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Smartphones Could Become UK’s New Credit Cards

Most Britons will be able to pay for items using their mobile phone next year.

Banks and financial institutions representing 90% of current accounts have agreed to launch the UK's first industry-wide mobile payment service in spring 2014.

Using a process similar to texting, people will be able to sign up to send and receive payments using their own number.

It will be done without the need to disclose their bank account details.

The  Payments Council , the industry body that is leading the project, said using mobiles to buy goods and services, as well as send money to friends and family, would become a mainstream option due to the popularity of the plan among banks.

Eight financial institutions have already committed themselves to offering the service, and discussions are under way for others to join.

The council pointed out that while there are existing ways to pay using a mobile, the project is the first to have the potential to link every bank account in the country with a mobile number.

Chief executive Adrian Kamellard said: "This new service will offer a simple, secure way to split a bill for dinner, receive money from a friend or pay a tradesman without needing to remember or share account details."

Before the service launches, the financial institutions involved will invite customers to register via their online banking service, mobile app or other approved method.

The Payments Council said more details about the industry-wide registration process and the precise launch date would be announced later.

More than 5,000 consumers took part in Payments Council research, which revealed the service is likely to prove most popular with smartphone users, who accounted for 67% of those surveyed.

One in three smartphone users said they were either "definitely" or "extremely likely" to sign up to the new service when it launches.

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How the Credit Card Gravy Train Is Running Over You

The credit card business is now the banking industry’s biggest cash cow, and it’s largely due to lucrative hidden fees. 

You pay off your credit card balance every month, thinking you are taking advantage of the “interest-free grace period” and getting free credit. You may even use your credit card when you could have used cash, just to get the free frequent flier or cash-back rewards. But those popular features are misleading. Even when the balance is paid on time every month, credit card use imposes a huge hidden cost on users—hidden because the cost is deducted from what the merchant receives, then passed on to you in the form of higher prices.

Visa and MasterCard charge merchants about 2% of the value of every credit card transaction, and American Express charges even more. That may not sound like much. But consider that for balances that are paid off monthly (meaning most of them), the banks make 2% or more on a loan averaging only about 25 days (depending on when in the month the charge was made and when in the grace period it was paid). Two percent interest for 25 days works out to a 33.5% return annually (1.02^(365/25) – 1), and that figure may be conservative.

Merchant fees were originally designed as a way to avoid usury and Truth-in-Lending laws. Visa and MasterCard are independent entities, but they were set up by big Wall Street banks, and the card-issuing banks get about 80% of the fees. The annual returns not only fall in the usurious category, but they are returns on other people’s money – usually the borrower’s own money!  Here is how it works . . . .

The Ultimate Shell Game

Economist Hyman Minsky observed that anyone can create money; the trick is to get it accepted. The function of the credit card company is to turn your IOU, or promise to pay, into a “negotiable instrument” acceptable in the payment of debt. A negotiable instrument is anything that is signed and convertible into money or that can be used as money.

Under Article 9 of the Uniform Commercial Code, when you sign the merchant’s credit card charge receipt, you are creating a “negotiable instrument or other writing which evidences a right to the payment of money.” This negotiable instrument is deposited electronically into the merchant’s checking account, a special account required of all businesses that accept credit.  The account goes up by the amount on the receipt, indicating that the merchant has been paid.  The charge receipt is forwarded to an “acquiring settlement bank,” which bundles your charges and sends them to your own bank. Your bank then sends you a statement and you pay the balance with a check, causing your transaction account to be debited at your bank.

The net effect is that your charge receipt (a negotiable instrument) has become an “asset” against which credit has been advanced.  The bank has simply monetized your IOU, turning it into money.  The credit cycle is so short that this process can occur without the bank’s own money even being involved. Debits and credits are just shuffled back and forth between accounts.

Timothy Madden is a Canadian financial analyst who built software models of credit card accounts in the early 1990s. In personal correspondence, he estimates that payouts from the bank’s own reserves are necessary only about 2% of the time; and the 2% merchant’s fee is sufficient to cover these occasions. The “reserves” necessary to back the short-term advances are thus built into the payments themselves, without drawing from anywhere else.

As for the interest, Madden maintains:

The interest is all gravy because the transactions are funded in fact by the signed payment voucher issued by the card-user at the point of purchase. Assume that the monthly gross sales that are run through credit/charge-cards globally double, from the normal $300 billion to $600 billion for the year-end holiday period. The card companies do not have to worry about where the extra $300 billion will come from because it is provided by the additional $300 billion of signed vouchers themselves. . . .

That is also why virtually all banks everywhere have to write-off 100% of credit/charge-card accounts in arrears for 180 days. The basic design of the system recognizes that, once set in motion, the system is entirely self-financing requiring zero equity investment by the operator . . . . The losses cannot be charged off against the operator’s equity because they don’t have any. In the early 1990′s when I was building computer/software models of the credit/charge-card system, my spreadsheets kept “blowing up” because of “divide by zero” errors in my return-on-equity display.

A Private Sales Tax

All this sheds light on why the credit card business has become the most lucrative pursuit of the banking industry. At one time, banking was all about taking deposits and making commercial and residential loans. But in recent years, according to the Federal Reserve, “credit card earnings have been almost always higher than returns on all commercial bank activities.”

Partly, this is because the interest charged on credit card debt is higher than on other commercial loans. But it is on the fees that the banks really make their money. There are late payment fees, fees for exceeding the credit limit, balance transfer fees, cash withdrawal fees, and annual fees, in addition to the very lucrative merchant fees that accrue at the point of sale whether the customer pays his bill or not. The merchant absorbs the fees, and the customers cover the cost with higher prices.

A 2% merchants’ fee is the financial equivalent of a 2% sales tax – one that now adds up to over $30 billion annually in the US. The effect on trade is worse than either a public sales tax or a financial transaction tax (or Tobin tax), since these taxes are designed to be spent back into the economy on services and infrastructure. A private merchant’s tax simply removes purchasing power from the economy.

As financial blogger Yves Smith observes:

[W]hen anyone brings up Tobin taxes (small charges on every [financial] trade) as a way to pay for the bailout and discourage speculation, the financial services industry becomes utterly apoplectic. . . . Yet here in our very midst, we have a Tobin tax equivalent on a very high proportion of retail trade. . . . [Y]ou can think of the rapacious Visa and Mastercharge charges for debit transactions . . . as having two components: the fee they’d be able to charge if they faced some competition, and the premium they extract by controlling the market and refusing to compete on price. In terms of its effect on commerce, this premium is worse than a Tobin tax.

A Tobin tax is intended to have the positive effect of dampening speculation. A private tax on retail sales has the negative effect of dampening consumer trade. It is a self-destruct mechanism that consumes capital and credit at every turn of the credit cycle.

The lucrative credit card business is a major factor in the increasing “financialization” of the economy. Companies like General Electric are largely abandoning product innovation and becoming credit card companies, because that’s where the money is. Financialization is killing the economy, productivity, innovation, and consumer demand.

Busting the Monopoly

Exorbitant merchant fees are made possible because the market is monopolized by a tiny number of credit card companies, and entry into the market is difficult. To participate, you need to be part of a network, and the network requires that all participating banks charge a pre-set fee.

The rules vary, however, by country. An option available in some countries is to provide cheaper credit card services through publicly-owned banks. In Costa Rica, 80% of deposits are held in four publicly-owned banks; and all offer Visa/MC debit cards and will take Visa/MC credit cards. Businesses that choose to affiliate with the two largest public banks pay no transaction fees for that bank’s cards, and for the cards of other banks they pay only a tiny fee, sufficient to cover the bank’s costs.

That works in Costa Rica; but in the US, Visa/MC fees are pre-set, and public banks would have to charge that fee to participate in the system. There is another way, however, that they could recapture the merchant fees and use them for the benefit of the people: by returning them in the form of lower taxes or increased public services.

Local governments pay hefty fees for credit card use themselves. According to the treasurer’s office, the City and County of San Francisco pay $4 million annually just for bank fees, and more than half this sum goes to merchant fees. If the government could recapture these charges through its own bank, it could use the proceeds to expand public services without raising taxes.

If we allowed government to actually make some money, it could be self-funding without taxing the citizens. When an alternative public system is in place, the private mega-bank dinosaurs will no longer be “too big to fail.” They can be allowed to fade into extinction, in a natural process of evolution toward a more efficient and sustainable system of exchange.

____________

Ellen Brown is an attorney, chairman of the Public Banking Institute, and author of twelve books including the bestselling Web of Debt. In her latest book, The Public Bank Solution, she explores successful public banking models historically and globally. She is currently running for California State Treasurer on a state bank platform.

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“Smart Cards” in a Surveillance Society: The Implanted Radio-Frequency Identification Chip

The Implanted Radio-Frequency Identification Chip: "Smart Cards" in a Surveillance Society

If incorporating personal details into an RFID (radio-frequency identification) chip implanted into a passport or driver’s license may sound like a “smart” alternative to endless lines at the airport and intrusive questioning by securocrats, think again.

Since the late 1990s, corporate grifters have touted the “benefits” of the devilish transmitters as a “convenient” and “cheap” way to tag individual commodities, one that would “revolutionize” inventory management and theft prevention. Indeed, everything from paper towels to shoes, pets to underwear have been “tagged” with the chips. “Savings” would be “passed on” to the consumer. Call it the Wal-Martization of everyday life.

RFID tags are small computer chips connected to miniature antennae that can be fixed to or implanted within physical objects, including human beings. The RFID chip itself contains an Electronic Product Code that can be “read” when a RFID reader emits a radio signal. The chips are divided into two categories, passive or active. A “passive” tag doesn’t contain a battery and its “read” range is variable, from less than an inch to twenty or thirty feet. An “active” tag on the other hand, is self-powered and has a much longer range. The data from an “active” tag can be sent directly to a computer system involved in inventory control–or surveillance.

But as Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN), the American Civil Liberties Union (ACLU), the Electronic Frontier Foundation (EFF) and the Electronic Privacy Information Center (EPIC) state in a joint position paper, “RFID has the potential to jeopardize consumer privacy, reduce or eliminate purchasing anonymity, and threaten civil liberties.” As these organizations noted:

While there are beneficial uses of RFID, some attributes of the technology could be deployed in ways that threaten privacy and civil liberties:

* Hidden placement of tags. RFID tags can be embedded into/onto objects and documents without the knowledge of the individual who obtains those items. As radio waves travel easily and silently through fabric, plastic, and other materials, it is possible to read RFID tags sewn into clothing or affixed to objects contained in purses, shopping bags, suitcases, and more.

* Unique identifiers for all objects worldwide. The Electronic Product Code potentially enables every object on earth to have its own unique ID. The use of unique ID numbers could lead to the creation of a global item registration system in which every physical object is identified and linked to its purchaser or owner at the point of sale or transfer.

* Massive data aggregation. RFID deployment requires the creation of massive databases containing unique tag data. These records could be linked with personal identifying data, especially as computer memory and processing capacities expand.

* Hidden readers. Tags can be read from a distance, not restricted to line of sight, by readers that can be incorporated invisibly into nearly any environment where human beings or items congregate. RFID readers have already been experimentally embedded into floor tiles, woven into carpeting and floor mats, hidden in doorways, and seamlessly incorporated into retail shelving and counters, making it virtually impossible for a consumer to know when or if he or she was being “scanned.”

* Individual tracking and profiling. If personal identity were linked with unique RFID tag numbers, individuals could be profiled and tracked without their knowledge or consent. For example, a tag embedded in a shoe could serve as a de facto identifier for the person wearing it. Even if item-level information remains generic, identifying items people wear or carry could associate them with, for example, particular events like political rallies. (“Position Statement on the Use of RFID on Consumer Products,” Privacy Rights Clearinghouse, November 14, 2003)

RFID under the skin

As the corporatist police state unfurls its murderous tentacles here in the United States, it should come as no surprise that securocrats breathlessly tout the “benefits” of RFID in the area of “homeland security.” When linked to massive commercial databases as well as those compiled by the 16 separate agencies of the “intelligence community,” such as the Terrorist Identities Datamart Environment (TIDE) that feeds the federal government’s surveillance Leviathan with the names of suspected “terrorists,” it doesn’t take a genius to conclude that the architecture for a vast totalitarian enterprise is off the drawing board and onto the streets.

As last week’s mass repression of peaceful protest at the Republican National Convention in St. Paul amply demonstrated, the Bush regime’s “preemptive war” strategy has been rolled out in the heimat. As the World Socialist Web Site reports,

On Wednesday eight members of the anarchist protest group the Republican National Convention Welcoming Committee (RNCWC) were charged under provisions of the Minnesota state version of the Patriot Act with “Conspiracy to Riot in Furtherance of Terrorism.”

The eight charged are all young, and could face up to seven-and-a-half years in prison under a provision that allows the enhancement of charges related to terrorism by 50 percent. …

Among other things, the youth, who were arrested last weekend even prior to the start of the convention, are charged with plotting to kidnap delegates to the RNC, assault police officers and attack airports. Almost all of the charges listed are based upon the testimony of police infiltrators, one an officer, the other a paid informant. (Tom Eley, “RNC in Twin Cities: Eight protesters charged with terrorism under Patriot Act,” World Socialist Web Site, 6 September 2008)

As the ACLU pointed out, “These charges are an effort to equate publicly stated plans to blockade traffic and disrupt the RNC as being the same as acts of terrorism. This both trivializes real violence and attempts to place the stated political views of the defendants on trial,” said Bruce Nestor, president of the Minnesota Chapter of the National Lawyers Guild. “The charges represent an abuse of the criminal justice system and seek to intimidate any person organizing large scale public demonstrations potentially involving civil disobedience,” he said.

An affidavit filed by the cops in order to allow the preemptive police raid and subsequent arrests declared that the RNCWC is a “criminal enterprise” strongly implying that the group of anarchist youth were members of a “terrorist organization.”

Which, as we have learned over these last seven and a half years of darkness, is precisely the point: keep ‘em scared and passive. And when they’re neither scared nor passive, resort to police state tactics of mass repression. While the cops beat and arrested demonstrators and journalists outside the Xcel Energy Center, neanderthal-like Republican mobs chanted “USA! USA!” while the execrable theocratic fascist, Sarah Palin, basked in the limelight. But I digress…

Likened to barcodes that scan items at the grocery store check-out line, what industry flacks such as the Association for Automatic Identification and Mobility (AIM) fail to mention in their propaganda about RFID is that the information stored on a passport or driver’s license is readily stolen by anyone with a reader device–marketers, security agents, criminals or stalkers–without the card holder even being remotely aware that they are being tracked and their allegedly “secure” information plundered. According to a blurb on the AIM website,

Automatic Identification and Mobility (AIM) technologies are a diverse family of technologies that share the common purpose of identifying, tracking, recording, storing and communicating essential business, personal, or product data. In most cases, AIM technologies serve as the front end of enterprise software systems, providing fast and accurate collection and entry of data. (“Technologies,” Association for Automatic Identification and Mobility, no date)

Among the “diverse family of technologies” touted by AIM, many are rife with “dual-use” potential, that is, the same technology that can keep track of a pallet of soft drinks can also keep track of human beings.

Indeed, the Association touts biometric identification as “an automated method of recognizing a person based on a physiological or behavioral characteristic.” This is especially important since “the need” for biometrics “can be found in federal, state and local governments, in the military, and in commercial applications.” When used as a stand-alone or in conjunction with RFID-chipped “smart cards” biometrics, according to the industry “are set to pervade nearly all aspects of the economy and our daily lives.”

Some “revolution.”

The industry received a powerful incentive from the state when the Government Services Administration (GSA), a Bushist satrapy, issued a 2004 memo that urged the heads of all federal agencies “to consider action that can be taken to advance the [RFID] industry.”

An example of capitalist “ingenuity” or another insidious invasion of our right to privacy? In 2006, IBM obtained a patent that will be used for tracking and profiling consumers as they move around a store, even if access to commercial databases are strictly limited.

And when it comes tracking and profiling human beings, say for mass extermination at the behest of crazed Nazi ideologues, IBM stands alone. In his groundbreaking 2001 exploration of the enabling technologies for the mass murder of Jews, communists, Roma and gays and lesbians, investigative journalist Edwin Black described in IBM and the Holocaust how, beginning in 1933, IBM and their subsidiaries created technological “solutions” that streamlined the identification of “undesirables” for quick and efficient asset confiscation, deportation, slave labor and eventual annihilation.

In an eerie echo of polices being enacted today against Muslims and left-wing “extremists” by the corrupt Bush regime in their quixotic quest to “keep America safe” in furtherance of capitalist and imperialist goals of global domination, Black writes:

In the upside-down world of the Holocaust, dignified professionals were Hitler’s advance troops. Police officials disregarded their duty in favor of protecting villains and persecuting victims. Lawyers perverted concepts of justice to create anti-Jewish laws. Doctors defiled the art of medicine to perpetrate ghastly experiments and even choose who was healthy enough to be worked to death–and who could be cost-effectively sent to the gas chamber. Scientists and engineers debased their higher calling to devise the instruments and rationales of destruction. And statisticians used their little known but powerful discipline to identify the victims, project and rationalize the benefits of their destruction, organize their persecution, and even audit the efficiency of genocide. Enter IBM and its overseas subsidiaries. (IBM and the Holocaust: The Strategic Alliance Between Nazi Germany and America’s Most Powerful Corporation, New York: Crown Publishers, 2001, pp. 7-8)

As security and privacy analyst Katherine Albrecht writes describing IBM’s patented “Identification and Tracking of Persons Using RFID-Tagged Items in Store Environments,”

…chillingly details RFID’s potential for surveillance in a world where networked RFID readers called “person tracking units” would be incorporated virtually everywhere people go–in “shopping malls, airports, train stations, bus stations, elevators, trains, airplanes, restrooms, sports arenas, libraries, theaters, [and] museums”–to closely monitor people’s movements. (“How RFID Tags Could Be Used to Track Unsuspecting People,” Scientific American, August 21, 2008)

According to the patent cited by Albrecht, as an individual moves around a store, or a city center, an “RFID tag scanner located [in the desired tracking location]… scans the RFID tags on [a] person…. As that person moves around the store, different RFID tag scanners located throughout the store can pick up radio signals from the RFID tags carried on that person and the movement of that person is tracked based on these detections…. The person tracking unit may keep records of different locations where the person has visited, as well as the visitation times.”

Even if no personal data are stored in the RFID tag, this doesn’t present a problem IBM explains, because “the personal information will be obtained when the person uses his or her credit card, bank card, shopper card or the like.” As Albrecht avers, the link between the unique RFID number and a person’s identity “needs to be made only once for the card to serve as a proxy for the person thereafter.” With the wholesale introduction of RFID chipped passports and driver’s licenses, the capitalist panoptic state is quickly–and quietly–falling into place.

If America’s main trading partner and sometime geopolitical rival in the looting of world resources, China, is any indication of the direction near future surveillance technologies are being driven by the “miracle of the market,” the curtain on privacy and individual rights is rapidly drawing to a close. Albrecht writes,

China’s national ID cards, for instance, are encoded with what most people would consider a shocking amount of personal information, including health and reproductive history, employment status, religion, ethnicity and even the name and phone number of each cardholder’s landlord. More ominous still, the cards are part of a larger project to blanket Chinese cities with state-of-the-art surveillance technologies. Michael Lin, a vice president for China Public Security Technology, a private company providing the RFID cards for the program, unflinchingly described them to the New York Times as “a way for the government to control the population in the future.” And even if other governments do not take advantage of the surveillance potential inherent in the new ID cards, ample evidence suggests that data-hungry corporations will.

I would disagree with Albrecht on one salient point: governments, particularly the crazed, corporate-controlled grifters holding down the fort in Washington, most certainly will take advantage of RFID’s surveillance potential.

In 2005 for example, the Senate Republican High Tech Task force praised RFID applications as “exciting new technologies” with “tremendous promise for our economy.” In this spirit, they vowed to “protect” RFID from regulation and legislation. Needless to say, the track record of timid Democrats is hardly any better when it comes to defending privacy rights or something as “quaint” as the Constitution.

Under conditions of a looming economic meltdown, rising unemployment, staggering debt, the collapse of financial markets and continuing wars and occupations in Iraq and Afghanistan, U.S. imperialism, in order to shore up its crumbling empire, will continue to import totalitarian methods of rule employed in its “global war on terror” onto the home front.

The introduction of RFID-chipped passports and driver’s licenses for the mass surveillance and political repression of the American people arises within this context.

Tom Burghardt is a researcher and activist based in the San Francisco Bay Area. In addition to publishing in Covert Action Quarterly, Love & Rage and Antifa Forum, he is the editor of Police State America: U.S. Military “Civil Disturbance” Planning, distributed by AK Press.

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The Seven Pillars of the Matrix

“None are more hopelessly enslaved than those who falsely believe they are free.”
― Johann Wolfgang von Goethe
Contemporary baptized, corporatized and sanitized man rarely has the occasion to question his identity, and when he does a typical response might be, “I am product manager for a large retail chain, married to Betty, father of Johnny, a Democrat, Steelers fan and a Lutheran.”
His answers imply not only his beliefs but the many responsibilities, rules and restrictions he is subjected to.  Few if any of these were ever negotiated-  they were imposed on him yet he still considers himself free.
But is free the right adjective for him, or would modern domesticated simian be more apt?  He has been told what to do, believe, think and feel since he can remember.  A very clever rancher has bred billions of these creatures around the globe and created the most profitable livestock imaginable.  They work for him, fight for him, die for him, believe his wildest tales, laugh at his jokes and rarely get out of line.  When domesticated man does break one of the rules there are armies, jailers, psychiatrists and bureaucrats prepared to kill, incarcerate, drug or hound the transgressor into submission.

One of the most fascinating aspects of domesticated man’s predicament is that he never looks at the cattle, sheep and pigs who wind up on his plate and make the very simple deduction that he is just a talking version of them, corralled and shepherded through his entire life.  How is this accomplished?  Only animals that live in hierarchical groups can be dominated by man. The trick is to fool the animal into believing that the leader of the pack or herd is the person who is domesticating them.  Once this is accomplished the animal is under full control of its homo sapien master. The domesticated man is no different, originally organized in groups with a clear hierarchy and maximum size of 150-  it was easy to replace the leader of these smaller groups with one overarching figure such as God, King, President, CEO etc.  
The methodology for creating this exceptionally loyal and obedient modern breed, homo domesticus, can be described as having seven pillars from which an immense matrix captures the talking simians and their conscious minds and hooks them into a complex mesh from which few ever escape.  The system is so advanced that those who do untangle themselves and cut their way out of the net are immediately branded as mentally ill, anti-social, or simply losers who can’t accept the ‘complexity of modern life’, i.e. conspiracy nuts.
Plato described this brilliantly in his Allegory of the Cave, where people only see man made shadows of objects, institutions, Gods and ideas:
 “--Behold! human beings living in an underground cave...here they have been from their childhood...necks chained so that they cannot move, and can only see before them. Above and behind them a fire is blazing at a distance...the screen which marionette players have in front of them, over which they show the puppets... and they see only their own shadows, or the shadows of one another, which the fire throws on the opposite wall...”
It began with the word, which forever changed the ability of men to manipulate each other.  Before language, every sensation was directly felt through the senses without the filter of words.  But somewhere around 50,000 years ago language began to replace reality and the first pieces of code were put in place for the creation of the Matrix.  As soon as the words began to flow the world was split, and from that fracturing was born man’s angst and slavery.  The words separated us from who we really were, creating the first screen onto which the images from Plato’s cave were cast.  Gurdjieff said it well, “Identifying is the chief obstacle to self-remembering. A man who identifies with anything is unable to remember himself.”
It’s no accident that in Hesiod’s ages of man the Golden Age knew no agriculture, which appeared in the Silver age, and by the time we reach the Bronze age the dominant theme is toil and strife.  The two key elements to the enslavement of man were clearly language and agriculture.  In the hunter gatherer society, taking out the boss was no more complicated than landing a well placed fastball to the head.  Only since the advent of farming was the possibility of creating full time enforcers and propagandists made possible, and hence enslavement inevitable.
The search for enlightenment rarely if ever bears fruits in those temples of words, our schools and universities.  Almost all traditions point to isolation and silence as the only paths to awakening;  they are the true antidotes to modern slavery.  As Aristotle wrote, “Whosoever is delighted in solitude is either a wild beast or a god.”
So from the institution from which we are mercilessly bombarded with words and enslaved to time, we begin our descent through the seven layers of the Matrix.


Education



There are things we are born able to do like eating, laughing and crying and others we pick up without much of an effort such as walking, speaking and fighting, but without strict institutional education there is no way that we can ever become a functioning member of the Matrix. We must be indoctrinated, sent to Matrix boot camp, which of course is school.  How else could you take a hunter and turn him into a corporate slave, submissive to clocks, countless bosses, monotony and uniformity?

Children naturally know who they are, they have no existential angst, but schools immediately begin driving home the point of schedules, rules, lists and grades which inevitably lead the students to the concept of who they aren't.  We drill the little ones until they learn to count money, tell time, measure progress, stand in line, keep silent and endure submission.  They learn they aren't free and they are separated from everyone else and the world itself by a myriad of divides, names and languages.

It can’t be stressed enough how much education is simply inculcating people with the clock and the idea of a forced identity.  What child when she first goes to school isn't taken back to hear herself referred to by her full name?

It’s not as if language itself isn't sufficiently abstract- nothing must be left without a category.  Suzy can’t just be Suzy-  she is a citizen of a country and a state, a member of a religion and a product of a civilization, many of which have flags, mascots, armies, uniforms, currencies and languages.  Once all the mascots, tag lines and corporate creeds are learned, then history can begin to be taught.  The great epic myths invented and conveniently woven into the archetypes which have come down through the ages cement this matrix into the child’s mind.

Even the language that she speaks without effort must be deconstructed for her.  An apple will never again be just an apple-  it will become a noun, a subject, or an object.  Nothing will be left untouched, all must be ripped apart and explained back to the child in Matrixese.

We are taught almost nothing useful during the twelve or so years that we are institutionalized and conditioned for slavery- not how to cook, farm, hunt, build, gather, laugh or play.  We are only taught how to live by a clock and conform to institutionalized behaviors that make for solid careers as slaveocrats. 

Government


In the countries that claim to be democratic the concept of a government created to serve the people is often espoused.  Government, and the laws they create and enforce are institutionalized social control for the benefit of those who have seized power.  This has always been the case and always will be.  In the pre-democratic era it was much clearer to recognize who had power, but the genius of massive democratic states are the layers upon layers of corporatocracy and special interests which so brilliantly conceal the identify of those who really manage the massive apparatus of control.
The functions of the state are so well ensconced in dogmatic versions of history taught in schools that almost no one questions why we need anything beyond the bare essentials of government to maintain order in the post-industrial age.  The history classes never point the finger at the governments themselves as the propagators and instigators of war, genocide, starvation and corruption.  In Hollywood's version of history, the one most people absorb, 'good' governments are always portrayed as fighting 'bad' ones.  We have yet to see a film where all the people on both sides simply disengage from their governments and ignore the calls to violence.

The state apparatus is based on law, which is a contract between the people and an organism created to administer common necessities- an exchange of sovereignty between the people and the state.  This sounds reasonable, but when one looks at the mass slaughters of the 20th century, almost without exception, the perpetrators are the states themselves.
The loss of human freedom is the only birthright offered to the citizens of the modern nation.   There is never a choice.  It is spun as a freedom and a privilege when it is in fact indentured servitude to the state apparatus and the corporatocracy that controls it.

Patriotism is pure abstraction, a completely artificial mechanism of social control.  People are taught to value their compatriots above and beyond those of their own ethnic background, race or religion.  The organic bonds are to be shed in favor of the great corporate state.  From infancy children are indoctrinated like Pavlov’s dogs to worship the paraphernalia of the state and see it as a mystical demigod.
What is a country?  Using the United States as example, what actually is this entity?  Is it the USPS, the FDA, or the CIA?  Does loving one's country mean one should love the IRS and the NSA?  Should we feel differently about someone if they are from Vancouver instead of Seattle?  Loving a state is the same as loving a corporation, except with the corporations there is still no stigma attached to not showing overt sentimental devotion to their brands and fortunately, at least for the moment, we are not obligated at birth to pay them for a lifetime of services, most of which we neither need nor want.
Flags, the Hollywood version of history and presidential worship are drilled into us to maintain the illusion of the 'other' and force the 'foreigner/terrorist/extremist' to wear the stigma of our projections.  The archaic tribal energy that united small bands and helped them to fend off wild beasts and hungry hoards has been converted into a magic wand for the masters of the matrix.  Flags are waved, and we respond like hungry Labradors jumping at a juicy prime rib swinging before our noses.  Sentimental statist propaganda is simply the mouthguard used to soften the jolt of our collective electroshock therapy. 

