for two months in a row.

Shipments suffered their biggest October year-on-year decline, falling 10.5 percent, since the department began calculating the index 20 years ago.

The Freight TSI measures the month-to-month changes in freight shipments in ton-miles, which are then combined into one index.

The index measures the output of the for-hire freight transportation industry and consists of data from for-hire trucking, rail, inland waterways, pipelines and air freight.

FROM A SHOPPER: This happened at Wal-Mart (Supercenter Store #1279, 10411 N Freeway 45, Houston, TX 77037) a month ago. I bought a bunch of stuff, over $150 worth, and I glanced at my receipt as the cashier was handing me the bags. I saw a cash-back of $40. I told her I didn't request cash-back, and to delete it. She said I'd have to take the $40, because she couldn't delete it.

I told her to call a supervisor. The supervisor came, and said I'd have to take it. I said NO! Taking the $40 would be a cash advance against my Discover card, and I wasn't going to pay interest on a cash advance!!!!! If they couldn't delete it, then they would have to delete my whole order. So the supervisor had the cashier delete the whole order and re-scan everything. This second time around I looked at the electronic pad before I signed, and an unwanted cash-back of $20 popped up. At that point I told the cashier, and she deleted it. The total came out right.

The cashier agreed that the electronic pad must be defective. However, it was obvious that the cashier already knew that the electronic pad was defective because the first time around, although the $40 cash back showed up on the receipt, she kept quiet and NEVER offered me the money, like she should have! She intended to pocket my $40.

Can you imagine how many people went through before me, and at the end of her shift how much money she pocketed?

Few employers plan to ramp up hiring early next year, two surveys show – evidence that the economic recovery isn't likely to create many jobs anytime soon.

That will mean fierce competition for job openings that do exist. Nearly 6.3 unemployed workers, on average, are vying for each opening, government figures released Tuesday show. When the recession began, only 1.7 jobless workers were competing for each opening.

More of America's largest companies will shrink their staffs than will hire in the next six months, according to a quarterly survey from the Business Roundtable, a group of large-company CEOs released Tuesday.

Nineteen percent of the CEOs expect to expand their work forces, while 31 percent predict a decrease in the next six months, the survey found. That's slightly better than the 13 percent who expected to increase hiring three months earlier. At that time, 40 percent forecast cuts.

More chief executives foresee higher sales and capital spending compared with three months ago. But "it still will take some time for these gains to translate into more jobs," said Ivan Seidenberg, CEO of Verizon Communications and chairman of the Roundtable.

Separately, a survey of 28,000 employers by staffing company Manpower Inc. found that hiring may improve in the first quarter of 2010 compared with the current quarter – but any gains will likely be slight.

Manpower said its hiring index rose to 6. It was the first positive reading since the first quarter of 2009. Still, that's far below the 18 the index reached in the fourth quarter of 2007, when the recession began.

Economists say employment at large firms is likely to remain flat through much of 2010. Many companies already have hit their hiring targets for what's expected to be a weak and bumpy recovery.

The number of U.S. workers filing new claims for jobless benefits rose more than economists expected last week, the Labor Department said in its weekly report Thursday.

Total claims lasting more than one week, meanwhile, fell.

Initial claims for jobless benefits rose by 17,000 to 474,000 in the week ended Dec. 5. The previous week's level was unrevised at 457,000.

Economists surveyed by Dow Jones Newswires expected an increase of 8,000 initial claims.

An economist at the Labor Department said Thursday that an increase in claims is generally expected during this time of year because it reflects data from the week after Thanksgiving and because construction lay-offs tend to occur in that week.

"Generally...that week sees the biggest percentage increase in initial claims over the year, and this year was no exception," he said.

Although initial claims rose last week, the four-week moving average, which aims to smooth volatility in the data, still continued to drop. The Labor Department said the four-week moving average fell by 7,750 to 473,750 from the previous week's revised average of 481,500. That is the lowest figure since September 27, 2008.

Michelle Meyer, an economist at Barclays Capital, said in an interview Wednesday that despite the predicted increase in claims, she also expected the four-week moving average to continue to decline in a positive sign for the labor market.

"You are still seeing an improving trend," she said. "You are still experiencing an overall downturn in jobless claims."

In the Labor Department's Thursday report, the number of continuing claims--those drawn by workers for more than one week in the week ended Nov. 28 --fell by 303,000 to 5,157,000 from the preceding week's revised level of 5,460,000.

The unemployment rate for workers with unemployment insurance for the week ended Nov. 28 decreased to 3.9%, a 0.2 percentage point decline from the prior week's unrevised rate of 4.1%.

The largest increase in initial claims for the week ended Nov. 28 was in Wisconsin due to layoffs in the construction, service and manufacturing sectors. The largest decrease in initial claims occurred in California.

T he U.S. trade deficit narrowed unexpectedly in October, falling to $32.94 billion, as the rise in exports from September of goods such as cars was slightly higher than the increase in imports.

The figure, representing the U.S. deficit in international trade of goods and services, is 7.6% lower than the downwardly revised $35.65 billion trade gap the U.S. ran in September, the Commerce Department reported Thursday.

Economists surveyed by Dow Jones Newswires had expected the October trade deficit would widen to $37.0 billion. The September trade gap was originally estimated to be $36.5 billion.

The real, or inflation-adjusted deficit, used by economists to measure the impact of trade on gross domestic product, fell to $38.0 billion in October from a downwardly revised $41.49 billion in September.

U.S. GDP, a broad range of economic activity, rose in the third quarter by an annualized 2.8%, the first increase in more than a year. However, the economy's expansion was limited by a wider trade deficit, with net exports subtracting 0.8 of a percentage point to GDP in the July-September period.

Thursday's report showed U.S. exports in October rose 2.6% to $136.84 billion, the highest level in nearly a year, from $133.38 billion the previous month.

Imports rose by just 0.4% to $169.78 billion from $169.03 billion in September, but that was still the highest level in U.S. imports since Dec. 2008.

The U.S. paid $17.44 billion for crude oil imports in October, down from $19.51 billion the month before. After rising for seven months in a row, the average price per barrel was the lowest since January 2000, falling to $67.39 from $68.17 in September. Crude import volumes fell to 258.83 million barrels from 286.22 million barrels.

The total U.S. bill for all types of energy-related imports fell to $22.45 billion in October from $24.87 billion in September.

Imports of foreign-made consumer goods rose $1.0 billion in October, with imports of auto and related parts rising by $0.4 billion from September. Purchases of capital goods increased by $1.1 billion.

U.S. exports of consumer goods, including artwork and jewelry, rose by $1.0 billion in October compared to the prior month. The value of U.S. exports of industrial supplies, such as steelmaking material and gold, increased by $0.4 billion. Auto and related products exports also rose by $0.4 billion from September.

Meanwhile, capital goods exports rose by $1.2 billion in October from the previous month.

The U.S. trade gap with China was the highest since Nov. 2008, rising to $22.7 billion in October from the previous month's $22.1 billion. The trade deficit with Japan rose to $4.4 billion from $4.1 billion in September.

However, the U.S. trade deficit with some other major trading partners narrowed slightly. The deficit with the European Union fell to $4.9 billion from $5.5 billion a month earlier, while the trade shortfall with Mexico was unchanged at $4.6 billion.

Foreclosure filings in the U.S. will reach a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said.

This year’s filings will surpass 2008’s total of 3.2 million as record unemployment and price erosion batter the housing market, the Irvine, California-based company said.

“We are a long way from a recovery,” John Quigley, economics professor at the University of California, Berkeley, said in an interview. “You can’t start to see improvement in the housing market until after unemployment peaks.”

Foreclosure filings exceeded 300,000 for the ninth straight month in November, RealtyTrac said today. A weak labor market and tight credit are “formidable headwinds” for the economy, Federal Reserve Chairman Ben S. Bernanke said in a Dec. 7 speech in Washington. The 7.2 million jobs lost since the recession began in December 2007 are the most of any postwar economic slump, Labor Department data show. Unemployment, at 10 percent last month, won’t peak until the first quarter, Quigley said.

