March 12, 2012
By Alexander Higgins
UK Government prepares for Euro collapse and nuclear financial fallout of Moody’s officially declaring a Greece default on their sovereign debt.
Greece has now become the first developed western nation to default on its sovereign debt and, while the media is downplaying the consequences, no amount of propaganda and deception will be able hide the debris that will be scattered across Europe once the the financial shit-storm is done blowing over.
The consequences will be severe indeed as the spotlight focuses on the rest of the PIIGS nations while investors are forced to consider the situation in Greece, which does not bode well for the economic future of these nations nor is it a good omen for the future of the Euro.
While this can easily be written off as the speculation of some blogger, you’ll see below that the BBC reported that even the UK government issued a red alert warning just yesterday running the headline “UK must prepare for the collapse of the Euro” predicting that the events that unfolded today would soon come to fruition.
February 20, 2012
By Sara Sjolin
Gold prices rose Monday after China’s weekend decision to loosen reserve requirements for banks and Greece moved closer to an agreement on a second bailout.
Gold futures for April delivery GCJ2 +0.43% added $9.50, or 0.6%, to 1,735.40 an ounce, erasing a small loss from Friday.
Commodities rose across the board after the People’s Bank of China Saturday decided to cut major lender’s reserve requirement ratios — the amount of money banks must hold in reserve — by 50 basis points to spur lending and increase liquidity. The world’s second largest economy is a big user of natural resources and attempts to stimulate the economy could drive up the demand for commodities.
February 14, 2012
By Paul Craig Roberts
The United States government and its NATO puppets have been killing Muslim men, women and children for a decade in the name of bringing them democracy. But is the West itself a democracy?
Skeptics point out that President George W. Bush was put in office by the Supreme Court and that a number of other elections have been decided by electronic voting machines that leave no paper trail. Others note that elected officials represent the special interests that fund their campaigns and not the voters. The bailout of the banks arranged by Bush’s Treasury Secretary and former Goldman Sachs chairman, Henry Paulson, and Washington’s failure to indict any banksters for the fraud that contributed to the financial crisis, are evidence in support of the view that the US government represents money and not the voters.
Recent events in Greece and Italy have created more skepticism of the West’s claim to be democratic.
Two elected European prime ministers, George Papandreou of Greece and Silvio Berlusconi of Italy, were forced to resign over the sovereign debt issue. Not even Berlusconi, a billionaire who continues to lead the largest Italian political party, could stand up to the pressure brought by private bankers and unelected European Union officials.
Papandreou lasted only 10 days after announcing on October 31, 2011, that he would let the Greek voters decide in a referendum whether or not to accept the austerity being imposed on the Greek people from the outside. Austerity is the price charged by the EU for lending the Greek government the money to pay to the banks. In other words, the question was austerity or default. However, the question was decided without the participation of the Greek people.
Consequently, Greeks have taken to the streets. The conditions accompanying the latest tranche of the bailout have again brought large numbers of Greeks into the streets of Athens and other cities. Citizens are protesting a 20% cut both in the minimum wage and in pensions larger than 12,000 euros ($15,800) annually and more cuts in public sector jobs. Greek taxes were raised 2.3 billion euros last year and are scheduled to rise another 3.4 billion euros in 2013. The austerity is being imposed despite Greece’s unemployment rate of 21% overall and 48% for those under the age of 25.
One interpretation is that the banks, which were careless in their loans to governments, are forcing the people to save the banks from the consequences of their bad decisions.
Another interpretation is that the European Union is using the sovereign debt crisis to extend its power and control over the individual member states of the EU.
February 13, 2012
By Michael Pento
They always tell you no one rings a bell when a market top or bottom is reached. But a bell is now ringing for the end of the thirty-year bull market in U.S. debt. And ironically, the bell ringer is our very own U.S. Treasury!
The U.S. Treasury Borrowing Advisory Committee, which brings together dealers and Treasury officials, met last week in a closed meeting at the Hays Adams Hotel. The committee members unanimously agreed that the Treasury should start permitting negative interest rate bids for T-bills. In other words, newly issued T-bills from the Treasury would offer investors a guaranteed negative return if held to maturity. The mania behind the U.S. debt market has reached such incredible proportions that investors are now willing to lend money to the government at a loss; right from the start of their investment. This is a clear signal that the bond market can’t get any more overcrowded and can’t get any more overpriced.
Of course, many in the MSM contend there is justification for today’s ridiculously low bond yields and that a bubble in U.S. debt is impossible. But those are some of the same individuals who claimed back in 2006 that home prices could never decline on a national level and any talk of a bubble in real estate was nonsense. These are also the same people who assured investors in the year 2000 that prices of internet stocks were fairly priced because they should be valued based upon the number of eyeballs that viewed a webpage.