Religion



As powerful as the patriotic sects are, there has always been a need for something higher.  Religion comes from the Latin 're-ligare' and it means to reconnect.  But reconnect to what?  The question before all religions is, what have we been disconnected from?  The indoctrination and alienation of becoming a card carrying slave has a cost;  the level of abstraction and the disconnect from any semblance of humanity converts people into nihilistic robots.  No amount of patriotic fervor can replace having a soul.  The flags and history lessons can only give a momentary reprieve to the emptiness of the Matrix and that's why the priests are needed.
The original spiritual connection man had with the universe began to dissolve into duality with the onset of language, and by the time cities and standing armies arrived he was in need of a reconnection, and thus we get our faith based religions.  Faith in the religious experiences of sages, or as William James put it, faith in someone else's ability to connect.  Of course the liturgies of our mainstream religions offer some solace and connection, but in general they simply provide the glue for the Matrix.  A brief perusal of the news will clearly show that their 'God' seems most comfortable amidst the killing fields. 
If we focus on the Abrahamic religions, we have a god much like the state, one who needs to be loved.  He is also jealous of the other supposedly non-existent gods and is as sociopathic as the governments who adore him.  He wipes out his enemies with floods and angels of death just as the governments who pander to him annihilate us with cultural revolutions, atom bombs, television and napalm.  Their anthem is, "Love your country, it’s flag, its history, and the God who created it all"-  an ethos force fed to each new generation. 

Circus

The sad thing about circus is that it's generally not even entertaining.  The slaves are told it's time for some fun and they move in hordes to fill stadiums, clubs, cinemas or simply to stare into their electrical devices believing that they are are being entertained by vulgar propaganda.  
As long as homo domesticus goes into the appropriate corral, jumps when she is told to and agrees wholeheartedly that she is having fun, than she is a good slave worthy of her two days off a week and fifteen days vacation at the designated farm where she is milked of any excess gold she might have accumulated during the year.  Once she is too old to work and put to pasture, holes are strategically placed in her vicinity so she and her husband can spend their last few dollars trying to get a small white ball into them.

On a daily basis, after the caffeinated maximum effort has been squeezed out of her, she is placed in front of a screen, given the Matrix approved beverage (alcohol), and re-indoctrinated for several hours before starting the whole cycle over again. God forbid anyone ever took a hallucinogen and had an original thought.  We are, thankfully, protected from any substances that might actually wake us up and are encouraged stick to the booze.   The matrix loves coffee in the morning, alcohol in the evening and never an authentic thought in between.
On a more primal level we are entranced with the contours of the perfect body and dream of ‘perfect love’, where our days will be filled with soft caresses, sweet words and Hollywood drama.   This is maybe the most sublime of the Matrix’s snares, as Venus’s charms can be so convincing one willingly abandons all for her devious promise.  Romantic love is dangled like bait, selling us down the path of sentimentally coated lies and mindless consumerism. 


Money



Money is their most brilliant accomplishment.  Billions of people spend most of their waking lives either acquiring it or spending it without ever understanding what it actually is.  In this hologram of a world, the only thing one can do without money is breath.  For almost every other human activity they want currency, from eating and drinking to clothing oneself and finding a partner. Religion came from innate spirituality and patriotism from the tribe, but money they invented themselves-  the most fantastic and effective of all their tools of domestication.
They have convinced the slaves that money actually has some intrinsic value, since at some point in the past it actually did.  Once they were finally able to disconnect money completely from anything other than their computers, they finally took complete control, locked the last gate and electrified all the fences.  They ingeniously print it up out of the nothing and loan it with interest in order for 18-year-olds to spend four years drinking and memorizing propaganda as they begin a financial indebtedness that will most likely never end.  
By the time the typical American is thirty the debt is mounted so high that they abandon any hope of ever being free of it and embrace their mortgages, credit cards, student loans and car loans as gifts from a sugar daddy.  What they rarely asks themselves is why they must work to make money while banks can simply create it with a few key strokes.  If they printed out notes on their HP's and loaned them with interest to their neighbors, they would wind up in a penitentiary, but not our friends on Wall Street-  they do just that and wind up pulling the strings in the White House.  The  genius of the money scam is how obvious it is.  When people are told that banks create money out of nothing and are paid interest for it the good folks are left incredulous.  “It can't be that simple!"  And therein lies the rub- no one wants to believe that they have been enslaved so easily .
“Culture is the effort to hold back the mystery, and replace it with a mythology.”
As Terence loved to say, “Culture is not your friend.”  It exists as a buffer to authentic experience.  As they created larger and larger communities, they replaced the direct spiritual experience of the shaman with priestly religion.  Drum beats and sweat were exchanged for digitized, corporatized noise.  Local tales got replaced by Hollywood blockbusters, critical thinking with academic dogma.
If money is the shackles of the matrix, culture is its operating system.  Filtered, centralized, incredibly manipulative, it glues all their myths together into one massive narrative of social control from which only the bravest of souls ever try to escape.  It's relatively simple to see the manipulation when one looks at patriotism, religion or money.  But when taken as a whole, our culture seems as natural and timeless as the air we breathe, so intertwined with our self conception it is often hard to see where we individually finish and our culture begins.

Escaping the Grip of Control

Some might ask why this all-pervasive network of control isn't talked about or discussed by our ‘great minds’.  Pre-Socratic scholar Peter Kingsley explains it well:
“Everything becomes clear once we accept the fact that scholarship as a whole is not concerned with finding, or even looking for, the truth. That’s just a decorative appearance.  It’s simply concerned with protecting us from truths that might endanger our security; and it does so by perpetuating our collective illusions on a much deeper level than individual scholars are aware of.”

Whoever discovered water, it certainly wasn't a fish.  To leave the ‘water’, or Plato's cave takes courage and the knowledge that there is something beyond the web of control.  Over 2,300 hundred years ago Plato described the process of leaving the Matrix in the Allegory of the Cave as a slow, excruciating process akin to walking out onto a sunny beach after spending years in a basement watching Kabuki.

How can this awakening be explained?  How do you describe the feeling of swimming in the ocean at dusk to someone who has never even seen the sea?  You can't, but what you can do is crack open a window for them and if enough windows are opened, the illusion begins to lose its luster. 

Warren’s Post Office Proposal: Palast Aims at the Wrong Target

Investigative reporter Greg Palast is usually pretty good at peering behind the rhetoric and seeing what is really going on. But in tearing into Senator Elizabeth Warren’s support of postal financial services, he has done a serious disservice to the underdogs – both the underbanked and the US Postal Service itself.

In his February 27 article “Liz Warren Goes Postal,” Palast attacked her support of the USPS Inspector General’s proposal to add “non-bank” financial services to the US Postal Service, calling it “cruel, stupid and frightening” and equating it with the unethical payday lending practices it seeks to eliminate.

After “several thousand tweets by enraged liberals,” he wrote a follow-up article called “Brains Lost in Mail—Postal Bank Bunkum,” in which he contends, “the Postal Governors are running a slick, slick campaign” to “use federal property to run illegal loan-sharking shops.” He says they would “team up with commercial banks to cash in on payday predation,” exempting themselves from Warren’s own consumer protection regulations.

His first article concludes:

While the USPS wants to “partner” with big banks, why not, instead, allow community credit unions to use post offices as annexes to provide full, complete, non-usurious neighborhood banking services? This is the type of full-service “postal banking” successful in Switzerland and Japan that is envisioned by Ellen Brown, not the payday predation proposed by the USPS.

I obviously agree with him on the full-service postal banking alternative, but that is not something Congress appears ready to approve. Palast has not looked closely at the white paper from the Inspector General’s office  relied on by Senator Warren, or at the research on payday lending and the inability of credit unions to service that market. The IG’s proposal, rather than fleecing the poor, would save them from being fleeced by offering basic financial services at much reduced rates. And that makes it a very good start.

The Straits and Strictures of the USPS

In analyzing the proposal, we need to consider the stressed circumstances and limitations of the Postal Service. It is fighting for its life, after the nefarious 2006 Postal Accountability and Enhancement Act (PAEA) rendered it insolvent. Apparently intended to force the privatization of the post office, the Act required the prefunding of postal retiree health benefits for 75 years into the future. That means funding workers not yet born, an onerous burden no other public or private company is required to carry.

Worse, as the white paper notes:

The 2006 Postal Accountability and Enhancement Act (PAEA) generally prohibits the Postal Service from offering new nonpostal services. However, given that the Postal Service is already providing money orders and other types of non-bank financial services, it could explore additional options within its existing authority.

Given the hostility among conservatives in Congress to postal expansion of any sort, full-service banking (involving deposits, checking and savings accounts, and home and business loans) is unlikely to be authorized any time soon. But the proposed prepaid Postal Cards would simply be an electronic 21st century extension of paper money orders, and short-term Postal Loans could be construed as advances on those cards. According to the white paper, the proposed Postal Card would cost users less than half what they pay for prepaid cards now, and Postal Loans would cost them less than one-tenth the cost of a payday loan, a substantial savings for the poor.

It sounds good, but where will the post office get the money for the loans if it cannot branch into taking deposits? And where will it get the capital to back the loans when it is insolvent? The white paper states:

Electronic payment products like Postal Cards might be a wise entry point, and would expand upon existing services like paper money orders. . . . The right partners could bring much needed startup cash to the table as part of the deal, overcoming the Postal Service’s current funding limitations.

The white paper also suggests partnering with banks for the back-end network and expertise necessary to deal with a national or global card system. But the RIGHT partners are emphasized:

One important note of caution: the Postal Service should be very mindful to ensure that no partnership damages its reputation. The level of trust the Postal Service has earned from the public is an unmatched asset, and one that should not be jeopardized.

Billions More for the Poor

The white paper notes that more than a quarter of all US households do not have a bank account, or use costly services like payday loans and check-cashing exchanges just to make ends meet. People who filed for bankruptcy in 2012 were on average just $26 per month short of meeting their expenses, so even modest savings would make a major difference to them:

The average underserved household has an annual income of about $25,500 and spends about $2,412 of that just on alternative financial services fees and interest. That amounts to 9.5 percent of their income. To put that into perspective, that is about the same portion of income that the average American household spends on food in one year. In 2012 alone, the underserved paid some $89 billion in fees and interest.

Banks are closing branches all over the country, mostly in low-income areas; but post offices are still to be found everywhere. They could offer affordable financial services that would save the underserved billions of dollars in exorbitant fees and interest.

Postal Loans could be made for less than a tenth of the fees charged for a typical payday loan of the same size. The example is given of a $375 loan paid off in 5-1/2 months. A typical payday lender would charge annual interest of 391%, for a total of $520 in interest and fees. For a comparable Postal Loan, the borrower would pay a $25 upfront loan fee and 25% interest, making the total for interest and fees a mere $48 across the life of the loan. The white paper concludes:

If even one-tenth of the 12 million Americans who take out a payday loan each year got this hypothetical Postal Loan instead, they could collectively save more than half a billion dollars a year in fees and interest. And that is to say nothing of the benefits Postal Loans could bring to the 10 million unbanked U.S. households which cannot even get payday loans.

The proposed Postal Loan could save these marginal borrowers about $100 per month, potentially saving them from bankruptcy:

If this helped decrease personal bankruptcies by just 5%, it would not only help more than 50,000 people a year avoid the lasting stigma and financial effects of bankruptcy, it would also potentially keep some $10 billion a year in loans and other debts from being dragged through bankruptcy court, where much of it would be canceled at tremendous expense to creditors (most of whom are financial institutions). That would be good for American families, for banks, and for the entire country.

The Questionable Credit Union Alternative

Palast argues that his credit union can give the same loan for 10%, but this is doubtful. In a fall 2012 article titled “Are Payday Lending Markets Competitive?”, Victor Stango shows that credit unions, despite their claims, are generally not able to offer competitive payday loans. Few credit unions even offer them, because both credit unions and borrowers themselves find the credit union version unattractive. Stango’s survey found that borrowers actually preferred the higher-priced payday loans, because they had fewer restrictions.

Banks do not generally make small personal loans, even to creditworthy borrowers, because they are not cost-effective for the bank; and the underserved often cannot get credit cards because they have bad or nonexistent credit histories, making them a high credit risk. They therefore turn to payday loans, on which credit unions do offer lower rates; but they can offer them only by being more restrictive on approval and repayment terms and by adding fees. More restrictive terms mean credit union payday loans have lower default risk; but risk-adjusted prices on standard payday loans, says Stango, may actually be no higher than those on credit union payday loans.

The National Credit Union Administration now allows an APR of 28% on short-term small loans. Lenders can’t really afford to do it for less, because there are so many defaults.

As for big banks licking their chops at getting in on the USPS’ 25% short term loans, this hardly seems likely either. Big banks, including Wells Fargo, Bank of America and JPMorgan Chase, are already major funders of payday lenders—the ones in the 391% bracket. The USPS returns will seem paltry by comparison.

Profits to the People

Postal Loans and Postal Cards are only two of a suite of non-bank financial services proposed in the white paper that could result in substantial savings for the poor, while at the same time generating much-needed profits for the struggling Postal Service itself. Postal profits serve the public by keeping the Pony Express running and postage stamps affordable.

The Inspector General’s white paper concludes, “As the Postal Service continues to look for new ways to serve the citizens of the 21st century, non-bank financial services may be the ‘killer app’ for diversifying its revenue base.”

It may also be the killer app for keeping both the poor and the Postal Service itself out of bankruptcy.

_____________________

Ellen Brown is an attorney, president of the Public Banking Institute, and a candidate for California State Treasurer running on a state bank platform. She is the author of twelve books including the best-selling Web of Debt and her latest book, The Public Bank Solution, which explores successful public banking models historically and globally.

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The Debt Matrix: Consumption and Modern-Day Slavery

“Home life ceases to be free and beautiful as soon as it is founded on borrowing and debt”

Henrik Ibsen

Timothy Alexander Guzman, Silent Crow News – According to Oxford Dictionary the term Slave is defined as a person who is the legal property of another and is forced to obey them” as in the case of the United States during the 18th and 19th centuries where slavery was a legalized institution.  Oxford dictionary also defines slavery as “a person who works very hard without proper remuneration or appreciation” as in today’s world of a person working for a company or corporation where their efforts are usually under appreciated.  It also describes a slave as “a person who is excessively dependent upon or controlled by something” or “a device, or part of one, directly controlled by another”.  Debt can be an instrument used to control an individual or a nation for that matter.  In this case, an individual is dependent upon “Credit” to buy products.  Then the credit becomes a debt that has to be repaid.  It becomes a “control mechanism” as the creditor becomes the “Slave Owner” and the debtor becomes the “Slave”.  What is the point?   In today’s world of unlimited credit, consumers become modern-day slaves to their creditors.  What is the difference between slavery in 18th century America with imported African slaves and the America of 2013?  There is no difference besides the physical abuse of the African slaves by their owners.  In America, consumers suffer psychological abuse by its creditors.  As long as an individual remains in debt bondage, that person will have to repay that debt until the day that person literally dies in most cases.

Black Friday is the day that starts the most important holiday for big name retailers and Wall Street speculators and that is Christmas.  It is the shopping season that investors, economists and corporations pay close attention to as they measure consumer confidence and the profits they reap from consumer spending.  Major retailers and corporations such as Wal-Mart expect to make profits.  Wall Street expects consumers to spend on Black Friday through the Christmas holidays following the Federal Reserve’s continued policies of Quantitative Easing (QE).  Economists across the spectrum predict that the new Federal Reserve chairwoman Janet Yellen will continue to buy US bonds indefinitely continuing Ben Bernanke’s current policies.  All the while consumers continue to accumulate debt.  Black Friday was marked with chaos followed by violence as mobs of consumers’ raided shopping centers and malls for discounts and sales on numerous products including flat screen televisions, toys, clothing and other goods they most likely don’t need.  Regardless of the economic situation, consumers will continue to buy.  Granted, Christmas is about giving your loved ones gifts in a traditional sense.  It is also about spending time with the family.  It is supposed to be a joyous holiday for families, but the American population is mired in debt ranging from credit cards, mortgages, student loans and auto loans.  Earlier this month Bloomberg reported that U.S. households increased their debt levels by continuing to borrow at unprecedented levels:

Consumer indebtedness rose $127 billion to $11.28 trillion, the biggest increase since the first quarter of 2008, according to a quarterly report on household debt and credit released today by the Fed district bank. Mortgage balances climbed $56 billion, student loans increased $33 billion, auto loans were up $31 billion and credit-card debt rose by $4 billion.

“We observed an increase of household balances across essentially all types of debt,” Donghoon Lee, senior research economist at the New York Fed, said in a statement. “With non-housing debt consistently increasing and the factors pushing down mortgage balances waning, it appears that households have crossed a turning point in the deleveraging cycle.”

Consumerism has taking hold in America.  The population continues to stampede at malls and in some cases injuring and even killing individuals.  In 2008, a Wal-Mart worker was trampled to death in Long Island, New York by a stampede of hungry consumers looking for bargains.  There were also several people injured during the incident.  This Black Friday proved to be more of the same as shoppers filled shopping malls.  Some malls experienced violent crowds pushing and fighting with each other over items that were on sale.  It is absolutely mind boggling to see average people become violent over products sold at major retail stores.  Morality is in decline in America.

Regardless of debt the American public faces, it seems that shopping is the only thing that matters.  As debt increases it becomes harder for them to repay.  Can the American people ever awaken from their dystopian nightmare of mass consumption of products they don’t need?  They are accumulating large amounts of debt thanks to the Federal Reserve Bank’s printing of unlimited cheap money with incredibly zero to low interest rates.  Although, many do buy their basic necessities such as food and clothing, buying the latest products that includes video games and other computer gadgets are turning consumers into life-long debt slaves that will continue to pay their credit card companies with “interest” until the debt is paid.  That can take a long period of time since interest rates are tied to credit cards and other revolving loan payments.  According to the Federal Reserve Bank (who continues endless money printing) and other government institutions, the average US household owes between $7,000 and $15,112 on credit cards.  The average mortgage debt is at $146,215 and student loans’ reaching the $1 trillion mark is at $31,240.  The total amount of debt the United States owes to its creditors namely China is at $17 Trillion and steadily increasing as the Federal Reserve Bank continues to buy its own US bonds.

Debt Slavery is the new modern-day slavery as millions continue to buy products on credit becoming perpetual servants of mega corporations and international banks.  How?  As you buy with credit cards or loans, the “interest rates” attached to the purchases made is the bond that ties you and the corporate interests or bankers for eternity.  The debt people get into is difficult to escape as interest rates accumulate over time it becomes extremely difficult to repay since it keeps adding up.  In the 2009 film called ‘The International’ with Clive Owen and Naomi Watts which was actually inspired by the BCCI (Bank of Credit and Commerce International) scandal in real life had an interesting scene involving an Italian politician named Umberto Calvini, who is a weapons manufacturer who explains to Eleanor Whitman (Watts) and Louis Salinger (Owens) that IBBC was interested in buying a missile guiding system that his factory produces then later assassinated.  He explained that the true value was not conflicts but the debt it produces:

Calvini: “No, this is not about making profit from weapon sales.  It’s about control.”

Eleanor: “Control the flow of weapons, control the conflict?”

Calvini: “No. No No. The IBBC is a bank. Their objective isn’t to control the conflict, it’s to control the debt that the conflict produces. You see, the real value of a conflict – the true value – is in the debt that it creates. You control the debt, you control everything.  You find this upsetting, yes?  But this is the very essence of the banking industry, to make us all, whether we be nations or individuals, slaves to debt.”

It was an interesting scene coming out of Hollywood, which by every standard is a propaganda machine.  Debt is serious business especially for banks and corporations.  .

With all of the problems the American public faces with the prospect of a future war on Iran will impact the world’s economy.  With 100 million people out of work in the United States and a reduction in food stamps and inflation hitting food prices, there is much concern.  Celebrities’ personal lives still dominate headlines in the main stream media.  The ‘War on Terror’ has taken away civil liberties and the ‘War on Drugs’ has increased the prison population.  High-crime rates in major cities remain problematic. With the rollout of 7000 drones in 2015, endless wars, a looming dollar collapse, and endless Pharmaceutical commercials that keep people heavily drugged are serious problems for the American public.  Yet, shopping on Black Friday resulting in violence and chaos among uneasy crowds seems to be the norm.

The media and corporate advertisements have turned the American population into a “Slave” state of mind. Many people in the United States are accumulating debt at levels never seen in its 237 years of its existence.  It is a lesson to the world in what NOT to do.  An economy that is consumer based with credit is a disaster in the making because that debt only becomes unmanageable in the long run, especially when the people have no means to repay its debt obligations.  An economy based on consumerism leads to moral decay.  When people become ingrained in consumption disregarding the debt they inherit, they become immune to the realities around them.  When the situation becomes intense with a coming dollar collapse and a possible war in the Middle East, reality will sink in.  Then when the necessities such as food and shelter become scarce the people will begin to panic and lose control over their own lives.  Who knows what people in America will be capable of, but then again as you saw what happened on Black Friday, it is a reminder of how people react when products they don’t really need are on sale.  Imagine how they will react in times of economic despair.

Sanders Bill Would Break Up Big Banks

WASHINGTON - March 27 - U.S. Sen. Bernie Sanders (I-Vt.) said today he will introduce legislation to break up banks that have grown so big that the Justice Department has not pursued prosecutions for fear an indictment would harm the financial system.

The 10 largest banks in the United States are bigger now than before a taxpayer bailout following the 2008 financial crisis. At the time Congress, over Sanders’ objection, approved a $700 billion bank rescue because of concerns by some that the financial institutions were too big to fail. Another $16 trillion from the Federal Reserve propped up financial institutions.

Attorney General Eric H. Holder Jr. now says the Justice Department may not pursue criminal cases against big banks because filing charges could “have a negative impact on the national economy, perhaps even the world economy.”

“In other words,” Sanders said, “we have a situation now where Wall Street banks are not only too big to fail, they are too big to jail. That is unacceptable and that has got to change because America is based on a system of law and justice.”

U.S. banks have become so big that the six largest financial institutions in this country (J.P. Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley) today have assets of nearly $9.6 trillion, a figure equal to about two-thirds of the nation’s gross domestic product. These six financial institutions issue more than two-thirds of all credit cards, over half of all mortgages, control 95 percent of all derivatives held in financial institutions and hold more than 40 percent of all bank deposits in the United States.

Sanders’ legislation would give Treasury Secretary Jacob Lew 90 days to compile a list of commercial banks, investment banks, hedge funds and insurance companies that he deems too big to fail. The affected financial institutions would include “any entity that has grown so large that its failure would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial government assistance.”

Within one year after the legislation became law, the Treasury Department would be required to break up those banks, insurance companies and other financial institutions identified by the secretary.

“If an institution is too big to fail, it is too big to exist,” Sanders said. “No single financial institution should be so large that its failure would cause catastrophic risk to millions of American jobs or to our nation’s economic wellbeing. No single financial institution should have holdings so extensive that its failure could send the world economy into crisis,” Sanders said. “We need to break up these institutions because they have done of the tremendous damage they have done to our economy.”

To watch Sanders’ Senate floor speech, click here.

Partier Beware: 9 Ploys to Exploit Spring Breakers

The financial headache is worse than the hangover.

Photo Credit: Shutterstock.com

March 25, 2013  |  

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The beer-soaked blur of spring break is a rite of passage, and at least since the 1980s, when MTV dropped in on the party, it’s been corporate America’s bootylicious wet dream . With the potent mix of inebriated young people and cultural pressure to have the most off-the-chain experience, there’s big money to be made and beaucoup merchandise to be moved. And if the kids aren’t careful, a financial headache worse than the hangover will follow them home.

1. Scam season: There are as many scams engineered to rip off spring breakers and their families as there are beaches in sunny Florida . Popular frauds include the “grandparent scam,” where grandpa gets a call from someone saying that young Johnnie has landed in a Mexican jail and needs bail money wired immediately. Also ubiquitous are fly-by-night operations that offer the trip of a lifetime, and then split with the money. Various hidden cost hustles get students to pay a low rate for a hotel room but upon arrival they find that various fees like “season rate” charges and gratuities have been tacked on. Students who post their whereabouts on Twitter and Facebook may also wake to find that burglars have been assiduously following social media.

2. The big swipe: Credit card companies encourage students to rack up charges during spring break, advertising their wares with pictures of attractive tanned bodies lounging under palm trees. When they aren’t conjuring fantasy, they’re marketing products with “safety first” admonitions that cards are ever so much less dangerous than carrying cash. Until the bill comes, of course. Forbes magazine offers a handy list of the “ Best Credit Cards For Spring Break Road Trips,” which praises the Discover More Card for its APR teaser and a transfer fee of 3 percent. Chase is applauded for offering rebates for big spenders, while Bank of America lets students link the card to savings or checking account so they “can top off the tank and load up on snacks.” Not to mention debt. 

3. Predator’s paradise: Of all the shady characters who have enriched themselves at the expense of spring breakers, Joe Francis, the founder of the "Girls Gone Wild" empire, deserves top billing in the Slimeball Hall of Fame. Francis discovered that exploiting and humiliating young women in sleazy videos was the road to riches, and set about haunting spring break locales and luring barely legal (and sometimes not) women into baring their breasts and performing suggestive acts. Francis has battled the courts over consent issues, and recently filed for bankruptcy, noting in the disclosure that his company, like American Airlines and General Motors, just needed a little restructuring. Greed, apparently, conquers all.

4. Billion-dollar party: Hotels, cruises, jam-packed restaurants, spray-tanning sessions, all-inclusives and rivers of booze. Between Florida and Texas alone, college students blow an estimated $1 billion on spring break. The travel industry estimates that over than 1.5 million students take part in the annual bacchanalia. That’s a boatload lot of wallets, and plenty of ways to empty them.

5. Marketing mayhem: The marketing frenzy surrounding the spring break has achieved scientific precision, deftly adjusting to evolving trends.  This year, savvy marketing departments are pushing computer-related items, video games, movies and TV shows, along with a mind-blowing cornucopia of other youth-oriented consumer products. The site Boozinggear.com purveys must-have accoutrements such as the “Double Down Beer Bong” and the “Bouncing Boobs Red Can Cooler Set.” The app industry intensifies the party experience with everything from Beach TV, which streams the party in Panama City Beach, to Happy Hour Finder, which guides you to the nearest tiki bar.

Cameron’s crackdown: PM targets UK immigrants

Published time: March 25, 2013 13:59
Britain's Prime Minister David Cameron.(AFP Photo / Andrew Cowie)

Jobless immigrants will have UK government support payments ripped from their hands after six months. Further measures are to come into force preventing foreign entrants from even being put on a waiting list for social housing for two to five years.

Immigrants from EU states residing in Britain will lose their jobseekers’ allowance – a weekly government support payment- and other benefits, if they cannot prove that they’ve actively been looking for employment, David Cameron said in a speech on Monday.

He said that concerns that immigrants “take advantage of our generosity” were not just legitimate, "but right," adding that in the past, the UK had been a soft-touch.

Non-nationals will have to devise a way of proving that they have a ‘genuine chance’ of finding work. However, exactly how this would be done in practice is unclear. The ‘habitual residence’ test, sat by migrants who want financial support from the government, will also be made increasingly difficult.

Extra tests will have to be taken by people applying for social housing. Once the measures come into force it could take anything up to five years for residents of an area to even be put on a waiting list for a home.

However, Cameron said that he was “putting the welfare of the child at the heart of the...process”

There will be a clampdown on access to healthcare, as well as in housing and benefits payment. Immigrants entering the country from outside the EU will be forced to demonstrate evidence of medical insurance, and the NHS – a traditionally free institution - will impose charges for doctor visits. Potential immigrants entering to gain access to healthcare have had the label ‘health tourists’ slapped on them.

Earlier this month, it was announced that immigrants entering Britain may be forced to pay a deposit fee upon entering the country, which would only be reimbursed when they leave the UK, and only if they haven’t used its health service.

Even harsher measures are to be imposed on illegal immigrants. Steps are being taken to prevent illegal immigrants from getting credit cards or driving licenses, and their employers and landlords could be fined. Cameron said they were "doubling the fines levied against employers who employ illegal workers."

“Once we’ve found them we’re going to make it easier to remove them,” Cameron said. He added that he would ensure faster deportation, saying that “wherever possible” people would be deported first, and could appeal the decision second.