Loan-modification programs and an expanded government tax credit for first-time homebuyers are helping slow the monthly pace of filings and “keeping a lid” on further foreclosures, James Saccacio, RealtyTrac’s chief executive officer, said in the statement.

Paterson: 'New York Has Run Out Of Cash'

Huffington Post DECEMBER 11, 2009

ALBANY, N.Y. — Gov. David Paterson said Wednesday that New York has run out of cash and he's directing budget officials to reduce state aid payments to schools, local governments and nonprofit service providers until things improve.

Speaking at the Museum of American Finance in Manhattan, Paterson said he'll probably get sued, but he won't let the state run out of money on his watch.

"I am directing the Division of the Budget to limit payments so that we will have the cash to pay our debts at the end of December," Paterson said. "I will continue to withhold payments until this economy is leveled off."

"Now New York has run out of cash," he said. "You can't spend money that you don't have."

Budget Director Robert Megna said the state faces a shortfall of more than $1 billion in the general fund at the end of December, which would be a first for New York.

Other state funds can be tapped to help close that gap, Megna said, but even using all $1.2 billion of rainy day reserves and delaying a pension fund payment will leave the margin "razor thin."

Rather than risking some setback that would force hasty cuts, Megna said the administration is cutting spending in an orderly fashion. The Budget Division plans to detail temporary cuts this week, he said.

In his executive budget proposal next year, Paterson could propose making them permanent.

"We've had a revenue collapse over the last 24 to 36 month period," Megna said. "The state's cash position is at its weakest point in recent history."

Last week, after lawmakers agreed to cuts of about $2.8 billion, Paterson said it wouldn't be enough. He warned then of reduced and delayed payments, targeting school aid and funding to hospitals.

Timothy Kremer, executive director of the New York State School Boards Association, said they've asked their roughly 700 members to assess the impact if approximately $300 million in school aid is delayed or permanently cut, which Paterson had proposed in November. Lawmakers rejected the cut, which would be a roughly 1.5 percent reduction across the board.

"We think it's inappropriate and likely illegal for him to unilaterally act in that way," Kremer said. Several organizations, including his association, may seek a court order to block it, he said.

Stephen Acquario, executive director of the New York State Association of Counties, said their reimbursements for providing state-mandated services like public health, mental hygiene and other programs are already lagging by months and in some cases a year or more. "Many counties don't have the available fund balance to cover the state's bills," he said.

The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed

By: Jeff Cox
CNBC.com

As experts debate the potential speed of the US recovery, one figure looms large but is often overlooked: nearly 1 in 5 Americans is either out of work or under-employed.

According to the government's broadest measure of unemployment, some 17.5 percent are either without a job entirely or underemployed. The so-called U-6 number is at the highest rate since becoming an official labor statistic in 1994.

The number dwarfs the statistic most people pay attention to—the U-3 rate—which most recently showed unemployment at 10.2 percent for October, the highest it has been since June 1983.

The difference is that what is traditionally referred to as the "unemployment rate" only measures those out of work who are still looking for jobs. Discouraged workers who have quit trying to find a job, as well as those working part-time but looking for full-time work or who are otherwise underemployed, count in the U-6 rate.

With such a large portion of Americans experiencing employment struggles, economists worry that an extended period of slow or flat growth lies ahead.

"To me there's no easy solution here," says Michael Pento, chief economist at Delta Global Advisors. "Unless you create another bubble in which the economy can create jobs, then you're not going to have growth. That's the sad truth."

Pento warns that forecasts of a double-dip ("W") or a straight up ("V") recovery both could be too optimistic given the jobs situation.

Instead, he believes the economy could flatline (or "L") for an extended period as small businesses struggle to grow and consequently rehire the workers that have been furloughed as the U-3 unemployment rate has doubled since March 2008.

As that trend has happened, the U-6 rate has expanded at an even more dramatic pace. Economists cite several reasons for the phenomenon.

For one, more workers are becoming discouraged as real estate—the focal point for the expansion in the earlier part of the decade—has collapsed and taken millions of directly related and ancillary jobs with it.

Many workers believe those jobs aren't coming back, and have thus quit looking and added themselves to the broader unemployment count.

"In the earlier part of this decade, 40 percent of all new jobs created were in real estate. Attorneys, mortgage brokers, agents, construction—they were all circled around housing," Pento says. "We've had a jobless recovery in the last two recessions. This is going to be the third jobless recovery in a row."

Another factor that may be leading people onto the rolls of those no longer looking for jobs is the government's accommodative extensions of jobless benefits.

"Workers are unemployed for a much longer span than we've seen historically," says David Resler, chief economist at Nomura Securities International in New York. "Part of that may be affected by the longer availability of benefits. It reduces the incentives for an urgent job search."

The U-6 rate debuted in January of 1994 at 11.8 percent, while the U-3 was at 6.6 percent. The measure hit a low of 6.9 percent in April 2000 while U-3 sat at 3.8 percent.

While the current methodology only dates back 15 years, a former U-6 gauge was in existence previously and peaked at 14.3 percent in 1982. Economists predict the current measure would fall just below that number using the same methodology.

"We're in the process of discovering how severe this recession and the long-run impact on certain industries will be and what that will do to overall employment," Resler says. The U-6 rate "portends a very slow, sluggish recovery."

If that holds and the US economy stays weak, that presents challenges for investors.

"People focus too much on that 10 percent number and not on the larger number," says Kevin Mahn, chief investment officer at Hennion & Walsh in Parsippany, N.J. "There's a humongous inventory of people out there looking for work and have been looking for work for a long time. Where are those jobs going to come from?"

High unemployment and the resulting pressure on consumers is driving many investors to look for opportunities overseas and in other assets.

Walsh says that trend is going to continue, with clients going to foreign markets, real estate investment trusts, certain bonds—anywhere that can offer profits above the slow-growth mire of US-based investments.

"If full employment is 4 percent, people are wondering how we're going to get from 10 (percent) to 4. Well, try getting from 17 to 4. We may not get back to full employment for a decade," Mahn says. "As an investor, that causes me to look for different places now. Maybe you can't just put money in US large caps and ride out this recovery."

World Currencies To Join In Race To The Bottom

The International Forecaster Oct. 24, 2009

G20 meets and makes noise about the dollar, currency to soon go to a race to the bottom, a promised relief to the financial crisis in the form of policy changes, Financial education for these times is important

The G-20 finance ministers meet in Scotland on November 6th and 7th, and they will all be bleating about the fall in the dollar. France started this week, and the others will follow. Their currencies are rising in value and they do not like it.

We expect other nations to follow, Mexico and Brazil in imposing a 2% tax on incoming funds and others will print their currencies and buy dollars to reduce the value of their currencies and at the same time buy US Treasuries that are decreasing in value. That will neutralize any benefit from the exercise. In addition, they will all scream for a strong dollar policy. By the time the meeting begins the dollar should be between 71 and 72 on the USDX, the dollar index. The weaker dollar means dollar debt will be cheaper to pay back. The big question is how long will it take for the dollar to fall to 40 to 55?

We are often asked how does today compare with the 1930s in tax revenue and government spending? In 1930-31 tax revenue fell almost 53%. It increased 250% in 1932 and tripled in 1938. Yet, growth during the 30s went nowhere. In spite of an increase of 45% in government spending during those years by 1940 GDP had not returned to the levels of 1930. In 1939 unemployment was still 17.2% and in 1940, 16.4%. This is the same monetary policy being used today that was used during the 1930s. Keynesian monetization that does not work. The only reason the depression did not continue is that FDR arranged another war, otherwise the depression could have continued indefinitely. The debt bubble of the 1920s only lasted seven years. Our present debt bubble actually began in 1978, was purged in 1982-83 and began again in 1986. It was killed in 1989 and resurrected in 1994. The bubble of 2000-2001 was replaced by our current real estate bubble in 2003, which is now in the process of deflating. The privately owned Federal Reserve engineered all this.

The current fiasco was accompanied by a shortfall in tax collections to government spending from 2003 to 2007. 2008 held its own due to cooking the books and 2009 fell almost 18%. Unless further tax increases are implemented you can expect 2009 to fall short as well. Thus, if taxes are not increased the American economy will collapse. This is harsh and tax increases will come at just the wrong time. It can in part by temporarily covered by hyperinflation, but that would be a transitory solution. 62.8% of foreign reserves are in US dollars, so as the dollar depreciates foreign debt decreases. The flip side is that there is major imported inflation, particularly in the cost of goods and services.