But we can easily see the future of U.S. Treasuries from viewing what is occurring in Portugal and Greece today. Portugal and Greece were able to borrow tremendous amounts of money because they converted their domestic currencies to the Euro and therefore, had the German balance sheet behind them. If these two countries had to borrow in Escudo’s and Drachma’s instead, yields would have increased much earlier, forcing a reconciliation of the debt years before a major crisis occurred. Therefore, their current debt to GDP ratios would be much more manageable. But now their bond bubbles have burst. The yield on the Portuguese 10 year was 5% a year and a half ago; today it is 15%. Greek 10 year bonds yielded 5% two and a half years ago; today they are 34%! The bottom line is that these counties were able to borrow more money than their economy was able to sustain because their interest rates were kept artificially low.
February 9, 2012
By Chris Martenson
The idea that the very same economic forces that are currently plaguing Greece, et al., are somehow not relevant to the United States’ circumstances does not hold water. As goes the rest of the world, so goes the US.
When we back up far enough, it is clear that money and debt are there to reflect and be in service to the production of real things by real people, not the other way around. With too much debt relative to production, it is the debt that will suffer. The same is true of money. Neither are magical substances; they are merely markers for real things. When they get out of balance with reality, they lose value, and sometimes even their entire meaning.
This report lays out the case that the US is irretrievably down the rabbit hole of deficits and debt, and that, even if there were endless natural resources of increasing quality available at this point, servicing the debt loads and liabilities of the nation will require both austerity and a pretty serious fall in living standards for most people.
Of course, the age of cheap oil is over. And as Jim Puplava says, the oil price is the new Fed funds rate, meaning that it is now the price of oil that sets the pace of economic movement, not interest rates established by the Fed.
However, of all the challenges that catch my eye right now, the one most worrisome is the shredding of our national narrative to the point that it no longer makes any sense whatsoever. I’m a big believer that our actions are guided by the stories we tell ourselves. To progress as a society, having a grand vision that aligns and inspires is essential.
But when words emphasize one set of priorities and actions support another, any narrative falls apart. At a personal level, if someone touts their punctuality but chronically shows up hours late, the narrative that says “this person is reliable” begins to fall apart.
Likewise, if a company boasts about being green but its track record belies them as a major polluter, the “green” narrative fizzles.
And at the national level, if we say we are a nation of laws, but the Justice Department selectively prosecutes only the weak and relatively powerless while leaving the well-connected and moneyed entirely alone, then the narrative that says “we are a nation of blind justice and equal laws” falls apart.
I wish this was just some idle rumination, but I see more and more examples validating the importance of alignment of narrative and behavior. Because when there is a disconnect between words and actions, anxiety and fear take root.
Unfortunately, there is quite a lot to fear and be anxious about in the most recent State of the Union address and GOP response.
February 9, 2012
By Eric Blair
“What to change the world? Build something new.” –KTRN
Due to gross injustices built into the current system, angry mobs of disenfranchised protesters are pushing most of the world to the edge of global revolution. It’s wonderful to see people find solidarity in opposing the destructive nature of the system.
However, the idea that the public will ever force the entrenched corporate-states around the world to bend to their will because they’re on the streets is very unlikely. Even if the protests become violent riots like in Greece, the controllers will not release their clutches. In fact, history says they’ll only tighten them.
Additionally, those seeking systematic solutions all seem well-intentioned and deserve credit for offering ideas. But the more we understand that the system’s creators and beneficiaries don’t want it to change, the more we realize that even apparent solutions will never take place unless they’re co-opted to fit the needs of the controllers. Therefore, so-called collective solutions forced by the current system of control are not likely to benefit the general public even if it appears that more crumbs are offered to the peasants.
There seems to be an awful lot of energy being spent fighting against the system, which is akin to swimming upstream.
We’re getting nowhere fast and it’s zapping our energy, as it seems intended to do. We mustn’t concern ourselves with what other people are doing. Their behavior is and always will be out of our control. Attempting to control people’s behavior is at the heart of what’s wrong with the current system; therefore, why would we think that imposing our flavor of control would taste any better? It won’t.
What if each of us focused our energy on figuratively building our own rafts to float against the current? What if each raft represented a productive individual solution? And what would happen if each disenfranchised protester stopped demanding something, and, instead, simply started creating the change?
I’m not talking about solutions like drafting a petition or a certain piece of legislation and collecting signatures to influence government. That is the perfect example of swimming upstream. Even if successful, it will just use the guns of government to force your ideas on the public, which will never work no matter how noble your collective solution may seem.
I’m talking about taking a systematic problem that you’re most passionate about, identifying a change you can make in your personal life to limit your contribution to the problem, while also finding a tangible alternative to fully support. Ideally, this tangible alternative would be market-based to allow you to make a living while being the change you wish to see in the world.
February 6, 2012
By Associated Press
“Go Anonymous, go. They should be given a medal for bravery.” –KTRN
Saboteurs stole passwords and sensitive information on tipsters while hacking into the websites of several law enforcement agencies worldwide in attacks attributed to the collective known as Anonymous.