The new policies will come into force in 2014. The coalition's reforms would give Britain the toughest controls in the world, according to Conservative Minister of State for Immigration Mark Harper, who spoke to Sky News on Sunday.  

Cameron said that immigration got ‘badly out of control’ under Labour.

“Immigration has to be properly controlled,” he argued. “Under the last government this simply wasn’t the case. Immigration was far too high.”

However, net migration into Britain has fallen by a third in recent years, from 247,000 in June 2011 to 163,000 in 2012, according the Office for National Statistics (ONS). Additionally, their valuable contribution to the UK economy has been pointed out.

“Nothing wrong with debating immigration. But lets [sic] not omit the fact that immigrants put 6% more in to UK GDP than they take out,” said Parmjit Dhanda , former Labour MP, on Twitter. 

Cameron said that he wanted to train young British people to fill the skills gap, while saying that he was "rolling out the red carpet" to bright foreign students and entrepreneurs.

Last week, Business Secretary Vince Cable warned that restricting immigration would damage the UK economy.

The increasingly hard stance is shared by the country’s main three political parties. In light of the Eastleigh by-election results in February in which UKIP –a party renowned for its hard stance on immigration – won. All three major UK political parties are now cracking down on social support from the government; Liberal Democrat leader Nick Clegg voiced support for the entry fee on Friday, suggesting it could be as much as 1,000 pounds.

“We need stronger action against illegal immigration and a more effective system for the migration we need,” tweeted Labour Press Team’s Chris Bryant. “The immigration system just isn't working- fewer illegal immigrants are being stopped or sent back,” he said, going on to add that the test of the PM’s speech was whether he could stop the government’s expanding list of practical failings on immigration

“As we have said for some time, Britain does not need an arms race on immigration rhetoric, it needs practical measures to make sure the system works and immigration is properly managed and controlled,”
said Yvette Cooper MP Labour’s Shadow Home Secretary on Monday.

Cameron’s spokesman spent around 50 minutes prior to the speech fielding considerably skeptical questions from the press regarding whether Cameron's measures will have any impact whatsoever, according to the Guardian.

The UKIP is claiming credit for the outcry.

“Cameron will only create a whole pile of bureaucracy that will affect everyone in the UK, cost the taxpayer millions and will still be riddled with loopholes and therefore totally ineffective,” said UKIP’s Nigel Farage in a statement on Monday.

He went on to declare that the only way to prevent wide-scale immigration is for Britain to leave the EU.

Cypriot bank workers rally outside parliament as cash hoarding begins

Published time: March 22, 2013 16:20

Protesters shout slogans during an anti-bailout rally by employees of Cyprus Popular Bank outside the parliament in Nicosia March 22, 2013.(Reuters / Andreas Manolis)

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As politicians try and hammer out a solution to the Cypriot banking crisis, bank workers protest outside parliament and ordinary citizens feel the pinch as cash becomes scarcer and people hold their breath for a deal to be reached.

Politicians in Cyprus appear to be moving closer towards a rejigged version of the deal agreed last weekend but rejected by MPs, known as plan A. This would entail losses for large depositors, whose savings would be used to levy the Cypriot contribution to its own bailout fund, but smaller savers with less than 100,000 euros would be saved.

As politicians inched closer towards an agreement, about 1000 bank workers gathered outside parliament on Friday waiting for news on Laiki, the island’s second largest bank.

Many fear the loss of their jobs, and many of them have not been to work since the banks closed their doors to customers nearly a week ago.

Three lines of riot police were on hand to stop protesters reaching parliament, although at one point they sat in the road at an intersection near parliament, blocking access for vehicles.

Many Cypriots blame Germany for the crisis. Many people on the streets of Cyprus believe it was mainly German officials who pushed for a Cypriot levy on deposits to be part of any European Central Bank bailout.

Tesa Arcilla, RT’s correspondent in Nicosia, the Cypriot capital, explained that there is a widespread feeling of negativity, especially at the EU, the Troika and Germany.

“It’s not fair, this situation is not just for economic reasons, the main reason is the Europeans want to send the Russians out of Cyprus,” a Cypriot man told RT.

People are worried that the European Central Bank will only supply liquidity to the country until Monday and after that only if an EU, IMF program has been agreed.

The result is a dash for cash on the ground, as Cypriots try and get as much money out as they can from ATMs; many of which have imposed limits on how much can be withdrawn.

A Russian shopkeeper explained that business is down 70% in the last week, while another local shop owner complained of sleepless nights brought on by anxiety.

Another direct effect of the crisis being felt on the ground is that most filling stations no longer accept credit cards and will only take cash as people try to hold on to as much money as possible.

Many people are not confident that the banks will reopen on Monday and people are concentrating on getting through the next few days after already being in limbo for a week, Tesa Arcilla explained.

Iceland’s proposed porn ban ‘like repression in Iran, N. Korea’ — activists

Published time: March 01, 2013 14:39

AFP Photo

A group of 40 human rights activists from around the world fear that Iceland could become “a role model for Internet censorship” if it introduces Internet filters blocking online content deemed pornographic.

“The act of censoring pornography in Iceland differs in no way from repression of speech in Iran, China or North Korea,” human rights advocates wrote in an open letter to Icelandic Interior Minister Ögmundur Jónasson.

Activists from nearly 20 countries, including the UK, America, Austria and Finland, said that Iceland’s moral reasons for the push to censor Internet pornography is “justifying rather than condemning the actions of totalitarian regimes.”

Critics – including Jillian C. York, Director for International Freedom of Expression, Electronic Frontier Foundation, Sunil Abraham, Executive Director for India’s Internet and Society Center, and Ot van Daalen, head of the Dutch Bits of Freedom Center – have described the controversial measure as “an affront to basic principles of the society.”

They also argued that those advocating the Web porn ban have offered “no definition, no evidence, and suggested no technology.”

The authors of the letter warned that the prohibition of pornographic content could create demand for an underground porn industry, unregulated and most certainly affiliated with other illegal activities, “as we have seen in the case of drugs or alcohol prohibition. Hiding the problem is not a solution and may in fact make things worse.”

The solution, according to the activists, could be better sex education at home and schools: “Sex education that deals not only with conception, contraception and sexually transmitted diseases, but also relationships, communication and respect.”

Iceland, known for its feminist policies, could become the first Western country to censor online pornography, despite concerns over who will be given the authority to choose what is banned.

“It is tempting to regard filtering the Internet as a quick and easy way to restrict unwanted speech, opinions, or media, which the government regards as harmful for either them or the people,” the letter said. “The right to see the world as it is, is critical to the very tenets and functions of a democracy and must be protected at all costs.”

The activists claimed that it is technically impossible to censor the Internet without monitoring all telecommunications with automated machines: “This level of government surveillance directly conflicts with the idea of a free society.”

Iceland is not the only European country that has tried to implement such a ban. In December, the UK proposed blocking access to all pornographic websites, but UK ministers rejected the idea over a lack of public support.

According to supporters of the Icelandic ban, pornography has unquestionably damaging effects on both children and women.

"We have to be able to discuss a ban on violent pornography, which we all agree has a very harmful effects on young people and can have a clear link to incidences of violent crime,"
Interior Minister Jonasson, the author of the proposed ban, was quoted as saying.

While Iceland has already passed a law banning the distribution and printing of pornography, the proposed ban would eventually restrict access to pornographic websites in the country, and make it impossible to use Icelandic credit cards on X-rated sites.

Private Debt — Not Government Debt — Will Destroy America

Personal debt.(Photo: SeniroLiving.org)There are two kinds of debt. One that’s relatively harmless. And one that can destroy us all.  

There’s public sector debt – or government debt – which is over $16 trillion. This is the sort of debt that politicians scream and holler about when they demand austerity.

And then there’s private sector debt – the debt owned by you and me and millions of Americans across the nation in the form of credit cards, home and auto loans, along with America's corporate debt. This sort of debt doesn’t seem to bother politicians at all, even though total private sector debt is $38 trillion, more than double government debt.

Now here’s what you need to know. Public sector debt is not a problem at all. Our national debt, despite the big number, is not a threat to the nation.

Currently, our national debt is roughly 100% of GDP. After World War 2, it was much higher – over 120% of GDP.  But, rather than freaking out in the 1950’s and demanding austerity spending cuts, both Republican and Democratic Presidents and lawmakers grew our nation out of this so-called debt problem with government spending.

There were massive government investments to build the Interstate Highway System, send returning GIs to college, and to grow the social safety net.

And it worked. With more government investments, more Americans were put to work, which meant they had more money to spend, which meant more businesses hired more people to keep up with the higher demand, which meant Americans all around were earning more money and paying more revenue into the government through taxes. Our debt-to-GDP ratio plummeted from its peak of over 120% in the 1950’s to around 20% in the 1970’s.  

Then Reagan came in, gave billionaires a massive tax cut, increased defense spending, and our national debt exploded again. But, two Presidents later, Bill Clinton had the budget balanced and the nation on track to completely eliminate the national debt within ten years.

George W. Bush blew up that plan with his tax cuts, wars, corporate giveaways, and his economic crash, so now we have a pretty massive debt, although not as big as the one Truman and Eisenhower faced and beat.

Our nation has a long history, from the Revolutionary War to the Civil War to World War II of dealing with our national debt, and reducing debt levels that are much higher than we see today. That’s why government debt is not a problem right now. With just a small amount of political will, it can be solved pretty easily: more government investments to put people to work and more taxes on the rich so that they pay their fair share again have always solved it in the past.

On the other hand, private sector debt is a huge problem. Not only is it devastating the livelihoods of millions of Americans around the nation, but it’s also pushing our economy toward collapse.   

After World War 2, total private debt was below 50% of GDP. Today, it’s more than 250% of GDP, which is even higher than it was during the Great Depression.

There are several reasons for this.

The first is that when Reagan stopped enforcing the Sherman Anti-Trust Act, businesses started merging and acquiring each other like crazy. Because of changes in the rules on how that could be done, Private Equity or LBO firms came into existence, driving the monopolistic merger process with trillions in debt. Today virtually every corporate merger involves the company taking on huge debt, while the executives and the Pirate Equity boys take home billions. The result is that most of this private sector debt is corporate debt, and it's dangerously high, a teetering, towering house of cards. 

And then there's household debt.  

Since Reagan, Americans have not been paid more for their increased productivity, so wages have failed to keep up with the rising costs of housing, energy, education, and healthcare. To make ends meet, Americans had to extend their credit lines and home mortgages, thus sinking further into debt.

Also, there was the housing bubble, which was caused by banksters pushing mortgages – or debt – on millions of Americans, knowing that those same Americans were unlikely to be able to pay down those mortgages and debt.

But the banks made a ton of money selling off that bad debt to other investors before the market went bust, and skimming fees off the top of every single transaction.

And, of course, all of the losses that the banksters did incur during the crisis were promptly repaid by our government thanks to the bailout.

But nobody seemed to care about the debt that everyone else who wasn’t a bankster still had. Nobody except the banks, which are still trying to suck more and more money out of their indebted customers, and are now bringing back debtor’s prisons to help in this effort.

In Arkansas, a breast cancer survivor, Lisa Lindsay, was thrown in jail because she didn’t pay a $280 medical bill, which was charged to her by mistake.

Debtors’ prisons haven’t officially been used in America since before the Civil War. But today, a third of the states in the country allow debt collectors to use the public court system to go after people who owe them money. So, rather than being thrown in jail for specifically owing money, Americans are thrown in jail for not showing up to court hearings or not paying legal fines stemming from their debts.  

There’s even a law in Arkansas that allows landlords to throw tenants in jail if they're late on their rent. According to a recent report by Human Rights Watch, hundreds of tenants in Arkansas who’ve fallen on hard times and can’t pay their rent are taken to court and sometimes jailed.

So, in a roundabout way, the debtors prisons have returned to America.

This is a huge problem because economies depend on consumers – people like you and me – spending money. But, if we’re in debt up to our eye-balls, and being thrown in prison for that debt, then we can’t spend money to stimulate the economy.

As economist Steve Keen told me, “That’s why we’re in a crisis.”

He added that it wasn't the government deficit we have to worry about.  Instead, he said, “It’s the dynamics of private debt that have determined the crunch we’re in now.”

While debt can be useful and free up more spending in the economy, we’ve reached a point where businesses and individual Americans can no longer afford to go deeper into debt. 

And a major reason why the economy continues to stagnate after the collapse is because Americans are paying down their debt rather than spending money in the economy. And the more Americans continue to pay down their debt instead of spending, the worse the economy will get.

When this happens, Keen told me, “You plunge off the cliff.” 

Even government stimulus can’t help at this point. Whether it was Bush’s stimulus at the end of 2008 that gave everyone a couple hundred bucks, or Obama’s stimulus in 2009, any extra money Americans get from the government is diverted away from the economy and put instead toward paying down their huge individual debts, which has no stimulative effect on the economy at all.  

If private debt was 50% of GDP like in the 1950’s, then Americans could afford to both buy things and pay down their own debt.  And ditto for businesses. But at 250% of GDP, that private sector debt strangles the economy and sets the stage for a looming economic collapse.

So then, what’s to be done?

We should wipe the worst and most destructive of the private sector debt, the debt that prevents people from spending.

Keen calls for a debt jubilee. That means using the government to simply pay off much of the individual debt across America, from mortgages to student loans to credit cards.

This is also the approach Occupy Wall Street is taking with its “Strike Debt” campaign, though the organization is also relying on private donations to help buy people’s overdue debt at a cheap price and then completely wipe it out.   

A debt jubilee isn’t a radical idea. In fact, it’s promoted in the Bible in the Book of Leviticus, which calls for a debt jubilee every 49 years.  As Leviticus 25:10 reads, "This fiftieth year is sacred—it is a time of freedom and of celebration when everyone will receive back their original property, and slaves will return home to their families."

Debt cancellation is supported in the Koran, too. And it was used in Ancient Athens and many Native American societies.

Wiping out private debt would unleash enormous spending in our economy in ways we haven’t seen since the boom years of the 1950’s and 1960’s. The only reason it’s not seriously being considered by our lawmakers today is because a debt jubilee would diminish the profits of the banksters who thrive – and prey – on an indebted nation.

But, in the not-to-distant future, as our economy continues to collapse under the weight of tens of trillions of dollars in private sector debt, our nation will be faced with an ultimate choice: Strike Debt or watch our economy completely collapse in a way that will make 1929 look like a picnic.

Let’s make the right choice now!     

Iceland weighing ban on Internet pornography

Lock on computer keyboard

Lock on computer keyboard

Iceland could become the first Western country to censor online pornography with the introduction of radical internet filters that would block online content. Critics of the plan fear censorship, citing concerns over who will choose what to filter.

­Proponents of the ban claim that pornography has damaging effects on children and women. Icelandic Interior Minister Ogmundur Jonasson, the author of the proposed ban, said he believes it will help stop youth from viewing Internet pornography.

"We have to be able to discuss a ban on violent pornography, which we all agree has a very harmful effects on young people and can have a clear link to incidences of violent crime," Interior Minister Jonasson said.

The ban would block access to pornographic websites in Iceland, and make it impossible to use Icelandic credit cards on X-rated sites. Iceland has already passed a law that forbids the printing and distribution of pornography; the law excludes the Internet, however.

Experts have argued that there is domestic support for such a ban: "We have many experts from educationalists to the police and those who work with children behind this, that this has become much broader than party politics," political adviser Halla Gunnarsdottir told the Daily Mail.

“At the moment, we are looking at the best technical ways to achieve this,” Gunnarsdottir said. “But surely if we can send a man to the Moon, we must be able to tackle porn on the Internet.”

At such a scale and magnitude, Iceland’s online pornography censorship scheme would be the first of its kind for any European nation, Professor Gail Dines told the Telegraph: "It is looking at pornography from a new position – from the perspective of the harm it does to the women who appear in it and as a violation of their civil rights."

However, opponents of the ban have argued that such censorship is unfeasible.

"When you have a group of people who have the job of monitoring the network traffic and deciding what would be allowed and what won’t be increases the risk of non-pornography sites to be added to the list and blocked off,” explained Prostur Jonasson of Iceland’s Association of Digital Freedom.

The UK is the only other European country that has tried to implement a similar ban. It proposed blocking access to all pornography websites this past December, but UK ministers rejected the idea over a lack of public support.

Iceland is known for its pro-women policies, which may credit to country’s openly lesbian Prime Minister, Johanna Sigurdardottir.

In 2010, the country implemented a highly controversial ban on all strip clubs, arguing that they are harmful to women. The Scandinavian country also launched a consultation process in 2010 to investigate the effects of Internet pornography on women and children.

The study concluded that viewing violent online pornography increased the intensity of sex attacks, and that if children were exposed to such content at an early age, they displayed similar signs of trauma as those who had actually been abused, the Daily Mail reported.

Cyber-gang extorted millions by posing as cops, copyright holders

European police have busted a cybercriminal ring that extorted millions of euros with a computer virus that locked machines up and demanded a ransom. They also posed as police, accusing victims of viewing child pornography and infringing copyrights.

­Eleven suspects were detained in an operation by Europol and Spanish police, police reported on Wednesday. A 27-year-old Russian who allegedly created and distributed the virus was detained in the United Arab Emirates in December, while on vacation. Ten others were detained in Spain last week, including Russians, Ukrainians and Georgians, Spanish police said.

"This is the first major success of its kind against a very new phenomenon that we have only identified in the last two years,"
Europol Director Rob Wainwright said at a news conference at the Spanish Interior Ministry in Madrid.

The cyber-gang used so-called ‘ransomware,’ a type of malware that locks down an infected computer until a ransom is paid. This particular operation targeted users with false accusations from national and international police forces, and occasionally organizations defending copyright holders. A message would demand payment of a fine of 100 euro ($134) over alleged wrongdoings, including searching for child pornography, visiting terrorist websites and illegal file-sharing.

"It used the idiom and logo of each specific police service,"
Wainwright said. "Even Europol and my own name have been used to defraud citizens."

Cybersecurity expert have found at least 48 variations of the malware, the oldest dating back to 2005, which used different logos and accusations. They also believe the gang had specifically targeted users who may have been involved in illegal online activities, making their ransom claims more plausible.

Police believe that about 3 percent of those targeted actually paid the ransom – enough to make the criminal operation quite lucrative, netting them millions annually. In Spain alone, they are believed to have collected more than 1 million euros ($1.3 million), according to Spanish police.

The gang operated in six countries when police first detected their activities two years ago. As the investigation proceeded, they expanded to as many as 30 nations, mostly in Europe.

Spanish police seized hardware and more than 200 credit cards in the raid. They said the suspects also had 26,000 euros ($35,000) in cash with them.

Of the 10 suspects detained, six have been charged with laundering, fraud and involvement in a criminal organization; the four others remain under investigation. The police offered no detail on the prosecution of the alleged author of the malware, who is also believed to be the gang’s leader.

Guest Post: Show This To Anyone That Believes That “Things Are Getting Better” In...

Submitted by Michael of The Economic Collapse blog,

How can anyone not see that the U.S. economy is collapsing all around us?  It just astounds me when people try to tell me that "everything is just fine" and that "things are getting better" in America.  Are there people out there that are really that blind?  If you want to see the economic collapse, just open up your eyes and look around you.  By almost every economic and financial measure, the U.S. economy has been steadily declining for many years.  But most Americans are so tied into "the matrix" that they can only understand the cheerful propaganda that is endlessly being spoon-fed to them by the mainstream media.

As I have said so many times, the economic collapse is not a single event.  The economic collapse has been happening, it is is happening right now, and it will continue to happen.  Yes, there will be times when our decline will be punctuated by moments of great crisis, but that will be the exception rather than the rule.  A lot of people that write about "the economic collapse" hype it up as if it will be some huge "event" that will happen very rapidly and then once it is all over we will rebuild.  Unfortunately, that is not how the real world works.

We are living in the greatest debt bubble in the history of the world, and once it completely bursts there will be no going back to how things were before.  Right now, we are living in a "credit card economy".  As long as we can keep borrowing more money, most people think that things are just fine.  But anyone that has lived on credit cards knows that eventually there comes a point when the game is over, and we are rapidly approaching that point as a nation.

Have you ever been there?  Have you ever desperately hoped that you could just get one more credit card or one more loan so that you could keep things going?

At first, living on credit can be a lot of fun.  You can live a much higher standard of living than you otherwise would be able to.

But inevitably a day of reckoning comes.

If the federal government and the American people were forced at this moment to live within their means, the U.S. economy would immediately plunge into a depression.

That is a 100% rock solid guarantee.

But our politicians and the mainstream media continue to perpetuate the fiction that we can live in this credit card economic fantasy land indefinitely.

And most Americans could not care less about the future.  As long as "things are good" today, they don't really think much about what the future will hold.

As a result of our very foolish short-term thinking, we have now run up a national debt of 16.4 trillion dollars.  It is the largest debt in the history of the world, and it has gotten more than 23 times larger since Jimmy Carter first entered the White House.

The chart that you see below is a recipe for national financial suicide...

U.S. National Debt

Of course things have accelerated over the past four years.  Since Barack Obama entered the White House, the U.S. government has run a budget deficit of well over a trillion dollars every single year, and we have stolen more than 100 million dollars from our children and our grandchildren every single hour of every single day.

It is the biggest theft of all time.  What we are doing to our children and our grandchildren is beyond criminal.

And now our debt is at a level that most economists would consider terminal.  When Barack Obama first entered the White House, the U.S. debt to GDP ratio was under 70 percent.  Today, it is up to 103 percent.

We are officially in "the danger zone".

If things really were "getting better" in America, we would not need to borrow so much money.

Our politicians are stealing from the future in order to make the present look better.  During Obama's first term, the federal government accumulated more debt than it did under the first 42 U.S presidents combined.

That is utter insanity!

If you started paying off just the new debt that the U.S. has accumulated during the Obama administration at the rate of one dollar per second, it would take more than 184,000 years to pay it off.

So what is the solution?

Get ready to laugh.

The most prominent economic journalist in the entire country, Paul Krugman of the New York Times, recently suggested the following in an article that he wrote entitled "Kick That Can"...

Realistically, we’re not going to resolve our long-run fiscal issues any time soon, which is O.K. — not ideal, but nothing terrible will happen if we don’t fix everything this year. Meanwhile, we face the imminent threat of severe economic damage from short-term spending cuts.

So we should avoid that damage by kicking the can down the road. It’s the responsible thing to do.

You mean that we might actually do damage to the debt-fueled economic fantasy world that we are living in if we stopped stealing so much money from future generations?

Oh the humanity!

It is horrifying to think that all that one of the "top economic minds" in America can come up with is to "kick the can" down the road some more.

Unfortunately, neither Paul Krugman nor most of the American people understand that our financial system is actually designed to create government debt.

The bankers that helped create the Federal Reserve intended to permanently enslave the U.S. government to a perpetually expanding spiral of debt, and their plans worked.

At this point, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.

So why don't the American people understand what the Federal Reserve system is doing to us?

It is because most of them are still plugged into the matrix.  A Zero Hedge article that I came across today put it beautifully...

US society in a nutshell: Chris Dorner has been around for a week and has 222 million results on Google; the Federal Reserve has been around for one hundred years and has 187 million results.

If nothing is done about our exploding debt, it is only a matter of time before we reach financial oblivion.

According to Boston University economist Laurence Kotlikoff, the U.S. government is facing a "present value difference between projected future spending and revenue" of 222 trillion dollars in the years ahead.

So how in the world are we going to come up with an extra 222 trillion dollars?

But it is not just the U.S. government that is drowning in debt.

Just check out this chart which shows the astounding growth of state and local government debt in recent years...

State And Local Government Debt

All over the United States there are state and local governments that are on the verge of bankruptcy.  Just check out what is going on in Detroit.  The only way that most of our state and local governments can keep going at this point is to also "kick the can" down the road some more.

And of course most of the rest of us are drowning in debt as well.

40 years ago, the total amount of debt in the U.S. economic system (government + business + consumer) was less than 2 trillion dollars.

Today, the total amount of debt in the U.S. economic system has grown to more than 55 trillion dollars.

Can anyone say bubble?

The good news is that U.S. GDP is now more than 12 times larger than it was 40 years ago.

The bad news is that the total amount of debt in our financial system is now more than 30 times larger than it was 40 years ago...

Total Credit Market Debt Owed

At the same time that we are going into so much debt, our ability to produce wealth continues to decline.

According to the World Bank, U.S. GDP accounted for 31.8 percent of all global economic activity in 2001.  That number dropped to 21.6 percent in 2011.  That is not just a decline - that is a nightmarish freefall.  Just check out the chart in this article.

We are becoming less competitive as a nation with each passing year.  In fact, the U.S. has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.

Most Americans don't understand this, but the United States buys far more from the rest of the world than they buy from us each year.  In 2012, we had a trade deficit of more than 500 billion dollars with the rest of the world.

That means that more than 500 billion dollars that could have gone to U.S. workers and U.S. businesses went out of the country instead.

So how does our country survive if hundreds of billions of dollars more is flowing out of the country than is flowing into it?

Well, to make up the shortfall we go to the countries that we sent our money to and we beg them to lend it back to us.  If that doesn't work, we just print and borrow even more money.

Overall, the United States has run a trade deficit of more than 8 trillion dollars with the rest of the world since 1975.

That is 8 trillion dollars that could have saved U.S. businesses, paid the salaries of U.S. workers and that would have helped fund government.

But instead, our foolish policies have greatly enriched China and the oil barons of the Middle East.

Sadly, politicians from both political parties continue to boldly support the one world economic agenda of the global elite.

Just consider how destructive many of these "free trade" deals have been to our economy...

When NAFTA was pushed through Congress in 1993, the United States had a trade surplus with Mexico of 1.6 billion dollars.

By 2010, we had a trade deficit with Mexico of 61.6 billion dollars.

Back in 1985, our trade deficit with China was approximately 6 million dollars (million with a little "m") for the entire year.

In 2012, our trade deficit with China was 315 billion dollars.  That was the largest trade deficit that one nation has had with another nation in the history of the world.

In particular, our trade with China is extremely unbalanced.  Today, U.S. consumers spend approximately 4 dollars on goods and services from China for every one dollar that Chinese consumers spend on goods and services from the United States.

But isn't getting cheap stuff from China good?

No, because it costs us good paying jobs.

According to the Economic Policy Institute, the United States is losing half a million jobs to China every single year.

Overall, more than 56,000 manufacturing facilities in the United States have been shut down since 2001.  During 2010, manufacturing facilities in the United States were shutting down at a rate of 23 per day.  How can anyone say that "things are getting better" when our economic infrastructure is being absolutely gutted?

The truth is that there are never going to be enough jobs in America ever again, because millions of our jobs are being sent overseas and millions of our jobs are being lost to technology.

You won't hear this on the news, but the percentage of the civilian labor force in the United States that is employed has been steadily declining every single year since 2006.

Younger workers have been hit particularly hard.  In 2007, the unemployment rate for the 20 to 29 age bracket was about 6.5 percent.  Today, the unemployment rate for that same age group is about 13 percent.

If you are under the age of 30 and you aren't living with your parents, there is a really good chance that you are living in poverty.  If you can believe it, U.S. families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.

Our economy has been steadily bleeding huge numbers of middle class jobs, and many of those jobs have been replaced by low paying jobs in recent years.

According to one study, 60 percent of the jobs lost during the last recession were mid-wage jobs, but 58 percent of the jobs created since then have been low wage jobs.

And at this point, an astounding 53 percent of all American workers make less than $30,000 a year.

Oh, but "things are getting better", right?

Maybe if you live on Wall Street or if you are an employee of the federal government.

But for most families this economic decline has been a total nightmare.  Median household income in America has fallen for four consecutive years.  Overall, it has declined by over $4000 during that time span.

Sometimes people forget how good things were about a decade ago.  About three times as many new homes were sold in the United States in 2005 as were sold in 2012.

But we like to live in denial.

In fact, a lot of families are trying to keep up their standards of living by going into tremendous amounts of debt.

Back in 1983, the bottom 95 percent of all income earners in the United States had 62 cents of debt for every dollar that they earned.  By 2007, that figure had soared to $1.48.

Fake it until you make it, right?

But how much debt can our system possibly handle?

Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.

Total credit card debt in the United States is now more than 8 times larger than it was just 30 years ago.

We are a nation that is completely addicted to debt, but as the financial crisis of 2008 demonstrated, all of that debt can have horrific consequences.

As the economy has slowed in recent years, the Federal Reserve has decided that "the solution" is to recklessly print money in an attempt to get the debt spiral cranked up again.

Have they gone overboard?  You be the judge...