Present government stimulation is not going to work. It didn’t work in the 1930s and Japan has found out to its dismay that since 1992 it didn’t work for them either. Why should it work in America? The debt that has been so wantonly created is still going to be there and if taxes are not raised or costs cut, it will be even larger.

Our government, Wall Street and many Americans are basing their future on stimulation and recovery and it isn’t going to happen. This supposedly is how government is going to generate its tax revenue. All we can say is good luck.

At the G-20 and G-7 we hear about an exit strategy. A strategy that doesn’t exist. Others may raise taxes but we can assure you the US and UK will be the last to do so. They are currencies in disparate trouble. The dollar will find its real value somewhere between 40 & 55 on the USDX. The dollar will become a third world currency and as a result gold will climb to $2,500 to $3,000.

The G-20 let us know that they would be replacing the G-7 and G-8. This desperation of power to developing countries would expedite the transfer of wealth from Western nations in the third world via carbon taxation in order to lower standards to meet those of the lower tier countries. This is being done to force the first world to accept world government.

In his address to the conclave US Treasury Secretary Tim Geithner told attendees that the US was going to legislate sweeping changes to the financial system under the guise of creating greater protection for consumers and investors and to promote a more stable financial system that would relieve taxpayers of the burden of the financial crisis.

The members still want to complete the Doha trade talks that have been bogged down for four years. What the WTO is really trying to accomplish is extreme financial deregulation under the cover of trade agreements, which would undermine genuine regulation and would make the entire world a free trade zone to be further looted by transnational conglomerates. The force behind WTO deregulation is the EU and they are pushing the worst aspects of the plan.

The WTO has an agreement called the FSA, the Financial Services Agreement that explicitly applies to more than 100 countries and mandates major deregulation. Mr. Geithner worked on this plan during the Clinton administration, so his regulation statements are meant for public consumption only. Incidentally, the WTO-EU rules are virtually unknown to the US Congress.

Geithner was the one who closed the deregulation deal for the Clinton entourage as lead negotiator. He knows all about the existing agreements. He was directly instrumental in the destruction of Glass-Steagall. The whole new crowd in the Obama administration was responsible for setting up what has become the destruction of our financial system.

The present US course is to re-regulate and that is in direct opposition to what the WTO and the EU want. There will be quite a fight over this change of direction by the US, especially over the WTO, Understanding on Commitments in Financial Services, which is severe deregulation. The bottom line is Doha, the FSA, WTO and the EU have to be stopped. More deregulation is now politically unaccepted by Americans who have lost so many jobs. There obviously are two factions within the Illuminist structure fighting this out. In fact, the FSA was largely written by American Express and AIG. These are some of the inner workings behind the scenes that you never hear about. Things are never what they seem to be.

The Treasury will have major issuances next week. On Monday alone they will issue $116 billion in new notes and bills, 2, 5 & 7-year paper; plus another $30 billion in bills and $7 billion in TIFS. Tuesday will see $44 billion in 2-year notes. On the 28th, $41 billion in 5-year notes and on the 29th, $31 billion in 7-year notes. That totals $182 billion and that is disastrous.

Domestic investors are selling the rally in domestic stocks at an accelerating rate while continuing to invest overseas, and in the emerging bond bubble.

Don’t’ be deceived by Wall Street and Washington, the worst remains ahead for the economic and systemic-solvency crisis. There are no meaningful signs of business recovery, with the current depression likely to evolve into a great depression, in conjunction with the collapse of the value in the US dollar and a hyperinflation. Risks are high for these crisis’s to explode in the year ahead. The general outlook is not changed says economist John Williams.

Mortgage application fell for a second straight week with refinance loans decreasing 13.7%, the lowest since 9/11/09.

Barclays Capital hosted a private meeting yesterday with Goldman Sachs president Gary Cohn, CFO David Viniar and Global Sales and Treading co-heads David Heller and Harvey Schwartz.

How concerned are they about any new regulations on the financial industry? Not much. In a copy of the notes Barclay is putting out on the meeting, and obtained by EconomicPolicyJournal.com, Goldman told Barclay that it is educating the regulators.

Barclay advised that senior Goldman management are spending an, "exorbitant amount of time thinking about potential regulatory and policy outcomes and educating regulators and policymakers on the intricacies of financial markets."

The only picture I can conjure up is Blankfein and company educating,
Gene Sperling ("Counselor" to Geithner) who last year took in $887,727 from Goldman

Lee Sachs (Geithner's "right hand man") who reported more than $3 million in salary and partnership income from the hedge fund Mariner Investment Group (started by Brace Young former Goldman partner) and Gary Gensler (Head of CFTC) former Goldman partner.

Even the Fed Doesn't Want to Hold U.S. Dollars

Seeking Alpha Oct. 23 2009

This is the scariest image in finance:

The above chart shows the dollar’s performance since the Fed announced its Quantitative Easing program in March. This chart tells us two things:

1. Americans just got 15% poorer on the world stage thanks to Ben Bernanke
2. A currency crisis is in the works (and perhaps already starting)

Regarding #1: When the financial crisis hit, the Fed realized it would need to keep interest rates low while it attempted to bail out the banks (80% of the $200+ trillion in derivatives sitting on commercial banks’ balance sheets are related to interest rates).

The problem with this is that it makes Treasuries very unattractive to foreign investors (China & Japan) who want a higher yield. Consequently, the Fed decided to pick up the slack by buying $300 billion worth of Treasuries through the now famous Quantitative Easing program.

As I noted last week, the Fed is now the largest buyer of US debt (it bought more debt than the next three largest buyers combined in 2Q09). China and Japan are no one’s fools. And they’re not going to fund a monetary policy that is both profligate and likely to erode the value of their dollar holdings.

Which brings us to item #2: the coming dollar crisis.

I am not a huge fan of technical analysis, but it is a useful tool for navigating a trader-heavy, liquidity driven, manipulated market such as today’s. On that note, I want to point out that the dollar began forming a falling bullish wedge pattern starting in June (see above chart). This pattern entails an ever-tightening range of lower highs and lower lows and typically precedes major breakouts to the upside.

Except it didn’t.

As you can see, the dollar broke down out of this pattern in late September. It then rallied back up into the trading range before breaking down again. This is bad news. The next line of support (place where the dollar could bounce) is 76. We've already broken that one too.

Now the next line of support is 72. Now, the dollar has only fallen to this level once in the last 30 years (Summer 2008, see the chart below). If we fall below that, then we’re in uncharted territory and a major dollar devaluation is in the works.

Perhaps it’s already happening.

To review a point made earlier, the dollar has lost 15% of its value since March 2009. On an annualized basis, we’re talking about the dollar losing almost a third of its value in one year (30%). That is an absurd level of devaluation. And China, Japan, etc. have had enough. It is now clear that a flight from the dollar has begun; the Fed buys more US debt than the next three biggest buyers combined.

However, what most people don’t realize is that even the Fed itself is shifting away from the dollar. Everyone knows that China and Japan hold massive foreign reserves (the dollar). But the US Federal Reserve does this too (we own euros, yen, etc.). And for some reason the amount of foreign reserve assets (non-dollar assets) on the Fed’s balance sheet skyrocketed by 50% to $133 billion at the end of August.

Now, $133 billion in foreign reserves is nothing compared to China and Japan’s ~$3 trillion. But a 50% increase in one week is an astounding rate of change.

The culprit?

A 500% increase in SDRs: the “global” currency issued by the IMF. The blog ZeroHedge caught this story first and pointed out that SDRs are the IMF’s means of maintaining a “super reserve” currency for the world. SDRs are defined as: a basket of currencies, today consisting of the euro, Japanese yen, pound sterling, and U.S. dollar.

Now, one has to wonder why the US Federal Reserve decided to suddenly buy $40 billion worth of SDRs overnight. The answer is that the IMF decided to massively increase the amount of SDRs outstanding from SDR 21 billion to SDR 204 billion in late August.