Breaches were reported this week in Boston, Syracuse, N.Y., Salt Lake City and Greece.
Hackers gained access to the Salt Lake City Police Department website that gathers citizen complaints about drug and other crimes, including phone numbers, addresses and other personal data of informants, police said.
The website remained down Friday as police worked to make it more secure.
Anonymous is a collection of Internet enthusiasts, pranksters and activists whose targets have included financial institutions such as Visa and MasterCard, the Church of Scientology and law enforcement agencies.
Following a spate of arrests across the world, the group and its various offshoots have focused their attention on law enforcement agencies in general and the FBI in particular.
The group also claimed responsibility for hacking the website of a Virginia law firm that represented a U.S. Marine involved in the deaths of civilians in Iraq in 2005.
Anonymous also published a recording on the Internet Friday of a phone call between the FBI and Scotland Yard, gloating in a Twitter message that “the FBI might be curious how we’re able to continuously read their internal comms for some time now.”
February 1, 2012
By Robin Emmott
Euro zone unemployment has risen to its highest level since before the euro was introduced, data showed on Tuesday, a day after EU leaders promised to focus on creating millions of new jobs to try to kickstart Europe’s floundering economy.
Joblessness among the 17 countries sharing the single currency rose to 10.4 percent in December, on a par with an upwardly revised November figure, the EU’s statistics office Eurostat said in its release of seasonally-adjusted data.
It was the highest rate since June 1998, before the euro was introduced in 1999.
“We’re looking at a further increase over the coming months, so that is worrying,” said Martin van Vliet, an economist at ING. “Look at Greece, where unemployment is some 20 percent, and it is 23 percent in Spain. At a certain point this could lead to political unrest.”
After two years of debt crisis and budget austerity, the number of Europeans out of work has risen to 16.5 million people, with another 20,000 people without a job in December from the month before.
At a summit on Monday, Europe’s leaders tried to shift the debate from fighting the debt crisis to reviving growth in a bloc that produces 16 percent of global economic output.
They are looking to deploy up to 82 billion euros of unspent funds from the EU’s 2007-2013 budget in an attempt to boost employment. But most economists expect scant progress while the euro zone’s high debtors are compelled to persist with harsh austerity programs under a new ‘fiscal compact’.
January 23, 2012
By John Rubino
As the Greek default (and it is a default no matter what they end up calling it) is finalized this week, the consensus seems to be that failure to reach a deal would cause a global financial apocalypse.
That may be true. And if it is, why aren’t we more worried about Illinois? It’s more or less the same size as Greece, its finances are in the same generally catastrophic shape, and its leaders are just as feckless and dishonest. It owes tens of billions of dollars to various investors and stakeholders and will clearly have to stiff many of them at some point. The following article captures the “failed state” dilemma perfectly.
The question isn’t whether Illinois’ finances are in dreadful shape, it’s how to fix the problem. Or perhaps more accurately, will legislators have the political will to fix it when they return to Springfield for their spring session?
Even though the legislature and Gov. Pat Quinn last year imposed a temporary 67 percent state income tax increase, Quinn’s office expects to have a $500 million budget deficit this year.
Quinn is calling for a 9 percent cut in most areas of state government, except education and health care. But even with cuts at that level, the state would have a projected $800 million budget deficit for fiscal 2015, the year when most of the tax hike expires.
Quinn’s budget spokesman, Kelly Kraft, said the state’s fiscal situation is not pretty.
“These projections clearly demonstrate that action must be taken to control not only Medicaid costs but also (pension) costs, or all other areas of government will continue to be squeezed,” Kraft said.
Looking at the bigger picture, the state has a backlog of about $8.5 billion in unpaid bills and owes about $27 billion in outstanding bonds. And then there’s the roughly $80 billion owed to the state’s public employee pension funds.
Now, legislative leaders and Quinn are floating ideas to cut the two areas that account for the biggest chunks of the state budget — pension contributions and Medicaid.
In the proposed $33.7 billion budget for fiscal 2013, the state’s pension payment will be $5.3 billion, and Medicaid will cost taxpayers about $7 billion.
Proposals include reducing the benefits or the eligibility for Medicaid. On pensions, ideas include decreasing the benefits and increasing the contributions for current employees. A new pension system was approved last year, but it’s only for new employees, and there’s debate on whether the benefits for existing employees can legally be changed.
January 11, 2012
By Dan Mitchell
I don’t know whether to laugh or cry when I write about insanely stupid government policies. But I know I get more motivated to fight big government.
How can anyone want to give more money and power to politicians, for instance, after reading these comparisons of dumb government policy in the United States and United Kingdom? Or how can anyone think it’s a good idea to expand the public sector after reading these examples of bureaucratic incompetence?
But now I’ve come across something even more amazing, a story of government stupidity that trumps these other examples. And this is not satire. It is not from The Onion.
Believe it or not, the Greek government has decided that pedophiles are “disabled” and therefore deserve money from the government.