Monetary Base 2013

And of course this won't have any affect on the value of the money that you have been saving up all these years right?

Wrong.

Every single dollar that you own is continually losing value...

Purchasing Power Of The Dollar

Overall, the value of the U.S. dollar has declined by more than 96 percent since the Federal Reserve was first created.

As the cost of living continues to go up and wages continue to go down, millions of American families have fallen out of the middle class and into poverty.

If you can believe it, the number of Americans on food stamps has grown from about 17 million in the year 2000 to more than 47 million today.

But "things are getting better", right?

Incredibly, more than a million public school students in the United States are homeless.  This is the first time that has ever happened in our history.

But "things are getting better", right?

There are now 20.2 million Americans that spend more than half of their incomes on housing.  That represents a 46 percent increase from 2001.

But "things are getting better", right?

In 1999, 64.1 percent of all Americans were covered by employment-based health insurance.  Today, only 55.1 percent are covered by employment-based health insurance.

But "things are getting better", right?

Today, more Americans than ever have found themselves forced to turn to the federal government for help.

Overall, the federal government runs nearly 80 different "means-tested welfare programs", and at this point more than 100 million Americans are enrolled in at least one of them.

According to the U.S. Census Bureau, 49 percent of all Americans live in a home that receives direct monetary benefits from the federal government.  Back in 1983, less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.

So is it a good sign or a bad sign that the percentage of Americans that are financially dependent on the federal government is at an all-time high?

And in future years the number of Americans that are receiving benefits from the federal government is projected to absolutely skyrocket.

Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, one out of every 6 Americans is on Medicaid, and things are about to get a whole lot worse.  It is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

If you take a look at Medicare, things are very more sobering.

As I wrote recently, it is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.

At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately $328,404 for every single household in the United States.

Are you ready to contribute your share?

Social Security is a complete and total nightmare as well.

Right now, there are approximately 56 million Americans collecting Social Security benefits.

By 2035, that number is projected to soar to an astounding 91 million.

Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

Oh, but don't worry because "things are getting better", right?

I honestly do not know how anyone can look at the numbers above and come to the conclusion that the economy is in good shape.

We have accumulated the largest mountain of debt in the history of the world, our economic infrastructure is being gutted, we are bleeding good jobs, government dependence is at an all-time high and we are getting poorer as a nation with each passing day.

But other than that, everything is rainbows and lollipops, right?

If you want to see the economic collapse, just open up your eyes.

And if dramatic changes are not made quickly, things are going to get much, much worse from here.

Please share this article with as many people as possible.  Time is quickly running out and there are a whole lot of people out there that we need to wake up while we still can.

The Economic Collapse Is Happening

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Breaking the Chains of Debt Peonage

Paying bills(Image: Paying Bills via Shutterstock)Chris Hedges gave this talk Saturday night in Brooklyn at the People’s Recovery Summit.

The corporate state has made it clear there will be no more Occupy encampments. The corporate state is seeking through the persistent harassment of activists and the passage of draconian laws such as Section 1021(b)(2) of the National Defense Authorization Act—and we will be in court next Wednesday to fight the Obama administration’s appeal of the Southern District Court of New York’s ruling declaring Section 1021 unconstitutional—to shut down all legitimate dissent. The corporate state is counting, most importantly, on its system of debt peonage to keep citizens—especially the 30 million people who make up the working poor—from joining our revolt.

Workers who are unable to meet their debts, who are victimized by constantly rising interest rates that can climb to as high as 30 percent on credit cards, are far more likely to remain submissive and compliant. Debt peonage is and always has been a form of political control. Native Americans, forced by the U.S. government onto tribal agencies, were required to buy their goods, usually on credit, at agency stores. Coal miners in southern West Virginia and Kentucky were paid in scrip by the coal companies and kept in perpetual debt servitude by the company store. African-Americans in the cotton fields in the South were forced to borrow during the agricultural season from their white landlords for their seed and farm equipment, creating a life of perpetual debt. It soon becomes impossible to escape the mounting interest rates that necessitate new borrowing.

Debt peonage is a familiar form of political control. And today it is used by banks and corporate financiers to enslave not only individuals but also cities, municipalities, states and the federal government. As the economist Michael Hudson points out, the steady rise in interest rates, coupled with declining public revenues, has become a way to extract the last bits of capital from citizens as well as government. Once individuals, or states or federal agencies, cannot pay their bills—and for many Americans this often means medical bills—assets are sold to corporations or seized. Public land, property and infrastructure, along with pension plans, are privatized. Individuals are pushed out of their homes and into financial and personal distress.

Debt peonage is a fundamental tool for control. This debt peonage must be broken if we are going to build a mass movement to paralyze systems of corporate power. And the most effective weapon we have to liberate ourselves as well as the 30 million Americans who make up the working poor is a sustained movement to raise the minimum wage nationally to at least $11 an hour. Most of these 30 million low-wage workers are women and people of color. They and their families struggle at a subsistence level and play one lender off another to survive. By raising their wages we raise not only the quality of their lives but we increase their capacity for personal and political power. We break one of the most important shackles used by the corporate state to prevent organized resistance.

Ralph Nader, whom I spoke with on Thursday, has been pushing activists to mobilize around raising the minimum wage. Nader, who knows more about corporate power and has been fighting it longer than any other American, has singled out, I believe, the key to building a broad-based national movement. There is among these underpaid 30 million workers—and some of them are with us tonight—a mounting despair at being unable to meet even the basic requirements to maintain a family. Nader points out that Walmart’s 1 million workers, like most of the 30 million low-wage workers, are making less per hour, adjusted for inflation, than workers made in 1968, although these Walmart workers do the work required of two Walmart workers 40 years ago.

If the federal minimum wage from 1968 were adjusted for inflation it would be $10.50. Instead, although costs and prices have risen sharply, the federal minimum wage remains stuck at $7.25 an hour. It is the lowest of the major industrial countries. Meanwhile, Mike Duke, the CEO of Walmart, makes $11,000 an hour. And he is not alone. These corporate chiefs make this much money because they have been able to keep in place a system by which workers are effectively disempowered, forced to work for substandard wages and denied the possibility through unions or the formal electoral systems of power to defend workers’ rights. This is why corporations lavish these CEOs with obscene salaries. These CEOs are the masters of plantations. And the moment workers rise up and demand justice is the moment the staggering inequality of wealth begins to be reversed.

Being a member of the working poor, as Barbara Ehrenreich chronicles in her important book “Nickel and Dimed,” is “a state of emergency.” It is “acute distress.” It is a daily and weekly lurching from crisis to crisis. The stress, the suffering, the humiliation and the job insecurity means that workers are reduced to doing little more than eating, sleeping—never enough—and working. And, most importantly, they are kept in a constant state of fear. Ehrenreich writes:

When someone works for less pay than she can live on—when, for example, she goes hungry so that you can eat more cheaply and conveniently—then she has made a great sacrifice for you, she has made you a gift of some part of her abilities, her health, and her life. The “working poor,” as they are approvingly termed, are in fact the major philanthropists of our society. They neglect their own children so that the children of others will be cared for; they live in substandard housing so that other homes will be shiny and perfect; they endure privation so that inflation will be low and stock prices high. To be a member of the working poor is to be an anonymous donor, a nameless benefactor, to everyone else.

It is time to halt the sacrifice of the working poor. It is time to empower the 30 million low-wage workers—two-thirds of which are employed by large corporations such as Walmart and McDonald’s—to fight back.

Joe Sacco and I spent the last two years in the poorest pockets of the United States, our nation’s sacrifice zones, for our book “Days of Destruction, Days of Revolt.” We saw in Pine Ridge, S.D., Camden, N.J.—the poorest and the most dangerous city in the nation—the coalfields of southern West Virginia and the produce fields of Immokalee, Fla., how this brutal system of corporate exploitation works. In these sacrifice zones no one has legal protection. All institutions, from the press to the political class to the judiciary, are wholly owned subsidiaries of the corporate state. And what has been done to those in these sacrifice zones, those places corporations devastated first, is now being done to all of us.

There are no impediments within the electoral process or the formal structures of power to prevent predatory capitalism. We are all being forced to kneel before the dictates of the marketplace. The human cost, the attendant problems of drug and alcohol abuse, the neglect of children, the early deaths—in Pine Ridge the average life expectancy of a male is 48, the lowest in the Western Hemisphere outside of Haiti—is justified by the need to make greater and greater profit. And these costs are now being felt across the nation. The phrase “the consent of the governed” has become a cruel joke. We use a language to describe our systems of governance that no longer correspond to reality. The disconnect between illusion and reality makes us one of the most self-deluded populations on the planet.

The Weimarization of the American working class, and increasingly the middle class, is by design. It is part of a corporate reconfiguration of the national and global economy into a form of neofeudalism. It is about creating a world of masters and serfs, of empowered oligarchic elites and broken disempowered masses. And it is not only our wealth that is taken from us. It is our liberty. The so-called self-regulating market, as the economist Karl Polanyi wrote in “The Great Transformation,” always ends with mafia capitalism and a mafia political system. This system of self-regulation, Polanyi wrote, always leads to “the demolition of society.”

And this is what is happening—the demolition of our society and the demolition of the ecosystem that sustains the human species. In theological terms these corporate forces, driven by the lust for ceaseless expansion and exploitation, are systems of death. They know no limits. They will not stop on their own. And unless we stop them we are as a nation and finally as a species doomed. Polanyi understood the destructive power of unregulated corporate capitalism unleashed upon human society and the ecosystem. He wrote: “In disposing of a man’s labor power the system would, incidentally, dispose of the physical, psychological, and moral entity ‘man’ attached to the tag.”

Polanyi wrote of a society that surrendered to the dictates of the market. “Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as victims of acute social dislocation through vice, perversion, crime, and starvation. Nature would be reduced to its elements, neighborhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed. Finally, the market administration of purchasing power would periodically liquidate business enterprise, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society. Undoubtedly, labor, land, and money markets are essential to a market economy. But no society could stand the effects of such a system of crude fictions even for the shortest stretch of time unless its human and natural substance as well as its business organizations was protected against the ravages of this satanic mill.

The global and national economy because of this “satanic mill” continues to deteriorate, and yet, curiously, stock market levels are close to their highs in 2007 before the global financial meltdown. This is because these corporations have been able to suppress wages, slash social programs and bilk the government for staggering sums of money. The Federal Reserve purchases about $85 billion worth of mortgage-backed securities and Treasury bills every month. This means that the Fed is printing endless streams of money to buy up government debt and toxic assets from the banks.  The Federal Reserve now owns assets, much of them worthless, of $3.01 trillion. This is triple what it was in 2008.

And while corporations such as Citibank and General Electric loot the Treasury they exact more pounds of flesh in the name of austerity. General Electric, as Nader points out, is a net job exporter. Over the past decade, as Citizens for Tax Justice has documented, GE’s effective federal income tax rate on its $81.2 billion in pretax U.S. profits has been at most 1.8 percent. Because of the way General Electric’s accountants play with tax liabilities the company actually receives money from the Treasury. They have several billion dollars paid to them from the federal government into company bank accounts—and these are not tax refunds. The company, as Nader argues, is a net drain on the Treasury and a net drain on jobs. It violates a host of environmental and criminal laws. And yet Jeffery Immelt, the CEO of General Electric, was appointed to be the chairman of Obama’s Jobs Council. Immelt’s only major contribution to the jobs initiative was to get rid of 37,000 of his employees since 2001. Jim McNerney, president and CEO of Boeing, who also sat on the Jobs Council, has cut over 14,000 jobs since 2008, according to Public Campaign. The only jobs the CEOs on the Jobs Council were concerned with were the ones these CEOs eradicated. The Jobs Council, which Obama disbanded this week, is a microcosm of what is happening within the corridors of power. Corporations increasingly terminate jobs here to hire grossly underpaid workers in India or China while at the same time stealing as much as fast as they can on the way out the door.

As Michael Hudson has pointed out, financialization has created a new kind of class war. The old class warfare took place between workers and bosses. Workers organized to fight for fair wages, better work hours and safety conditions in the workplace as well as adequate pensions and medical benefits. But with a country of debtors and a government that must also borrow to continue operating, Hudson says, we have changed the way class warfare works. Finance, he points out, controls state and federal policy as well as the lives of ordinary workers. It is able to dictate working conditions. The financiers, who insist that cuts be made so governments can repay loans, impose draconian austerity and long-term unemployment to, as Hudson told a Greek newspaper, “drive down wages to a degree that could not occur in the company-by-company clash between industrial employers and their workers.”

The former Federal Reserve Chairman Alan Greenspan, testifying before Congress, was quite open about the role of debt peonage in keeping workers passive. Greenspan pointed out that since 1980 labor productivity has increased by about 83 percent. Yet real wages have stagnated. Greenspan said this was because workers were too burdened with mortgage debts, college loans, auto payments and credit-card debt to risk losing a job. Household debt in the United States is around $13 trillion. This is only $2 trillion less than the country’s total yearly economic output. Greenspan was right. Miss a payment on your credit card and your interest rates jumps to 30 percent. Fail to pay your mortgage and you lose your home. Miss your health insurance payments, which have been spiraling upwards, and if you are seriously ill you go into bankruptcy, as 1 million Americans who get sick do every year. Trash your credit rating and your fragile financial edifice, built on managing debt, collapses. Since most Americans feel, on some level, as Hudson points out, that they are a step or two away from being homeless, they are deeply averse to challenging corporate power. It is not worth the risk. And the corporate state knows it. Absolute power, the philosopher Thomas Hobbes wrote, depends on fear and passivity.

The only way to break this fear and passivity is to organize workers to break the cycle of mounting debt. And the first step to achieving independence from debt—the primary form of political control by the corporate state—is to raise the minimum wage. There are other solutions—forgiving mortgage and student debt, instituting universal health care, establishing a nationwide jobs program to rebuild the country’s Third World infrastructure, and green energy—but none of this will happen until we are able to mount a sustained mass movement that discredits the corporate state. This mass movement will arise, as Nader says, when we mobilize around the minimum wage.

The lowest-grade worker at the General Electric plant that makes high-tech health care devices outside Paterson in Totowa [New Jersey]—a pay grade known as the D 04—was just raised to $14,555 a year. That is under $8 an hour. The plant’s highest-paid hourly employee, known as D 16, earns $22,000. Immelt makes over $11 million a year. This vast disparity in income, and this wage abuse, is played out in every corporation in the country. No one in Washington intends to challenge it.

Only 11.3 percent of workers in this country belong to unions. This is the lowest percentage in 80 years. And nearly all these unions, and especially the AFL-CIO, have been emasculated by corporate power.

Nader is right when he warns that we are not going to be assisted in this effort by established unions. Union leaders are bought off. They are comfortable. They are pulling down at least five times what rank-and-file workers make. Nader says we have to mount protests not only outside the doors of Walmarts and General Electric plants, not only outside congressional offices, but outside the doors of the AFL-CIO. There is no established institution inside or outside government that will help us. They are all broken or complicit. But there are the 30 million working poor who, if we organize to break the system of debt peonage that holds them hostage, may be willing to rise up. We are bound with many chains and shackles. We will have to break them one at a time. But once we rise up, once we are able to threaten the corporate systems that keep us supine through fear, we will unleash a torrent of energy and passion that will confirm the worst nightmares of our corporate overlords.

Breaking the Chains of Debt Peonage

Chris Hedges gave this talk Saturday night in Brooklyn at the People’s Recovery Summit.

(Photo: watchingfrogsboil via flickr)The corporate state has made it clear there will be no more Occupy encampments. The corporate state is seeking through the persistent harassment of activists and the passage of draconian laws such as Section 1021(b)(2) of the National Defense Authorization Act—and we will be in court next Wednesday to fight the Obama administration’s appeal of the Southern District Court of New York’s ruling declaring Section 1021 unconstitutional—to shut down all legitimate dissent. The corporate state is counting, most importantly, on its system of debt peonage to keep citizens—especially the 30 million people who make up the working poor—from joining our revolt.

Workers who are unable to meet their debts, who are victimized by constantly rising interest rates that can climb to as high as 30 percent on credit cards, are far more likely to remain submissive and compliant. Debt peonage is and always has been a form of political control. Native Americans, forced by the U.S. government onto tribal agencies, were required to buy their goods, usually on credit, at agency stores. Coal miners in southern West Virginia and Kentucky were paid in scrip by the coal companies and kept in perpetual debt servitude by the company store. African-Americans in the cotton fields in the South were forced to borrow during the agricultural season from their white landlords for their seed and farm equipment, creating a life of perpetual debt. It soon becomes impossible to escape the mounting interest rates that necessitate new borrowing.

Debt peonage is a familiar form of political control. And today it is used by banks and corporate financiers to enslave not only individuals but also cities, municipalities, states and the federal government. As the economist Michael Hudson points out, the steady rise in interest rates, coupled with declining public revenues, has become a way to extract the last bits of capital from citizens as well as government. Once individuals, or states or federal agencies, cannot pay their bills—and for many Americans this often means medical bills—assets are sold to corporations or seized. Public land, property and infrastructure, along with pension plans, are privatized. Individuals are pushed out of their homes and into financial and personal distress.

Debt peonage is a fundamental tool for control. This debt peonage must be broken if we are going to build a mass movement to paralyze systems of corporate power. And the most effective weapon we have to liberate ourselves as well as the 30 million Americans who make up the working poor is a sustained movement to raise the minimum wage nationally to at least $11 an hour. Most of these 30 million low-wage workers are women and people of color. They and their families struggle at a subsistence level and play one lender off another to survive. By raising their wages we raise not only the quality of their lives but we increase their capacity for personal and political power. We break one of the most important shackles used by the corporate state to prevent organized resistance.Ralph Nader, whom I spoke with on Thursday, has been pushing activists to mobilize around raising the minimum wage. Nader, who knows more about corporate power and has been fighting it longer than any other American, has singled out, I believe, the key to building a broad-based national movement. There is among these underpaid 30 million workers—and some of them are with us tonight—a mounting despair at being unable to meet even the basic requirements to maintain a family. Nader points out that Walmart’s 1 million workers, like most of the 30 million low-wage workers, are making less per hour, adjusted for inflation, than workers made in 1968, although these Walmart workers do the work required of two Walmart workers 40 years ago.

If the federal minimum wage from 1968 were adjusted for inflation it would be $10.50. Instead, although costs and prices have risen sharply, the federal minimum wage remains stuck at $7.25 an hour. It is the lowest of the major industrial countries. Meanwhile, Mike Duke, the CEO of Walmart, makes $11,000 an hour. And he is not alone. These corporate chiefs make this much money because they have been able to keep in place a system by which workers are effectively disempowered, forced to work for substandard wages and denied the possibility through unions or the formal electoral systems of power to defend workers’ rights. This is why corporations lavish these CEOs with obscene salaries. These CEOs are the masters of plantations. And the moment workers rise up and demand justice is the moment the staggering inequality of wealth begins to be reversed.

Being a member of the working poor, as Barbara Ehrenreich chronicles in her important book “Nickel and Dimed,” is “a state of emergency.” It is “acute distress.” It is a daily and weekly lurching from crisis to crisis. The stress, the suffering, the humiliation and the job insecurity means that workers are reduced to doing little more than eating, sleeping—never enough—and working. And, most importantly, they are kept in a constant state of fear. Ehrenreich writes:

When someone works for less pay than she can live on—when, for example, she goes hungry so that you can eat more cheaply and conveniently—then she has made a great sacrifice for you, she has made you a gift of some part of her abilities, her health, and her life. The “working poor,” as they are approvingly termed, are in fact the major philanthropists of our society. They neglect their own children so that the children of others will be cared for; they live in substandard housing so that other homes will be shiny and perfect; they endure privation so that inflation will be low and stock prices high. To be a member of the working poor is to be an anonymous donor, a nameless benefactor, to everyone else.

It is time to halt the sacrifice of the working poor. It is time to empower the 30 million low-wage workers—two-thirds of which are employed by large corporations such as Walmart and McDonald’s—to fight back.

Joe Sacco and I spent the last two years in the poorest pockets of the United States, our nation’s sacrifice zones, for our book “Days of Destruction, Days of Revolt.” We saw in Pine Ridge, S.D., Camden, N.J.—the poorest and the most dangerous city in the nation—the coalfields of southern West Virginia and the produce fields of Immokalee, Fla., how this brutal system of corporate exploitation works. In these sacrifice zones no one has legal protection. All institutions, from the press to the political class to the judiciary, are wholly owned subsidiaries of the corporate state. And what has been done to those in these sacrifice zones, those places corporations devastated first, is now being done to all of us.

There are no impediments within the electoral process or the formal structures of power to prevent predatory capitalism. We are all being forced to kneel before the dictates of the marketplace. The human cost, the attendant problems of drug and alcohol abuse, the neglect of children, the early deaths—in Pine Ridge the average life expectancy of a male is 48, the lowest in the Western Hemisphere outside of Haiti—is justified by the need to make greater and greater profit. And these costs are now being felt across the nation. The phrase “the consent of the governed” has become a cruel joke. We use a language to describe our systems of governance that no longer correspond to reality. The disconnect between illusion and reality makes us one of the most self-deluded populations on the planet.

The Weimarization of the American working class, and increasingly the middle class, is by design. It is part of a corporate reconfiguration of the national and global economy into a form of neofeudalism. It is about creating a world of masters and serfs, of empowered oligarchic elites and broken disempowered masses. And it is not only our wealth that is taken from us. It is our liberty. The so-called self-regulating market, as the economist Karl Polanyi wrote in “The Great Transformation,” always ends with mafia capitalism and a mafia political system. This system of self-regulation, Polanyi wrote, always leads to “the demolition of society.”

And this is what is happening—the demolition of our society and the demolition of the ecosystem that sustains the human species. In theological terms these corporate forces, driven by the lust for ceaseless expansion and exploitation, are systems of death. They know no limits. They will not stop on their own. And unless we stop them we are as a nation and finally as a species doomed. Polanyi understood the destructive power of unregulated corporate capitalism unleashed upon human society and the ecosystem. He wrote: “In disposing of a man’s labor power the system would, incidentally, dispose of the physical, psychological, and moral entity ‘man’ attached to the tag.”

Polanyi wrote of a society that surrendered to the dictates of the market. “Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as victims of acute social dislocation through vice, perversion, crime, and starvation. Nature would be reduced to its elements, neighborhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed. Finally, the market administration of purchasing power would periodically liquidate business enterprise, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society. Undoubtedly, labor, land, and money markets are essential to a market economy. But no society could stand the effects of such a system of crude fictions even for the shortest stretch of time unless its human and natural substance as well as its business organizations was protected against the ravages of this satanic mill.

The global and national economy because of this “satanic mill” continues to deteriorate, and yet, curiously, stock market levels are close to their highs in 2007 before the global financial meltdown. This is because these corporations have been able to suppress wages, slash social programs and bilk the government for staggering sums of money. The Federal Reserve purchases about $85 billion worth of mortgage-backed securities and Treasury bills every month. This means that the Fed is printing endless streams of money to buy up government debt and toxic assets from the banks.  The Federal Reserve now owns assets, much of them worthless, of $3.01 trillion. This is triple what it was in 2008.

And while corporations such as Citibank and General Electric loot the Treasury they exact more pounds of flesh in the name of austerity. General Electric, as Nader points out, is a net job exporter. Over the past decade, as Citizens for Tax Justice has documented, GE’s effective federal income tax rate on its $81.2 billion in pretax U.S. profits has been at most 1.8 percent. Because of the way General Electric’s accountants play with tax liabilities the company actually receives money from the Treasury. They have several billion dollars paid to them from the federal government into company bank accounts—and these are not tax refunds. The company, as Nader argues, is a net drain on the Treasury and a net drain on jobs. It violates a host of environmental and criminal laws. And yet Jeffery Immelt, the CEO of General Electric, was appointed to be the chairman of Obama’s Jobs Council. Immelt’s only major contribution to the jobs initiative was to get rid of 37,000 of his employees since 2001. Jim McNerney, president and CEO of Boeing, who also sat on the Jobs Council, has cut over 14,000 jobs since 2008, according to Public Campaign. The only jobs the CEOs on the Jobs Council were concerned with were the ones these CEOs eradicated. The Jobs Council, which Obama disbanded this week, is a microcosm of what is happening within the corridors of power. Corporations increasingly terminate jobs here to hire grossly underpaid workers in India or China while at the same time stealing as much as fast as they can on the way out the door.

As Michael Hudson has pointed out, financialization has created a new kind of class war. The old class warfare took place between workers and bosses. Workers organized to fight for fair wages, better work hours and safety conditions in the workplace as well as adequate pensions and medical benefits. But with a country of debtors and a government that must also borrow to continue operating, Hudson says, we have changed the way class warfare works. Finance, he points out, controls state and federal policy as well as the lives of ordinary workers. It is able to dictate working conditions. The financiers, who insist that cuts be made so governments can repay loans, impose draconian austerity and long-term unemployment to, as Hudson told a Greek newspaper, “drive down wages to a degree that could not occur in the company-by-company clash between industrial employers and their workers.”

The former Federal Reserve Chairman Alan Greenspan, testifying before Congress, was quite open about the role of debt peonage in keeping workers passive. Greenspan pointed out that since 1980 labor productivity has increased by about 83 percent. Yet real wages have stagnated. Greenspan said this was because workers were too burdened with mortgage debts, college loans, auto payments and credit-card debt to risk losing a job. Household debt in the United States is around $13 trillion. This is only $2 trillion less than the country’s total yearly economic output. Greenspan was right. Miss a payment on your credit card and your interest rates jumps to 30 percent. Fail to pay your mortgage and you lose your home. Miss your health insurance payments, which have been spiraling upwards, and if you are seriously ill you go into bankruptcy, as 1 million Americans who get sick do every year. Trash your credit rating and your fragile financial edifice, built on managing debt, collapses. Since most Americans feel, on some level, as Hudson points out, that they are a step or two away from being homeless, they are deeply averse to challenging corporate power. It is not worth the risk. And the corporate state knows it. Absolute power, the philosopher Thomas Hobbes wrote, depends on fear and passivity.

The only way to break this fear and passivity is to organize workers to break the cycle of mounting debt. And the first step to achieving independence from debt—the primary form of political control by the corporate state—is to raise the minimum wage. There are other solutions—forgiving mortgage and student debt, instituting universal health care, establishing a nationwide jobs program to rebuild the country’s Third World infrastructure, and green energy—but none of this will happen until we are able to mount a sustained mass movement that discredits the corporate state. This mass movement will arise, as Nader says, when we mobilize around the minimum wage.

The lowest-grade worker at the General Electric plant that makes high-tech health care devices outside Paterson in Totowa [New Jersey]—a pay grade known as the D 04—was just raised to $14,555 a year. That is under $8 an hour. The plant’s highest-paid hourly employee, known as D 16, earns $22,000. Immelt makes over $11 million a year. This vast disparity in income, and this wage abuse, is played out in every corporation in the country. No one in Washington intends to challenge it.

Only 11.3 percent of workers in this country belong to unions. This is the lowest percentage in 80 years. And nearly all these unions, and especially the AFL-CIO, have been emasculated by corporate power.

Nader is right when he warns that we are not going to be assisted in this effort by established unions. Union leaders are bought off. They are comfortable. They are pulling down at least five times what rank-and-file workers make. Nader says we have to mount protests not only outside the doors of Walmarts and General Electric plants, not only outside congressional offices, but outside the doors of the AFL-CIO. There is no established institution inside or outside government that will help us. They are all broken or complicit. But there are the 30 million working poor who, if we organize to break the system of debt peonage that holds them hostage, may be willing to rise up. We are bound with many chains and shackles. We will have to break them one at a time. But once we rise up, once we are able to threaten the corporate systems that keep us supine through fear, we will unleash a torrent of energy and passion that will confirm the worst nightmares of our corporate overlords.

© 2013 TruthDig

Chris Hedges

Chris Hedges writes a regular column for Truthdig.com. Hedges graduated from Harvard Divinity School and was for nearly two decades a foreign correspondent for The New York Times. He is the author of many books, including: War Is A Force That Gives Us Meaning, What Every Person Should Know About War, and American Fascists: The Christian Right and the War on America.  His most recent book is Empire of Illusion: The End of Literacy and the Triumph of Spectacle.

Breaking the Chains of Debt Peonage

Breaking the Chains of Debt Peonage

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Posted on Feb 3, 2013
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By Chris Hedges

Chris Hedges gave this talk Saturday night in Brooklyn at the People’s Recovery Summit.