This came as part of a G20 decision made in April 2009 to stabilize the global financial system. Interestingly, of the countries involved in buying SDRs, the US bought the most at SDR 30 billion, compared to Japan (SDR 11 billion), and China (SDR 6 billion).

I realize this is getting a bit technical. But in simple terms this means that the US Fed intentionally participated in a world reserve currency scheme that devalued the dollar.

Folks, even the Fed doesn't want to own dollars. It’s time to look for a currency that can't be devalued.

The Fed At The Heart Of Control Of Our Country

Bob Chapman@ The International Forecaster Posted: October 21 2009

who controls things in Washington DC, really? Americans don’t understand how their system really works, Thugs with Ivy League Degrees run the show, debt monetized at a frantic pace and makes matters worse, delinquent and default mortgages, banks get money for nothing

Last week the Dow added 1.3%, the S&P 1.5%, the Russell 2000, 0.2% and the Nasdaq 100, 0.7%. Cyclicals rose 2.6%; transports 3.8%; consumers 1.7%; utilities 1.3%, as banks fell 0.3% and broker/dealers fell 0.6%. High tech fell 0.2% semis 1.1%; bitoechs 1.9% and Internets rose 0.2%. Gold bullion rose $3.00 and the HUI was unchanged, but up 47.5% on the year. The USDX, the dollar index fell 1.1% to 75.62.

The 2-year T-bills fell 2 bps to 0.83%, the 10-year notes rose 2 bps to 3.41% and the 10-year German bund added 8 bps to 3.28%.

Freddie Mac 30-year fixed rate mortgages rose 5 bps to 4.92%; the 15’s rose 4 bps to 4.37% and the one-year ARMs jumped 7 bps to 4.60%. The 30-year fixed jumbo fell 6 bps to 6.00%.

Federal Reserve credit declined $12.9 billion, up 21% yoy. Fed foreign holdings of Treasury/Agency debt rose $4.1 billion to a record $2.865 trillion. Custody holdings for foreign central banks expanded at a 17.5% rate ytd, and yoy 15.2%.

M-2 narrow money supply fell $23.3 billion to $8.341 trillion, that is 5.9% yoy.

Total money market assets dropped $42.3 billion to $3.404 trillion. They have declined $427 billion ytd, or 14.1% annualized.

The charade in NYC and Washington goes on. There is no question that our government is controlled by the unelected that lurks behind the scenes or are appointed as bureaucrats to run our country. It was never more evident than when administrations changed last January. Team A replaced Team B, all of whom just happen to be members of the Council on Foreign Relations, the Trilateral Commission and the Bilderberg Group. There is no debate. There is only one plan and that is for one-world government. These are the Illuminists who will Shepard us into final bondage. This is what our government is all about today and has been since WWII.

The heart of the elitist control mechanism is the Federal Reserve and the Treasury Department. Control of our country emanates from these two entities. They control the purse strings of our nation. They allow us to pay for our own destruction. This is achieved by taxation and debt. The system in place has been used for centuries to keep control over people. The elitists want total power over us and all the inhabitants of the world.

Their plans to bring down the world’s economic and financial structure is well underway. The problem is that the public has begun to discover what they are up too via talk radio, the Internet and publications such as the International Forecaster. That has caused the elitists to accelerate their plans and that has opened the window of opportunity for us.

This is why now it is the appropriate time to pass HR1207 and SB604, bills to audit and investigate the Federal Reserve. Once the public discovers what these elitists have been doing to the American people for almost a century, they will disband the Fed and turn its job of monetary policy back to the Treasury where it was placed by our Constitution. This way we will have control and transparency. The next step will be to close the revolving door between Wall Street and Washington.

t has been two years since the beginning of the credit crisis and the breakdown of our economic and financial structure. The plan by the elitists since then has been to keep the system functioning as long as possible so that they can continue their massive frauds and corruption; or until the time is ripe to allow the system to collapse. These plans are ably assisted by 95% of our House and Senate who are bought and paid for. The corruption is so widespread that investigations do not take place and the guilty are protected and at worst pay a fine.

Due to these machinations the America we have known is gone. Our country is run by thugs in $3,000 suits with Ivy League degrees.

Most Americans do not understand what is going on or don’t care to know. Most are ill-educated and do not really and a chance of comprehending what is going on. That is compounded by drugs and alcohol and a steady stream of media propaganda and brainwashing produced by NYC and Washington. Our daughter teaches the fourth grade and 20 of 23 students are not passing. They are split three ways: white, black and Spanish speaking. Then there is no ‘Child Left Behind,’ which will make sure they pass summer school and when they graduate they will be functionally illiterate. It doesn’t get much worse than this. When we went to school one or maybe two out of 30 wouldn’t pass and they were kept back for a year. It is outrageous. They spend all their time studying for federal government mandated tests, and learn little else. Our three grandchildren read one to four extra books a week and fortunately really excel in their studies. It can be done, but it takes lots of work and dedication something that most parents do not have time for. This in part is what is responsible for America’s failure and lack of leadership. Leadership, which is totally in the hands of the wealthy Illuminists. If it is any consolation the rest of the world isn’t doing much better.

The geniuses, the masters of the universe, have a broken system. This time the system they have deliberately destroyed cannot be resurrected. Due to talk radio, the Internet and publications such as the IF they had to accelerate their program for on-world government and they are scrambling, hoping they’ll be successful, and unscathed. We will make sure they’ll be no chance of that.

As a result of these machinations America is at the mercy of its creditors and for all intents and purposes is bankrupt. The only thing left holding America together is its imperial armies that eventually will collapse for lack of funding. Foreigners are not going to stand for monetization indefinitely. Yes, the players know the system has failed, and some have already broken ranks. If they had not Forex assets in sovereign reserves would not have fallen from 64.5% to 62.8% over the past nine months, as proof of that.

We have told you where we have been headed over and over again for more than ten years and we have been almost totally right unfortunately. If we do not stop these monsters we and our ancestors will live in bondage for ever. That is why passage of HR1207 and SB604 are so important. We have to drive a stake through the heart of the Illuminist machine. That heart is the Fed. If we are unsuccessful we are doomed to chaos and perhaps revolution. Americans had best wake up and snap out of denial.

Most analysts try to figure out what others within the financial and economic sphere are doing. Unfortunately they are burdened by playing within the system. They cannot see what is really going on because for one reason or another they are forced to frame their results within the inner sanctum of the Illuminists. This is the cover that is used for deliberately destroying nations. These ideas cannot simply be avoided. You would think reading history that all these brilliant people wouldn’t be deceived, but they have been. Every time, what they are doing has been tried, has been a failure. Deliberate collapses, destroyed currencies, social chaos and revolution. During the French Revolution 300,000 people such as these lost their heads. Perhaps this time it will be 3 million. Inflation can only be controlled by deflation and deflation is totally uncontrollable. Misguided isn’t the word for it. Smug and arrogant they’ll again be proven wrong and unfortunately we will all pay a terrible price.

The progenitors of this false economic policy, Keynesianism, have brought the distortion of price mechanisms, created unlimited opportunities for speculation and they have thrown all discipline to the wind. This is the basis for our current Federal Reserve System, which is the engine for such a philosophy. As a result of this policy we will be entering hyperinflation next year and the dollar will continue to fall in value.

Even though gold and silver are suppressed, gold hit a new high this past week. The CRB index did as well with oil leading the way. This is all a manifestation of coming hyperinflation and a falling dollar.

The Keynesians are pumping the money supply and monetizing domestic and foreign debt at a wild pace. The deflationary undertow continues strong as residential and commercial property prices continue their decent. The final impact is still two or more years away.

There are few financial reports that do not include bogus accounting. The FASB changed the rules last year and allowed mark-to-model accounting. Let’s see if they reinstate mark-to-market January 1st. The Basel Accords have been simply ignored and no one discusses them. Exclusive of present on and off balance sheet losses, banks are going to get hit with more residential foreclosure losses and they will be hit by 35% more commercial losses over the next two years. If nothing else the banks cannot refinance perfectly good loans because they do not have the funds to do so.

The big question for the banks is will the government perpetuate this fraud? We do not know, but we rather think they may for the good of the country. If fraud continues it will be for the benefit of Illuminists who run the banks, brokerage houses, insurance companies and transnational conglomerates. Either way again all they are doing is buying time; the end result will be the same. The banking, brokerage and insurance businesses are still broke. Nothing has been done to fix the underlying problem. There have been no structural changes, just the same old criminality. Any changes are patchwork for the public. Stimulus packages, home loan modification and $250 checks for seniors who will not get a COLA increase for the next three years. It is like the mad hatter has been set loose.

Where are the tariffs on goods and services we so desperately need to bring production and jobs back from the third world? Without them everything else is futile. Offshore tax-free earnings, now some $1.3 trillion, are too juicy for the Illuminists to give up. Then again, what better way to destroy an economy, as we wrote in 1967 in the American Mercury?

Then there is the outrageous scam of terrorism and mindless, endless war to again fill the coffers of the Illuminists and rid the world of useless eaters.

Monetization only makes matters much worse, as we shall see when hyperinflation revisits us next year. In this process the dollar is allowed to collapse and it was planned that way.

Borrowers have sold more than $1 trillion in US corporate bonds in 2009, the fastest pace on record. Citigroup and General Electric were the year’s biggest issuers. Sales compare with $873.2 billion in all of 2008, and $1.17 trillion for 2007, the biggest year for bond sales.

The record rally in the price of loans owed by the riskiest corporate borrowers may end a two- year drought in leveraged buyouts.  Banks provided almost $7.5 billion of high-yield loans in the U.S. and Europe since July 1 to finance acquisitions, more than double the amount in the three months ended June 30 and more than four times the figure in the first quarter.

Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two-quarter rout in almost two decades.  Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion. Nations reporting currency breakdowns put 63% of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.  World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy. The diversification signals that the currency won’t rebound anytime soon after losing 10.3% on a trade-weighted basis the past six months, the biggest drop since 1991.

US foreclosure filings climbed to a record in the third quarter according to RealtyTrac Inc.  A total of 937,840 homes received a default or auction notice or were repossessed by banks, a 23% increase from a year earlier.

The Chicago Transit Authority proposed service cuts and boosting some bus and train fares 33% to close a $300 million budget gap prompted by pension obligations and the weak economy.

The volume of delinquent commercial mortgages jumped sevenfold last month as borrowers who got loans with lax terms fail to make debt payments amid sinking real estate values, according to Credit Suisse Group AG.  In September, installments on $22.4 billion of mortgages were at least 60 days late, up from $3.2 billion a year earlier. The delinquency rate rose 33 bps to 3.34%.

Even as the economy continues to struggle, much of Wall Street is minting money — and looking forward again to hefty bonuses.

Many Americans wonder how this can possibly be. How can some banks be prospering so soon after a financial collapse, even as legions of people worry about losing their jobs and their homes?

It may come as a surprise that one of the most powerful forces driving the resurgence on Wall Street is not the banks but Washington. Many of the steps that policy makers took last year to stabilize the financial system — reducing interest rates to near zero, bolstering big banks with taxpayer money, guaranteeing billions of dollars of financial institutions’ debts — helped set the stage for this new era of Wall Street wealth.

You can’t make up stuff like this! Facing jeers over outlandish pay, the CEO of Goldman Sachs stresses the social goods of his firm's business.

Blankfein, speaking at a breakfast conversation hosted by Fortune, emphasized that the investment firm serves "an important social purpose" by channeling pools of money held by pension funds and others to companies and governments around the world…

But Blankfein said principal trading -- trades the firm makes for its own account -- makes up just a small fraction of Goldman's profits. [Perhaps Blankfein needs remedial math.]

How can Blankfein make such an absurd claim when in the last quarter $10B of Goldie’s $12.4B in revenue came from trading? Obviously Blankfein believes people are stupid given his statement that Goldies principal trading makes up a small fraction of Goldie’s profits. What a crock! And Al Capone used to run soup kitchens.

Borrow from the Federal Reserve at zero and lend to Treasury for a profit. That's some racket. The banks have no incentive to lend. Most of them still have a significant amount of bad loans sitting on their books that they don't want to recognize as nonperforming. If the banks recognize these bad loans, all the write-offs may force them into bankruptcy. Instead, they hope that over time renegotiated loan terms will eventually allow the borrowers to make their payments. This ordeal could last at least a decade if this cycle is similar to other crises, like Japan's lost decade of the 1990s…banks can earn a huge spread by borrowing virtually unlimited amounts for nothing and lending that same money back to the Treasury.

U.S. Households Still Getting Much Poorer

September 24, 2009 (LPAC)—Economists in Washington have projected that the average American household's real income is in the process of falling by a huge 9.3% (-$4,813/year) from 2007-2010, taking households back to early- to mid-1990s level income. The Economic Policy Institute (EPI) projects that the average household has already had its income cut by 8.1% (-$4,212/year) from July 2007 to now. This is the largest income drop since the Great Depression, and has occurred simultaneously with a loss of wealth by households, of $6 trillion, or $50,000 per household in the United States.

The Institute's projection comes from Census Bureau reports already released, which cover only the milder period of this economic collapse, mid-2007 to mid-2008. As far as poverty of households is concerned, the EPI projects that the national poverty rate will increase to 15.1% by early 2010, even against the extremely low income measure of the official "poverty line"; that child poverty is increasing by 8.6% to 26.6% of all American children in poverty in early 2010; and that the poverty rate among Black Americans is increasing by 7.3% to 31.8%!

The heads of these households are not finding work, despite constant claims of an "economic turn-around" by the Obama White House. The Bureau of Labor Statistics (BLS) reported today that long-term unemployment (joblessness for more than 27 weeks while actively seeking work) in August reached 3.2% of the entire U.S. civilian workforce, the highest level in BLS-data history, and well above the 1981 recession peak of 2.6% of labor force.

Of course this is only that fraction of long-term unemployed officially recorded as such and receiving state or fed benefits (5.1 million workers). The real number includes 6 million others who've given up and dropped out of the labor force, and others who don't receive benefits; it is near 8% of the whole workforce, who've wanted a job and been unable to find one for more than six months.

In August, the number of job seekers per available job reached 6.2 [!] and rising—again, a record—from 1.7 two years ago.

Fairy Tales of Recovery, Reality of More Failures

September 2 2009

International Forecaster Weekly
Summary: Little recovery with bailout funds, More failures to come in credit card, loans, and commercial real estate, Other currencies are not the answer for anybody, since all currencies rise and fall in relation to gold and silver, foreign investors feasting on US banks, negative GDP decline in other major economies, perpetual crisis for perpetual government control, Things dont look good and a TARP wont cover it, US poverty rate now higher than Mexico or Turkey.

The Illuminists are desperate. They are appealing the Bloomberg directive to reveal who received funding to keep from going bankrupt from the Federal Reserve.

In addition HR 1207 will pass in the House this month. The question is in what form. No matter what happens the Illuminati knows we are hot on their trail. They have to do everything possible to end the depression, or go for broke.

Thus far there has been little recovery even with an official $23.7 trillion committed by the Treasury and the Fed. This number alone shows you how serious this situation is. The banking sector is still broke and is using TARP funds to buy out failing smaller banks. The residential TARP funds returned will go toward helping bail out the collapsing commercial real estate industry. Quantitative easing has not worked, nor has TARP and the endless stream of money from TALF. We are anxious to see if the FASB sticks to its guns and demands mark-to-market accounting. That will pull the cover off of the fraud known as mark-to-model, which really is mark to whatever you want it to be. As you can now see this is a much deeper problem than a subprime problem. That just triggered events. As we pointed out before we are still facing a new wave of subprime loans written over the past year by FHA, Ginnie Mae, Fannie Mae and Freddie Mac, plus ALT-A, Option ARMS Pick-and-Pay Loans and the failure of prime loans that will stretch to 2013. On top of that we have commercial real estate loans now to deal with and credit card failure. This is what the Illuminati crime syndicate has brought you in their lust for more power and riches. We must not forget as well, standing in the wings, are America’s creditors, especially the Chinese who are dumping $25 billion to $100 billion in dollar denominated assets monthly. Their goal is to be out of dollar paper in another 1-1/2 years. Then there are the other sellers. There are few buyers, so the Fed will have to monetize trillions of dollars in dollar denominated bonds, which they are doing secretly presently. It is no wonder they are terrified of an audit, which would not only uncover their illegal activities, but also expose their leadership and participation in the outrageous suppression of gold and silver prices. The status of foreign creditors could turn on a dime. We predict they will abandon ship one at a time, as the dollar slips lower and lower. The Fed and the Treasury have tried over and over to keep the USDX, dollar index, over 80 for weeks and they have been totally unsuccessful. It settled this past Friday at 78.31, just ready to break to new lows. We wonder how long these countries will tolerate such arrogance and the dream of world government? One must remember these countries are suffering the fallout of the actions that have been deliberately executed by these Illuminists and they are not happy about that. They are all suffering recession and many depression. It is only a matter of time before they too dump dollar denominated assets.