The corporate state has made it clear there will be no more Occupy encampments. The corporate state is seeking through the persistent harassment of activists and the passage of draconian laws such as Section 1021(b)(2) of the National Defense Authorization Act—and we will be in court next Wednesday to fight the Obama administration’s appeal of the Southern District Court of New York’s ruling declaring Section 1021 unconstitutional—to shut down all legitimate dissent. The corporate state is counting, most importantly, on its system of debt peonage to keep citizens—especially the 30 million people who make up the working poor—from joining our revolt.

Workers who are unable to meet their debts, who are victimized by constantly rising interest rates that can climb to as high as 30 percent on credit cards, are far more likely to remain submissive and compliant. Debt peonage is and always has been a form of political control. Native Americans, forced by the U.S. government onto tribal agencies, were required to buy their goods, usually on credit, at agency stores. Coal miners in southern West Virginia and Kentucky were paid in scrip by the coal companies and kept in perpetual debt servitude by the company store. African-Americans in the cotton fields in the South were forced to borrow during the agricultural season from their white landlords for their seed and farm equipment, creating a life of perpetual debt. It soon becomes impossible to escape the mounting interest rates that necessitate new borrowing.

Debt peonage is a familiar form of political control. And today it is used by banks and corporate financiers to enslave not only individuals but also cities, municipalities, states and the federal government. As the economist Michael Hudson points out, the steady rise in interest rates, coupled with declining public revenues, has become a way to extract the last bits of capital from citizens as well as government. Once individuals, or states or federal agencies, cannot pay their bills—and for many Americans this often means medical bills—assets are sold to corporations or seized. Public land, property and infrastructure, along with pension plans, are privatized. Individuals are pushed out of their homes and into financial and personal distress.

Debt peonage is a fundamental tool for control. This debt peonage must be broken if we are going to build a mass movement to paralyze systems of corporate power. And the most effective weapon we have to liberate ourselves as well as the 30 million Americans who make up the working poor is a sustained movement to raise the minimum wage nationally to at least $11 an hour. Most of these 30 million low-wage workers are women and people of color. They and their families struggle at a subsistence level and play one lender off another to survive. By raising their wages we raise not only the quality of their lives but we increase their capacity for personal and political power. We break one of the most important shackles used by the corporate state to prevent organized resistance.

Ralph Nader, whom I spoke with on Thursday, has been pushing activists to mobilize around raising the minimum wage. Nader, who knows more about corporate power and has been fighting it longer than any other American, has singled out, I believe, the key to building a broad-based national movement. There is among these underpaid 30 million workers—and some of them are with us tonight—a mounting despair at being unable to meet even the basic requirements to maintain a family. Nader points out that Walmart’s 1 million workers, like most of the 30 million low-wage workers, are making less per hour, adjusted for inflation, than workers made in 1968, although these Walmart workers do the work required of two Walmart workers 40 years ago.

If the federal minimum wage from 1968 were adjusted for inflation it would be $10.50. Instead, although costs and prices have risen sharply, the federal minimum wage remains stuck at $7.25 an hour. It is the lowest of the major industrial countries. Meanwhile, Mike Duke, the CEO of Walmart, makes $11,000 an hour. And he is not alone. These corporate chiefs make this much money because they have been able to keep in place a system by which workers are effectively disempowered, forced to work for substandard wages and denied the possibility through unions or the formal electoral systems of power to defend workers’ rights. This is why corporations lavish these CEOs with obscene salaries. These CEOs are the masters of plantations. And the moment workers rise up and demand justice is the moment the staggering inequality of wealth begins to be reversed.

Being a member of the working poor, as Barbara Ehrenreich chronicles in her important book “Nickel and Dimed,” is “a state of emergency.” It is “acute distress.” It is a daily and weekly lurching from crisis to crisis. The stress, the suffering, the humiliation and the job insecurity means that workers are reduced to doing little more than eating, sleeping—never enough—and working. And, most importantly, they are kept in a constant state of fear. Ehrenreich writes:

When someone works for less pay than she can live on—when, for example, she goes hungry so that you can eat more cheaply and conveniently—then she has made a great sacrifice for you, she has made you a gift of some part of her abilities, her health, and her life. The “working poor,” as they are approvingly termed, are in fact the major philanthropists of our society. They neglect their own children so that the children of others will be cared for; they live in substandard housing so that other homes will be shiny and perfect; they endure privation so that inflation will be low and stock prices high. To be a member of the working poor is to be an anonymous donor, a nameless benefactor, to everyone else.

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Investing in Silver, Moving out of the Dollar: The Roman Denarius, the American Dollar...

silver

If the US dollar collapses, it will have a dramatic impact on the world economy because the dollar is the standard unit of currency for commodity markets, especially gold and oil. The U.S. dollar is still the world’s reserve currency, but the reality is that it can lead the world into an economic depression.

Nations with large external debts will not be able to trade sufficiently to earn the needed income to service their debts. They will slide into bankruptcy. However, countries such as Russia and China are taking necessary steps to avoid an economic tsunami caused by a collapse of the US dollar by announcing in 2010 that they will use their own currencies which is the Russian Ruble and the Chinese Yuan for bilateral trade.

Iran and India decided to trade gold for oil due to US sanctions on Iran because of its nuclear program.

Japan and China announced that they will also trade in their own currencies despite diplomatic problems involving the Diaoyu Islands in the East China Sea.  One thing is certain, the world is slowly but surely moving away from the US dollar.

The cost of living among people who deal with the US dollar on a daily basis especially by those who live within the United States will see a rapid decline in the standards of living due to Federal Reserve Bank’s debasement of the dollar by printing unlimited amounts of money through Quantitative easing (QE). The Federal Reserve’s action will cause food, clothing and energy prices to soar, which will hurt the average family. As the US Federal Reserve Bank continues to print dollars, the result will be inflation. It will cause panic on the world markets and civil unrest among the people who realize that the US dollars they depend on would no longer be able to buy their basic necessities.  What can be done around the world to avoid such a scenario when the collapse of the dollar is inevitable? History proves that silver can become an alternative currency that can replace the dollar, although many countries are purchasing large amounts of gold such as Russia and China with other countries in Latin America and Asia following in the same footsteps.  However, silver will still be a good option.  At least you have a choice in which precious metals you can invest in.

Silver has been used for thousands of years as a monetary system for the economies of past civilizations. Silver was first discovered in 4000 BC in Anatolia, today’s Modern Turkey with the use of “Electrum”, a gold and silver mix currency. Between 449-413 BC Greece used the “Athenian Owl” a pure silver coin remained in circulation up to 30 BC.

Silver was recognized as more precious than Gold in ancient Egypt as early as 930 BC. The Roman Empire relied on silver to pay for certain commodities such as silk from China. In the Roman Empire, the “denarius”, a pure 100% silver coin was the currency of choice for more than 5 centuries until its gradual debasement that began with Emperor Augustus.

This debasement of the metal in terms of purity fluctuated with the strength of the Empire through its military. It was an indication that Rome lacked precious metals and reduced treasury savings due to their expansionist Imperial policies that resulted in inflation. High taxes on the Roman population further weakened the economy to pay for military expenses. Roman Emperor Nero (54-68 A.D.) preferred to debase the denarius to 87% silver to pay the costs of the military and the ever expanding bureaucracy than raise taxes on the people who were already being heavily taxed. But Nero and other emperors that followed chose to debase the currency by reducing the denarius metal content was already a form of taxation. The devaluation continued with the silver content valued at 50% towards the end of the 2nd century. By the middle of the 3rd century, the denarius was comprised of 0.05% silver.

Around A.D. 215, Rome issued the “Antoninianus” that was valued at twice that of a denarius but was short lived, as the silver content was also removed over several decades of devaluation. The coin was then made from bronze that eventually became useless as the circulation of these coins contained no silver as the Roman currency became worthless.Rome collapsed soon after.

China also used silver throughout most of its history for trade. In 1791, the first Secretary of the Treasury of the United States Alexander Hamilton called for the establishment of a national currency with gold and silver or “bimetallism” as a form of money. The US Congress passed legislation the following year by establishing gold and silver as the “monetary standards” of the United States through the 1792 Coinage Act. The gold standard was regulated at 15 times the valueUS Dollar of silver. The dollar was then established as the basic monetary unit that was instrumental in the creation of the national mint. The dollar was defined through the weight of silver. The death penalty was enacted as a rule of law for anyone who decided to debase the value of the new currency. But these laws were changed as the system became politically corrupt as the years went by. In Article 1, Section 10 of the US Constitution stated the following:

No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.

The future of silver has potential to become an alternative currency because the world’s reserve currency, the US dollar, is not stable.  “The dollar is an unreliable international currency and should be replaced by a more stable system” according to CNN on June 29, 2010 based on a report conducted by the United Nations Department of Economic and Social Affairs.  Silver can be used for a number of industries that produce goods that can be sold internationally. It can open the global markets for trade among nations. Silver is the best conductor of electricity. From computers to cell phones and switches all must use silver. Technology based industries that produce lasers, satellites, and robotics need silver to operate. Digital technology and telecommunications also need silver. It is used in televisions, wall switches and refrigerators and other appliances. Silver is used in the chemical industry for the production of plastics. In the Healthcare industry silver is found in many pharmaceuticals such as silver sulfadiazine, which is used for burn treatments. It can be used for water purification purposes as well. And the list goes on. Silver is a valuable metal that can be used for many industries.

The US government is on the path to an economic collapse just as the Roman Empire when Ben Bernanke announced unlimited QE back on September 13, 2012.  This means endless printing of the dollar until it becomes completely worthless.  The US has devalued their currency by printing dollars to bail out the banks and auto industry and to fund the Military-Industrial Complex which will have an impact on the economy. The more you print, the dollar becomes less valuable just as what happened to the denarius during Roman times. The US dollar will collapse sooner or later as countries around the world continue to move away from the dollar and look to other forms of currencies that are reliable.

The United States government cannot finance its debt by printing more money. Market forces will dictate when interest rates will rise as it would make the US Federal debt more expensive to service the debt.

If the Federal Reserve Bank decided to run the printing press, it would lead to hyperinflation. A scenario the US population and the rest of the world does not want to see.  The US population would no doubt witness a massive rise in interest rates on practically everything from credit cards, home mortgages, student loans, auto loans and every other loan you can imagine.

The best option for anyone who wants to protect themselves from the dollar collapse should invest in silver or any other precious metals that includes gold. History has shown that precious metals especially silver can be used as a currency that has intrinsic value. The best thing people and nation-states can do is to look outside the US dollar because sooner or later the Federal Reserve Bank would not able to sustain the economy with the printing press because market forces as always will be the deciding factor. Silver is a viable option for both short and long-term investments. The most important factor to investing in silver is to protect you and your family.  Silver will be in demand in the near future as it was in the past because history has always told us so.

Faber To Shiller: “You Keep Your U.S. Dollars And I’ll Keep My Gold”

From GoldCore

Faber To Shiller: “You Keep Your U.S. Dollars And I’ll Keep My Gold”

Today’s AM fix was USD 1,677.00, EUR 1,258.06, and GBP 1,059.18 per ounce.
Yesterday’s AM fix was USD 1,692.25, EUR 1,268.84, and GBP 1,066.19 per ounce.

Silver is trading at $31.92/oz, €24.05/oz and £20.26/oz. Platinum is trading at $1,692.75/oz, palladium at $718.00/oz and rhodium at $1,200/oz.


Cross Currency Table – (Bloomberg)

Gold fell $4.90 or 0.29% in New York yesterday and closed at $1,685.60/oz. Silver fell to $32.08 in Asia then rallied to a high of $32.47 in the afternoon in NY trade, but then it dropped off in the last few hours and finished with a gain of just 0.25%.

Gold edged down in most currencies on Thursday, easing off the one month high hit earlier in the week. More speculative players may be taking profits after the recent run from $1,625/oz to over $1,695/oz or 4.3%.

It is noteworthy that while gold is weaker in most currencies today it is again higher in Japanese yen as the yen has fallen sharply on the international markets due to concerns that the yen will be devalued in the coming months.

Gold in yen terms remains near record multiyear highs above 0.150 million yen per ounce. New nominal highs in yen terms above 0.2 million yen per ounce are only a matter of time (see charts). 

Bloomberg reported that Credit Suisse says gold holders may have withdrawn gold from the euro zone due to the region’s debt crisis. They noted the Bundesbank comment about capacity becoming available in its own vaults in Germany.

The World Economic Forum is into its second day in Davos, Switzerland, and with the theme of ‘Resilient Dynamism’ it appears a good time to announce or spin positive news in Europe such as a slight growth in consumer morale and confidence.  

I’m not sure what Europe the Davos attendees are living on but Ireland, Spain, Portugal and Greece’s ‘recoveries’ are bleak at best.

Spanish youth unemployment has risen again and is now nearly at 60%.

The U.S. House of Representatives passed a Republican led plan to allow the federal government to keep borrowing money through mid-May.

The borrowing and money printing party can continue a little while longer but it would be prudent to prepare for the hangover. 

Owning physical gold today is akin to drinking plenty of water and having a few pain killers to hand. When this party ends, those not owning gold are going to suffer one hell of a financial hangover.


XAU/JPY Daily, 2 Years – (Bloomberg)

“Everyone should keep gold in their portfolios” as the precious metal will be able to offer value to investors even in a worst-case scenario, said Marc Faber, the publisher of the Gloom, Boom & Doom report.

“In the worst case scenario, in the systemic failure that I expect, it would still have some value,” Faber, who is also the founder and managing director of Marc Faber Ltd., said today at an event hosted by Evli Bank Oyj in Helsinki.

Faber said his outlook was so bleak that he is “hyper bearish”. He joked that “sometimes I’m so concerned about the world I want to jump out of the window.”

He wisely said that `I advise everyone to have some gold.'

Faber said that he thought there could be a flight out of cash and overvalued bonds and into equities and gold. 

In response to a question from Yale University’s Robert Shiller querying the recommendation to hold gold, Faber said: “I’m prepared to make a bet, you keep your U.S. dollars and I’ll keep my gold, we’ll see which one goes to zero first.”


XAU/JPY Quarterly, 1971-2013 – (Bloomberg)

Shiller, who is the co-creator of the S&P/Case-Shiller index of property values, responded "I'm inclined to think gold prices after this crisis might return to a lower level. Given the low yields of the alternatives [ie, bonds], the valuation of the stock market doesn't look so bad."

Faber, whose advice has protected millions of investors in recent years, warned of a global systemic crisis possibly due to massive size of the global derivatives market which is now worth over an incredible $700 trillion.

He warned “when the system goes down,” and only plastic credit cards are left, “maybe then people will realize and go back to some gold-based system.”


What's Going To Happen To The Price Of Gold And Silver In 2013?

Join us for a webinar on Jan 30, 2013 at 1300 GMT.

?  Register now!

Join two experts - Money Week columnist, Dominc Frisby and GoldCore's Head of Research, Mark O'Byrne for a one hour webinar as they discuss the outlook for gold and silver in 2013. 

 
NEWS

Gold Seen Extending Rally as Fed Sticks With QE3 for Years - Bloomberg

Strong Silver Jewelry Sales Reported During 2012 Holiday Season – The Silver Institute

Gold drifts from 1-mth high, 'recovery' hopes dull appetite - Reuters

Currency war talk not appropriate – IMF chief economist - Reuters

COMMENTARY

The One Chart That Explains the Massive Risk of Investing in Gold & Gold Stocks – Zero Hedge

How Far Up Could Silver Go? - Minyanville

Video: undesbank's Thiele on Gold Relocation - Bloomberg

Central bankers should be brought to heel by elected parliaments – The Telegraph

For breaking news and commentary on financial markets and gold, follow us on Twitter.

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Russian banks hit record $33.3bn profit in 2012

RIA Novosti / Igor Zarembo

RIA Novosti / Igor Zarembo

Russia’s lenders set a new record for net earnings last year, which was mostly underpinned by fast growth in personal credit.

Banks across Russia beat their 2011 record $28.3bn, according to Aleksey Simanovsky, first deputy head of the Central Bank of Russia (CBR). While corporate banking produced little growth, Russia’s households were very active and increased consumer credit by 40% in 2012 compared to the year earlier.

Credit cards together with mortgage loans accounted for the largest part of the growth, with the amount of debt through cards increasing 74.81% year on year and loans for housing needs going up 50.53%, the National Bureau for Credit Histories calculated.

“The fast pace of crediting development, especially in the segments of mortgage lending and credit cards is a positive factor that reflects the market maturity and an increase in its technological effectiveness and responsibility,” Aleksandr Vikulin, CEO of the National Bureau for Credit Histories, told Gazeta newspaper.

The CBR has long been warning fast credit growth could hamper macroeconomic stability, “if a regulator doesn’t react in time,” as Sergey Moiseev, deputy director at CBR financial stability department said earlier in December.

Unlike foreign markets, Russian producers benefit little from the growing credit markets, complains Pavel Samiev, CEO at Expert rating agency. While accelerated growth of retail credit results in a revival in domestic demand abroad, in Russia it’s the country’s imports that go up, the expert concluded.

The growth, however, isn’t expected to go into 2013, according to Maria Pomelnikova, an analyst at Raiffeisenbank. Demand for retail credit will be falling as Russian households will be becoming less confident about future income and tighter regulation by the CBR. “A slowdown [in the credit market] can very quickly translate into lower consumer activity and a 1% cut of consumption growth in our estimations could lower GDP growth by about 0.5%,” Pomelnikova concluded.

Violence is Deeply Rooted in American Culture: An Interview With Henry A. Giroux

C. J. Polychroniou: America’s fascination with guns is turning into an ever growing nightmare, with the latest carnage taking place last month at Sandy Hill Elementary School in Newtown Connecticut where 20 young children and six educators were killed. Yet, there is no evidence that the US is any closer to joining the rest of the civilized nations and imposing strict gun control laws in order to reduce violent crime.  Is the National Rifle Association largely to blame for this?

Henry A. Giroux: After every national tragedy involving guns, the American public is being inundated with figures about gun violence, ranging from the fact that more than 84 people are killed daily with guns, to the shocking statistic that there are more than 31,000 gun-related deaths annually. In 2010, for example, there were 8,775 murders by firearms in the U.S., while in Britain there were only 638. Moreover, there are 300 million firearms in a country of just over 311 million and just over 47 percent of Americans own guns. Most disturbingly, as pointed out by the Children’s Defense fund, is the fact that in 2010, “2694 children and teens were killed by gunfire [and] since 1979 …a shocking 119,079 children and teens have been killed by gun violence. That is more child and youth deaths in America than American battle deaths in World War I (53,402) or in Vietnam (47,434) or in the Korean War (33,739) or in the Iraq War (3,517).”[1] These are startling figures, but they do not tell us enough about the cult and spectacle of violence in American society. Nor do they make visible the myriad of forces that has produced a country drenched in bloodshed and violence.

There is little doubt that the role of the NRA is instrumental in the violence haunting American culture, or that gun control is important, but it is only one factor in the culture of symbolic and institutional violence that has such a powerful grip on the everyday cultural apparatuses and workings of American society. The issue of violence in America goes far beyond the issue of gun control. When gun control is the focus — instead of a broader consideration of violence — it can actually serve to deflect the most important questions that need to be raised. The grave reality is that violence saturates almost every aspect of North American culture. Domestically, violence weaves through the cultural and social landscape like a highly charged forest fire burning everything in its path. Popular culture, extending from Hollywood films and sports thuggery, to video games, embraces the spectacle of violence as the primary medium of entertainment. The real issue here is the existence of a pedagogy of violence that actually makes the power of deadly violence attractive.  Representations of violence dominate the media and often parade before viewers less as an object of critique than as a for-profit spectacle, just as the language of violence and punishment now shapes the U.S. culture  — with various registers of violence now informing school zero-tolerance policies, a bulging prison-industrial complex, and the growing militarization of everyday life. There is also the fact that as neoliberalism and its culture of cruelty weaves its way through the culture it makes the work place, schools, and other public spheres sites of rage, anger, humiliation, and misery, creating the foundation for blind rebellion against what might be termed intolerable conditions. Accepting the logic of radical individual responsibility, too many Americans blame themselves for being unemployed, homeless, and isolated and end up perceiving their misery as an individual failing and hence are vulnerable to forms of existential depression and collective rage.  We have seen such violence among students reacting to bullying and among postal workers responding to intolerable work conditions. There is no one cause of violence, but a series of a number of causes that range from the war on drugs and the militarization of police departments to mass incarcerations in prisons to the return from brutal wars of many trained killers suffering with PTSD.[2] All of these factors combine in an explosive mix to create an dangerous culture of violence and cruelty and as Jeff Sparrow points out a “willingness of ordinary people to commit unthinkable atrocities.”[3]

C. J. Polychroniou: Is this what you mean when you refer in your writings to a break down between the realm of war and civil life?

Henry A. Giroux: Exactly.  The metaphysics of war and associated violence creep into everyday life in the United States, a process which has intensified since 9/11. War and militarism not only eat up resources and revenue, it also determines the more general meanings that shape the values of social relations of everyday life and is constitutive of both social power and culture itself.  Under neoliberalism, markets are now fused with the warlike logic of militarization as ways of thinking, subject positions, and the ordering of social relations are fused, as the philosopher David Theo Goldberg points out, with “military truth, structure, and temporality.”[4]  

Of course, what I mean by this is that is the United States is not only obsessed with military values shaping foreign policy, but war and militarism have become a mediating force that now seep into almost every aspect of daily life.  War now makes men, and becomes the most important logic mediating not simply contemporary views of masculinity but social relations in general. We see war and its dynamics of cruelty and punishment seeping into a whole range of institutions. For instance, we see schools and social services modeled increasingly after prisons. We see police forces being paramilitarized. We see popular culture endlessly celebrating the spectacle of violence. What is startling is that the logic of war and violence have become addictive, a socially constructed need that we simply cannot get away from. Violence has become a defining organizing principle of society that has become one of the few shared mediating forces that now holds everyday life together. What is crucial to acknowledge here is that “the fields of politics and violence—a violence that seems to lack rational organization, not excepting self-destruction—are no longer separated. They have progressively permeated one another.”[5]  

State violence is now amplified in the rise of the punishing state which works to support corporate interests and suppress all forms of dissent aimed at making corporate power accountable. Violence as a mode of discipline is now enacted in spheres that have traditionally been created to counter the symbolic and institutional violence perpetuated by forms of state and corporate sovereignty. Airports, schools, public services, and a host of other public spheres are now defined through a militarized language of discipline, regulation, control, and order. Human behavior is now reduced to the instrumental logic of cost-benefit analyses, market shares, and profit ratings. Human relations and behaviors are not simply militarized, viewed as targets, but also reified and dehumanized making it easier to legitimate a culture of cruelty and politics of disposability that are central organizing principles of casino capitalism.

C. J. Polychroniou: Where does all this come from?

Henry A. Giroux: Part of it comes from the fact that all of a sudden we live in a society marked by what some have called “a failed sociality.” We have no language for democracy. We have no language for compassion. Neoliberalism collapses public issues into private troubles and in doing so not only destroys democratic values and forms of solidarity, but also extends a continuity of cruelty, misery, and exploitation into every sphere of everyday life–from schools and the work place to the workings of a state that now thrives on punishing rather than nourishing the welfare state. We view any form of dependency, any form of regard for the other as humiliating and worthy of scorn.  We live in a neoliberal market-driven culture that basically celebrates an unchecked notion of self-interest and narcissism. This is a culture that has gone over the top in its worship of celebrity culture and violence. It views the news as a video game, a source of entertainment where a story gains prominence by virtue of the notion that if it bleeds it leads. So it’s really not surprising in the lack of any substantive existence of a formative culture that would value a sense of compassion and regard for the other that we end up in a moral vacuum in which violence finds suitable legitimation. And of course, formal education has been turned into a quest for private satisfactions and is no longer viewed as a public good, thus cutting itself off from teaching students about public values, the public good and engaged notions of critical citizenship.

What has emerged in the United States is a civil and political order structured around the criminalization of social problems and everyday life. This governing-through-crime model produces a highly authoritarian and mechanistic approach to addressing social problems that often focuses on the poor and minorities, promotes highly repressive policies, and places undue emphasis on personal security, rather than considering the larger complex of social and structural forces that fuels violence in the first place.

C. J. Polychroniou: In your writings, you also talk of the “neoliberal terror” and the politics of disposability that has taken hold over American society, suggesting that there is a new form of class warfare directed against the poor and the working class. Would you elaborate a bit on this?

Henry A. Giroux: In the US there is an institutionalized regime of neoliberal violence directed against low income people, poor minorities, immigrants, the disabled, and others now considered disposable under a ruthless and savage fanatical capitalism that luxuriates in the poisonous dream worlds of commodification, deregulation, consumption, and privatization.  Within this regime of neoliberal violence, the politics of disposability is shored up by the assumption that some lives and social relationships are not worthy of a meaningful social existence, empathy and social protections. For instance, those considered “other” because of their lack of capital, consuming power, or alleged refusal to accept the unethical grammar of an Atlas Shrugged winner-take-all ethos are now relegated to zones of abandonment and terminal exclusion.  Lacking social protections, such populations increasingly are addressed within the growing reach of the punishing state, as a source of entertainment, or are relegated to what the French philosopher Etienne Balibar calls the "death zones of humanity."[6] 

In a culture defined by excessive inequality, suffering, and cruelty, the protective covering of the state, along with the public values and the formative culture necessary for a democracy is corrupted, increasingly dismantled, and held in contempt. And the disposable are not merely those populations caught in extreme poverty. Increasingly, they are individuals and groups now ravaged by bad mortgages, poor credit and huge debt. They are the growing army of the unemployed forced to abandon their houses, credit cards and ability to consume -- a liability that pushes them to the margins of a market society. These are the groups whose homes will not be covered by insurance, who have no place to live, no resources to fall back on, no way to imagine that the problems they will be facing are not just personal, but deeply structural, built into a system that views the social contract and the welfare state as a lethal disease.

In this economic Darwinist measure of value, those marginalized by race and class, who might detract from, rather than enlarge another's wealth are not only demonized, but are also viewed as problematic in that they become burdens to be disposed of, rather than a valuable and treasured human resource in which to invest. The discourse of disposability is not limited to right-wing politicians, but it is also built into the vocabulary of neoliberal governmental policy. Market societies are ruled by a predatory form of economic Darwinism in which greed and avarice are legitimated through a war-against-all, survival-of-the-fittest mentality that embraces a near sociopathic lack of interest in others and provides few social protections against individual and collective misfortune while at the same time dismissing the value of social provisions.  As the sociologist Elliott Currie has pointed out, neoliberal societies have become criminogenic in that they destroy peoples’ livelihoods, withdraw public supports, create massive extremes of economic inequality, erode social bonds while creating debilitating forms of atomization,  promote materialistic values that produce a culture of callousness, corrupt the political process, and market a form of normalized brutality evident in the massive rise of corporate crime and a culture of corruption.[7]  

Neoliberalism represents a full-fledged assault on democratic values, relations, and public spheres and does so by universalizing its own ideology, policies, and modes of governance. Its logic of disposability reduces citizenship to the logic of consumerism, reinforces the dominance of public life by giant corporations, and produces what the anthropologist Joao Biel calls a “machinery of social death.” In fact, the “machinery of social death,” is fed by corporate investments in the organized production of violence for profit and I am not just talking about industries that make big profits as part of the military-industrial complex. As New York Times journalist Andrew Ross Sorkin states, what has been overlooked in the recent debate about gun worship in the United States is that some of the biggest gun makers are “owned by private equity funds run by Wall Street titan.” For instance, Cerberus Capital Management, Sciens Capital Management, and MidOcean Partners make big profits selling everything from Ak-47s to military-grade night-vision goggles.[8] The technology of death is a big profit maker for Wall Street and makes clear that neoliberalism is actively engaged in the production of a dystopian society in which people, resources, and goods are now considered throwaways, just as moral responsibility is detached from actions, and politics is removed from the promise of a substantive democracy.

NOTES:

[1] Marian Wright Edelman, “Dear God! When Will It Stop?”, Common Dreams, (December 15, 2012). Online: https://www.commondreams.org/view/2012/12/15-0

[2] Don Hazen, “We are a country drenched in Bloodshed: Some Hard thoughts About Violence in the Media,” Alternet (December 20, 2013). Online:http://www.alternet.org/media/we-are-country-drenched-bloodshed-some-hard-truths-about-violence-media

[3] Jeff Sparrow, “When the Burning Moment Breaks: Gun Control and Rage Massacres,” Overland, (August 6, 2012). Online: http://overland.org.au/blogs/new-words/2012/08/when-the-burning-moment-breaks-gun-control-and-rage-massacres/

[4] David Theo Goldberg, “Mission Accomplished: Militarizing Social Logic,” in Enrique Jezik: Obstruct, Destroy, Conceal, ed. Cuauhtemoc Medina (Mexico: Universidad Nacional Autonoma de Mexico, 2011), p. 187.

[5] Etienne Balibar, “Outline of a Topography of Cruelty: Citizenship and Civility in the Era of Global Violence,” We, the People of Europe? Reflections on Transnational Citizenship (Princeton: Princeton University Press, 2004), p. 125.

[6] Etienne Balibar, “Outline of a Topography of Cruelty: Citizenship and Civility in the Era of Global Violence,” We, the People of Europe? Reflections on Transnational Citizenship (Princeton: Princeton University Press, 2004), p. 128.

[7] Elliott Currie, “Market, Crime and Community: Toward a Mid-Range Theory of Post-Industrial Violence,” Theoretical Criminology 1, no. 2 (1997): 147-172

[8] Andrew Ross Sorkin, “Wall Street, Invested in Firearms, Is Unlikely to Push for Reform,” The New York Times, (December 17, 2012).http://dealbook.nytimes.com/2012/12/17/wall-street-invested-in-firearms-is-unlikely-to-push-for-reform/

**A shorter version of this interview appeared in the Greek newspaper, Eleftherotypia.

Bank Of America Earnings Plagued By Legacy Countrywide Woes Offset By $900 Million In...

As disclosed 10 days ago in its agreement with Fannie, Bank of America already warned that it would see a $2.7 billion pre-tax hit to earnings resulting from just one GSE reps and warrants settlement. Sure enough, this was the biggest one time adjustment to the company's earnings which came out at $700 million on a pre-adjustment basis, or some $0.03. Excluding all the various incurred "charges", the bank reported $0.29 in earnings.  Of course, the assumption is that the bulk of the charges highlighted below are "one time" - yet, since most of them relate to the ongoing reps and warrants litigation, it is rather safe to put them in the recurring cost of business as the total amount of outstanding claims on R&W warrant cases has soared to a record $28.3 billion, compared to just $12.6 billion a year ago. Netting out the $13.5 billion in GSE claims which are now settled there are still some $125 billion in private and monoline claims which will continue to be a drain on BAC cash and EPS for years to come.

The full breakdown of Q4 "earnings", including the rather odd $2.4 billion tax benefit, and all the charges is shown below. Oddly enough, a year ago it paid some $441 million in taxes.

In brief: $10.56 billion in net interest income, better than the $10.24 billion estimate, driven by the arbitrate $900 million in loan loss reserve releases for the quarter (see below). The far less adjustable non-interest income was just $8.34 billion, far below the estimated $11.7 billion. Of course, BofA's argument is that this is due to one-time charges. Yet are these truly one time charges? A quick look at the outstanding Reps and Warrants claims shows there is much more legacy Countrywide pain to come for the bank:

In one years total claims have increased from $12.6 billion to $28.3 billion. Of this the GSE claims are now settled, which means only some $5-10 billion to settle the outstanding Private and Monoline R&W claims. In other words, it is safe to assume that the same kinds of "one-time" charges will be seen for years to come.

Net interest margin declined from a year ago, from 2.45% to 2.35%, although it rose by a tiny 3 bps from last quarter. This resulted in some $10.6 billion in Net Interest Income in the quarter, or well over half of the total revenue of $18.9 billion reported in Q4.

The $10.6 billion in Net Interest Income, which was "better than estimates" of $10.24 billion, was offset by some $2.2 billion provision for credit losses. Of course, this being Bank of America, there was a lot of Loan Loss Reserve Releases. Sure enough, as the chart below shows of the $700 million in unadjusted Net Income, some $900 million, or more than all of it, came from everyone's accounting gimmick. Absent the release, the firm would have reported a negative pre-adjustment Net Income number.

The $900 million reserve reduction was accompanied by some $3.1 billion in charge offs, of which $2.9 billion in consumer and $251 million in commercial. Of the consumer charge offs, $714MM was in resi mortgage, $767 million in home equity and $978 million in credit cards. The total was $2.2 billion provision for credit losses.

The loan book did not improve much if at all, with some $15.3 billion in residential NPAs. This was driven by a reduction in the 180 day past dues from $10.1 billion to $9.2 billion, offset by an increase in the < 180 days from $5.7 billion to $6.1 billion. Home Equity NPAs was unchanged at $4.3 billion.

Then we look at sales and trading revenue, that other bastion of profitability of the New Normal bank hedge funds, where we find that it declined by $0.7 billion from Q3 to $2.5 billion ($1.8 billion in FICC and $0.7 billion in Equity Income), although rising from a year ago. A far cry from the blow out trading numbers reported by Goldman. What is odd, is that while the Goldman VaR plunged, BAC's soared:

Finally, there were quite a few pink slips at the bank in the quarter, with some 228.5K FTEs at the end of Q4, down from 230.9K last quarter, and 242.3K a year ago.

In short: yet another quarter marked by "one-time" charges which will likely never go away, and ongoing deterioration in business fundamentals offset by loan loss reserve releases.

Full presentation below

BAC Q3 by zerohedge

Your rating: None

Bank Of America Earnings Plagued By Legacy Countrywide Woes Offset By $900 Million In...

As disclosed 10 days ago in its agreement with Fannie, Bank of America already warned that it would see a $2.7 billion pre-tax hit to earnings resulting from just one GSE reps and warrants settlement. Sure enough, this was the biggest one time adjustment to the company's earnings which came out at $700 million on a pre-adjustment basis, or some $0.03. Excluding all the various incurred "charges", the bank reported $0.29 in earnings.  Of course, the assumption is that the bulk of the charges highlighted below are "one time" - yet, since most of them relate to the ongoing reps and warrants litigation, it is rather safe to put them in the recurring cost of business as the total amount of outstanding claims on R&W warrant cases has soared to a record $28.3 billion, compared to just $12.6 billion a year ago. Netting out the $13.5 billion in GSE claims which are now settled there are still some $125 billion in private and monoline claims which will continue to be a drain on BAC cash and EPS for years to come.

The full breakdown of Q4 "earnings", including the rather odd $2.4 billion tax benefit, and all the charges is shown below. Oddly enough, a year ago it paid some $441 million in taxes.

In brief: $10.56 billion in net interest income, better than the $10.24 billion estimate, driven by the arbitrate $900 million in loan loss reserve releases for the quarter (see below). The far less adjustable non-interest income was just $8.34 billion, far below the estimated $11.7 billion. Of course, BofA's argument is that this is due to one-time charges. Yet are these truly one time charges? A quick look at the outstanding Reps and Warrants claims shows there is much more legacy Countrywide pain to come for the bank:

In one years total claims have increased from $12.6 billion to $28.3 billion. Of this the GSE claims are now settled, which means only some $5-10 billion to settle the outstanding Private and Monoline R&W claims. In other words, it is safe to assume that the same kinds of "one-time" charges will be seen for years to come.

Net interest margin declined from a year ago, from 2.45% to 2.35%, although it rose by a tiny 3 bps from last quarter. This resulted in some $10.6 billion in Net Interest Income in the quarter, or well over half of the total revenue of $18.9 billion reported in Q4.

The $10.6 billion in Net Interest Income, which was "better than estimates" of $10.24 billion, was offset by some $2.2 billion provision for credit losses. Of course, this being Bank of America, there was a lot of Loan Loss Reserve Releases. Sure enough, as the chart below shows of the $700 million in unadjusted Net Income, some $900 million, or more than all of it, came from everyone's accounting gimmick. Absent the release, the firm would have reported a negative pre-adjustment Net Income number.

The $900 million reserve reduction was accompanied by some $3.1 billion in charge offs, of which $2.9 billion in consumer and $251 million in commercial. Of the consumer charge offs, $714MM was in resi mortgage, $767 million in home equity and $978 million in credit cards. The total was $2.2 billion provision for credit losses.

The loan book did not improve much if at all, with some $15.3 billion in residential NPAs. This was driven by a reduction in the 180 day past dues from $10.1 billion to $9.2 billion, offset by an increase in the < 180 days from $5.7 billion to $6.1 billion. Home Equity NPAs was unchanged at $4.3 billion.

Then we look at sales and trading revenue, that other bastion of profitability of the New Normal bank hedge funds, where we find that it declined by $0.7 billion from Q3 to $2.5 billion ($1.8 billion in FICC and $0.7 billion in Equity Income), although rising from a year ago. A far cry from the blow out trading numbers reported by Goldman. What is odd, is that while the Goldman VaR plunged, BAC's soared:

Finally, there were quite a few pink slips at the bank in the quarter, with some 228.5K FTEs at the end of Q4, down from 230.9K last quarter, and 242.3K a year ago.

In short: yet another quarter marked by "one-time" charges which will likely never go away, and ongoing deterioration in business fundamentals offset by loan loss reserve releases.

Full presentation below

BAC Q3 by zerohedge

Your rating: None

The Finance Industry Has Pried into Every Sector of the Economy, and Has Ended...

Finance has moved to capture the economy at large, industry and mining, public infrastructure, and now even the educational system.

December 31, 2012  |  

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Today’s economic warfare is not the kind waged a century ago between labor and its industrial employers. Finance has moved to capture the economy at large, industry and mining, public infrastructure (via privatization) and now even the educational system. (At over $1 trillion, U.S. student loan debt came to exceed credit-card debt in 2012.) The weapon in this financial warfare is no larger military force. The tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labor means that it no longer is necessary to hire strikebreakers to attack union organizers and strikers.

Workers have become so deeply indebted on their home mortgages, credit cards and other bank debt that they fear to strike or even to complain about working conditions. Losing work means missing payments on their monthly bills, enabling banks to jack up interest rates to levels that used to be deemed usurious. So debt peonage and unemployment loom on top of the wage slavery that was the main focus of class warfare a century ago. And to cap matters, credit-card bank lobbyists have rewritten the bankruptcy laws to curtail debtor rights, and the referees appointed to adjudicate disputes brought by debtors and consumers are subject to veto from the banks and businesses that are mainly responsible for inflicting injury.

The aim of financial warfare is not merely to acquire land, natural resources and key infrastructure rents as in military warfare; it is to centralize creditor control over society. In contrast to the promise of democratic reform nurturing a middle class a century ago, we are witnessing a regression to a world of special privilege in which one must inherit wealth in order to avoid debt and job dependency.

The emerging financial oligarchy seeks to shift taxes off banks and their major customers (real estate, natural resources and monopolies) onto labor. Given the need to win voter acquiescence, this aim is best achieved by rolling back everyone’s taxes. The easiest way to do this is to shrink government spending, headed by Social Security, Medicare and Medicaid. Yet these are the programs that enjoy the strongest voter support. This fact has inspired what may be called the Big Lie of our epoch: the pretense that governments can only create money to pay the financial sector, and that the beneficiaries of social programs should be entirely responsible for paying for Social Security, Medicare and Medicaid, not the wealthy. This Big Lie is used to reverse the concept of progressive taxation, turning the tax system into a ploy of the financial sector to levy tribute on the economy at large.

Financial lobbyists quickly discovered that the easiest ploy to shift the cost of social programs onto labor is to conceal new taxes as user fees, using the proceeds to cut taxes for the elite 1%. This fiscal sleight-of-hand was the aim of the 1983 Greenspan Commission. It confused people into thinking that government budgets are like family budgets, concealing the fact that governments can finance their spending by creating their own money. They do not have to borrow, or even to tax (at least, not tax mainly the 99%).

The Greenspan tax shift played on the fact that most people see the need to save for their own retirement. The carefully crafted and well-subsidized deception at work is that Social Security requires a similar pre-funding – by raising wage withholding. The trick is to convince wage earners it is fair to tax them more to pay for government social spending, yet not also to ask the banking sector to pay similar a user fee to pre-save for the next time it itself will need bailouts to cover its losses. Also asymmetrical is the fact that nobody suggests that the government set up a fund to pay for future wars, so that future adventures such as Iraq or Afghanistan will not “run a deficit” to burden the budget. So the first deception is to treat only Social Security and medical care as user fees. The second is to aggravate matters by insisting that such fees be paid long in advance, by pre-saving.

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Holy macaroni! Noodles & Co. faces customer data breach in 27 states

Oh, manicotti. If you’ve eaten at a Noodles & Company restaurant in the first half of...

15 Things To Do Now

Spend ten minutes on the web surfing the keywords “prepping skills” and you will be presented with the site after site preaching the gospel...

George Soros Is Preparing For Economic Collapse – Does He Know Something That You...

Michael Snyder Why is George Soros selling stocks, buying gold and making “a series of big, bearish investments”?  If things stay relatively stable like they...

Trump University & beyond: Debt, 30 years of lawsuits against Trump arise as election...

As the lawsuit over Trump University takes another twist, Donald Trump’s legal history reveals a tenacious...

Released Trump University ‘playbooks’ encourage using other people’s money

Documents related to Trump University, Donald Trump’s for-profit real estate program, were made public on Tuesday...

New gov’t rule would give Americans more power to sue banks

A proposed rule by a federal consumer watchdog would grant Americans more power to sue banks...

Woman Faces 60 Years in Prison for the Death of Her Abusive Ex

UPDATE: Twelve jurors found Cherelle Baldwin not guilty of murder on Thursday in the death of her ex-boyfriend, Jeffrey Brown. Jurors in Connecticut...

Fascist Spain’s Biggest Supporters Were Hitler, Mussolini, and This American Oilman

(Photo: Gerard Stolk / Flickr) This piece has been adapted from Adam Hochschild’s new book, Spain in Our Hearts: Americans in the Spanish Civil War, 1936-1939. “Merchants...

Behind the Facade: America, The Bankrupt Hegemon

Fantasy and fairy tales can go only so far when it comes to the true condition of anything or anyone. Sooner or later the...

The Escalating War on Cash

On February 16th, The Washington Post printed the article, “It’s time to kill the $100 bill.” This came on the heels of a CNNMoney item, the...

Cracking Down on Abusive Debt Collectors

Have you ever picked up your phone to find an aggressive voice on the other end demanding payments on a debt you know nothing...

Digging Up a Mountain of Debt

For the first time in more than 30 years, the federal government has decided to hold off on authorizing new leases for coal mining on federal...

The Cashless Society Cometh: European Nations Such As Sweden And Denmark Are ‘Eradicating Cash’

Michael Snyder (RINF) - Did you know that 95 percent of all retail sales in Sweden are cashless? And did you know that the government...

The Banking Industry’s Transparent Attempt to Weaken the CFPB

Elizabeth Warren You'll never guess who's going around Washington, trolling the halls of Congress, talking about the importance of protecting the long-term health of the...

Bernie Sanders versus Obama & the Clintons: The Big Difference

Eric Zuesse I state here why I have come to support Bernie Sanders for President: Whereas Hillary Clinton, Bill Clinton and Barack Obama – the...

You’ve Been Scammed! (On Going for Broke in Ponzi Scheme America)

It couldn’t be a sunnier, more beautiful day to exit your lives -- or enter them -- depending on how you care to look...
Image from marines.mil

Pentagon sham: Defense Dept altered books in long-awaited audit, reports claim

The US Defense Department’s watchdog knowingly turned a blind eye to financial irregularities, leading to the Pentagon signing off on an audit. This has...

JP Morgan stockpiling physical silver: Are you getting ready for what is coming?

Michael Snyder RINF Alternative News Why in the world has JP Morgan accumulated more than 55 million ounces of physical silver? Since early 2012, JP Morgan’s stockpile...

Sanders: Stand Up to Wall Street, Break Up Big Banks

Speaking last night at the Commonwealth Club of California, U.S. Sen. Bernie Sanders (I-Vt.) said it is time to break up “too-big-to-fail” Wall Street...

The student debt crisis time-bomb is about to implode

Chuck Collins There’s a generational time-bomb ticking – and the student debt crisis is the trip wire. Adults under 35 disproportionately bear the brunt of escalating...

Corrupt Politicians, IMF Loans And Foreign Aid

Lenin Nightingale RINF Alternative News External forces do not enslave the masses of the world - they are enslaved by those from their own country who...

The Economy Of The Largest Superpower On The Planet Is Collapsing Right Now

Michael Snyder RINF Alternative News How do you fix a superpower with exploding levels of debt, that has a rapidly aging population, that consumes far...

Ex-CIA Official Proposes Assassination of Putin

In a recent op-ed, a former CIA official suggested the removal of Russian President Vladimir Putin, by assassination if necessary, should be the primary...

How to protect yourself in an economic crisis

Does the current economic crisis have you worried? Are you wondering how to achieve financial freedom so you can protect yourself and your family...

Lloyds Bank admits fixing repo rate

Jean Shaoul Britain’s Lloyds Bank found a new way to rig the market in order to reduce the fees it paid the Bank of England...

The Seven Pillars of the Matrix

“No one is more of a slave than he who thinks himself free without being so.” ― Johann Wolfgang von Goethe Robert Bonomo  RINF Alternative News Contemporary baptized,...

68 percent of Britons ‘tricked’ by small print financial fees – poll

More than half of Britons say they have been hit with extra fees on their credit cards, bank accounts mortgage or insurance in the...

The United States Of Debt: Total Debt In America Hits A New Record High...

What would you say if I told you that Americans are nearly 60 TRILLION dollars in debt?  Well, it is true.  When you total up all forms of debt including government debt, business debt, mortgage debt and consumer debt, we are 59.4 trillion dollars in debt.  That is an amount of money so large that [...]

The Austerity Diaries: A Rainy Day Fund is Your Top Priority

The reasons you might need to tap into an emergency fund are as varied as the news headlines - there are so many different disasters that can arise, and nearly every single one of them will require that you have some additional funds available.

The Austerity Diaries

Refuse to take part in the nation's economic collapse. Take control of your life by taking control of meeting your own needs.

Our Economy Wants You to Be In Debt: 5 Things You Can Do to...

Last month PM Press published the Debt Resisters' Operations Manual –also known as “the DROM.” But don’t let that menacing-sounding acronym fool you: this is a...

Our Economy Wants You to Be In Debt–5 Things You Can Do to Take...

We poured through a debt-resistance manual created by former Occupiers to bring you these practical tips. Liz Pleasant Last month PM Press published the Debt Resisters' Operations Manual –also known...

My Device Is Me. GCHQ — Stop Hacking Me

Eric King RINF Alternative News Spy agencies have long sought to turn the technologies that improve all our lives against us. From some of the very...

The Folly of Playing High-Stakes Poker with Vladimir Putin: More to Lose than Gain...

Johanna C. Granville RINF Alternative News In the weeks following the Russian annexation of the Crimean Peninsula, both the United States and European Union have issued...

Crowdsourcing Surveillance, Mainstream Conspiracies, No GMO Russia — New World Next Week

Welcome to http://NewWorldNextWeek.com — the video series from Corbett Report and Media Monarchy that covers some of the most important developments in open source intelligence news. This week: Story #1: Los Angeles Law Enforcement Looking To Cro...

Interview 863 — New World Next Week with James Evan Pilato

This week on New World Next Week: Police try to crowdsource the snitch state; conspiracy theories (against the boogeymen) become "acceptable"; and Russia blocks GMOs.

What Will You Do When You Can No Longer Buy Or Sell Without Submitting...

In some areas of the world, payment systems that require palm scanning or face scanning are already being tested.  We have entered an era where biometric security is being hailed as the “solution” to the antiquated security methods of the past.  We are being promised that the constant problems that hackers are causing with [...]

Is College A Waste Of Time And Money?

Are you thinking of going to college?  If so, please consider that decision very carefully.  You probably have lots of people telling you that an "education" is the key to your future and that you will never be able to get a "good job" unless you go to college.  And it is true that those [...]

After Several Near Misses, Experts Warn The Next Carrington Event Will Plunge Us Back...

Most people have absolutely no idea that the Earth barely missed being fried by a massive EMP burst from the sun in 2012, in 2013 and just last month.  If any of those storms would have directly hit us, the result would have been catastrophic.  Electrical transformers would have burst into flames, power grids [...]

Government Agency: If 9 Substations Are Destroyed, The Power Grid Could Be Down For...

What would you do if the Internet or the power grid went down for over a year?  Our key infrastructure, including the Internet and the power grid, is far more vulnerable than most people would dare to imagine.  These days, most people simply take for granted that the lights will always be on and that [...]

Postcard from the End of America: Joliet

Linh Dinh RINF Alternative News The story of Joliet is familiar enough. With its industries gone, a city turns to the casino as a last ditch salvation, but...

Millions at the Mercy of Bank Interest Rates: UK Facing Housing Costs Time Bomb

Dennis Moore RINF Alternative News Millions of people across Britain have serious concerns as to whether they will be able to afford to keep their homes,...

In 19 Minutes, A Team Of Snipers Destroyed 17 Transformers At A Power Station...

When a real terrorist attack happens, sometimes we don’t hear about it until months afterward (if we ever hear about it at all).  For example, did you know that a team of snipers shot up a power station in California?  The terrorists destroyed 17 transformers and did so much damage that the power station [...]

NY Times calls JPMorgan CEO’s pay raise “laudable”

Andre Damon and Barry Grey  RINF Alternative News The New York Times published a commentary last Friday in which the author called a 74 percent pay increase announced...

Banks Are Out To Steal Your Money: What’s Happening Out There?

Bill Sardi  RINF Alternative News With the average household carrying $15,000 of debt on their credit cards and plunging retail store traffic (see below) it is becoming clear...

Are You Ready Series: Rolling Blackouts and Power Outages

This article has been contributed by Tess Pennington and is part of the Are You Ready? series, which examines and provides preparedness solutions for...

Are You Ready Series: Rolling Blackouts

by Tess Pennington Originally published at Ready Nutrition The U.S. power grid, as it exists today, is dying a slow and miserable death. Experts in the private and public sector are also concerned about the weakness of the grid and suggest we are one major catastrophic event away from a complete meltdown inRead the Rest...

A Tale of Two Jobs: How Low Wages Are Bad for Business

Companies that pay employees more have...

Target hackers stole encrypted bank PINs

Target, the No. 3 US retailer said last week that hackers stole data from as many as 40 million cards, making it the second-largest...

Chase limits debit card use for customers shopping at Target

Erin McClamNBC NewsDecember 23, 2013 JPMorgan Chase, the largest bank in the United States, told customers...

Will Digital Currency Replace the US Dollar? Wall Street Strategy to Make Bitcoin the...

Matthias Chang RINF Alternative News Bitcoin — The Potential Monsanto of Digital Currency? Its ultimate objective is to control, control of the “alternative currency” when the Petro-Dollar...

Will Digital Currency Replace the US Dollar? Wall Street Strategy to Make Bitcoin the...

Matthias Chang RINF Alternative News Bitcoin — The Potential Monsanto of Digital Currency? Its ultimate objective is to control, control of the “alternative currency” when the Petro-Dollar...

The Global Money Matrix: The Forces behind America’s Economic Destruction

On the Brink of Economic Calamity We are witnessing unprecedented low points in American economic history as 50 million Americans—17 million of them children—are living...

Celebrating the Season without Worshipping Consumerism

You can be a Scrooge when...

Russia moving to devalue the ruble

By Clara Weiss6 December 2013 The Russian central bank last month initiated a policy of allowing the ruble to sink in value, intensifying a...

Most Americans don’t trust each other

Only one-third of Americans say most can be trusted. The majority of American people do not trust each other, according to a poll conducted by...

Christmas Time on Wall Street

Remember how Quantitative Easing was going to “get the banks lending again”? Well, it hasn't worked that way. In fact, after 4 years of zero...

11 Ways the Drug War Raises Your Taxes and Shrinks Your Profits

One public policy with profound impacts...

In the World of Kiddie Capitalism

Several years ago it looked like theme parks would go the way of drive-in movies – down the trap door of history. But recently...

Stratfor hacker sentenced to ten years in prison

By Kristina Betinis21 November 2013 On Friday November 15, 28-year old Jeremy Hammond, an Anonymous-affiliated hacker, anti-war activist, and anarchist from Chicago, was sentenced...

Government Is Taking Steps to Regulate Bitcoin

Senators attending this week's hearing entitled “Beyond Silk Road: Potential Risks, Threats and Promises of Virtual Currencies” being held by the Senate Homeland Security...

The Craziest OkCupid Date Ever

Jeff and I traveled to eight...

The 14 Habits of Highly Miserable People

How to succeed at self-sabotage.

Occupy Wall Street Eliminates $15 million of Debt

Since the protest started in Zucotti Park in New York City near the financial district, the Occupy Wall Street movement has done a lot...

‘People’s Bailout’ Abolishes $15 Million in Personal Medical Debt

In what is being touted as a "bailout by the people," the Rolling Jubilee announced Monday they have now abolished nearly $15 million in...

Economic False Positives

A first look at US third quarter 2013 GDP and October Jobs Reports gives the impression that the US economy is mending and might...

On the Value of Our Social Movements

(To Elizabeth Hallett, who has devoted her life to social change and caring for the wounded.) It´s yet another bloqueo, paro y huelga in Bolivia,...

A Billionaire’s Plea for Higher Taxes

When billionaires start complaining about taxation policies that are too lenient on the rich, you know something is out of whack. According to billionaire Bill...

Skyway Robbery: 6 Ways the Out-of-Control Airline Industry Is Ripping Off America

Taxpayers, workers and travelers are getting...

What Are You Going To Do When A Massive EMP Blast Fries The U.S....

About the Author: Michael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the...

RINFORMATION

USA Topics 9/11 Agenda 21 Assassinations Banks Bush, George Jr Boston Bombings Bohemian Grove CIA Cointelpro Corruption DARPA Democrats Disinformation Congress Drones Eugenics FBI Federal Reserve Guantanamo HAARP ...

New line of wearable technology lets users control drones with fingernails, eyelashes

My Fox DC October 24, 2013 A scientist has created a new line of wearable technology that combines conductive materials and beauty items...

RFID Microchips to be Embedded in Breast Implants

Technology backed by CEO who promoted implantable chips as replacement for credit cards Paul Joseph Watson A manufacturer of breast implants has announced...

3 Ways Regular Americans Will Be Hurt by a Debt Ceiling Default

Many Americans this week may be asking themselves: Why should I care about the debt ceiling, or the -- barring Congressional action -- coming...

A Response to Alfredo Lopez

In Alfredo Lopez's article “Stallman, FOSS and the Adobe Nightmare”. I think that article gets some of Richard Stallman's message wrong and ends up...

The Hidden Face of the Asia Pacific Economic Community (APEC) Summit: Tri Hita Karana,...

When you arrive in Bali, the most diverse and popular of Indonesia's 7000 plus Islands, you are immediately confronted with a just constructed state...

Dark Web Rising: McAfee Founder To Launch New “NSA Killer” Privacy Device

Their tentacles are everywhere. If it's plugged into the internet there is a near 100% chance that the National Security...

Crushing the Middle Class

The Federal Reserve presently lends money at a lower rate than anytime in history. In fact, the rate at which the Fed lends money...

Arrests made over Barclays cyber theft

UK police have arrested eight men on suspicion of stealing £1.3 million from a Barclays bank branch.British police have arrested eight men on suspicion...

17 mass shootings in US since Newtown

There have been at least 17 mass shootings in the United States since the massacre of elementary school students and teachers in Newtown, Conn.,...

“Pulse Password” Technology Emerges

newyork.cbslocal.comSeptember 18, 2013 Passwords, pin numbers, and credit cards could soon be a thing of the...

Exposing the Financial Core of the Transnational Capitalist Class

IntroductionIn this study, we decided to identify in detail the people on the boards of directors of the top ten asset management firms and...

252 Documented Examples of Barack Obama’s Lying, Lawbreaking, Corruption, Cronyism, etc.

freedomoutpost.com August 29, 2013 The following is a contribution from Dan from Squirrel Hill. The original title of the article is “Obama supporters...

Our Banks Own Airports, Control Power Plants and Much More–How Can We Stop Them...

Giant bank holding companies now own airports, toll roads, and ports; control power plants; and store and hoard vast quantities of commodities of all...

Our Banks Own Airports, Control Power Plants and Much More — How Can We...

Giant bank holding companies now own airports, toll roads, and ports; control power plants; and store and hoard vast quantities of commodities of all...

Reddit co-founder sought work with shadowy intelligence firm, WikiLeaks reveals

A popular co-founder of the social news site Reddit previously attempted to gain employment as a consultant for Stratfor, a shadowy private geopolitical intelligence...

The Leveraged Buyout of America

Giant bank holding companies now own airports, toll roads, and ports; control power plants; and store and hoard vast quantities of commodities of all...

Why Is The Government Leaving Our Most Critical Infrastructure Wide Open To Terror Attacks?

If the federal government is so concerned about the threat of terrorism, then why is it doing so little to protect our most critical...

Lebanon Offers Palestinians Syria Ramadan Greetings

The Syria/Lebanon border crossing at Masnaa On 8/5/13 this observer decided, quite on the spur of the moment, to take a three day break from...

Congress should be ashamed about jobs

US Representative Marlin Stutzman said, "Most people will agree that if you are an able bodied adult without any kids you should find your...

Communism Now Big in Japan; Still Little in Virtue

Will the grinding poverty and initiative killing of collectivism soon wear the label “Made in Japan”? Such a prospect is likely a ways off,...

Federal Court Rules That the Bitcoin Is Money

When the Securities and Exchange Commission (SEC) charged Trendon Shavers, the founder of Bitcoin Savings and Trust (BTCST) with running a Ponzi scheme, Shavers challenged...

It’s Official, Everyone Is Now A Terrorist According to The US Government

Anthony GucciardiInfowars.comAugust 2, 2013 It’s official, every single American can now be classified as...

Senator Rand Paul Proposes Debt Ceiling Solution

Kentucky Senator Rand Paul has announced an alternative solution to the current debate over whether to raise the country’s debt ceiling, as the national...

Living in a One-Superpower World: Edward Snowden vs. Robert Seldon Lady

He came and he went: that was the joke that circulated in 1979 when 70-year-old former Vice President Nelson Rockefeller had a heart attack...

Obama’s Master Class in Demagogy 101

http://www.truthdig.com/report/item/obamas_master_class_in_demagogy_101_20130727/ Posted on Jul 27, 2013 By...

Obama’s Master Class in Economic Demagogy 101

Yesterday President Obama chose Knox College in Galesburg, Illinois (originally founded by anti-slavery activists in the 1830s) to float the economic program he has...

Collateral Damage: QE3 and the Shadow Banking System

Rather than expanding the money supply, quantitative easing (QE) has actually caused it to shrink by sucking up the collateral needed by the shadow...

The Tip Of The Iceberg Of The Coming Retirement Crisis That Will Shake America...

The pension nightmare that is at the heart of the horrific financial crisis in Detroit is just the tip of the iceberg of the...

Share This Chart With Anyone That Believes The U.S. Economy Is Not Going To...

Anyone that thinks that the U.S. economy can keep going along like this is absolutely crazy. We are in the terminal phase of an...

GlaxoSmithKline Alleged to Pay Bribes in China

GlaxoSmithKline (GSK) has been accused of bribing doctors in China in order to boost sales. Chinese government officials say they have uncovered evidence of...

Man Refuses To Comply With Internal Checkpoint; Border Patrol Smashes Their Way Into Vehicle

Has possessions confiscated, detained for NINE HOURS Steve Watson Infowars.com July 11, 2013 A man who recently refused to comply with an internal...

Latin American Nations Upset Over NSA Spying, U.S. Interference

The Rio de Janeiro, Brazil-based newspaper O Globo reported on July 9 that former NSA contractor and whistleblower Edward Snowden had provided it with...

Giant Banks Take Over Real Economy As Well As Financial System. Manipulation On a...

Big Banks Move Into Uranium Mining, Petroleum Products, Aluminum, Ownership and Operation Of Airports, Toll Roads, and Ports, and Electricity Top economists, financial experts and...

South American Leaders Protest Rerouting of Bolivian Plane

South American leaders invited to attend a special summit in the Bolivian city of Cochabamba released a joint statement on July 4 demanding an...

Eleven revolutionary ways to celebrate your independence from the system on this July 4th

Mike AdamsNatural NewsJuly 4, 2013 For this July 4th – Independence Day – you’re going to...

Hurting the Little Guy

Oh-Mama!-Care by ...

Do We Hate Our Children? The Insane System That Turns Young Adults into Indentured...

Next time you’re watching a college graduation, as you look out over the sea of caps and gowns, make sure you notice the ball...

2014: We Have the Target Date

Ever since the crisis of 2008 Americans have been asking ‘when will we finally get back to normal?’ We now have a target date. Forget the...

Would the NSA's PRISM Have Prevented 9/11?

Former Vice President Dick Cheney said on Fox News Sunday this week that if the National Security Agency's daily collection of private telephone records...

Would the NSA's PRISM Have Prevented 9/11?

Former Vice President Dick Cheney said on Fox News Sunday this week that if the National Security Agency's daily collection of private telephone records...

The Obama Regime: What the NSA Revelations Tell Us about America’s Police State

Ongoing revelations by The Guardian and The Washington Post of massive, illegal secret state surveillance of the American people along with advanced plans for...

Reading Infowars.com? You’re Probably on the Main Core List

Kurt NimmoInfowars.comJune 12, 2013 Michael Snyder has provided details on Main Core, a list...

The Predictable Response to Edward Snowden’s Disclosure of PRISM

Now that the source of the leak published last week in the Washington Post has identified himself, the response from defenders of the surveillance state...

27 Edward Snowden Quotes About U.S. Government Spying That Should Send A Chill Up...

Would you be willing to give up what Edward Snowden has given up? He has given up his high paying job, his home, his girlfriend, his family, his future and his freedom just to expose the monolithic spy machinery that the U.S. government has been secretly building to the world.

Main Core: A List Of Millions Of Americans That Will Be Subject To Detention...

Michael SnyderAmerican DreamJune 11, 2013 Are you on the list? Are you one of the...

One American Who Isn’t For Sale

http://www.truthdig.com/report/item/one_american_who_isnt_for_sale_20130611/ Posted on Jun 11, 2013 ...

Main Core: A List Of Millions Of Americans That Will Be Subject To Detention...

This article has been generously contributed by Michael Snyder. You can follow his regular writings, research and analysis at The Economic Collapse Blog and...

The Predictable Response to Edward Snowden’s Disclosure of PRISM

Now that the source of the leak published last week in the Washington Post has identified himself, the response from defenders of the surveillance state...

State of Emergency and “Continuity of Government”: What is the Real Reason the Government...

Are Emergency Plans Meant Only for Nuclear War the Real Justification for Spying? To understand the scope, extent and reason that the government spies on...

NSA leaker Snowden supported Ron Paul’s presidential run

As news continues to surface about classified NSA documents leaked last week, the man who blew the whistle on the secret spy program is...

US security officials said NSA leaker, journalist should be 'disappeared' — report

A US editor has alleged he overheard security officials saying that the NSA leaker and the Guardian columnist who broke his story should be...

NSA Whistleblower Revealed: Q&A with Edward Snowden

Edward Snowden. Get used to hearing the name that belongs to the twenty-nine year old systems administrator for the private defense company...

The Oslo Illusion: The Historical Accords between Palestine and Israel

This year marks the twentieth anniversary of the signing of the Oslo Accords between the Palestine Liberation Organization (PLO) and the Israeli government. Officially...

Truthdigger of the Week: Jeremy Hammond

http://www.truthdig.com/report/item/truthdigger_of_the_week_jeremy_hammond_20130601/ Posted on Jun 1, 2013 ...

Deflation Smackdown: Bernanke’s Madcap Money Printing Fails to Boost Inflation

“Under a fiat money system, a government… should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest...

Deflation Smackdown

“Under a fiat money system, a government… should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest...

The Student Loan Delinquency Rate In The United States Has Hit A Brand New...

Michael SnyderEconomic CollapseMay 30, 2013 37 million Americans currently have outstanding student loans, and the delinquency...

Anonymous hacker Jeremy Hammond pleads guilty to Stratfor breach

Hacker and activist Jeremy Hammond pleaded guilty Tuesday morning in a New York courtroom to violating the Computer Fraud and Abuse Act as a...

Rand Paul Bolsters Libertarian Bona Fides, Delays Decision on 2016

CNN, quoting The Independent, reports that Senator Rand Paul (R-Ky.) has made the decision to run in 2016 – for reelection to the Senate. During a...

Rand Paul Bolsters Libertarian Bona Fides, Delays Decision on 2016

CNN, quoting The Independent, reports that Senator Rand Paul (R-Ky.) has made the decision to run in 2016 – for reelection to the Senate. During a...

Rand Paul Bolsters Libertarian Bona Fides, Delays Decision on 2016

CNN, quoting The Independent, reports that Senator Rand Paul (R-Ky.) has made the decision to run in 2016 – for reelection to the Senate. During a...

Major Retailers Sue Visa and MasterCard Over Swipe Fees

Seventeen major retailers, including Macy’s, Target, and Kohl’s, filed an anti-trust suit yesterday in New York City to protest Visa and MasterCard’s lack of...

Marching in Chicago: Resisting Rahm Emanuel’s Neoliberal Savagery

http://www.truthdig.com/report/item/marching_in_chicago_resisting_rahm_emanuels_neoliberal_savagery_20130524/ Posted on May 24, 2013 ...

Major Retailers Sue Visa and MasterCard Over Swipe Fees

Seventeen major retailers, including Macy’s, Target, and Kohl’s, filed an anti-trust suit yesterday in New York City to protest Visa and MasterCard’s lack of...

Rand Paul: Obama Embroiled In ‘Old MacDonald’s Farm’ Of Scandals

“Here a scandal, there a scandal, everywhere a scandal”Steve WatsonInfowars.comMay 24, 2013 Senator...

Under Obamacare, Health Insurers Want Cash On The Barrelhead

Infowars.comMay 24, 2013 Obamacare will force you to either ante up an expensive insurance...

Corporate Corruption And The Special Interest State

“I am in this race to tell the corporate lobbyists in Washington that their days of setting the agenda are over.” Guess who said...

Mayor Bloomberg's advice to students: become plumbers

A college education won’t necessarily fatten your pockets, but the billionaire mayor of New York City has a suggestion he wants students to consider...

Mayor Bloomberg's advice to students: become plumbers

A college education won’t necessarily fatten your pockets, but the billionaire mayor of New York City has a suggestion he wants students to consider...

What is Paper Terrorism? Anti-Gov’t Nuts File Tens of Thousands of False Docs as...

How do you stop one anti-government extremist from coordinating a trillion dollar “paper terrorism” scheme involving a raft of false financial documents, or deal with another who sues prosecutors for allegedly conspiring against him by using poor grammar?

Have We Forgotten That “Undocumented Citizens” Are In Our Country Illegally?

Infowars.comMay 16, 2013 On top of everything else Congress is arguing about in the...

The Cashless Society Arrives in Africa. The “Multipurpose” Biometric National Identity Smart Card

It was recently announced at the World Economic Forum in Cape Town, South Africa that MasterCard and the Nigerian National Identity Management Commission (NIMC)...

How to Know When to Tax and When to Spend

(Photo: Jim Larson / Flickr)Let's talk economics 101. Capitalism has cycles of bust and boom. They're normal, and they're called the "business cycle." From the George Washington administration to the Ronald Reagan administration, when the business cyc...

America’s Deplorable State of the Union

obamadouble
Obama's annual State of the Union addresses reflect beginning-to-end doublespeak duplicity. Empty rhetoric signals business as usual. Policy prioritizes corporate empowerment, rewarding rich elites, letting popular needs go begging, funding America's war machine, and cracking down hard on non-believers.

CNN’s Ali Velshi Lets GOP Sen. Ron Johnson Blow Smoke

Lately, CNN's Ali Velshi has done a good job of pushing back at some of these Republican politicians when they come on his show and lie. This wasn't one of those times. While Velshi did do a good job of making clear that raising the debt ceiling is pay...

The Rolling Jubilee – Occupy’s plan to cancel consumer debt

Press TV | A new initiative is re-energizing the Occupy movement. Called the Rolling Jubilee, it is a plan to use money from donations to...

FACT: A handful of companies control the global economy

Andrew Gavin Marshall | In October of 2011, New Scientist reported that a scientific study on the global financial system was undertaken by three complex systems theorists at...

Trick or Treat Jobs Report

Stephen Lendman, rinf.com | Friday's headline number belies dire economic reality. Main Street's in protracted Depression. Nearly 25 million Americans are jobless. Real unemployment...

It’s Only Natural to Compare – Comparison Website Technology

One of the biggest success stories of internet business in the past 5 years is the growth of shopping comparison websites in their various...

7 iPhone Apps for Managing Your Finances

by Tom Blackwell
There are so many really good iPhone apps especially in the Finance category.  We decided to take a look at some of the most popular apps for managing your finances.  It is really neat to be...

Networking with the Gurus of Your Niche

by Ally C
In any situation, the people that you have connections with are just as important as the skills that you have and the knowledge that you know. Being able to network yourself...

High-Tech Technology — Are You Safe?

by Melissa Dean
The Smartphone craze has gotten to the point where Smartphones are outselling conventional PCs. It is OK to be crazy about your Smartphone or to want to own one – after all, jumping on the bandwagon is...

Online Payment Options for Your Business

by BuyerZone
Today, most stores have websites that make it easy for their customers to purchase a wide variety of products and services. Before you can use this option, though, you have to choose online payment options that will work well for your business.

Giving Your Business a Kick Start and Keeping it on Top

by Archie June
Big things start with small ones, and this is a principle that is applied in the world of business. Where do you think all those big business started from? Take a look at their histories and you will find out that indeed, they first started as small companies and then grew on to become the big names that...

10 Common Mistakes Every Entrepreneur Should Avoid

by Roxanne Lane
In 2004, the Office of Advocacy reported that there were 24.7 million businesses within the US. According to the Small Business Administration, 66% of new businesses make it past the two year mark. Only 44% are still open after four years. Don’t make the errors that more than half of these entrepreneurs have made.

Online Event Software: How to Choose the Right One?

by Davis Stephenson
Hosting an event has become much easier with the advancement of technology. When you are going to organize an event it is important that you keep an accurate

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by Stephen Lendman

US-led NATO threatens humanity. It's an imperial tool. It's a global killing machine. 

It prioritizes war. It deplores peace. Humanity's survival hangs in the balance.

It includes 28 member nations, 22 Euro-Atlantic Partnership Council (EAPC) ones, seven Mediterranean Dialogue countries, and four Istanbul Cooperation Initiative (ICI) states.

They comprise nearly one-third of world nations. NATO plans exponential expansion. It wants new members and partners.

It wants them on all continents. It wants them virtually everywhere. It wants a global military established.

It wants unchallenged control. It wants all outliers eliminated. It wants pro-Western vassal states replacing them.

Its strategy prioritizes war on humanity. It's ravaging and destroying one country after another.

Ukraine is in the eye of the storm. On Friday, Putin said it may join NATO. Washington may take full advantage. 

It may deploy nuclear-armed missiles on Russia's borders. It may target its heartland.

Ukraine's coup occurred, said Putin. "(T)hey (won't) talk to us." They obey orders from Washington. 

"The next step will be Ukraine's membership in NATO. They never ask us about that…" 

"(A)nd they do not engage in dialog with us…'No dialog,' they say…" 

"(I)t is none of your business, and it does not concern you.' " 

"Ukraine may become a member of NATO tomorrow," said Putin. Under US control. 

Doing so threatens Russia. Cooperative relations with Moscow ended. Minimal contacts alone continue.

Putin said Western countries elevated Kiev putschists to power. They have no legitimacy whatever.

"There was a coup d'etat backed by American and European partners," he explained. "Then there was chaos, and now we are witnessing a full-scale civil war."

Washington imposed sanctions on Russia to gain economic advantage, Putin said. They're counterproductive. They won't work.

On the one hand, Chinese investors will replace EU companies if they're squeezed out. So will other global businesses.

On the other, Russian economist/Putin advisor Andrey Belousov said Moscow prepared retaliatory measures in response.

At different levels, he explained. It depends on US policy going forward. Moscow will respond in kind. 

In its own way. Its own timing. "(W)e know exactly how to react," said Belousov.

On May 23, Reuters headlined "Exclusive: EU weighs Russia sanctions from caviar to oil and gas," saying:

"EU leaders will hold their first detailed discussion next week of specific steps they can take against Russia if Ukraine's elections are not free and fair, including restrictions ranging from luxury goods imports to an oil and gas ban."

Reuters cited a two-page document. It explains three scenarios - low, medium and high-intensity sanctions.

Low ones target Russian diamonds, precious metals, furs, vodka, caviar, and other luxury goods.

Medium ones aim at fertilizers, chemicals, tires, vessels to Russia, as well as weapons imports and exports.

High-intensity ones target investments, capital markets, other financial operations, as well as importing oil and gas.

At the same time, said Reuters, "there is no (EU) unanimous backing for (this) move." German and other European business interests strongly oppose it. 

They want no restrictions imposed. They want nothing interfering with bottom line interests.

"Unless there is unanimous backing for stricter sanctions, the EU will not be able to move ahead - a hurdle that has been frustrating for the United States, which is keen for Europe to move further in imposing restrictions on Moscow," said Reuters.

On May 24, Itar Tass headlined "Lugansk Republic head says provocations possible during Ukrainian presidential elections."

A false flag attack may be planned. Lugansk People's Republic (LPR) Governor Valery Bolotov said:

"I recommend LPR nationals not go to the polling stations as we have information about provocations being prepared by the Ukrainian government and National Guard." 

"They will be conducted to later accuse the Army of the Southeast of disrupting the elections."

May 25 voting began. It remains ongoing. Kiev's sham electoral process won't change things. 

Putschist approved aspirants alone are competing. Billionaire bandit Petro Poroshenko looks sure to win. 

A previous article explained. He made his money the old-fashioned way. He stole it.

He supported Maidan putschists. He ignored their violence. He helped bankroll them. He wants Ukraine plundered for profit. 

He's up to his old tricks again. He's paying 1,000 hryvnyas per day (about $84) for anti-Eastern Ukrainian freedom fighter volunteers.

He admitted it publicly. Their "life and health will be insured for one million hryvnyas," he said. Ukrainian forces receive 600 hryvnyas per month.

Results are predetermined for Poroshenko to win. Perhaps on two rounds. Ballot choices exclude democracy. Expect worse than ever policies to follow. 

Fascist regimes operate this way. Ukraine is Europe's worst. Putschists threaten regional security and stability.

Voice of Russia (VOR) interviewed Ukrainian Dennis Schedrivy. He participated in Maidan protests. He supported them. No longer.

Kiev-instigated violence continues, he said. He expects more ahead. He called coup-appointed Kiev officials "junta" governance.

"I don't see (May 25) elections as anything," he said. "The whole thing with Maidan revolution is not successful." 

"According to the law they have adopted, even if the small village (alone) votes…elections will be considered successful."

"I am sure that at least part of the sane world will not accept these elections," he added.

"(T)hey are bombing…civilians…(T)his is a farce. (T)hey will try to (legitimize) this whole circus…"

Growing thousands of Ukrainians express similar views. Nothing ahead looks encouraging.

War without mercy rages. Ukrainian forces target civilians. They're killing them in cold blood.

Freedom is on the chopping block. Fascists want it entirely eliminated. They want unchallenged top-down hardline rule replacing it. 

They want it enforced. They want junta power institutionalized. Gangsterism is planned. Democracy is prohibited. 

They want what most Ukrainians oppose. It remains to be seen how they'll react. Civil war rages. National rebellion may follow.

Nothing ahead looks promising. What kind of government usurps power? What kind establishes itself by force?

What kind rules extrajudicially? What kind by intimidation? What kind of legitimacy do ultranationalist, xenophobic, neo-Nazi, anti-Semites have? 

What kind substitutes unrestrained coercion for rule of law principles? What kind prohibits opposing views? 

What kind mandates its message alone getting out? The same kind substituting despotism for democracy!

The battle for Ukraine's soul didn't end with putschists usurping power. It just began. It continues.

Ukraine's future is up for grabs. Ordinary people alone will determine it. They have every right to do so. 

Hopefully they'll take full advantage. They'll have themselves to blame if not.

A Final Comment

On May 24, RT International headlined "Russian journalists being banned entry to Ukraine to cover presidential election."

They're accredited to do so. It doesn't matter. They're refused entry. RT's press service said:

"Without explaining the reason for refusal, the members of (Ukraine's) border service forced the RT crew to buy return tickets at their own expense."

It's not the first time. It won't be the last. Fascist regimes operate this way. 

Expect more of the same ahead. Expect police state ruthlessness enforced. 

RT's Anna Knishenko, Elderra Khaled ad Konstantin Bolshakov arrived at Kiev's Borispol International Airport.

Knishenko explained what followed, saying:

"At the border control, they immediately took our passports. An hour later, we - one by one - were invited to a special room for an interview."

They were denied entry. For falsified reasons. For not properly explaining why they came, they were told.

Echo of Moscow correspondent Ilya Azar was treated the same way. So were Russian TV channel reporters.

Everyone denied entry had press cards. Ukraine's Central Electoral Committee accredited them to cover its election earlier.

It didn't matter. Fabricated reasons denied them. Kiev wants its message alone reported. It wants truth suppressed. 

"A whole range of Russian media outlets, including Channel One, NTV, TVC and Zvezda channels have been denied entry to Ukraine headed by the coup-appointed authorities," said RT.

Kiev putschists wage war on media freedom. Russian journalists are targeted. So are others not putschist-approved.

On May 23, The New York-based Committee to Protect Journalists (CPJ) headlined "Russian journalists barred from entering Ukraine," saying:

CPJ "condemns the move…(It) call(ed) on Ukrainian authorities to allow all journalists to carry out their job without harassment."

CPJ's Europe and Central Asia program researcher Muzaffar Suleymanov added:

"If Ukrainian authorities are looking to build a democratic state, they must stop barring the press from covering public events in the country, especially the presidential vote."

"Openness and transparency are vital for democracy." 

"We urge Ukraine to grant entry to all journalists, no matter their nationality or affiliation, or their newsroom's editorial line."

It "equate(s)" legitimate conflict reporting "with terrorism," he added. CPJ denounced what media scoundrels ignore.

They support Sunday's sham process. They equate putschist rule with democracy. 

They turn truth on its head claiming it. Don't expect them to explain.

Stephen Lendman lives in Chicago. He can be reached at [email protected] 

His new book as editor and contributor is titled "Flashpoint in Ukraine: US Drive for Hegemony Risks WW III."


Visit his blog site at sjlendman.blogspot.com. 

Listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network.

It airs three times weekly: live on Sundays at 1PM Central time plus two prerecorded archived programs. 


http://www.progressiveradionetwork.com/the-progressive-news-hour 

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As things stand, the banks are the permanent government of the country, whichever party is in power.

 – Lord Skidelsky, House of Lords, UK Parliament, 31 March 2011)

On March 20, 2014, European Union officials reached an historic agreement to create a single agency to handle failing banks. Media attention has focused on the agreement involving the single resolution mechanism (SRM), a uniform system for closing failed banks. But the real story for taxpayers and depositors is the heightened threat to their pocketbooks of a deal that now authorizes both bailouts and “bail-ins” – the confiscation of depositor funds. The deal involves multiple concessions to different countries and may be illegal under the rules of the EU Parliament; but it is being rushed through to lock taxpayer and depositor liability into place before the dire state of Eurozone banks is exposed.

The bail-in provisions were agreed to last summer. According to Bruno Waterfield, writing in the UK Telegraph in June 2013:

 Under the deal, after 2018 bank shareholders will be first in line for assuming the losses of a failed bank before bondholders and certain large depositors. Insured deposits under £85,000 (€100,000) are exempt and, with specific exemptions, uninsured deposits of individuals and small companies are given preferred status in the bail-in pecking order for taking losses . . . Under the deal all unsecured bondholders must be hit for losses before a bank can be eligible to receive capital injections directly from the ESM, with no retrospective use of the fund before 2018.

As noted in my earlier articles, the ESM (European Stability Mechanism) imposes an open-ended debt on EU member governments, putting taxpayers on the hook for whatever the Eurocrats (EU officials) demand. And it’s not just the EU that has bail-in plans for their troubled too-big-to-fail banks. It is also the US, UK, Canada, Australia, New Zealand and other G20 nations. Recall that a depositor is an unsecured creditor of a bank. When you deposit money in a bank, the bank “owns” the money and you have an IOU or promise to pay.

Under the new EU banking union, before the taxpayer-financed single resolution fund can be deployed, shareholders and depositors will be “bailed in” for a significant portion of the losses. The bankers thus win both ways: they can tap up the taxpayers’ money and the depositors’ money.

 The Unsettled Question of Deposit Insurance

 But at least, you may say, it’s only the uninsured deposits that are at risk (those over €100,000—about $137,000). Right?

Not necessarily. According to ABC News, “Thursday’s result is a compromise that differs from the original banking union idea put forward in 2012. The original proposals had a third pillar, Europe-wide deposit insurance. But that idea has stalled.”

European Central Bank President Mario Draghi, speaking before the March 20th meeting in the Belgian capital, hailed the compromise plan as “great progress for a better banking union. Two pillars are now in place” – two but not the third. And two are not enough to protect the public.As observed in The Economist in June 2013, without Europe-wide deposit insurance, the banking union is a failure:

[T]he third pillar, sadly ignored, [is] a joint deposit-guarantee scheme in which the costs of making insured depositors whole are shared among euro-zone members. Annual contributions from banks should cover depositors in normal years, but they cannot credibly protect the system in meltdown (America’s prefunded scheme would cover a mere 1.35% of insured deposits). Any deposit-insurance scheme must have recourse to government backing. . . . [T]he banking union—and thus the euro—will make little sense without it.

All deposits could be at risk in a meltdown. But how likely is that?

Pretty likely, it seems . . . .

What the Eurocrats Don’t Want You to Know

Mario Draghi was vice president of Goldman Sachs Europe before he became president of the ECB. He had a major hand in shaping the banking union. And according to Wolf Richter, writing in October 2013, the goal of Draghi and other Eurocrats is to lock taxpayer and depositor liability in place before the panic button is hit over the extreme vulnerability of Eurozone banks:

European banks, like all banks, have long been hermetically sealed black boxes. . . . The only thing known about the holes in the balance sheets of these black boxes, left behind by assets that have quietly decomposed, is that they’re deep. But no one knows how deep. And no one is allowed to know – not until Eurocrats decide who is going to pay for bailing out these banks.

When the ECB becomes the regulator of the 130 largest ECB banks, says Richter, it intends to subject them to more realistic evaluations than the earlier “stress tests” that were nothing but “banking agitprop.”  But these realistic evaluations won’t happen until the banking union is in place. How does Richter know? Draghi himself said so. Draghi said:

 “The effectiveness of this exercise will depend on the availability of necessary arrangements for recapitalizing banks … including through the provision of a public backstop. . . . These arrangements must be in place before we conclude our assessment.”

Richter translates that to mean:

The truth shall not be known until after the Eurocrats decided who would have to pay for the bailouts. And the bank examinations won’t be completed until then, because if any of it seeped out – Draghi forbid – the whole house of cards would collapse, with no taxpayers willing to pick up the tab as its magnificent size would finally be out in the open!

Only after the taxpayers – and the depositors – are stuck with the tab will the curtain be lifted and the crippling insolvency of the banks be revealed. Predictably, panic will then set in, credit will freeze, and the banks will collapse, leaving the unsuspecting public to foot the bill.

 What Happened to Nationalizing Failed Banks?

 Underlying all this frantic wheeling and dealing is the presumption that the “zombie banks” must be kept alive at all costs – alive and in the hands of private bankers, who can then continue to speculate and reap outsized bonuses while the people bear the losses.

But that’s not the only alternative. In the 1990s, the expectation even in the United States was that failed megabanks would be nationalized. That route was pursued quite successfully not only in Sweden and Finland but in the US in the case of Continental Illinois, then the fourth-largest bank in the country and the largest-ever bankruptcy. According to William Engdahl, writing in September 2008:

 [I]n almost every case of recent banking crises in which emergency action was needed to save the financial system, the most economical (to taxpayers) method was to have the Government, as in Sweden or Finland in the early 1990’s, nationalize the troubled banks [and] take over their management and assets … In the Swedish case the end cost to taxpayers was estimated to have been almost nil.

Typically, nationalization involves taking on the insolvent bank’s bad debts, getting the bank back on its feet, and returning it to private owners, who are then free to put depositors’ money at risk again. But better would be to keep the nationalized mega-bank as a public utility, serving the needs of the people because it is owned by the people.

As argued by George Irvin in Social Europe Journal in October 2011:

[T]he financial sector needs more than just regulation; it needs a large measure of public sector control—that’s right, the n-word: nationalisation. Finance is a public good, far too important to be run entirely for private bankers. At the very least, we need a large public investment bank tasked with modernising and greening our infrastructure . . . . [I]nstead of trashing the Eurozone and going back to a dozen minor currencies fluctuating daily, let’s have a Eurozone Ministry of Finance (Treasury) with the necessary fiscal muscle to deliver European public goods like more jobs, better wages and pensions and a sustainable environment.

A Third Alternative – Turn the Government Money Tap Back On

A giant flaw in the current banking scheme is that private banks, not governments, now create virtually the entire money supply; and they do it by creating interest-bearing debt. The debt inevitably grows faster than the money supply, because the interest is not created along with the principal in the original loan.

For a clever explanation of how all this works in graphic cartoon form, see the short French video “Government Debt Explained,” linked here.

The problem is exacerbated in the Eurozone, because no one has the power to create money ex nihilo as needed to balance the system, not even the central bank itself. This flaw could be remedied either by allowing nations individually to issue money debt-free or, as suggested by George Irvin, by giving a joint Eurozone Treasury that power.

The Bank of England just admitted in its Quarterly Bulletin that banks do not actually lend the money of their depositors. What they lend is bank credit created on their books. In the U.S. today, finance charges on this credit-money amount to between 30 and 40% of the economy, depending on whose numbers you believe.  In a monetary system in which money is issued by the government and credit is issued by public banks, this “rentiering” can be avoided. Government money will not come into existence as a debt at interest, and any finance costs incurred by the public banks’ debtors will represent Treasury income that offsets taxation.

New money can be added to the money supply without creating inflation, at least to the extent of the “output gap” – the difference between actual GDP or actual output and potential GDP. In the US, that figure is about $1 trillion annually; and for the EU is roughly €520 billion ($715 billion). A joint Eurozone Treasury could add this sum to the money supply debt-free, creating the euros necessary to create jobs, rebuild infrastructure, protect the environment, and maintain a flourishing economy.

_________________

Ellen Brown is an attorney, founder of the Public Banking Institute, and a candidate for California State Treasurer running on a state bank platform. She is the author of twelve books, including the best-selling Web of Debt and her latest book, The Public Bank Solution, which explores successful public banking models historically and globally.

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Cheerleading Potential Disaster

Cheerleading Potential Disaster

by Stephen Lendman

Consider the times. Daily events should scare everyone. Washington rules alone matter. Unfettered power reflects things.

Rule of law principles are ignored. Core Bill of Rights protections are gone. Freedom hangs by a thread.

Democracy is a convenient illusion. Obama presides over a police state apparatus. Bipartisan complicity shares responsibility. Full-blown tyranny is a hair's breadth away.

Fundamental rights don't matter. Big Brother watches everyone. De facto one-party rule runs things.

Monied interests created a multi-headed monster. Super-wealth and privilege rule. Popular needs go begging. 

Social justice is disappearing in plain sight. Money power in private hands is used to make more of it at the public's expense.

Imperial madness defines official policy. Sovereign independence is criminalized. It's considered justification for war. 

Unchallenged global dominance is prioritized. Wars rage without end. New ones are planned. Humanity's fate hangs in the balance.

Warmakers win peace prizes. Peacemakers are scorned. War is considered peace. Criminality is rewarded. Doing the right thing is punished.

Today is the most perilous time in world history. Ukraine's crisis is the gravest since WW II. A potential clash of civilizations looms. 

Media propagandists masquerade as journalists. Presstitution substitutes for real news, information and analysis. 

Defending the indefensible persists. Doing so makes the unthinkable possible. Humanity survived two global wars. 

Another one perhaps means armageddon. Avoiding it should be top priority. Russia bashing takes precedence. 

It rages out-of-control daily. It's malicious. It's merciless. It's outrageous. It doesn't matter. It continues. More on this below.

Obama exceeds the worst of his predecessors. Recklessness defines his agenda. He imposed two rounds of sanctions on Russia. He threatened much tougher ones ahead.

Sergei Lavrov is a consummate diplomat.  He responded, saying:

"Unilateral sanctions have never done any good. They are not legal. And they do not have international legal grounds."

"The UN Security Council is the only body entitled to decide on coercive measures towards sovereign states, but it has not made such decisions in regards to the Russian Federation and the Ukrainian administration of President Yanukovych."

"Even if we speak about the Ukrainian constitution, the people who grabbed power in Kiev in an anti-constitutional revolt did that with at least moral support and, I believe, that support was not just moral, by their actions."

"The trampling upon laws, which aimed to bring their stooges to power, who relied on blatant ultra-nationalists and who were unable to control even Kiev without them, and accusations of us and Crimeans of breaching Ukrainian laws are totally void from the legal point of view and, I believe, totally unacceptable from the point of view of morals and ethics."

A Foreign Ministry statement added:

"Lavrov stressed that the decision on Crimea's reunification with Russia reflected the expression of will of the absolute majority of its people, that it may not be reviewed and must be respected."

"Lavrov drew particular attention to the ongoing violence by ultranationalist and extremist forces targeting businessmen and journalists, dissenters, the Russian-speaking population and our compatriots."

"It is time to put an end to the condoning of the Right Sector militants and Svoboda party" extremists.

NATO Secretary Anders Fogh Rasmussen is a convenient US stooge. He endorses US policies. He supports Kiev neo-Nazi putschists.

On March 20, he lied saying "Russia will go beyond Crimea, and the next goal will be the eastern provinces of Ukraine."

Relations between NATO and Russia can no longer remain "just business," he added. Things are different than weeks earlier, he said. 

He blamed Russia for Western imperial crimes. Perhaps he has war plans in mind. Perhaps planned US-led NATO military exercises in Ukraine suggest trouble.

Rapid Trident is scheduled for this summer. Similar exercises are conducted annually. 

US forces in Europe web site says they're designed to "promote regional stability and security, strengthen partnership capacity, and foster trust while improving interoperability between the land forces of Ukraine, and NATO and partner nations."

Perhaps something more sinister is planned. Perhaps possible confrontation with Russia looms.

On Wednesday, Vice President Joe Biden commented irresponsibility. Washington could invoke NATO's Article 5 for war on Russia, he said. 

Perhaps he knows more than he's admitting. Reckless comments heighten tensions. So do irresponsible sanctions. 

EU leaders targeted 12 additional Russian officials. Business ones were excluded. June EU-Russia summit plans were cancelled.

European leaders intend "targeted economic measures" if Russia "continues to destabilize Ukraine," they said. According to European Council president Herman Van Rompuy:

"We will assess each action, each incident in itself. We will not put all our cards on the table…But the preparations are ongoing."

Angela Merkel said: "As long as there is no political environment for such an important political format as the G-8, the G-8 doesn't exist anymore."

Vladimir Putin responded, saying:

"Are they hoping to put us in a worsening social and economic situation so as to provoke public discontent?"

"We consider such statements irresponsible and clearly aggressive in tone, and we will respond to them accordingly."

Columnist Roger Cohen is one of many New York Times imperial apologists. He never misses an opportunity to miss an opportunity. 

Instead of choosing the right side of history, he's polar opposite every time. Especially when it matters most. Setting the record straight isn't his long suit.

He's been bashing Russia for weeks. On March 20, he headlined "Cold Man in the Kremlin," saying:

"Putin’s push for a revived Soviet-like space reached its apotheosis (with) the annexation of Crimea." He called it "a watershed moment for Europe, where such an event had not happened since World War II." 

He ignored Yugoslavia's systematic destruction. He turned a blind eye to US-led NATO's full responsibility. 

He said nothing about Washington transforming most former Soviet republics and Warsaw Pact countries into subservient pro-Western puppet states. He paid no attention to accompanying human misery.

"The Continent is once again combustible," he said. "The United States faces a foe in Moscow who laces his comments about America with contempt."

Cohen wrongfully compared Crimean/Russian reunification to Hitler's Austrian Anschluss. Both events were polar opposites.

Washington bears full responsibility for heightened continental tensions. Rogue EU partners share it. Putin's straight talk is derided. Don't expect Cohen to explain. 

Defending the indefensible takes precedence. So does suppressing truth. "The language Putin understands is force and power," he claimed.

"If further Russian designs on Ukraine are to be stopped, President Obama has to respond to the Russian president in the idiom he understands," he added.

He lied accusing Putin of "proposing an alternative civilization of brutality, force, imperial expansion, systemic corruption, a cowed press, conspiracy theories and homophobia."

His characterization describes Washington. For sure not Putin. It bears repeating. Don't expect Cohen to explain.

Neocon Washington Post editors wage daily war on Russia. They repeated the Big Lie about Russian "aggression."

WaPo editors don't recognize the real thing. They call lawless US imperial wars humanitarian interventions. 

They consider ravaging and destroying one country after another liberation. Unrestrained plunder is called economic development. Despots running things are labeled democrats.

Hit 'em again harder, they urge. Pile on tougher sanctions.

Punish Putin "while minimizing the collateral damage to the US, European and global economies that could come from a broader economic war."

Credit Obama "for leading the Western response…" US sanctions "still fall far short of what is needed to inflict the 'massive' damage to the Russian economy…"

WaPo editors repeated the Big Lie. Russia invaded Crimea, they screamed. They outrageously accused Putin of "steady escalation since Russian troops fanned out in Crimea nearly three weeks ago."

Putin "appears bent on bringing about the (Kiev government's) downfall," they claim.

Moscow justifiably rejects putschist illegitimacy. WaPo editors embrace it and then some.

"…Putin and his political elite appear drunk with euphoria over their successful seizure of Crimea and skeptical about the West's will to push back," they claim. 

"If the latest sanctions do not quickly sober them up," WaPo editors wants tougher policies instituted. Again, they barely stopped short of urging war. Neocons prioritize it.

Garry Kasparov is a convenient US stooge. He's a former world chess champion turned hard right politician. 

He's a dubious character and then some. He gets generous National Endowment for Democracy funding.

He's a former Center for Security Policy board member. Neocon Frank Gaffney heads it. Its board, staff and members include likeminded hardliners.

Kasparov is linked to former Yukos oil vice president Leonid Nevzlin. It's no longer operating. 

Nevzlin was Russian oligarch Michael Khodorokvsky's partner. He fled to Israel to avoid charges of involvement with contract killers hired to eliminate "objectionable people."

In 2009, Kasparov met personally with Obama in Washington. At the time, they discussed internal Russian elements opposed to Putin.

Kasparov allied with a 2010 "Putin must go" initiative. WaPo editors gave him featured op-ed space. He headlined "It's time to stop Putin." 

He repeated the same Big Lie. He "invad(ed) Crimea," he said. He called legitimate reunification "defiance." 

He wants Putin confronted more forcefully. He wants tough pressure applied. He wants policies "target(ing) his hold on power."

He claims it's "all (he) cares about…" He berated Obama for saying he won't send US forces to defend Ukraine. He ludicrously called it "a gesture of peaceful intent."

He claimed there's "no dealing with Putin, no mutually beneficial business as usual." He turned truth on its head saying he "feels no obligation to operate by the rule of law or human rights in or outside of Russia."

"Putin is a lost cause," he hyperventilated. Russia "will be until he is gone. The West has been in denial about this for far too long."

"It has always been an error to treat (him) like any other leader; now, there are no more excuses."

You can't make this stuff up. Imagine featuring this type rubbish. Kasparov is no democrat. He's no populist. He's connected to some of the most extremist neocon ideologues. 

They deplore peace. They endorse war. They want one country  after another ravaged. They want them plundered. They want monied interests alone benefitting. 

They want ordinary people exploited. They want despots they control replacing democrats. Their agenda risks global war.

Not according to Kasparov. "Obama and Europe's leaders keep trying to play by the rules even though Putin has ripped up the rule book and thrown the shreds in their faces," he claimed.

He wants him targeted ruthlessly. He wants him ousted. Maybe he has war in mind to do it. He's part of the problem. For sure not the solution.

Wall Street Journal editors continued their daily anti-Russia barrage. On March 20, they headlined "The Russo-Sanctions War," saying:

Putin "keeps ignoring Mr. Obama's pleas to stop carving up Ukraine…" On Thursday, "economic war" began.

Obama targeted Russian business figures. He included Bank Rossiya. It's Putin's bank. It handles financial transactions for other Russian officials.

Obama's Executive Order authorizes targeting key sectors of Russia's economy. Make it scream, Journal editors urge.

"(T)his is an economic war the US should be able to win," they said. If carried to extremes, not without a potential significant global cost.

Conditions worldwide are weak. They're unstable. China's economy is slowing markedly. Slowdown affects India, Brazil, and other emerging economies.

Eurozone countries are troubled. Italy faces major problems. Economic stagnation harms France. Spain, Portugal and Greece remain basket cases.

Problems experienced by one country affects others. US/Russia economic war could ripple globally. Crisis conditions could follow.

Journal editors should know better. They endorse what should be avoided at all costs. They want tougher measures taken.

They lied claiming Russia's "military is poised to move into Ukraine's south and east on the Kremlin's orders."

They urge countering Putin by "impos(ing) enough immediate and substantial pain on (him), his friends and the Russian economy…"

They want world banks forced "to choose between doing business with" America or Russia. They want Moscow's "dominance in European energy" confronted.

They want Ukraine given military aid. The want NATO forces deployed close to Russia's borders. It bears repeating. Perhaps they want WW III.

Media scoundrels lack legitimacy. They support wrong over right. They march in lockstep with lawless US policy. 

They blame victims for crimes Washington commits. They lie to readers and viewers consistently. They endorse policies risking global conflict. Don't ask them to explain.

Stephen Lendman lives in Chicago. He can be reached at [email protected] 

His new book is titled "Banker Occupation: Waging Financial War on Humanity."

http://www.claritypress.com/LendmanII.html

Visit his blog site at sjlendman.blogspot.com. 

Listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network.

It airs three times weekly: live on Sundays at 1PM Central time plus two prerecorded archived programs. 


http://www.progressiveradionetwork.com/the-progressive-news-hour 

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Looking Back: Five Years after the Obama Election


By 2008, the US electorate was fed up with George Bush. In fact, the US ruling class was fed up, too. Internationally, US prestige was at a low point, thanks to the Bush administration's brazen and failed military aggressions. Domestically, the bottom had fallen out of the US economy. It was time for him to go. His failings cast a shadow over the system's legitimacy.
Anyone with even a passing understanding of US history understood that “regime change” was in the cards. That is, it was the moment for the two-party juggernaut to spit out a fresh face untainted by the previous administration, vigorous, and promising a new direction. It was essential that new leadership appear different, self-confident, and representative of policies contrasting with the old regime.
We saw this before.
Franklin Roosevelt was such a figure. He came forward as a clean, untainted alternative to the failed Hoover administration. Disgust with Hoover was so great, that merely by avoiding large, looming issues, FDR was able to capture the Presidency with a virtual carte blanche to rescue the sinking capitalist economy. Yet he was, as a leading commentator of the time, Walter Lippmann, observed before Roosevelt's election, “... an amiable man with many philanthropic impulses, but he is not the dangerous enemy of anything. He is too eager to please.... Franklin D. Roosevelt is no crusader. He is no tribune of the people. He is no enemy of entrenched privilege. He is a pleasant man who, without any important qualifications for the office, would very much like to be President." All historians agree that Roosevelt was, first and foremost, practical. If policies worked or were popular, he supported them.
Over time, a myth arose that Roosevelt was a savior, a messianic figure who arose and smote the rich and powerful. Those who organized the bonus marches, the unemployment councils, the general strikes, the tenant and share cropper actions of the Depression era, like those who built the industrial unions that made up the powerful CIO, were swept under the historical rug. Acknowledging that they were the source or driving force for New Deal reforms was an inconvenient truth. That said, Roosevelt's pragmatism, his respect for new ideas in desperate times, marked him as an uncommon political leader.
The New Deal myth sustained the Democratic Party for decades, even though Party leaders began a retreat from the New Deal upon Roosevelt's death. After 1944, the “New Deal” label fell into disuse as both political Parties rallied around anti-Communism and a relatively benign social compact. Political leaders willingly conceded a modest social contract with labor for cooperation in the anti-Communist campaign and business unionism.
Anti-Communist excesses (so-called “McCarthyism”), overt and institutional racism (segregation), setbacks in foreign policy (Cuba, the U-2) tarnished the US reputation internationally and stirred discontent at home by the end of the 1950s.
Once again, a new face, representing religious diversity, youth, cosmopolitan life style, and change, emerged as an alternative. John Kennedy, like FDR, injected vigor into a two-party landscape driven by the now dominant medium of television. Again regime change was in order and the appearance of regime change was achieved. Despite the mythology of the Kennedy Camelot-- and sealed by his assassination-- Kennedy's administration was ruled by the continuation of the Cold War and lip-service to domestic discontent. While some opportunistic adjustments were forced on his administration, Kennedy largely sought to construct a more compassionate, tolerant face to US capitalism; his assassination obviously shows that this was not acceptable to many important, powerful members of the old club.
Months after the Kennedy assassination, left pundit I.F. Stone captured Kennedy's role: “ ...Kennedy, when the tinsel was stripped away, was a conventional leader, no more than an enlightened conservative, cautious as an old man for all his youth, with a basic distrust of the people and an astringent view of the evangelical as a tool of leadership.”
Less than a decade later, with the criminal implosion of the Nixon administration, the credibility of the US political system was undermined. Resignations, criminal charges and Impeachment bred an unprecedented cynicism and challenge to two-party legitimacy.
A fresh face entered from the wings: Jimmy Carter, neither a Senator nor a corporate attorney, but an obscure Southern Governor and a peanut farmer. Like Roosevelt, Carter brought a fresh, unstained image to the political game, a much-needed contrast to the sleaze of his predecessors.
I wrote in 2008 of the 1976 election: “Most citizens looked to the then forthcoming elections with a profound desire for a new course. The Democrats chose a political outsider, Governor Jimmy Carter of Georgia. Carter promised to make the government 'as good as the people.' Pundits hailed Carter as a departure from the old politics and a fresh, honest voice for change (e.g. The Miracle of Jimmy Carter, Howard Norton and Bob Slosser, 1976).”
I went on to note that Carter proved to be a prophet of false hope and absent change. He quickly turned his back on the most progressive Democratic platform since the New Deal and ushered in economic policies that were soon to be dubbed “Reaganomics.
It was this historical backdrop that prompted me to suggest that candidate Barack Obama might well be another postured savior at a moment of crisis in the two-Party system, a carefully crafted, groomed alternative to a bumbling, embarrassing regime.
There are some striking and illuminating parallels between this election season and the Presidential election campaign of 1976... Like the eight years of the Bush administration, the eight years of Nixon/Ford produced an unparalleled collapse of support for the Republican Party. The Watergate scandal coupled with the failure of the US military in Vietnam and an economic crisis left the Republican Party wounded and regrouping.
Similar to 1976 Presidential candidate J. Carter, his presumptive 2008 counterpart, Barack Obama, is viewed as a Washington “outsider”. He has campaigned as a candidate of change. Pundits hail him as a fresh voice untainted by the vices of the establishment.
Obama must contend with similar issues: a brutal military adventure, collapsing mass living standards, and an economy exhibiting more and more of the symptoms of “stagflation.” Like Carter, his campaign is geared to appealing to the mass base of the Democratic Party: the working class, liberals, and African-Americans. His campaign strategists will likely recommend - as Carter’s advisors did - that the candidate tack to the right to garner center-right and independent votes going into the general election. Every Democratic Party Presidential candidate since has employed a similar strategy. Despite this maneuver, Carter managed to lose his huge lead in the polls and eke out a narrow victory in the November election. Nonetheless, this failed approach continues to seduce Democratic Party tacticians. (ZZ, 2008: A Reprise of 1976?Fall, 2008)
Obama represented a constant of modern US politics: political crisis or threat to legitimacy spawning a face-lift, cosmetic changes, and a re-kindling of “hope” and “change” in the form of a vigorous, youthful, well-spoken Democrat. And Obama, as an African American, had the special appeal of breaking through racial barriers and perhaps sharing some common sensibilities with diverse peoples outside of the US.
While contemporary history taught that appearance generally belied actual change, liberals and most of the US Left succumbed to the allure, putting aside their picket signs, marching shoes, and petitions to open their pocketbooks and enthusiasm to the Obama campaign.
With the November, 2008 victory under his belt, Obama's unprecedented campaign contributions from the financial sector, his lame, discredited cabinet appointees, and his blatant, shameless, scandalizing of his home-town pastor, Reverend Wright, left the adoring Left unfazed.
By fitting Obama with the mantle of progressive change, the leadership of the broad left - much of the peace movement, liberals, environmental social justice activists, etc. - surrendered their critical judgment, independence, and influence to a blind trust in a fictitious movement for change. In the history of social change in the US, every real advance was spurred by independent organization and struggle,unhampered by the niceties of bourgeois politics. From the Abolitionist movement to the Civil Rights movement, from the Populist movement to the Great Society, from the Anti-imperialist League to the Anti-Vietnam War movement, the initiative for change sprung from committed, independent activists who defied the caution and inertia of elected officials. Why have these lessons been ignored? (ZZ, Let Obama be Obama? December 29, 2008)
Yet everyone from the Hollywood liberal set to the Communist Party USA hailed Obama as the Second-coming of FDR, if not Lincoln.
Over the top, but representative of the self-delusional moment, one hopped-up “progressive” wrote in a widely disseminated 19-page homageto the election of Barack Obama: "...hundreds of millions-Black, Latino, Asian, Native-American and white, men and women, young and old, literally danced in the streets and wept with joy, celebrating an achievement of a dramatic milestone in a 400-year struggle, and anticipating a new period of hope and possibility."
Leaving aside the hyperbole (less than 130 million people voted for BOTH candidates and 400 years takes us back to well-before there was a USA), this screed correctly captured the unjustified euphoria that swept through the Left.
Seemingly, every generation of the Left surrenders to the false hope of the Democratic Party; every generation repeats the same mistake.
Tragedy? Farce?
Today, the Obama administration owns the betrayal of the EFCA promise to labor, an untenable healthcare system borrowed from Mitt Romney, 800 hundred deaths a month in the failed state of Iraq, an Afghani nation that may kick the US military out before it plans to leave, the destabilization of Libya and Syria, a broken promise on Guantanamo, widening income and wealth gaps, crumbling infrastructures, a host of unfulfilled promises, a legacy of corporate coddling, and cowardly and illegal (drone) murders. The shattering of a racial barrier-- the election of the first African American President-- has shamefully served to cover the criminal neglect and decline of the well-being of African Americans.
And everyone knows it. In 2013 alone, Obama's approval rating dropped nine points to 43%; the percentage believing that Obama is honest and straightforward has dropped ten points to 37%.
And this is the candidate embraced by the broad Left in 2008?
With three years left-- two years before the 2016 Presidential campaign begins in earnest-- Democratic Party influentials are pressing Obama to establish some kind of legacy to energize the base, to charge up the “respectable” Left and labor for future elections. As a lame-duck, he will likely make numerous gestures towards the social, life-style issues valued by the upper-middle strata-- the petty-bourgeoisie. There may even be a highly publicized, but feeble attempt to raise the minimum wage. But expect no serious changes in ruling class foreign or economic policy. Liberals have demonstrated that they will not hold elected Democrats to any promises on these questions.
Will this herd the sheep-like liberals and soft-Left back into the fold? Will they repeat again the slavish loyalty of the past? Will they drink the Kool-aid?
Or will people finally recognize the Democratic Party trap and begin to construct a movement towards independent politics, perhaps rallying around Jill Stein and the Green Party? Will there be a long overdue departure from bankrupt ideology and shameless opportunism? Will the idea of people power and the companion notion of socialism take root?
We have a new year to find out...

Zoltan Zigedy



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The housing market cooled, home values shrank, and the financial structure built around home ownership began to collapse. As the stock market fell freely from previous highs, led by the implosion of bank stocks, investors withdrew dramatically from the market. Credit froze and consumption slowed. Thus began a downward spiral of employee layoffs, reduced consumption, capital hoarding, and retarded growth, followed by more layoffs, etc. etc.
As fear set in, policy makers scrambled to find an answer to a crisis that threatened to deepen and spread to the far reaches of the global economy. With interest rates near zero, they recognized that the monetarist toolbox, in use since the Carter administration, offered no answer.
At the end of the Bush administration, bi-partisan leaders approved the injection of hundreds of billions of public dollars into the financial system with the hope of stabilizing the collapsing market value of banks, a move popularly dubbed a “bailout.”
Early in the Obama administration, Democratic Party administrators crafted another recovery program totaling about three-quarters of a trillion dollars, a program involving a mix of tax cuts, public-private infrastructure projects, and expanded direct relief. Economists generally viewed this effort as a “stimulus” program designed to trigger a burst of economic activity to jump-start a stalled economic engine. Dollar estimates of aggregate US Federal bailouts and stimuli meant to overcome the crisis rose as high as the value of one year's Gross Domestic Product in the early years after the initial free fall. The Federal Reserve continues to offer a $75 billion transfusion every month into the veins of the yet ailing US economy.
Bad Faith
The last three decades of the twentieth century brought forth a new economic consensus of not merely market primacy, but total market governance of economic life. Regulation of markets was believed to destabilize markets and not correct them. Public ownership and public services were seen as inefficient and untenable holdouts from market forces. Public and private life beyond the economic universe were subjected to markets, measured by market mechanisms, and analyzed through the lens of market-thought. Indeed, market-speak became the lingua franca unifying all of the social sciences and humanities in this era. With the fall of the Soviet Union, capital and its profit-driven processes penetrated every corner of the world. Only independent, anti-imperialist, market-wary movements like those led by Hugo Chavez, Evo Morales, and a few others gained some political success against the unprecedented global dominance of private ownership and market mechanisms.
While capitalism in its most unadorned, aggressive form enjoyed the moments of triumph, forces were at play undermining that celebration. Those forces crashed the party in 2000 in the form of a serious economic downturn, the so-called “Dot-com Recession” featuring a $5 trillion stock market value loss and the disappearance of millions of jobs. Economists marveled at how slowly the jobs were returning before the US and global economy were hit with another, more powerful blow in 2008. Clearly, the first decade of the twenty-first century will be remembered as one of economic crisis and uncertainty, a turmoil that continues to this day.
Apart from the human toll-- millions of lost jobs, poverty, homelessness, lost opportunities, destruction of personal wealth-- the crisis-ridden twenty-first century challenged the prevailing orthodoxy of unfettered markets and private ownership. Even such solid and fervent advocates of that orthodoxy as the Wall Street Journal, The Economist, and The Times were rocked by the crisis, questioning the soundness of classical economic principles. No principle is more dear and essential for the free marketeers than the idea that markets are self-correcting. While there may be short-term economic imbalances or downturns, free-market advocates believe that market movement always tends towards balance and expansion in the long run. Thus, a persistent, long term stagnation or decline is thought to be virtually impossible (with the caveat that there are no restrictions imposed on the market mechanism).
So when perhaps the greatest era of extensive global open-market economy experienced the most catastrophic economic collapse since the Great Depression, serious doubts arose about the fundamental tenets of market ideology. And during the darkest days of 2008 and 2009, a veritable ideological panic swept over pundits and experts of the Right and the “respectable” Left. Some rehabilitated an out-of-fashion economist and spoke of a “Minsky moment.” Liberals proclaimed the death of neo-liberalism (the popular term for the return to respectability of classical economics that began in the late 1970s). And still others foresaw a restoration of the interventionist economics represented by John Maynard Keynes, the economic theories that guided the capitalist economy through most of the post-war period. Even the most conservative economists conceded that market oversight, if not regulation, was both necessary and forthcoming.
Yet, change has not come forth. Despite over five years of decline and stagnation, despite a continued failure of markets to self-correct, free-market ideology continues to dominate both thinking and policy, clearly more faith-based than reality-based. In part, the resilience of open-market philosophy emanates from the shrewd manufacture of debt-fear by politicians and debt-mongering by financial institutions. By raising the shrill cry of exploding debt and impending doom, attention was diverted from the failings of the unfettered market and towards government austerity and massive debt reduction.
Diagnosis?
Clearly all the Nobel Prize-winning mathematical economic models thought to capture economic activity failed to predict and explain the 2008 crash. No amount of faith could disguise the monumental failure of raw, unregulated markets and the policies that promoted them. Two competing, sharply contrasting, and simplistic explanations came forward.
Defenders of free markets shamelessly, brazenly argue that government meddling thwarted the full and free operation of market mechanisms, thus, exacerbating what would have been a painful, but quickly resolved correction. Following the metaphor alluded to in this article’s title, heartburn was misdiagnosed, treated with radical surgery, only to create a life-threatening condition.
Of course this is self-serving nonsense.
Whatever else we may know about markets, we know this: since the process of deregulating markets began in earnest in the late 1970s, crises have only occurred more frequently, with greater amplitude, and