We would like to say for individuals caught up in this mess worldwide, other currencies are not the answer. Only gold and silver related assets are the answer. Remember that, for in the final analysis all currencies will fall in value versus gold and silver and there are no exceptions. We have been there before and seen that, so do not be deluded into going into other currencies, or shares in foreign markets denominated in other currencies, they are not the answer, only gold and silver are.

Then we hear the fairy tales of recovery in the US, Europe and Asia. If you spend enough money you can create a recovery albeit of short duration. No one is out of the woods. Europe, particularly the eurozone, has cut issuance of money and credit to 3.7% but they are maintaining interest rates at 1%, which is in reality ½%. The European recovery will be a parallel movement for a year and without more cheap money or an increase in money and credit it will die and wither away. Then there are the ongoing real estate collapses in the US, Ireland, Spain and in the Persian Gulf. There could be a bank panic or holiday in any of these regions. If a panic occurs the first liquid asset sold will be US Treasuries and Agencies and the US dollar. This would spread terror in Frankfurt, Paris, London and NYC. All these stock exchanges could collapse as well. The NYSE, FTSE, CAC and the DAX as countries in trouble sell everything not nailed down to simply survive. The world is about to find out that free trade and globalization has been a disaster. The millions of jobs lost in the US and Europe, so that transnational conglomerates could prosper is in the final stages of death. The redistribution of wealth from the rich to the poor countries is about to end in a shattering smash-up. The myth of worldwide prosperity is about to end. Contrary to prevailing thought the biggest losers will be world exporters, such as China, which has already seen a 40% fall in exports. All the money and credit creation we have seen in China over the past seven months, some $1.9 trillion, isn’t going to work. They still face 30 million unemployed. Those jobs are not going to return for a long time if ever. Out of desperation there eventually will be tariffs, legislated in the US, Europe and in other countries and inflation will rise as a result.

In America the safety net of the FDIC doesn’t exist. It is virtually broke and that is why a few months ago unofficially the FDIC asked government for $500 billion. Putting this into perspective, about $700 billion would insure about 1% of all the qualifying deposits in the US.

Not only will the Federal Reserve Transparency Act, HR-1207, pass the House, but also it will pass the Senate, because you are going to write every Senator demanding that they pass it.

If passed, we will see our gold inventories. We’ll find out what toxic garbage the Fed has been buying from banks and what they have paid for it. We will find out every company that received funds and how they were spent. We will subpoena every piece of correspondence, fax, e-mail and phone calls the Fed has ever made. We will get a real balance sheet; not some version the GAO approved. Wait until the public sees how the Fed and its owners have looted the people for almost 100 years.

Two Republican lawmakers, Darrell Issa, (R-Ca) and Rep. Spencer Bachus, (R-OK), House Financial Services ranking members are seeking an audit of the trust that manages the government’s controlling stake in AIG.

Three more U.S. banks failed on Friday, bringing the total to 84 so far this year, as the industry continues to grapple with deteriorating loans on their books. Regulators shuttered Affinity Bank of Ventura, California, Bradford Bank in Baltimore, and Mainstreet Bank of Forest Lake, Minnesota, which in total are expected to cost the government's deposit insurance fund about $446 million. The Federal Deposit Insurance Corp on Thursday reported that the insurance fund's balance stood at $10.4 billion at the end of the second quarter. But the agency also noted that the figure was adjusted to account for $32 billion set aside for expected failures over the next year. FDIC Chairman Sheila Bair said this week that bank failures will remain elevated as banks go through the painful process of recognizing loan losses and cleaning up balance sheets. The total of 84 failures this year marks a sharp rise over the 25 last year, and the three failures in all of 2007.

We stated long ago the somewhere between 3,400 and 4,200 banks would go under and the FDIC would spend trillions of dollars to cover the loses. A loss of 3,400 banks would lead to losses of over $33 trillion.

The FDIC now has foreign banks and private equity groups about to engorge themselves on failing US banks. Worse yet, rather than cash the FDIC is allowing these financial firms to use equity which is unprecedented. The use of non-cash collateral assets is being used because the purchasing banks are broke and without TARP not only could they not buy anything, but they’d probably be out of business. What Ms. Bair has done has been to expedite the takeover of banks by bigger banks and involved the use of foreign banks as well as private equity partnerships.

As far as we are concerned, as a foreigner, you have to be deranged to buy dollar denominated assets with the massive monetization of agency securities, collateralized debt obligations and treasuries going on, never mind the underhanded secret deals the Fed is involved in to fund their markets. If we can understand what the fed is up too, so can these foreigners. That is what a more than $600 billion swap facility is all about, including suppression of foreign currencies in order to bolster the strength of the dollar.

This month, September, a great confusion will begin. The occupation of Iraq will continue; more troops will be sent to Afghanistan and Pakistan will become another major battleground. Terrorism will be used to continue to propagandize the American public, along with Cap & Trade and medical reform and the Swine Flu fiasco. These are all distractions to keep the publics’ eye off the continued failure of our financial system.

Deflation continues to eat away at assets, except for gold and silver, and the Fed creates money and credit to offset deflation’s savages.

The torrent of money and credit has pulled some nations at least temporarily out of the negative decline on GDP. Japan, France and Germany are examples. The question is when will their economies run out of stream? Probably when they attempt to raise interest rates. In the case of the eurozone the expansion of money and credit has already fallen 3.7%.

The global economic crisis, now more than two years old has allowed governments to run banking and financial systems in a usurpation of power over the individual and private property. What we are facing is perpetual crisis and intended government control. There will not be a return to normality. Next will come food shortages and rationing and one epidemic or pandemic after another. We wonder what will happen when the public finds out that all these problems were preplanned by the Illuminati. Then comes the control of all labor. Government is now spending 185% of tax receipts. The budget deficit will be between $1.6 and $2.00 trillion for fiscal 2009, ended on 9/30/09.

For those who hadn’t noticed, yoy commercial real estate values fell 27% and are off 36% from their 10/07 peak. We see a total drop of 70% to 75% from the highs, when all is said and done. Refinancing has to be found for $165 billion in properties by the end of the year, which is impossible, even with left over TARP funds.

Deflation has prices somewhere between minus 2% to plus 5% worldwide as imports and exports have fallen over 30%. As an example, Los Angeles, the busiest port in the US, imports have fallen 16.9% yoy. It is the exporters who are getting hit the hardest and some have cut prices in the process.

The only thing that keeps a veneer of equilibrium is the massive creation of money and credit pumped out by central banks worldwide. We said we had entered depression this past February and as when we called the beginning of recession two years before, no one shared our opinion. If we are not in depression than what is the significance of 20.8% unemployment, a factory utilization level of 65% and continued massive foreclosures? As we have said over and over again the Fed, Treasury, Wall Street and banking are in a box and they cannot get out. They deliberately created this horrible situation and there is no going back. It is impossible to reverse the process. We are in an economic and financial depression. The palliative supposedly is bigger budget deficits and credit expansion into infinity. We are going to see a replay of the 1970s. Inflation will catch up and overtake deflation one more time, but in the end deflation will prevail.

Fiscal spending is running wild and our president predicts a budget deficit of $9 trillion dollars over the next ten years. The Congressional Budget Office (CBO) says spending has to be cut 8% permanently over the next several years. In July alone federal spending rose 26%, as revenues fell 6%. Corporate tax receipts fell 58%, as individual revenues fell 21%. The official economic contraction is the worst since the great depression. Can you imagine what it really is? 9.4% unemployment is front-page news, but you didn’t hear about the 4.7% loss in salaries and wages of 4.7% for the 12 months ended in June. There are more government employees now than all those employed in manufacturing and construction. How is it that state employees now make 40% more than the average income in non-governmental jobs? What a perversion of government. It is no wonder that the US poverty rate is higher than in Mexico and Turkey.

Economic Breakdowns Cause Social Breakdowns

International Forecaster Weekly August 29 2009
More to the public option than you know, presidents dont make policy, anger over bailouts at town hall, America's debt will never be repaid,  Make no mistake, higher inflation is on the way and probably hyperinflation. It will also be affected by a break down in the tax system as well. The trio leads to economic, financial, social and political dysfunction.
The public option for Obama insurance coverage has been described as just a sliver of the overall proposal. Universal coverage directly by government was not an essential element says Health & Human Services. Of course it was. The program is in retreat and the only way the Democrats can get passage of any kind is to re-craft a toothless passage and ram it through in a party line vote. The public is enraged at what the liberals and socialists have tried to foist on them. Worse yet, the administration has submitted to Wall Street and the insurance giants, which they intended to do from before the beginning. Just look at the line up of campaign contributors. The same goes for the euthanasia section. This could well have been a loss leader to get the rest of this monstrosity passed. The exercise will cost the President and Congress dearly as their approval ratings sink to 41% and 12% respectively. November of 2010 will be the time of reckoning.
We remind you that presidents do not make presidential policies. They are made by the bureaucratic types, who receive their marching orders from the Illuminists above them. This is why you had the seamless transition from the neocon administration to the current decidedly more fascistic one now in power. Team A replaced Team B from the Council on Foreign Relations, Trilateralists and Bilderbergers. Nothing really changed. If you accept the premise that they are all intent on creating world government then you can understand why they all are preparing us for controlled collapse. These planners expected problems, but they were not prepared for the potential of major social unrest displayed at Town Hall meetings nationwide. There is finally growing social unrest and rightly so. All that was initiated by bailing out the rich financial sector to the tune of $23.7 trillion, and then the lying about where funds were going and how they were being used, then more lies, and then the bonuses at AIG and Goldman Sachs and at other Illuminist companies. The public has begun to listen to our story and the elitists cannot let the truth see the light of day. The system is rigged toward the rich insiders and now the public isn’t even getting crumbs and everything is being taken away from them. Those insiders who are dismissive of population and the fairness of the system should check with the ancestors of the 300,000 who lost their heads in France during the revolution. Read more here:

Real US unemployment rate at 16 pct: Fed official

Wednesday August 26, 2009 

The real US unemployment rate is 16 percent if persons who have dropped out of the labor pool and those working less than they would like are counted, a Federal Reserve official said Wednesday.

"If one considers the people who would like a job but have stopped looking -- so-called discouraged workers -- and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent, said Atlanta Fed chief Dennis Lockhart.

He underscored that he was expressing his own views, which did "do not necessarily reflect those of my colleagues on the Federal Open Market Committee," the policy-setting body of the central bank.

Lockhart pointed out in a speech to a chamber of commerce in Chattanooga, Tennessee that those two categories of people are not taken into account in the Labor Department's monthly report on the unemployment rate. The official July jobless rate was 9.4 percent.

Lockhart, who heads the Atlanta, Georgia, division of the Fed, is the first central bank official to acknowledge the depth of unemployment amid the worst US recession since the Great Depression.

Lockhart said the US economy was improving but "still fragile," and the beginning stages of a sluggish recovery were underway.

"My forecast for a slow recovery implies a protracted period of high unemployment," he said, adding that it would be difficult to stimulate jobs through additional public spending.

"Further fiscal stimulus has been mentioned, but the full effects of the first stimulus package are not yet clear, and the concern over adding to the federal deficit and the resulting national debt is warranted," he said.

President Barack Obama's administration has resisted calls for more public spending, arguing that the 787-billion-dollar stimulus passed in February needs time to work its way through the economy.

Lockhart noted that construction and manufacturing had been particularly hard hit in the recession that began in December 2007 and predicted some jobs were gone for good.

Prior to the recession, he said, construction and manufacturing combined accounted for slightly more than 15 percent of employment. But during the recession, their job losses made up more than 40 percent of all US job losses.

"In my view, it is unlikely that we will see a return of jobs lost in certain sectors, such as manufacturing," he said.

"In a similar vein, the recession has been so deep in construction that a reallocation of workers is likely to happen -- even if not permanent."

Payroll employment has fallen by 6.7 million since the recession began. Link:

Searching for the Depression and Finding It Economic Stress Is Hidden, But It’s There in a Recovery That Isn’t.

by Danny Schechter Global Research, August 21, 2009

Last week I was telling a visiting filmmaker from overseas about the financial crisis and how it was getting worse. He looked at me askance. The market had just gone up, he said, and the White House was talking about an emerging recovery.
“I have been in New York before, he said, and it looks the same.”
A lot of the pain is hidden, I told him, hidden behind the deceptive spin in our media or buried in the denial and delusions of many people on the streets who have not taken the trouble to try to understand the nature of the calamity they are living through.
On the elevator, we pass the offices of City Harvest, a charity that collects excess food from restaurants and distributes it to shelters and programs for the hungry. An employee explains that with the restaurant business way off, they have less to donate. What about the demand by the hungry, I ask? With a shrug, he tells me the need is way up. (AP is reporting, “The nation's food banks, struggling to meet demand in hard times, are turning to prison inmates for free labor to help feed the hungry.”)
Out in the street, you soon notice fewer cabs and town cars. More people are walking or using public transportation, even though, the fares recently went up. Even that is deceptive because there are still a lot of tourists in Midtown to complicate the picture. New Yorkers have other things on their minds. There are retail vacancies on every block. Other stores are discounting everything. The fast food places have their specials going for $2-5 dollars. Many of the clothing stories look like good will shops. When a JC Penny opened a store in Midtown, 15,000 people applied for 500 jobs.
As we walked downtown, we passed nearly empty bars and restaurants, a sign that the most customers are staying away. Media reports are now confirming what I saw. The Wall Street Journal reports, “Major retailers reported that American consumers are continuing to hunker down, casting a cloud over the durability of the U.S. recovery and underscoring the importance of overseas demand in restoring the world economy to health. Retailers across the spectrum provided foreboding reports.”
Down where I live, you also pass new buildings with empty stores and unsold apartments. The foreclosure crisis is already hitting New York’s condos and co-ops. You just can’t see it from the street the way you can in a suburban tract. When you read the auction noticies, you realize its real. A new wave of foreclosures is expected and not just in poor homes. The middle class and commercial real estate is affected.
Almost every block on 8th Avenue in Chelsea has a new bank branch. It’s like ATM heaven except most are not crowded. There was a report last week that banking industry opened 10,000 branches over the last five years. Most were based in shopping areas or concentrated in affluent neighborhoods. Only a small number are in poorer communities, especially those victimized by predatory subprime lending. The New York Times reported this week that 91,100 NY households hide their savings in closets, in pillows — even in brown paper lunch bags, just not at a bank
Meanwhile, every week, more banks are going bust and being taken over and sold by the FDIC. There are reports that the FDIC itself is insolvent.
And as for the markets, cooler heads prevailed when the wisemen realized that consumer demand has fallen up as defaults and delinquencies rise
Inequality is mounting in social and racial terms. Recent statistics cited in a Times study: "From the first quarter in 2008 to the first quarter in 2009, the national unemployment rates for blacks rose from 8.9 percent to 13.6 percent, compared to a rise for whites of 4.8 percent to 8.2 percent. In NYC, it was even worse: from 5.7 percent to 14.7 percent, compared to 3.0 percent to 3.7 percent for whites.”
Remember these statistics notoriously undercount those not looking for jobs that are not there. Unless you are following the trajectory of this crisis you might not know that economist Nouriel Roubini, who was among the first to predict it, sill sees it as far more serious that most of us realize:
“This is the worst US and global recession in 60 years. If the US recession were—as is most likely—to be over at the end of the year, it will have been three times as long and about fives times as deep—in terms of the cumulative decline in output—as the previous two.” Notice he is not quite predicting its end, using the “If” word to mask his own uncertainty. The Financial Times cautions against optimism taking refuge in the term “caution.”
Here in the Big Apple, The City’s top money man, Controller Bill Thompson says, “108,000 jobs evaporating citywide between August, 2008 and May, 2009. Typically, unemployment continues to climb even after the economy bottoms out and begins to recover. I expect the number of unemployed in New York City to reach 400,000 in 2010, for the first time in decades.”
Still invisible are the impact of cutbacks on city services and the educational system.
Income disparities are growing, according to a new study but how do I show that to my visitor since people with credit cards can still charge it even as credit limits are being cut back and interest rates rise. At the same time, A Bank of America Merrill study shows the Middle class is being hit hardest.
The LA Times reports, “The consumer debt problem in the economy really is a debt problem for the middle class. The need to work off a chunk of that debt will sap middle-class family spending power for perhaps years to come. By contrast, the upper 10% of income earners face a much smaller debt burden relative to income and net worth. Those people should have ample spending power to help fuel an economic recovery.”
And don’t think the end of the recession will bring back many of the jobs that are gone. Economists are now getting us used to a new term: “jobless recovery.”
Already employers are introducing compulsory furloughs, as the Christian Science Monitor reveals: “For millions of Americans, this might be the year of the furlough. Over the course of a month or so, workers – both white-collar and blue - may have to take several days off whether they want to or not. Call it a temporary pay cut - an action that is sold by management as a way to help save some jobs.”
Another new study finds, “Income inequality in the United States is at an all-time high, surpassing even levels seen during the Great Depression, according to a recently updated paper by University of California, Berkeley Professor Emmanuel Saez. The paper, which covers data through 2007, points to a staggering, unprecedented disparity in American incomes. On his blog, Nobel prize-winning economist and New York Times columnist Paul Krugman called the numbers "truly amazing."
Its all amazing, all devastating to our lives and futures, and yet you can’t necessarily see it if you don’t look, or know what to look for. No one is talking about our economic pain—not the right or the left, perhaps because it is not an “event” that you can cover live at a town hall.
It’s there but, for many, it’s invisible and seen as a personal problem, not a social issue. This crisis didn’t just happen; it was caused. Will those responsible ever be held accountable? Out of sight is out of mind. The hope is that if we ignore it, it will go away.
If you think that, think again.

Link:

The Second Wave of The Depression: Hyperinflation is Likely

Webster Tarpley
Infowars
August 17, 2009
The second wave of the world economic depression is coming soon. Larry Summers, the economics czar of the Wall Street puppet regime currently in power in Washington, recently confessed to the Financial Times in an unguarded moment: “I don’t think the worst is over ..” A few weeks earlier, Jacques Attali, who served in the 1980s as the main economics adviser to French President Mitterrand, told an audience at the International Economic and Financial Forum (FIEF) in Paris that the world might well soon face a planetary Weimar “in the form of a hyperinflationary depression similar to the German events of 1922 – 1923.


The world depression of the 1930s was made irreversible by the British bankruptcy of September 1931, when the Bank of England ceased gold payment.
During the last world economic depression, the first wave came in the form of the famous New York Stock market crash of October 1929. But this was only the beginning, and hardly the main event. The world depression of the 1930s was made irreversible by the British bankruptcy of September 1931, when the Bank of England ceased gold payment. At that time, the vast majority of international trade was financed by pounds sterling bills of exchange drawn on London. When the British Pound began to float through a series of competitive devaluations, the lack of a stable reserve currency – and not the US Hawley-Smoot tariff – strangled world trade, thus making that depression as severe as it was. British default in turn undermined the US banking system, setting the stage for the banking panic which ravaged the United States in 1932 and 1933, to the point that not a single bank in the country was still operating by the time Franklin D. Roosevelt assumed the presidency in March of 1933. The United States would almost certainly have been lashed by additional waves of depression had it not been for the banking triage implemented by the Roosevelt administration during the bank holiday, and for other New Deal measures which succeeded in mitigating the Depression. Other countries, notably Germany, went into a permanent depression which was expressed in a series of military campaigns which aimed at the economic looting of the other countries of Europe. Whatever the ideological fanatics of the discredited Austria and Chicago schools of economic analysis may claim, there is no automatic business cycle capable of lifting the modern world out of serious economic disintegration. The depression will end when adequate New Deal style policies are implemented, and not before, as I show in my new book, the second edition of Surviving the Cataclysm.
TODAY: BETWEEN 1929 AND 1931
Today, therefore, we are, so to speak, in the trough between the October 1929 wave (which corresponds to the derivatives crisis and banking panic of 2008) and the September 1931 wave, which this time around is highly likely to take the form of a hyperinflationary dollar crisis, or in other words a hyper stagflation and depression of the world economy radiating out from Wall Street and the City of London. What then might be the leading characteristics of the next wave of the current world economic breakdown crisis?
The next wave is likely to involve a worldwide dollar panic. Using ballpark figures, we can say that there are about $4 to $5 trillion sloshing around the world in the form of hot money, US Treasury securities, Euro dollars, and various forms of zeno-dollars. Japan has about a trillion, China almost $2 trillion, and so forth. It is naturally very unwise for a developing country like China to hold so many dollars rather than using them to purchase needed infrastructure and capital goods, and the Chinese leaders are now very uncomfortable with their own foolish decision, which was of course taken under heavy US pressure. But the point is that this $4.5 trillion overhang is by its very nature exceedingly unstable. Every country that holds large sums of dollars or US Treasury bonds is nervously eyeing every other such country to see if they show signs of bolting for the exit. Up to now, so far as we know, no large holder of dollars has attempted to reduce its exposure to the battered greenback by dumping these dollars on the international market. If anyone did so, it would cause a true universal financial panic which would create chaos and mayhem not just in the United States and Great Britain, but in the vast areas of the rest of the world as well. This is concretely how hyperinflation could now very well arise: if one or more US creditor nations attempts to abruptly lighten up on dollars, the value of the US currency could undergo a catastrophic collapse, and that would spell runaway hyperinflation on the US domestic front.
World Dollar Panic Imminent?
We need to recall that the value of a modern currency is not determined inside the country, but rather on the international foreign exchange markets. This is where the fatal vulnerability of the US dollar is located. In the ruined form of the Bretton Woods system which has prevailed for almost 40 years since Nixon’s colossal historical vandalism of August 15, 1971, the US has emerged as the only country with a permanent license to finance imports by simply printing more of its own currency and sending those banknotes overseas. Every other country has to manufacture and export something that others want to buy in order to earn the necessary foreign exchange to pay for its own imports. The US license to print has made this country the buyer of last resort and the dumping ground for the unsold junk of the world, leading in the process to high permanent unemployment here. There are many signs that this inherently unworkable arrangement has now reached the breaking point.
International Currency Relations, Not Money Supply, Are The Key
Ms. Ellen Brown, who apparently supports the doctrines of the social credit movement of the 1930s, has recently argued that deflation is now on the agenda, and that hyperinflation can be ruled out. She bases this analysis on the fact that the private credit markets in this country have largely collapsed, and on the contention that the M1 and M2 money parameters have either declined or increased only slightly. But all of this is beside the point. The Federal Reserve and the Treasury have so far provided almost $13 trillion of new loans to banks, insurance companies, credit card companies, and other purely financial institutions.
This is being done in an effort to bailout the $1.5 quadrillion world derivatives bubble, of which something like two-thirds or more, meaning one quadrillion dollars, can be located inside the dollar zone. The world depression started when this derivatives bubble went into reverse leverage, meaning that super losses instead of super profits were generated at the apex of the speculative pyramid, as seen in the case of the $3 trillion AIG hedge fund located in London. The Obama regime is engaged in an hysterical attempt to restart derivatives production in the form of securitization, i.e. the creation of more and better asset backed securities derivatives. At the same time, the Obama regime has cynically and deliberately driven the Detroit automakers into bankruptcy, destroying hundreds of thousands of the few remaining industrial jobs here in the United States. Read more here: