Banking

Pretend to the Bitter End

mickeymouseclubgc2smFrom the keyboard of James Howard Kunstler
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Originally Published on Clusterfuck Nation January 4, 2016
 

Forecast 2016

There’s really one supreme element of this story that you must keep in view at all times: a society (i.e. an economy + a polity = a political economy) based on debt that will never be paid back is certain to crack up. Its institutions will stop functioning. Its business activities will seize up. Its leaders will be demoralized. Its denizens will act up and act out. Its wealth will evaporate.

Given where we are in human history — the moment of techno-industrial over-reach — this crackup will not be easy to recover from; not like, say, the rapid recoveries of Japan and Germany after the brutal fiasco of World War Two. Things have gone too far in too many ways. The coming crackup will re-set the terms of civilized life to levels largely pre-techno-industrial. How far backward remains to be seen.

Those terms might be somewhat negotiable if we could accept the reality of this re-set and prepare for it. But, alas, most of the people capable of thought these days prefer wishful techno-narcissistic woolgathering to a reality-based assessment of where things stand — passively awaiting technological rescue remedies (“they” will “come up with something”) that will enable all the current rackets to continue. Thus, electric cars will allow suburban sprawl to function as the preferred everyday environment; molecular medicine will eliminate the role of death in human affairs; as-yet-undiscovered energy modalities will keep all the familiar comforts and conveniences running; and financial legerdemain will marshal the capital to make it all happen.

Oh, by the way, here’s a second element of the story to stay alert to: that most of the activities on-going in the USA today have taken on the qualities of rackets, that is, dishonest schemes for money-grubbing. This is most vividly and nauseatingly on display lately in the fields of medicine and education — two realms of action that formerly embodied in their basic operating systems the most sacred virtues developed in the fairly short history of civilized human endeavor: duty, diligence, etc.

I’ve offered predictions for many a year that this consortium of rackets would enter failure mode, and so far that has seemed to not have happened, at least not to the catastrophic degree, yet. I’ve also maintained that of all the complex systems we depend on for contemporary life, finance is the most abstracted from reality and therefore the one most likely to show the earliest strains of crackup. The outstanding feature of recent times has been the ability of the banking hierarchies to employ accounting fraud to forestall any reckoning over the majestic sums of unpayable debt. The lesson for those who cheerlead the triumph of fraud is that lying works and that it can continue indefinitely — or at least until they are clear of culpability for it, either retired, dead, or safe beyond the statute of limitations for their particular crime.

Of course it says something about the kind of society we’ve become that such racketeering has become so normative and pervasive, and that evading responsibility for its consequences has been elevated to a sort of enviable skill-set. In fact, the art of evasion has taken the place of what used to be called honor. We live in a low time that honors only low men. Ironically, we affect to admire only “superheroes” because it has become impossible to imagine mere humans showing courage, fortitude, and respect for truth. All conduct is provisional and equivocal. Every law can be parsed to serve what it was created to oppose. Anything goes and nothing matters.

In this year’s go-round, I’ll try to describe what happened so far, where we stand, and where I think things are going. My method is emergent and heuristic. I’m allergic to charts and graphs, which are among the prime tools of the racketeers and the wishful thinking impresarios for bending the truth. Sadly, also, statistical analysis plays into the fantasy that if you can measure enough things you can control them. (And if you mis-measure things on purpose, you can pretend to be in control.) This illusion of control is the weakest ingredient in the financial system. When it does finally reach failure mode, it tends to produce calamity.

I’m more interested in the longer view than the moment-at-hand. The swirl of events generally includes more vectors and factors than any calculus can manage. Outcomes easily slip away from the linear. Ultimately this is a exercise that might be called a history of the future — that is, just a story.

Banking and Markets

The big event of the year past was the Federal Reserve’s Waiting for Godot act concerning the fed funds rate. When Godot finally showed up two weeks before year’s end, it was in the expected-but-pitiful form of a 25-50 basis point hike — which gives the impression of a possible 50 point rise, but with the way more likely probability of actually sticking to the lowest end of the gradient (and actual overnight lending rates were already a few basis points above zero, so the net was really less than 25 basis points.)

The background of this charade was pretty clear to anyone not brain damaged from the rigors of playing Candy Crush on their phone: the Fed was hiking rates into a wobbling global economy; they were forced to act at year’s end or surrender the last shreds of their credibility (i.e. being taken to mean what they say); and they left the door open to retreat in 2016 if necessary. But the damage to the Fed had already been done. They were unmasked as a propaganda machine powerless against the real tides of economy, creating only mischief and misunderstanding, and ultimately undermining all soundness in the relationship between money and real human activity. Anything they do in the election year ahead will be viewed with suspicion, specifically of pimping for Hillary Clinton’s coronation. And her relationship with the biggest banks is well-understood. So they had to make their grand gesture in December.

The stock markets skidded a little below sideways this year (except for the Nasdaq) which glided up more than 5 percent (techno-grandiosity rules!) — with one upchuck at the end of the summer that was remedied by China bailing out its own janky stock markets and playing games with its currency.

Gold and silver continued their four-year swoon thanks to repeated massive wee hour dumps of futures contracts before the traders in New York even got out of bed. The charts conclusively show this shady activity, raising the question: why would any seller want to hugely undercut the price of what he seeks to sell by selling into a market where no buyers are present… or even awake? The answer seems to be: to make the dollar appear more firm than it really is.

The many years of ZIRP (zero interest rate policy), combined with the previous accumulation of debt unlikely to be paid back has made it ever more difficult to issue new debt with any likelihood of being paid back. But ZIRP has also nullified the relationship between interest rates and risk. In a system unencumbered by central bank interventions, interest rates would have to go a whole lot higher on instruments with such poor prospects. Of course, higher interest rates would only make new bonds that much less likely to be serviced by their issuers, especially governments laboring under Himalayan-scale debt loads. The tension in this equation has been provisionally papered over by the use of interest rate swaps, reverse repos, and other abstruse machinations and derivatives aimed at suppressing true price discovery.

The corporate stock buyback fiesta of 2015 was the perfect example of an anything goes and nothing matters ethos. It happened in full view of everyone, and it happened solely to assure corporate executives that they would enjoy their bonuses and fringe benefits and nobody complained about it. Even so, it barely accomplished anything index-wise. The markets went sideways even with all that insider action because the fundamentals suck and the global economy was obviously sinking into a deflationary contraction.

My auditors derive no end of mirth from my attempts to predict the stock markets each year. So, to add to their enjoyment, I’ll be even more precise this time around. I predict that the S & P will top on January 15, 2016, at 2142, and then crumple below 1000 by June. Carnage at the margins of the bond market — high yield paper — will spread to the center and we’ll finally see the re-pricing of risk back in the European sovereign market. French, Spanish, UK, and Italian 10-year paper below 2.0 percent? What a colossal joke that’s been! Fasten your seat belts and check your pension funds.

Oil and Deflation

The oil picture has bamboozled both the broad public and the smaller cohort of supposedly sentient observers. I maintain that the deflationary contraction underway worldwide is largely due to the fact that the world has run out of a particular form of oil: affordable oil. Turns out the peak oil story is still true, just playing out differently than a lot folks predicted. We’re at the mercy of a pretty basic equation: oil over $75-a-barrel destroys industrial economies; oil under $75-a-barrel destroys oil companies. There is no “just right” Goldilocks place on the gradient.

The public got bamboozled by the Ponzi scheme of shale oil. It seemed like a fabulous techno-rescue: the “fracking miracle!” It operated by converting mountains of cheap leveraged capital into a very rapid bump-up in US oil production. It got full traction after a couple of years of $100 oil squashed economic activity — and then squashed demand for oil. Whoops. The problem was that shale oil was very expensive to produce even if reduced demand drove the market price very low. Back at $100-plus a barrel, hardly anyone made any profit on shale. At $40 a barrel shale was a laughable loser. So, in 2015, the shale oil companies laid off thousands of workers, idled the drilling rigs, and kicked back to pray that the price would go back up. Which it didn’t. Incidentally, all kinds of associated ventures went bust with that. The landscape of North Dakota is littered with unfinished garden apartment complexes that may never be completed, and the discharged construction carpenters and roofers drove back to Minnesota ahead of the re-po men coming for their Ford F-110s. Sad, I know….

The rapid ramp-up in shale oil production from 2010 to 2014 was intended as a demonstration project to convince Wall Street to stuff ever more investment capital into oil companies. It was also part of an enormous PR campaign to allow the people running things in business and government to pretend that America’s oil problems were behind us. The “shale miracle” was going to make us “Saudi America,” It was going to boost us into “energy independence.” It played into the Master Wish beneath all the wishful thinking in America: Please, God, let us be able to drive to WalMart forever. It wasn’t so much an evil conspiracy as a feckless collective effort in denial and self-delusion

It happened that a lot of that Wall Street finance came in the form of high-yield (junk) bonds issued by the oil companies — with fat commissions for the big banks to cream off in creating the bonds. So when the price of oil crashed below $50, a lot of oil companies — especially the smaller ones with no cash flow — couldn’t service the interest payments. What lies ahead in 2016 is a debacle of bond defaults and corporate bankruptcies in the US oil patches. What’s more, because of the peculiar geology of shale oil and the rapid depletion of the fracked wells, it is necessary to incessantly drill and frack new wells to keep production even level, let alone rising. That calls for evermore rounds of new financing. But since the current financial obligations can’t be serviced, new financing will not be not forthcoming. And so neither will additional production. All of which means that shale oil production is going to crash in 2016 when the backlog of previously-drilled but untapped wells runs out. I’ll predict that US oil production will go down a million barrels a day before 2017. That includes the roughly 5 percent annual decline of conventional oil.

Some might suppose that such a crash would drive prices back up again as the supply necks down. There are a couple of problems with that supposition. One is that the previous round of $100-plus oil did a lot of permanent damage to the economy, in particular to small businesses and households (i.e. middle-class workers). That damage looks more and more permanent, meaning a smaller aggregate economy and still-shrinking demand base as businesses and citizens go broke and stay broke. If oil prices do return to a level that would justify exploration and production of expensive, hard-to-get oil, (probably north of $110) it will only crash industrial economies again — and there are only so many times this can happen before the system is so damaged recovery is no longer possible. Another problem is that the oil price crash has done significant damage to the oil industry itself, including its credibility as a viable target for investment. Contrary to hopes and expectations, current low oil prices are doing nothing to re-stimulate economic activity. It all has the look of a self-reinforcing feedback loop, a downward spiral in a global complex networked system getting clobbered by the diminishing returns of its principal activities.

Hence I would predict that the price of oil will fall further in 2016, below the $30 mark, and that it will lead to more carnage in the oil industry, in banking and debt defaults, and to new manifestations of geopolitical trouble that could lead to profound oil scarcities and rationing. We can’t seem to face the fact that our techno-industrial paradigm was designed to run on cheap oil, which is just no longer available.

Geopolitics

People are getting very nervous. They can’t help harking back a hundred years to the mysterious lead-up of the First World War, which brought an end to the first iteration of globalism with a bang. The great nations of 1914 just seemed to get haplessly drawn into a debacle that no one had bargained for — the slaughter of the trenches, bankrupted national treasuries, the fall of three dynasties, the rise of the fascists and Bolsheviks… ugh!

Many people with more than half a brain are seeing similar motifs today — a general movement toward major war by way of sheer fecklessness. For instance, the ongoing effort led by the USA to antagonize Russia for no apparent good reason, dragging the dupes of NATO along with it. I won’t rehash our stupid operation to destabilize Ukraine. David Stockman covered that so nicely last week in his blog. Anyway, that Ukraine action was all back in 2013-14. Ukraine is now a failed state. I predict that in 2016 Ukraine will beg Russia to take it back into the Russian sovereign fold, to become once again a province of greater Russia. However, Russia will demur. Russia actually can’t afford such a woebegone, unreliable, and expensive ward. So Ukraine will then go begging back to the US and NATO to dole out financial life-support. By that time, the US and western Europe will be so economically distressed that they will only pretend to bail out Ukraine, just as they pretend to bolster their own economies via smoke-and-mirrors central bank shenanigans. Ukraine will sink into a World Made By Hand level of neo-medievalism, blazing the trail for everybody else in the world. Think: lawlessness, banditry, gangster autarky, neo-serfdom. Sounds harsh, I know, but it is what it is.

In 2015 the action between the US and Russia shifted to Syria. Our monumental blunderings in the Middle East, which included enabling the creation of ISIS, left us bereft of any coherent way to counter the barbarism and animus of radical Islam. So, our “adversary” Mr. Putin stepped in, on the premise that destabilizing what remains of the Syrian government under Mr. Assad was not such a good idea — as he explained very clearly to the UN General Assembly. It remains to be seen whether Russia will be able to pacify Syria, much of which lies in ruins now. But unlike the USA, Russia doesn’t have ambivalent intentions where ISIS is concerned. We’ve pretended that any old freelance gang opposing Assad is our friend. Russia’s aims are pretty straightforward: prop up Assad, rescue whatever governing institutions remain in Syria, and smash ISIS. In exchange they get a warm-water naval base on the Mediterranean. That’s supposed to be an existential threat to the USA.

The basic regional beef there, anyway, is between the Sunni and the Shi’ite, which is to say Arabian-sponsored Islamic maniacs versus Persian-sponsored Islamic maniacs. Unfortunately, that translates into the Saudi Arabia / USA and Iran / Russia contest of wills. Throw in some league wild-card players like Hezbollah and Israel and you have a pretty yeasty mix for rising animosities. Sadly, the US can’t seem to formulate a strategy that doesn’t make things worse for people in the region or for the US homeland (or for our allies in Europe, plagued by refugees they cannot comfortably absorb and the awful threat of terror events).

I expect in 2016 that Obama’s policy will be to just get out of the way of Putin and see what happens. He doesn’t have much left in the kit-bag for now. The worst thing to come out of this for Obama, really, is if Putin can succeed in pacifying Syria, America’s leaders will look bad — incompetent and foolish — which is the actual case, of course. Maybe sometimes you just have suck up your mistakes. Much as Obama dislikes Hillary, I doubt he wants to upend the whole groaning Democratic Party Washington DC patronage pyramid, so he might be careful to not start World War Three during the election year. He can leave that to Hillary, should her coronation actually occur on Jan 20, 2017.

Anything might happen across the Islamic world in 2016. Every Islamic nation is grossly overpopulated, given the poor quality of the terrain. Most of them occupy territory that has been horribly degraded during the population explosion of the past hundred years, and stand to suffer hugely from climate and weather abnormalities ahead. Governments will fall and may not be replaced by anything resembling a coherent polity. Algeria, Libya, Egypt, Iraq (fuggeddabowdit), Pakistan, Malaysia, Indonesia are all only marginally stable for now. Afghanistan is hopeless. We will never control the terrain or the people who live there. But we will continue to maintain a garrison to defend Kabul, pretending that control of the capital city is enough.

And then there is the Big Kahuna: Saudi Arabia, with its dwindling oil income and growing multitude of dependant layabouts. King Salman’s misadventure in Yemen’s civil war has birthed another failed state and dented Saudi Arabia’s resources. If the other clans of Arabia, whoever they turn out to be, overthrow Salman, they will also create an opening for ISIS-flavored non-royals to incite a multi-dimensional civil war. An upheaval in KSA would surely produce profound disorder in the oil markets. The USA would get suckered into this tar-pit wrestling match. The attempt to stabilize our old “ally” with troops on the ground would probably work out about as well as our adventure next door in Iraq did. The further result will be more conflict in this broad swathe of the world over remaining scarce resources, especially water, along with hot war at various scales, and ever more massive movements of populations fleeing the turmoil. If they journey to Europe, they will be turned away. The Camp of the Saints becomes a reality show.

Turkey, with the second-largest military in NATO, could have been a force for stability in the Middle East, but strongman President Recep Tayyip Erdo?an can’t get out of his own way. He can’t decide whether he’s on the side of the Islamists or the West and his attempts to play footsie with both, while piling up private booty, have left him suspect among both camps. Lately he has ventured into such misadventures as shooting down a Russian warplane and receiving stolen goods in the form of ISIS oil shipments from Syrian and Iraqi wells. He was unable to enlist NATO into joining the argument over Turkish airspace and has fatally alienated his western auditors by his actions. He’s lucky that Putin didn’t turn Ankara into an ashtray. The Kurds on Turkey’s southern border threaten to start a civil war by asserting their own nationhood, now just de facto. Meanwhile, the Turkish economy is faltering again, reinforcing its longtime status as “the sick man of Europe.”

Europe’s decades as the West’s delightful tourist theme park are over. The continent is back to being a dangerous free-for-all of nations, tribes, and factions, with the overlay of alien Islamic intruders making things worse. Who knows who or what will blow up next over there. When it becomes obvious in 2016 that the 2015 refugee influx was not a one-off that the Eurozone could comfortably absorb, the individual nations will commence the deportations. Getting to that has been a difficult road, with the headwind of the memory of the Holocaust. But then, unlike the Jews of the 1930s, the Islamists are slaughtering concert-goers, booby-trapping subways, shooting civilians in restaurants, beheading journalists, and explicitly threatening the existence of European society. This business with Islam is different and we are now four generations past Auschwitz. Europeans may just have to get real about defending their respective and collective cultures.

2016 will be the lead-up to the French presidential election of 2017. François Hollande has the whole of the coming year to demonstrate his weakness. But can the French stomach Marine Le Pen’s demi-fascist National Front. The French right wing is not for reduced government, just for pushing people around differently. As 2016 goes on, look for good ole Sarko (Nicolas Sarkozy) to flank them both. Sarko is a bit crooked, but as strong-willed as Le Pen, and not as crazy. French voters will be fed up Hollande-style squishiness, but unready for a female Hitler. Sarko is the Devil they know and they will want him back.

The same election time-line goes for Germany. Voters there will increasingly revolt against what Mutti Merkel represents: how she jammed a million Islamic refugees down Europe’s craw. They’re not shopping for another Hitler, either, but they will be looking for a strong-willed someone to protect the volk against the foreign hordes, of whom they are getting good and goddam sick. There is also the matter of Germany baby-sitting all the bankrupt nations to the south.

As 2016 unfurls, the PIIGS will spin back into financial intensive care. Spain, Italy, Portugal, Greece will eventually have to face the absence of buyers for their bonds and the falsity of their low interest rates. Spain, for one, is not finished with the Catalonian secession problem. Portugal needs to return to the 18th century. The clowns in Brussels have no plan to repair the finances of Euroland beyond massive QE that cannot be endless. Whoever replaces Merkel as chancellor may be the one who senses that Germany ought to lead the way out of the Euro currency fantasy and all the awful liabilities it entails.

Great Britain is a basketcase in search of a basket to land in. It has no economy left besides the swindlers of “the City,” its version of Wall Street, and that janky establishment is losing its grip as a desirable financial capital after years of sharp practice, with much of its action moving to Shanghai. Conservative Prime Minister David Cameron is a catamite for the big banks. The Labour Party leader, Jeremy Corbyn is an old-school romantic unionist Leftie in a nation with little remaining industrial workforce. Unlike France or Germany, Britain’s parliamentary system can route a government on short notice. The debt implosion of 2016 and rescheduled Great Depression 2.0 will thrust UK Independence Party’s Nigel Farage into the spotlight to salvage what remains of Old Blighty.

The big question around Asia is whether China can navigate its way out of the blind alley it’s trapped in: a banking system steeped in crony corruption, bad debt everywhere, and malinvestment like unto nothing the world has ever seen before. The country is choking on excess industrial capacity just as the world enters its epic Peak Everything contraction. Can they keep on pumping out salad shooters and Han Solo dolls to a world drowning in plastic crap and too broke to buy more of it? They still have $3.4 trillion in foreign exchange reserves to theoretically bail themselves out. But that starts affecting the value of their pegged currency, and their main trading partner (us) can play endless currency war games with them to dissuade them from dumping the rest of their accumulated US treasury paper, which, of course, only pisses them off more and makes them look for surreptitious ways to fight back — which is what currency war is all about. Which is also exactly why China (with Russia and others) has started up its own Asian version of the IMF, the BRICs Development Bank, and an alternative to the SWIFT international clearing system.

Chinese economic and financial statistics are even less reliable than the overcooked sludge offered up by the US agencies, but the tanking of commodity prices worldwide tells enough of a story: China is sure not expanding as much as the good old days, if at all. It’s been a great ride, but it was super-quick, and it happened just prior to the world reaching the bona fide limits to growth. China’s contraction may be as quick as its rise, and if that is the case, it will be rough ride into the same vortex of contraction that everybody else is entering.

My one wild-hair prediction about China for 2016: after Kim Jong-Un pulls some bonehead move against his neighbor to the south, China invades North Korea and installs a more rational management regime there. Kim Jong-Un ends up as a lounge singer in Macao. Lucky boy.

Homeland Frolics

            Be very afraid. Donald Trump isn’t funny anymore. He’s Hitler without the brains and the charm. But he’s gotten where he is for a reason. He expresses perfectly the depravity of the culture he springs from: narcissistic, morally rudderless, vulgar, shameless, lost in fantasy, and sadistic. Hillary (last name unnecessary) is not much better, but she’s not nearly as dumb, only more thoroughly corrupt. These are the avatars of our two major political parties. Be very afraid and weep!

The good news is that political parties do occasionally blow up and vanish from the scene, and that would be an interesting possible outcome of the 2016 national elections. Trump could accomplish this much more briskly with the Republicans. He’s made it clear already that he feels zero loyalty to the Red Team, and noises offstage can be heard that the party faithful would find some way to either expel or end-run the Donald Creature. Given our litigious society, one outcome of this would be an election held hostage by the courts. Oy vey is mir. Another possibility is that a message would be transmitted to the Trump Team from some combination of rogue elements in the NSA and the US Military that he’d better drop out or else. It would be done in such a way that Trump would not be able to use it for further narcissistic grandstanding. Were that not to happen, and were Trump somehow able to get elected, I predict there will be a coup d’état against him inside of April 2017. Hello constitutional crisis. Where it might go from there, no one can say.

Of Trump’s opponents for the Republican nomination, the only one I can grudge up any interest for is Rand Paul, who is a truly disruptive figure without being a maniac. In fact, I think he would make a good president, sober, thoughtful, unencumbered by obligation to the forces of racketeering. But he appears to have a near-zero chance of winning the party’s nomination.

Hillary is the opposite of a disrupter; she is the racketeer Godmother. As things proceed, however, she would merely preside over Great Depression 2.0. Unlike FDR in GD 1.0, Hillary would inspire no trust among a fractious population out for revenge against the very enablers of Hillary’s election, namely the Wall Street bankers. The nation would fall into factional fighting and possibly even regional breakup under Miz It’s-My-Turn. But I get ahead of myself…. The question at hand for 2016 is: Can Hillary be stopped. At this point, I don’t see how, given all the weight of the party machinery calibrated in her favor by the equally odious National Party Chairperson, Congressperson Debbie Wasserman Schultz.

Bernie Sanders mounted a noble opposition campaign, and perhaps it is too early to write him off here before the Iowa caucuses and the New Hampshire primary. Perhaps something can happen and he can at least slay the candidacy of Rodan the Flying Reptile – my other nickname for the Hillary Creature. Apart from that is my basic aversion to Bernie’s political philosophy as a self-proclaimed “socialist.” I know it sounds like a glib dismissal of a cartoonish political label, but Bernie’s self-applied label implies ever more intrusion by ever bigger government into the life of this nation. History wants to take us in another direction now, away from so much hyper-centralized control, and we go against the flow at our peril. While I admire Bernie’s presence as a vocal opposition to Hillary, I’m not keen on what he’s actually selling.

I know that Martin O’Malley is still “out there,” but he appears to be a blank cartridge, or a six-pack in search of worldview, and I don’t believe as some observers have averred that this is the fault of the media. In the few Democratic “debates” held last fall he offered next to nothing outside a conventional punch-list of shopworn center-left ideology — that is, no recognition of the extraordinary problems this country faces in the climax of the techno-industrial idyll, and the long emergency that is following it.

And that’s all you get on the Democratic side for the moment: a powerful sense that the fix is in. Yet there is the very real problem of Hillary’s loathsomeness and how that would go down at the polls. There’s even a pretty good chance that many women would vote against her. So my provisional conclusion / prediction for the November contest is that Hillary runs and loses against some as-yet-unknown un-Trump person. President Cruz? Ach! Rubio? Back in the playpen! Christie? Leave the body, take the canoli…! Jeb? El pendejo supremo! To be continued….

Race Relations and the Cowardice of the Thinking Classes

2015 was sure a bad year for different groups of Americans trying (or not) to get along, especially black people and white people. American society is feeling the full force of the identity ideologies cooked up on the college campuses over the past several decades, now boiling over into an orgy of victim-pleading, identity grandstanding, sexual hysteria, scapegoating, intellectual despotism, juridical blackmail, and (let’s not forget) careerist posturing. The more irrelevant higher education gets, the more strenuously the social justice inquisitors mount their persecutions against those who don’t buy the race-gender-privilege party line. In 2015 it has morphed into a campaign against free speech and free inquiry. The “diversity” deans multiply like fruit flies.

I made the “error” last year of suggesting that black Americans would benefit if the teaching of spoken English were made a high priority of primary and secondary schooling — and I was vilified for saying that. My opponents have not offered any useful counter-ideas beyond name-calling. I suspect that many people of good intentions are running out patience with this racket — and it is a racket for extorting preferential treatment and money from guilt-tripped white people.

In the arena of crime and policing, the situation is especially bad. Black lives matter, but not so much for black people themselves, who are ardently slaughtering each other in places like Baltimore, St. Louis, Detroit, Milwaukee, and “Chi-raq” at a rate proportionately much greater than other ethnic groups in the land. The martyrs of the movement act in ways likely to get them in trouble, for instance the hapless 12-year-old Tamir Rice, shot brandishing a BB gun designed to look exactly like the US Army 1911 issue .45 caliber ACP, Michael Brown thugging out on officer Darren Wilson, Trayvon Martin beating down George Zimmerman. The cops present at several notorious incidents include black officers; a black female sergeant who was supervising the action on the sidewalk in Staten Island when her colleagues choked Eric Garner. (she did nothing to intervene); the several black policemen in Baltimore who took Freddy Gray on his fatal ride in the paddy wagon. It’s a scene fraught with ambiguity, to be generous.

Where are we going with race relations in this country? For now, not in a favorable direction. The trend will be for police to regard certain neighborhoods as “no-go” areas — if only to avoid the gigantic multi-million dollar litigations that grow out of these ambiguous confrontations. Some may view that as a good thing, but it will only play into the decadent ethos that anything goes and nothing matters in this country. The larger question going forward is whether Black America will continue to insist on being an oppositional culture. That is what it has become, though the cowed thinking classes will not acknowledge it. They also will not recognize the need for a common culture in this nation, a set of truly shared values and standards of conduct.

Climate Change

This is the underlayment of despair that reflective persons cannot avoid thinking about when all the other petty issues of human relations and the project of civilization are disposed of. Weird weather? Biblical Floods? Melting icecaps? Sea level creep? It was 70 degrees on Christmas Eve here in upstate New York, dandelions blooming in the yard, just a week or so ago. Some people I know can’t stop thinking about climate change. Somehow I manage to put it out of mind and ruminate on other things, or even feel good about something that is happening in the present — a good meal, a gathering of friends, an evening of live music…. but it’s always lurking there in the background like some hooded reaper in a New Yorker cartoon.

Despite the hoopla of the Paris climate change talks, I’m not persuaded that national governments will really do anything, or even that anything they might do would avail to make things better. I’m not even so concerned about whether climate change is man-made or not. I just accept that something is up and that as things change, we will have to adjust. It seems to me that the adjustment will not be easy and five hundred years from now there will be far fewer human beings, if any, around. From the point of view of the planet’s well-being, that is probably a good thing.

In the mean time, let’s do the best we can to carry on and be as kind as possible to one another. Good luck in 2016!

 

James Howard Kunstler is the author of many books including (non-fiction) The Geography of Nowhere, The City in Mind: Notes on the Urban Condition, Home from Nowhere, The Long Emergency, and Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation. His novels include World Made By Hand, The Witch of Hebron, Maggie Darling — A Modern Romance, The Halloween Ball, an Embarrassment of Riches, and many others. He has published three novellas with Water Street Press: Manhattan Gothic, A Christmas Orphan, and The Flight of Mehetabel.

Peak Oil Ass-Backwards (part 1): Peak Oil, Meet Fractional-Reserve Banking

gc2smOff the keyboard of Allan Stromfeldt Christensen

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Published on From Filmers to Farmers on September 1, 2015

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If the ongoing crash of oil prices over the past year – and now the stock market crashes of last week – have continuously taught me one thing, that would be that I've got very little clue regarding the economic implications of peak oil. To explain this I'll have to take a circuitous, roundabout route here, but if you've been as afflicted as I've been then you might find the following a bit illuminating.

For starters, even though I learned about peak oil in 2005, fractional-reserve banking in 2006, and pretty much instantly proceeded to put two and two together, I still ended up falling for what I might unfairly call the "peak oil orthodoxy." I'm not sure where I first came across this "orthodoxy" I speak of, but an example as good as any – and maybe even better than any – would be that of author and a former Chief Economist at CIBC (one of Canada's Big Five banks), Jeff Rubin.

As Rubin explained it in his first of two peak oil books, because peak oil implies a curtailment on the supply of oil, and since the demand end of a growing economy is by definition increasing, the notion of supply and demand imply that prices will head upwards if supply is limited. Because of this, upon oil's peak its price will eventually rise to such ungodly high levels that it'll become unaffordable by many. Following that, its demand will therefore peter out, and so thanks to the new glut in supply the price will crash to equally ungodly low levels. Once things settle down and the consumer can once again afford the now lower-priced oil, the process will repeat itself since the new (and increasing) demand will once again bump up against the limits imposed by peaking oil supplies. As a result, another crash will occur. On and on the process repeats itself, but with the higher price spikes followed by higher troughs.

 

Available on Amazon for the bargain price of $0.01

 

For better or worse, that's what I now call the "peak oil orthodoxy," and is why I, for one, was waiting for the Second Coming of high oil prices after the spike of $147 in July of 2008. But after patiently waiting for six years, it never came. (At least those 2012 folk had a set date and could just re-apply for their jobs on the 22nd.) In fact, not only did oil's price spend a few years bouncing around the $100 level after rebounding from its low of $32.40 on Dec. 19, 2008, but beginning in June of 2014 it began to dive-bomb to its current level of about $40 (which has now jumped back up to $50 or so in the few days it's taken me to write this). Although the initial price-dive threw me off at first, a bit of reading near the end of 2014 (and I unfortunately can't remember the exact online sources) enlightened me in regards to the notion of demand destruction.

Although demand destruction made so much sense to me that I wrote my first oil piece on it – Peak Oil and the Fracking Bubble: Could this Mimic the 2004-2008 Housing Bubble? – I apparently hadn't properly comprehended the underlying factors and the ultimate implications of demand destruction as I was still expecting oil to eventually rise again, if not just hang out in some mushy middle-area of $70 or so. Although I knew enough that I could have known better, my background in economics – and especially my predisposition to even think in economic terms – is pretty much zilch, so I suppose I've got somewhat of an excuse for being a complete idiot here. In other words, although I'd at least managed to notice and call out the incongruences brought about by peak oil in a world of fractional-reserve banking, it took me until just recently to fully clue into the underlying and long-term implications of demand destruction. My apologies if you've already read me explain this a few times, but I'll repeat myself here for posterity's sake.

First off, the majority of "money" sloshing around out there – let's say 95% of it – is not created by governments but by private banks when they make loans. Secondly, the method by which this money is brought into existence, via fractional-reserve banking and double-entry bookkeeping, is upon the creation of new loans. In other words, money is created as debt. Furthermore, it is because banks create the principal and not the interest that there is never enough money in existence to pay off all the debts plus the interest. As a result, the debt bubble must be continually enlarged via ever-expanding credit so that previous loans can be serviced, lest the system implode in on itself. This is the debt treadmill, and is why economic growth must be maintained at all costs, even at the cost of utterly trashing the planet we live within.

So along with being gobsmacked when I learned about how most of our "money" is created, what pretty much instantly hit me was that since economic growth requires an increase in energy supplies to power that growth, and since peak oil implies an eventual maximum level of energy extraction, this limit to energy supplies is going to put us in a bit of a pickle.

 

I was thankfully proven to be only a partial crackhead

 

In the meantime, seeing how the only friend I had amenable to chatting about these things lived half-way across the world in New Zealand, and seeing how I'd quit the Internet (which actually ended up being a five-year hiatus) and so didn't have an Oil Drum or whatever to bounce these thoughts and ideas off of, it was quite some time before I came across any written material putting the two issues I speak of together (the first time came in the book Fleeing Vesuvius I think).

So seeing how we both lived in Toronto at the time, I figured it might be worth stopping over at one of the talks that Jeff Rubin was giving for the release of his second book (The End of Growth), as here was not only some guy writing about peak oil, but an economist writing about peak oil! When the talk – with David Suzuki!? – was over and both authors got to the book signing part of the night, I slowly made my way to the front of the Rubin cue and asked him the following:

If peak oil means the end of growth, and if fractional-reserve banking requires perpetual growth to keep the system going, doesn't that mean we should be moving away from fractional-reserve banking?

But that's not what I'm talking about.

Well, yeah. But still. Doesn't peak oil imply a serious problem to the way in which our banking and monetary systems currently operate, since they need ever more energy to keep growing?

You're talking about the money-multiplier effect, right?

Uhhh, yeah. [I’d only heard it referred to in this way once before.]

Well that's not what I'm talking about.

He then proceeded to say something which I'd already read in his book (of which didn't address my question at all), and as I'd obviously come upon a brick wall, I didn't bother pressing any further and so made my way home.

My stone-walling with Rubin should have been expected though, for if you take a look at his first book, the summation of his peak oil prognostication is pretty much this: Californian's will be eating less Ontario maple syrup, Ontarians will be eating less California avocadoes, and we'll all be eating more locally grown carrots. In short, it's all about basic market mechanisms of supply and demand, which mean that we don't really need to do anything ourselves, nor change our ways, since markets will tidily work out this oil issue for us. But in the meantime, we should get cracking on creating locally-manufactured television sets (according to his second book)! In other words, if you're looking for a ho hum story of peak oil, look no further than Jeff Rubin.

 

A much better book than The End of Growth, also by a Canadian ex-banker

 

Nonetheless, even though I'd clued into the banality of nearly everything Rubin had to say about peak oil, I unfortunately fell hook, line and sinker for his notion of escalating oil prices. So although I wasn't economically dogmatic and unwilling to question and factor in the method by which most of our money is created, I'd effectively handcuffed myself from being able to comprehend the economic ramifications of peak oil and fractional-reserve banking any further, even though, as mentioned, I'd already written a piece on demand destruction as being behind oil's recent dip in prices.

Nevertheless, for a while now I've had the hunch – based on nothing but a gut feeling – that oil was going to head on down to $20. I even got all techno-savvy and tweeted it, even before the recent stock market and oil price crashes (which, as already mentioned, have had a more recent upswing):

 

 

But then came the biggie. A few days after that I was reading the comments from an article on Resilience when it finally hit me: "Wait a second! Demand destruction doesn't imply a minor and/or temporary dip in prices to some mushy middle. It means the opposite of inflating prices – deflating prices! They're going to keep going downwards!"

In other words, not only have I somewhat been in the deflationary closet for nearly a decade now, but I didn't even realize there was a counter-argument, or even a counter-argument closet!

Having finally clued into all that, the implications that my willingness to put two and two together nearly a decade ago was finally leading somewhere. On top of that, that willingness of mine allowed me to take that further step that I'd been looking for, and so allowed me to put two and two and two together. That next "two" being money as a proxy for energy, as I'll get to in Part 2.

EDIT 06/09/2015: In the last sentence, the words "peak credit" have been changed to "money as a proxy for energy."

$75T in Shadow Banking Collapsing

Off the keyboard of Michael Snyder

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Published on The Economic Collapse on June 30, 2015

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Keep an eye on the shadow banking system – it is about to be shaken to the core.  According to the Financial Stability Board, the size of the global shadow banking system has reached an astounding 75 trillion dollars.  It has approximately tripled in size since 2002.  In the U.S. alone, the size of the shadow banking system is approximately 24 trillion dollars.  At this point, shadow banking assets in the United States are even greater than those of conventional banks.  These shadow banks are largely unregulated, but governments around the world have been extremely hesitant to crack down on them because these nonbank lenders have helped fuel economic growth.  But in the end, we will all likely pay a very great price for allowing these exceedingly reckless financial institutions to run wild.

If you are not familiar with the “shadow banking system”, the following is a pretty good definition from investing answers.com

The shadow banking system (or shadow financial system) is a network of financial institutions comprised of non-depository banks — e.g., investment banks, structured investment vehicles (SIVs), conduits, hedge funds, non-bank financial institutions and money market funds.

How it works/Example:

Shadow banking institutions generally serve as intermediaries between investors and borrowers, providing credit and capital for investors, institutional investors, and corporations, and profiting from fees and/or from the arbitrage in interest rates.

Because shadow banking institutions don’t receive traditional deposits like a depository bank, they have escaped most regulatory limits and laws imposed on the traditional banking system. Members are able to operate without being subject to regulatory oversight for unregulated activities. An example of an unregulated activity is a credit default swap (CDS).

These institutions are extremely dangerous because they are highly leveraged and they are behaving very recklessly.  They played a major role during the financial crisis of 2008, and even the New York Fed admits that shadow banking has “increased the fragility of the entire financial system”…

The current financial crisis has highlighted the growing importance of the “shadow banking system,” which grew out of the securitization of assets and the integration of banking with capital market developments. This trend has been most pronounced in the United States, but it has had a profound influence on the global financial system. In a market-based financial system, banking and capital market developments are inseparable: Funding conditions are closely tied to fluctuations in the leverage of market-based financial intermediaries. Growth in the balance sheets of these intermediaries provides a sense of the availability of credit, while contractions of their balance sheets have tended to precede the onset of financial crises. Securitization was intended as a way to transfer credit risk to those better able to absorb losses, but instead it increased the fragility of the entire financial system by allowing banks and other intermediaries to “leverage up” by buying one another’s securities.

Over the past decade, shadow banking has become a truly worldwide phenomenon, and thus it is a major threat to the entire global financial system.  In China, shadow banking has been growing by leaps and bounds, but this has the authorities deeply concerned.  In fact, according to Bloomberg one top Chinese regulator has referred to shadow banking as a “Ponzi scheme”…

Their growth had caused the man who is now China’s top securities regulator to label the off-balance-sheet products a “Ponzi scheme,” because banks have to sell more each month to pay off those that are maturing.

And what happens to all Ponzi schemes eventually?

In the end, they always collapse.

And when this 75 trillion dollar Ponzi scheme collapses, the global devastation that it will cause will be absolutely unprecedented.

Bond expert Bill Gross, who is intimately familiar with the shadow banking system, has just come out with a major warning about the lack of liquidity in the shadow banking system…

Mutual funds, hedge funds, and ETFs, are part of the “shadow banking system” where these modern “banks” are not required to maintain reserves or even emergency levels of cash. Since they in effect now are the market, a rush for liquidity on the part of the investing public, whether they be individuals in 401Ks or institutional pension funds and insurance companies, would find the “market” selling to itself with the Federal Reserve severely limited in its ability to provide assistance.

As far as shadow banking is concerned, everything is just fine as long as markets just keep going up and up and up.

But once they start falling, the whole system can start falling apart very rapidly.  Here is more from Bill Gross on what might cause a “run on the shadow banks” in the near future…

Long used to the inevitability of capital gains, investors and markets have not been tested during a stretch of time when prices go down and policymakers’ hands are tied to perform their historical function of buyer of last resort. It’s then that liquidity will be tested.

And what might precipitate such a “run on the shadow banks”?

1) A central bank mistake leading to lower bond prices and a stronger dollar.

2) Greece, and if so, the inevitable aftermath of default/restructuring leading to additional concerns for Eurozone peripherals.

3) China – “a riddle wrapped in a mystery, inside an enigma”. It is the “mystery meat” of economic sandwiches – you never know what’s in there. Credit has expanded more rapidly in recent years than any major economy in history, a sure warning sign.

4) Emerging market crisis – dollar denominated debt/overinvestment/commodity orientation – take your pick of potential culprits.

5) Geopolitical risks – too numerous to mention and too sensitive to print.

6) A butterfly’s wing – chaos theory suggests that a small change in “non-linear systems” could result in large changes elsewhere. Call this kooky, but in a levered financial system, small changes can upset the status quo. Keep that butterfly net handy.

Should that moment occur, a cold rather than a hot shower may be an investor’s reward and the view will be something less than “gorgeous”. So what to do? Hold an appropriate amount of cash so that panic selling for you is off the table.

In order to avoid a shadow banking crisis, what we need is for global financial markets to stabilize and to resume their upward trends.

If stocks and bonds start crashing, which is precisely what I have projected will happen during the last half of 2015, the shadow banking system is going to come under an extreme amount of stress.  If the coming global financial crisis is even half as bad as I believe it is going to be, there is no way that the shadow banking system is going to hold up.

So let’s hope that the financial devastation that we have seen so far this week is not a preview of things to come.  The global financial system has been transformed into a delicately balanced pyramid of glass that is not designed to handle turbulent times.  We should have never allowed the shadow banks to run wild like this, but we did, and now in just a short while we are going to get to witness a financial implosion unlike anything the world has ever seen before.

The Global Liquidity Squeeze Has Begun

Off the keyboard of Michael Snyder

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Published on The Economic Collapse on April 17, 2015

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Get ready for another major worldwide credit crunch.  Today, the entire global financial system resembles a colossal spiral of debt.  Just about all economic activity involves the flow of credit in some way, and so the only way to have “economic growth” is to introduce even more debt into the system.  When the system started to fail back in 2008, global authorities responded by pumping this debt spiral back up and getting it to spin even faster than ever.  If you can believe it, the total amount of global debt has risen by $35 trillion since the last crisis.  Unfortunately, any system based on debt is going to break down eventually, and there are signs that it is starting to happen once again.  For example, just a few days ago the IMF warned regulators to prepare for a global “liquidity shock“.  And on Friday, Chinese authorities announced a ban on certain types of financing for margin trades on over-the-counter stocks, and we learned that preparations are being made behind the scenes in Europe for a Greek debt default and a Greek exit from the eurozone.  On top of everything else, we just witnessed the biggest spike in credit application rejections ever recorded in the United States.  All of these are signs that credit conditions are tightening, and once a “liquidity squeeze” begins, it can create a lot of fear.

Over the past six months, the Chinese stock market has exploded upward even as the overall Chinese economy has started to slow down.  Investors have been using something called “umbrella trusts” to finance a lot of these stock purchases, and these umbrella trusts have given them the ability to have much more leverage than normal brokerage financing would allow.  This works great as long as stocks go up.  Once they start going down, the losses can be absolutely staggering.

That is why Chinese authorities are stepping in before this bubble gets even worse.  Here is more about what has been going on in China from Bloomberg

China’s trusts boosted their investments in equities by 28 percent to 552 billion yuan ($89.1 billion) in the fourth quarter. The higher leverage allowed by the products exposes individuals to larger losses in the event of stock-market drops, which can be exaggerated as investors scramble to repay debt during a selloff.

In umbrella trusts, private investors take up the junior tranche, while cash from trusts and banks’ wealth-management products form the senior tranches. The latter receive fixed returns while the former take the rest, so private investors are effectively borrowing from trusts and banks.

Margin debt on the Shanghai Stock Exchange climbed to a record 1.16 trillion yuan on Thursday. In a margin trade, investors use their own money for just a portion of their stock purchase, borrowing the rest. The loans are backed by the investors’ equity holdings, meaning that they may be compelled to sell when prices fall to repay their debt.

Overall, China has seen more debt growth than any other major industrialized nation since the last recession.  This debt growth has been so dramatic that it has gotten the attention of authorities all over the planet

Wolfgang Schaeuble, Germany’s finance minister says that “debt levels in the global economy continue to give cause for concern.”

Singling out China in particular, Schaeuble noted that “debt has nearly quadrupled since 2007″, adding that it’s “growth appears to be built on debt, driven by a real estate boom and shadow banks.”

According to McKinsey’s research, total outstanding debt in China increased from $US7.4 trillion in 2007 to $US28.2 trillion in 2014. That figure, expressed as a percentage of GDP, equates to 282% of total output, higher than the likes of other G20 nations such as the US, Canada, Germany, South Korea and Australia.

This credit boom in China has been one of the primary engines for “global growth” in recent years, but now conditions are changing.  Eventually, the impact of what is going on in China right now is going to be felt all over the planet.

Over in Europe, the Greek debt crisis is finally coming to a breaking point.  For years, authorities have continued to kick the can down the road and have continued to lend Greece even more money.

But now it appears that patience with Greece has run out.

For instance, the head of the IMF says that no delay will be allowed on the repayment of IMF loans that are due next month…

IMF Managing Director Christine Lagarde roiled currency and bond markets on Thursday as reports came out of her opening press conference saying that she had denied any payment delay to Greece on IMF loans falling due next month.

Unless Greece concludes its negotiations for a further round of bailout money from the European Union, however, it is not likely to have the money to repay the IMF.

And we are getting reports that things are happening behind the scenes in Europe to prepare for the inevitable moment when Greece will finally leave the euro and go back to their own currency.

For example, consider what Art Cashin told CNBC on Friday

First, “there were reports in the media [saying] that the ECB and/or banking authorities suggested to banks to get rid of any sovereign Greek debt they had, which suggests that maybe the next step will be Greece exiting,” Cashin told CNBC.

Also, one of Greece’s largest newspapers is reporting that neighboring countries are forcing subsidiaries of Greek banks that operate inside their borders to reduce their risk to a Greek debt default to zero

According to a report from Kathimerini, one of Greece’s largest newspapers, central banks in Albania, Bulgaria, Cyprus, Romania, Serbia, Turkey and the Former Yugoslav Republic of Macedonia have all forced the subsidiaries of Greek banks operating in those countries to bring their exposure to Greek risk — including bonds, treasury bills, deposits to Greek banks, and loans — down to zero.

Once Greece leaves the euro, that is going to create a tremendous credit crunch in Europe as fear begins to spread like wildfire.  Everyone will be wondering which nation will be “the next Greece”, and investors will want to pull their money out of perceived danger zones before they get hammered.

In the past, other European nations have been willing to bend over backwards to accommodate Greece and avoid this kind of mess, but those days appear to be finished.  In fact, the finance minister of France openly admits that the French “are not sympathetic to Greece”

Greece isn’t winning much sympathy from its debt-wracked European counterparts as the country draws closer to default for failing to make bailout repayments.

“We are not sympathetic to Greece,” French Finance Minister Michael Sapin said in an interview at the International Monetary Fund-World Bank spring meetings here.

“We are demanding because Greece must comply with the European (rules) that apply to all countries,” Sapin said.

Yes, it is possible that another short-term deal could be reached which could kick the can down the road for a few more months.

But either way, things in Europe are going to continue to get worse.

Meanwhile, very disappointing earnings reports in the U.S. are starting to really rattle investors.

For example, we just learned that GE lost 13.6 billion dollars in the first quarter…

One week following the announcement that it would dismantle most of its GE Capital financing operations to instead focus on its industrial roots, General Electric reported a first quarter loss of $13.6 billion.

The results were impacted by charges relating to the conglomerate’s strategic shift. A year ago GE reported a first quarter profit of $3 billion.

That is a lot of money.

How in the world does a company lose 13.6 billion dollars in a single quarter during an “economic recovery”?

Other big firms are reporting disappointing earnings numbers too

In earnings news, American Express Co. late Thursday said its results were hurt by the strong U.S. dollar, which reduced revenue booked in other countries. Chief Executive Kenneth Chenault reiterated the company’s forecast that 2015 earnings will be flat to modestly down year over year. Shares fell 4.6%.

Advanced Micro Devices Inc. said its first-quarter loss widened as revenue slumped. The company said it was exiting its dense server systems business, effective immediately. Revenue and the loss excluding items missed expectations, pushing shares down 13%.

And just like we saw just before the financial crisis of 2008, Americans are increasingly having difficulty meeting their financial obligations.

For instance, the delinquency rate on student loans has reached a very frightening level

More borrowers are failing to make payments on their student loans five years after leaving college, painting a grim picture for borrowers, according to the Federal Reserve Bank of New York.

Student debt continues to increase, especially for people who took out loans years ago. Those who left school in the Great Recession, which ended in 2009, had particular difficulty with repayment, with many defaulting, becoming seriously delinquent or not being able to reduce their balances, the New York Fed said today.

Only 37 percent of borrowers are current on their loans and are actively paying them down, and 17 percent are in default or in delinquency.

At this point, the American consumer is pretty well tapped out.  If you can believe it, 56 percent of all Americans have subprime credit today, and as I mentioned above, we just witnessed the biggest spike in credit application rejections ever recorded.

We have reached a point of debt saturation, and the credit crunch that is going to follow is going to be extremely painful.

Of course the biggest provider of global liquidity in recent years has been the Federal Reserve.  But with the Fed pulling back on QE, this is creating some tremendous challenges all over the globe.  The following is an excerpt from a recent article in the Telegraph

The big worry is what will happen to Russia, Brazil and developing economies in Asia that borrowed most heavily in dollars when the Fed was still flooding the world with cheap liquidity. Emerging markets account to roughly half of the $9 trillion of offshore dollar debt outside US jurisdiction.

The IMF warned that a big chunk of the debt owed by companies is in the non-tradeable sector. These firms lack “natural revenue hedges” that can shield them against a double blow from rising borrowing costs and a further surge in the dollar.

So what is the bottom line to all of this?

The bottom line is that we are starting to see the early phases of a liquidity squeeze.

The flow of credit is going to begin to get tighter, and that means that global economic activity is going to slow down.

This happened during the last financial crisis, and during this next financial crisis the credit crunch is going to be even worse.

This is why it is so important to have an emergency fund.  During this type of crisis, you may have to be the source of your own liquidity.  At a time when it seems like nobody has any cash, those that do have some will be way ahead of the game.

The EMP threat

Off the keyboard of Michael Snyder

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Published on The Economic Collapse on April 6, 2015

EMP.map.graphic

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The EMP Threat: All It Would Take Is A Couple Of Explosions To Send America Back To The 1800s

EMP ThreatOur entire way of life can be ended in a single day.  And it wouldn’t even take a nuclear war to do it.  All it would take for a rogue nation or terror organization to bring us to our knees is the explosion of a couple well-placed nuclear devices high up in our atmosphere.  The resulting electromagnetic pulses would fry electronics from coast to coast.  Of course this could also be accomplished without any attack.  Scientists tell us that massive solar storms have hit our planet before, and that it is inevitable that there will be more in the future.  As you will read about below, the most recent example of this was “the Carrington Event” in 1859.  If a similar burst from the sun hit us today, experts tell us that life in America could suddenly resemble life in the 1800s, and the economic damage caused could potentially be in the trillions of dollars.  This is one of the greatest potential threats that we are facing as a nation, and yet Barack Obama has essentially done nothing to get us prepared.

The technology necessary to conduct such an electromagnetic pulse attack against the United States has become much more accessible in recent years.  According to an article in the Wall Street Journal, even rogue nations such as North Korea and Iran either already have or will soon have the capability to hurt us in this way…

Rogue nations such as North Korea (and possibly Iran) will soon match Russia and China and have the primary ingredients for an EMP attack: simple ballistic missiles such as Scuds that could be launched from a freighter near our shores; space-launch vehicles able to loft low-earth-orbit satellites; and simple low-yield nuclear weapons that can generate gamma rays and fireballs.

If a successful, large scale EMP attack ever did take place, it would be a catastrophe beyond anything that the United States has ever seen before.  The EMP Commission, which was established by Congress, says that it is likely that most of us would end up dead

What would a successful EMP attack look like? The EMP Commission, in 2008, estimated that within 12 months of a nationwide blackout, up to 90% of the U.S. population could possibly perish from starvation, disease and societal breakdown.

In 2009 the congressional Commission on the Strategic Posture of the United States, whose co-chairmen were former Secretaries of Defense William Perry and James Schlesinger, concurred with the findings of the EMP Commission and urged immediate action to protect the electric grid. Studies by the National Academy of Sciences, the Department of Energy, the Federal Energy Regulatory Commission and the National Intelligence Council reached similar conclusions.

If you are a terrorist, a dictator or a fanatic that is looking for a “killshot” for the United States, those kinds of numbers would certainly get your attention.

And it was recently reported by WND that the Iranian military has already been playing around with such a scenario…

Peter Vincent Pry, who is executive director of a congressional advisory group called the Task Force on National and Homeland Security, raised the alarm as the agreement is about to be finalized.

He said U.S. military officials have confirmed such an Iranian plan.

“Iranian military documents describe such a scenario – including a recently translated Iranian military textbook that endorses nuclear EMP attack against the United States,” Pry wrote in a recent column in Israel’s main online media network, Aruz Sheva.

“Iran with a small number of nuclear missiles can by EMP attack threaten the existence of modernity and be the death knell of Western principles of international law, humanism and freedom,” he said.

Very chilling stuff.

And of course there are many, many others out there that would love to see the U.S. taken down other than just the Iranians.

Meanwhile, our power grid is far more vulnerable than most Americans would dare to imagine.

In previous articles, I discussed a recent Federal Energy Regulatory Commission report which stated the following…

“Destroy nine interconnection substations and a transformer manufacturer and the entire United States grid would be down for at least 18 months, probably longer.”

Are you starting to get the picture?

Our entire way of life depends upon electricity.  If you take away that electricity, our society is transformed literally overnight.

A successful EMP would be an utter nightmare for this nation.  Just consider what U.S. Representative Scott Perry had to say about a potential attack last year

The consequences of such an attack could be catastrophic; all electronics, power systems, and information systems could be shut down,” Rep. Scott Perry said in prepared remarks during an EMP hearing in May held by the U.S. House Committee on Homeland Security. “This could then cascade into interdependent infrastructures such as water, gas, and telecommunications. While we understand this is an extreme case, we must always be prepared in case a rogue state decides to utilize this technology.”

In essence, suddenly nothing would work and just about everything that we take for granted would suddenly be gone.

In a previous article, I spelled out some of the implications of such an event…

-There would be no heat for your home.
-Water would no longer be pumped into most homes.
-Your computer would not work.
-There would be no Internet.
-Your phones would not work.
-There would be no television.
-There would be no radio.
-ATM machines would be shut down.
-There would be no banking.
-Your debit cards and credit cards would not work.
-Without electricity, most gas stations would not be functioning.
-Most people would be unable to do their jobs without electricity and employment would collapse.
-Commerce would be brought to a standstill.
-Hospitals would not be able to function normally.
-You would quickly start running out of medicine.
-All refrigeration would shut down and frozen foods in our homes and supermarkets would start to go bad.

And as I mentioned above, all of this can happen even without an attack.

A direct hit from a major solar storm can cause the exact same thing.

In fact, NASA says that there is a 12 percent chance that such a storm will hit us during the next ten years…

NASA is warning that there’s a 12 percent chance an extreme solar storm will hit Earth in the next decade, sending out massive shock waves that would knock out grids across the world.

The economic impact of this doomsday scenario could exceed $2 trillion — or 20 times the cost of Hurricane Katrina, according to the National Academy of Sciences.

In recent years, we have been really lucky.

There was a close call in 2012 and another one in 2013.

The following is an excerpt from an upcoming book that I have co-authored with Barbara Fix that will soon be published entitled “Get Prepared Now”…

Most people have absolutely no idea that the Earth barely missed being fried by a massive EMP burst from the sun in 2012 and in 2013. And earlier in 2014 there was another huge solar storm which would have caused tremendous damage if it had been directed at our planet. 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 would have gone down and much of our technology would have been fried. In essence, life as we know it would have ceased to exist – at least for a time. These kinds of solar storms have hit the Earth many times before, and experts tell us that it is inevitable that it will happen again. The most famous one happened in 1859, and was known as the Carrington Event. But other than the telegraph, humanity had very little dependence on technology at the time. If another Carrington Event happened today, it would be a complete and utter nightmare. A study by Lloyd’s of London has concluded that it would have taken a $2,600,000,000,000 chunk out of the global economy, and it would take up to a decade to repair the damage. Unfortunately, scientists insist that it is going to happen at some point. The only question is when.

So keep an eye on the sun.

The giant ball of fire that we revolve around has started to behave very erratically, and it has the power to end our way of life at any time.

In fact, scientists tell us that we are about to get hit with a “glancing blow” on April 7th…

A filament of magnetism stretching halfway across the sun erupted during the late hours of April 4th (22:00-23:00 UT). The eruption split the sun’s atmosphere, hurling a CME into space and creating a “canyon of fire,” shown in a movie recorded by the Solar Dynamics Observatory: The glowing walls of the canyon trace the original channel where the filament was suspended by magnetic forces above the sun’s surface. From end to end, the structure stretches more than 300,000 km–a real Grand Canyon.

Fragments of the exploding filament formed the core of a CME that raced away from the sun at approximately 900 km/s (2 million mph): image. Most of the CME will miss Earth, but not all. The cloud is expected to deliver a a glancing blow to our planet’s magnetic field could on April 7th. High-latitude sky watchers should be alert for auroras.

The event of April 7th is not going to cause us major problems.  But someday there will be a solar storm that will.

Personally, I cannot even imagine what life would be like without electricity.

Because we have become so deeply dependent on technology, most of us would have absolutely no idea how to live without it.

An electromagnetic pulse attack would be one of the fastest ways to cripple America and end the dominance of the United States in world affairs.  And in this day and age, there are hundreds of millions of people around the planet that would love to see that happen.

So to not take steps to protect our power grid from such an attack is very foolish.  But that is precisely what Barack Obama (and presidents before him) have chosen to do.  We have technology which would mitigate the damage from an electromagnetic pulse, but rather than spend the money Obama has decided to just hope that it will never happen.

Up to this point, we have been fortunate.

But someday, our luck may run out.

From Minsk to Brussels, it’s all about Germany

Off the keyboard of Pepe Escobar
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Germany's Chancellor Angela Merkel (L) talks to France's President Francois Hollande during a meeting with the media after peace talks on resolving the Ukrainian crisis in Minsk, February 12, 2015. (Reuters / Grigory Dukor)

Germany’s Chancellor Angela Merkel (L) talks to France’s President Francois Hollande during a meeting with the media after peace talks on resolving the Ukrainian crisis in Minsk, February 12, 2015. (Reuters / Grigory Dukor)

Originally published in RT on February 13, 2015

Germany holds the key to where Europe goes next. A fragile deal may have been reached on Ukraine, but there’s still no deal with Greece. In both cases, there’s much more than meets the eye.

Let’s start with the grueling Eurogroup negotiation in Brussels over the Greek debt.

Greek officials swear they never received a draft of a possible agreement leaked by Eurogroup bureaucrats to the Financial Times. This draft, crucially, referred to an agreement “amending and extending and successfully concluding,” the current austerity-heavy bailout.

German Finance Minister Wolfgang Schaeuble cut off “amending”. This is the draft that was leaked. But then Greek Finance Minister Yanis Varoufakis called Prime Minister Tsipras – and the statement, still not signed, was rejected. So this was a top Tsipras decision.

Tsipras could not possibly balk – not after previously raising the stakes – as in promising to boost the Greek minimum wage and halt privatizations. He’s still betting the house that the Troika won’t allow a ‘Grexit’. Yet he may be wrong; the possibility of ‘Grexit’ is hovering around 35 percent to 40 percent, and it will be much higher if no deal is reached on the next crunch meeting, Monday.

Tsipras and Eurogroup President Jeroen Dijsselbloem at least agreed that Greek officials and the Troika (EC, ECB, IMF) should start talking “at a technical level.” Translation: they will be comparing the current austerity nightmare with new Greek proposals.

Athens essentially has only two choices. Either the Troika accedes to some form of debt repudiation – real or as a sleight of hand (that’s Syriza’s proposal – an arrangement that fosters growth); or ‘Grexit’ ensues, with Athens creating its own central bank and currency as an independent nation. There’s no third choice; a debt of 175 percent of Greece’s GDP is totally unpayable.

As much as the Troika and its institutional derivatives spin ‘Grexit’ won’t be a big deal, the fact is a Greek debt default could have a more devastating effect than the Lehman Brothers case. It was not the fundamentals at Lehman that caused widespread panic when it went down; but the fear that their derivative exposures would bring down the system.

And cutting through all the spin, what remains, essentially, is what European Commission President Jean-Claude Juncker told Le Figaro a few days ago; it’s out of the question to suppress the Greek debt and, most of all, “there can be no democratic option against European treaties.” There it is, crystal clear: EU institutions work against democracy.

Plan B remains a distinct possibility. Moscow has already invited Tsipras to meet with Putin. And Beijing has invited Tsipras to meet with Prime Minister Li Keqiang. These are the “R” and the “C” in BRICS in action.

It’s worth remembering Greek Defense Minister Panos Kammenos when he articulated if not a majority view, at least a substantial perception among Greek public opinion; “We want a deal. But if there is no deal, and if we see that Germany remains rigid and wants to blow Europe apart, then we will have to go to Plan B… We have other ways of finding money. It could be the United States at best, it could be Russia, it could be China or other countries.”

Alea jacta est. Troika or RC?

And it’s all about NATO

Greek Prime Minister Alexis Tsipras addresses a news conference after a European Union leaders summit in Brussels February 12, 2015. (Reuters / Francois Lenoir)

Greek Prime Minister Alexis Tsipras addresses a news conference after a European Union leaders summit in Brussels February 12, 2015. (Reuters / Francois Lenoir)

Then there’s Minsk. What was achieved after nearly 17 hours of a grueling marathon is not exactly, in French President Francois Hollande’s words, a “global” agreement and a “global ceasefire” in Ukraine.

There’s every possibility the ceasefire will be nullified only a few minutes after its implementation at midnight this Saturday – irony of ironies, at the end of Valentine’s Day. Significantly, the final statement bears no important signatures: Putin, Merkel, Hollande and Poroshenko.

German Foreign Minister Steinmeier was cautious, warning Minsk 2.0 is not exactly a breakthrough, but at least de-escalates matters. Merkel preferred to spin that Putin had to pressure the Eastern Ukraine federalists of the DNR and the LNR to agree to the ceasefire.

Predictably, like clockwork, even before the ceasefire, the IMF – under Washington’s orders – suddenly announced it would continue to rape, sorry, help bailout bankrupt, failed state Ukraine with a tranche of$17.5 billion, part of a large $40 billion, four-year “rescue” package. Translation: Kiev’s goons now have fresh cash to throw at a war they don’t want to give up on.

Poroshenko himself took no time to torpedo the ceasefire – spinning there’s no autonomy granted to the areas controlled by the federalists, and refusing to confirm Putin’s assertion that Kiev has agreed to terminate the vicious economic blockade of Donbass.

The precise contours of the demilitarized zone – bordering one frontline in September and a very different frontline five months later – remain a mystery. And Washington immediately turned the “withdrawal of foreign forces” clause into a joke. The Pentagon has already announced it will begin training Ukraine’s National Guard next month.

Minsk 2.0 hardly qualifies as a band-aid. Ukraine is unredeemable. It would only come back from the dead if a tsunami of cash – almost equivalent to the cost of German reunification – were poured in. Needless to add, no one in Europe wants to dish out even a few devalued euro.

This was, remains, and will continue to be, essentially about NATO expansion. Washington and the Kiev marionettes will never allow any constitutional reform that lets the Donbass block NATO embedded in Ukraine. So the ‘Empire of Chaos’, in a nutshell, won’t cease from using Ukraine to bully Russia. The ‘Empire of Chaos’ is not exactly in the business of nation building – quite the contrary.

Crossing the German bridge

And that brings us to the crucial role played by Germany – with France as sidekick.

Chancellor Merkel had to go to Moscow to negotiate with Putin because she saw which way the wind was blowing – counterproductive sanctions; Ukrainian economy in free fall; Kiev’s goons defeated on the battlefield. That was as much an imperative as a crucial demarcation away from the imperial NATO expansion obsession.

As Immanuel Wallerstein has observed Moscow is pursuing “a careful policy. Not totally in control of the Donetsk-Lugansk autonomists, Russia is nonetheless making sure that the autonomists cannot be eliminated militarily. The Russian price for real peace is a commitment by NATO that Ukraine is not a potential member.”

So Merkel may have defused the Obama administration’s drive to weaponize Kiev – but only for a moment. There’s no evidence – yet – that the Obama administration and its embedded neo-con cells have admitted that the self-proclaimed People’s Republics of Donetsk and Lugansk (DPR and LPR) are essentially “lost” to Kiev’s influence.

Hollande provided the perfect cover for Merkel. It was Hollande who publicly supported autonomy – as in federalization – for the DPR and the LPR. At the same time, both Merkel and Hollande know that Kiev will never de facto accept it (and even a substantial portion of the Donbass only accepts federalization as a stepping stone to eventual secession and union with Russia.)

Merkel – at least in terms of German public opinion – did manage to achieve her goal, emerging as a victor (“The world chancellor,” as the tabloid Bild coined it) after her frequent-flyer marathon. Putin also emerged a victor of sorts – as Merkel essentially rehashed proposals he made months ago. So yes, whichever angle we look at it, this was in fact a Moscow-Berlin deal.It’s easy to see who is extremely disgruntled and will do everything to bomb it; Washington, Kiev, London, Warsaw and the hysterical “Russia is invading” Baltic states.

Last but not least, let’s call attention to the monumental white elephant in the room. Minsk 2.0 was conducted in the total absence of the ‘Empire of Chaos’ and the (increasingly irrelevant) “special relationship” British minions.

Slowly but surely, public opinion across Europe – and especially Germany – is experiencing a tectonic shift. The obsession by the ‘Empire of Chaos’ to further weaponize Kiev has horrified millions – resurrecting the specter of a war in Europe’s eastern borderlands. Not only in Germany but also in France, Italy, Spain, there is a growing continental consensus against NATO.

Even at the height of a vicious Russia demonization campaign unleashed by virtually the whole German corporate media, a Deutschland Trend survey revealed that most Germans are against NATO troops in Eastern Europe. And no less than 49 percent would rather see Germany position itself as a bridge between East and West. The leadership in Beijing definitely took note.

So it’s tempting to hop on the Merkel/Hollande peace train as the heart of Europe finally exercising their sovereignty and frontally defying the ‘Empire of Chaos’. Perhaps that could be the embryo of a German-French partnership for peace in Europe and even beyond, from the Middle East to Africa.

That would frontally antagonize NATO’s screenplay – which implies the ’Empire of Chaos’ ruling uncontested over Europe, the Middle East and even across Eurasia, with continental European powers, especially Germany, France and yes, Russia, at the margins.

Sooner or later European politicians will have to wake up and smell the coffee; the notion of a German-French-Russian pan-European peace/trade partnership is way more popular than reflected in failed corporate media.

Now it’s up to Germany to clean up its act on Greece. The choice is stark. The EU may embark on a quadruple-dip recession as the ECB further destroys what is left of the European middle class. Or Germany, reflecting the thinking among its captains of industry, may tell the EU – Troika included – that the way to go is to shift the strategic, trade and political focus from West to the East. That would start by stuffing the corporate US-devised TTIP treaty – that’s NATO on trade. After all, this is going to be the Eurasian century – and this train has already left the station.

 

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).

Energy & Banking Criminal Racketeering

logopodcastOff the microphone of RE

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Aired on the Doomstead Diner on December 21, 2014

129-0117084051-GeneralSmedleyButler

Discuss this Rant at the Podcast Table inside the Diner

http://c420561.r61.cf1.rackcdn.com/12/5677-151653.jpghttp://republicandirtytricks.com/Images/BlogImages/Smedley_Butler.jpg

Snippet:

…A long time ago, Capo di Tutti Capis Alfonse Capone delivered his opinion upon being convicted on Racketeering charges that “Capitalism is the Legitimate Racket of the Ruling Class”. Far as Alfonse was concerned, he was no different than the folks running Da Goobermint and Da Federal Reserve Bank, and he was basically correct, except for the fact he wasn’t near so big or near so violent in trying to control his small market of the Chicago Liquor and Gambling Biz as TPTB were or still are in controlling the Oil and Banking biz.

If you don’t believe Alfonse, one of the main Enforcers for this Biz, General Smedley Butler said exactly the same thing at around the same time Alfonse said it, when he published his War is a Racket treatise. Smedley Butler was one of the most highly decorated Soldiers of the early 20th Century, he won the CMH not once, but TWICE! His words were as follows in his “On War” speech…

For the rest, LISTEN TO THE RANT!!!

Note: Transcript for non-native speakers of English and people who prefer to read rather than listen will be available HERE in a couple of days.

WAR IS A RACKET

http://i.ytimg.com/vi/EI3lckqaSk0/hqdefault.jpg

A speech delivered in 1933, by Major General Smedley Butler, USMC.

WAR is a racket. It always has been

It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives.

A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small “inside” group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.

In the World War [I] a mere handful garnered the profits of the conflict. At least 21,000 new millionaires and billionaires were made in the United States during the World War. That many admitted their huge blood gains in their income tax returns. How many other war millionaires falsified their tax returns no one knows.

How many of these war millionaires shouldered a rifle? How many of them dug a trench? How many of them knew what it meant to go hungry in a rat-infested dug-out? How many of them spent sleepless, frightened nights, ducking shells and shrapnel and machine gun bullets? How many of them parried a bayonet thrust of an enemy? How many of them were wounded or killed in battle?

Out of war nations acquire additional territory, if they are victorious. They just take it. This newly acquired territory promptly is exploited by the few – the selfsame few who wrung dollars out of blood in the war. The general public shoulders the bill.

And what is this bill?

This bill renders a horrible accounting. Newly placed gravestones. Mangled bodies. Shattered minds. Broken hearts and homes. Economic instability. Depression and all its attendant miseries. Back-breaking taxation for generations and generations.

For a great many years, as a soldier, I had a suspicion that war was a racket; not until I retired to civil life did I fully realize it. Now that I see the international war clouds gathering, as they are today, I must face it and speak out.

Again they are choosing sides. France and Russia met and agreed to stand side by side. Italy and Austria hurried to make a similar agreement. Poland and Germany cast sheep’s eyes at each other, forgetting for the nonce [one unique occasion], their dispute over the Polish Corridor.

The assassination of King Alexander of Jugoslavia [Yugoslavia] complicated matters. Jugoslavia and Hungary, long bitter enemies, were almost at each other’s throats. Italy was ready to jump in. But France was waiting. So was Czechoslovakia. All of them are looking ahead to war. Not the people – not those who fight and pay and die – only those who foment wars and remain safely at home to profit.

There are 40,000,000 men under arms in the world today, and our statesmen and diplomats have the temerity to say that war is not in the making.

Hell’s bells! Are these 40,000,000 men being trained to be dancers?

Not in Italy, to be sure. Premier Mussolini knows what they are being trained for. He, at least, is frank enough to speak out. Only the other day, Il Duce in “International Conciliation,” the publication of the Carnegie Endowment for International Peace, said:

“And above all, Fascism, the more it considers and observes the future and the development of humanity quite apart from political considerations of the moment, believes neither in the possibility nor the utility of perpetual peace… War alone brings up to its highest tension all human energy and puts the stamp of nobility upon the people who have the courage to meet it.”

Undoubtedly Mussolini means exactly what he says. His well-trained army, his great fleet of planes, and even his navy are ready for war – anxious for it, apparently. His recent stand at the side of Hungary in the latter’s dispute with Jugoslavia showed that. And the hurried mobilization of his troops on the Austrian border after the assassination of Dollfuss showed it too. There are others in Europe too whose sabre rattling presages war, sooner or later.

Herr Hitler, with his rearming Germany and his constant demands for more and more arms, is an equal if not greater menace to peace. France only recently increased the term of military service for its youth from a year to eighteen months.

Yes, all over, nations are camping in their arms. The mad dogs of Europe are on the loose. In the Orient the maneuvering is more adroit. Back in 1904, when Russia and Japan fought, we kicked out our old friends the Russians and backed Japan. Then our very generous international bankers were financing Japan. Now the trend is to poison us against the Japanese. What does the “open door” policy to China mean to us? Our trade with China is about $90,000,000 a year. Or the Philippine Islands? We have spent about $600,000,000 in the Philippines in thirty-five years and we (our bankers and industrialists and speculators) have private investments there of less than $200,000,000.

Then, to save that China trade of about $90,000,000, or to protect these private investments of less than $200,000,000 in the Philippines, we would be all stirred up to hate Japan and go to war – a war that might well cost us tens of billions of dollars, hundreds of thousands of lives of Americans, and many more hundreds of thousands of physically maimed and mentally unbalanced men.

Of course, for this loss, there would be a compensating profit – fortunes would be made. Millions and billions of dollars would be piled up. By a few. Munitions makers. Bankers. Ship builders. Manufacturers. Meat packers. Speculators. They would fare well.

Yes, they are getting ready for another war. Why shouldn’t they? It pays high dividends.

But what does it profit the men who are killed? What does it profit their mothers and sisters, their wives and their sweethearts? What does it profit their children?

What does it profit anyone except the very few to whom war means huge profits?

Yes, and what does it profit the nation?

Take our own case. Until 1898 we didn’t own a bit of territory outside the mainland of North America. At that time our national debt was a little more than $1,000,000,000. Then we became “internationally minded.” We forgot, or shunted aside, the advice of the Father of our country. We forgot George Washington’s warning about “entangling alliances.” We went to war. We acquired outside territory. At the end of the World War period, as a direct result of our fiddling in international affairs, our national debt had jumped to over $25,000,000,000. Our total favorable trade balance during the twenty-five-year period was about $24,000,000,000. Therefore, on a purely bookkeeping basis, we ran a little behind year for year, and that foreign trade might well have been ours without the wars.

It would have been far cheaper (not to say safer) for the average American who pays the bills to stay out of foreign entanglements. For a very few this racket, like bootlegging and other underworld rackets, brings fancy profits, but the cost of operations is always transferred to the people – who do not profit. 

CHAPTER TWO

WHO MAKES THE PROFITS?

The World War, rather our brief participation in it, has cost the United States some $52,000,000,000. Figure it out. That means $400 to every American man, woman, and child. And we haven’t paid the debt yet. We are paying it, our children will pay it, and our children’s children probably still will be paying the cost of that war.

The normal profits of a business concern in the United States are six, eight, ten, and sometimes twelve percent. But war-time profits – ah! that is another matter – twenty, sixty, one hundred, three hundred, and even eighteen hundred per cent – the sky is the limit. All that traffic will bear. Uncle Sam has the money. Let’s get it.

Of course, it isn’t put that crudely in war time. It is dressed into speeches about patriotism, love of country, and “we must all put our shoulders to the wheel,” but the profits jump and leap and skyrocket – and are safely pocketed. Let’s just take a few examples:

Take our friends the du Ponts, the powder people – didn’t one of them testify before a Senate committee recently that their powder won the war? Or saved the world for democracy? Or something? How did they do in the war? They were a patriotic corporation. Well, the average earnings of the du Ponts for the period 1910 to 1914 were $6,000,000 a year. It wasn’t much, but the du Ponts managed to get along on it. Now let’s look at their average yearly profit during the war years, 1914 to 1918. Fifty-eight million dollars a year profit we find! Nearly ten times that of normal times, and the profits of normal times were pretty good. An increase in profits of more than 950 per cent.

Take one of our little steel companies that patriotically shunted aside the making of rails and girders and bridges to manufacture war materials. Well, their 1910-1914 yearly earnings averaged $6,000,000. Then came the war. And, like loyal citizens, Bethlehem Steel promptly turned to munitions making. Did their profits jump – or did they let Uncle Sam in for a bargain? Well, their 1914-1918 average was $49,000,000 a year!

Or, let’s take United States Steel. The normal earnings during the five-year period prior to the war were $105,000,000 a year. Not bad. Then along came the war and up went the profits. The average yearly profit for the period 1914-1918 was $240,000,000. Not bad.

There you have some of the steel and powder earnings. Let’s look at something else. A little copper, perhaps. That always does well in war times.

Anaconda, for instance. Average yearly earnings during the pre-war years 1910-1914 of $10,000,000. During the war years 1914-1918 profits leaped to $34,000,000 per year.

Or Utah Copper. Average of $5,000,000 per year during the 1910-1914 period. Jumped to an average of $21,000,000 yearly profits for the war period.

Let’s group these five, with three smaller companies. The total yearly average profits of the pre-war period 1910-1914 were $137,480,000. Then along came the war. The average yearly profits for this group skyrocketed to $408,300,000.

A little increase in profits of approximately 200 per cent.

Does war pay? It paid them. But they aren’t the only ones. There are still others. Let’s take leather.

For the three-year period before the war the total profits of Central Leather Company were $3,500,000. That was approximately $1,167,000 a year. Well, in 1916 Central Leather returned a profit of $15,000,000, a small increase of 1,100 per cent. That’s all. The General Chemical Company averaged a profit for the three years before the war of a little over $800,000 a year. Came the war, and the profits jumped to $12,000,000. a leap of 1,400 per cent.

International Nickel Company – and you can’t have a war without nickel – showed an increase in profits from a mere average of $4,000,000 a year to $73,000,000 yearly. Not bad? An increase of more than 1,700 per cent.

American Sugar Refining Company averaged $2,000,000 a year for the three years before the war. In 1916 a profit of $6,000,000 was recorded.

Listen to Senate Document No. 259. The Sixty-Fifth Congress, reporting on corporate earnings and government revenues. Considering the profits of 122 meat packers, 153 cotton manufacturers, 299 garment makers, 49 steel plants, and 340 coal producers during the war. Profits under 25 per cent were exceptional. For instance the coal companies made between 100 per cent and 7,856 per cent on their capital stock during the war. The Chicago packers doubled and tripled their earnings.

And let us not forget the bankers who financed the great war. If anyone had the cream of the profits it was the bankers. Being partnerships rather than incorporated organizations, they do not have to report to stockholders. And their profits were as secret as they were immense. How the bankers made their millions and their billions I do not know, because those little secrets never become public – even before a Senate investigatory body.

But here’s how some of the other patriotic industrialists and speculators chiseled their way into war profits.

Take the shoe people. They like war. It brings business with abnormal profits. They made huge profits on sales abroad to our allies. Perhaps, like the munitions manufacturers and armament makers, they also sold to the enemy. For a dollar is a dollar whether it comes from Germany or from France. But they did well by Uncle Sam too. For instance, they sold Uncle Sam 35,000,000 pairs of hobnailed service shoes. There were 4,000,000 soldiers. Eight pairs, and more, to a soldier. My regiment during the war had only one pair to a soldier. Some of these shoes probably are still in existence. They were good shoes. But when the war was over Uncle Sam has a matter of 25,000,000 pairs left over. Bought – and paid for. Profits recorded and pocketed.

There was still lots of leather left. So the leather people sold your Uncle Sam hundreds of thousands of McClellan saddles for the cavalry. But there wasn’t any American cavalry overseas! Somebody had to get rid of this leather, however. Somebody had to make a profit in it – so we had a lot of McClellan saddles. And we probably have those yet.

Also somebody had a lot of mosquito netting. They sold your Uncle Sam 20,000,000 mosquito nets for the use of the soldiers overseas. I suppose the boys were expected to put it over them as they tried to sleep in muddy trenches – one hand scratching cooties on their backs and the other making passes at scurrying rats. Well, not one of these mosquito nets ever got to France!

Anyhow, these thoughtful manufacturers wanted to make sure that no soldier would be without his mosquito net, so 40,000,000 additional yards of mosquito netting were sold to Uncle Sam.

There were pretty good profits in mosquito netting in those days, even if there were no mosquitoes in France. I suppose, if the war had lasted just a little longer, the enterprising mosquito netting manufacturers would have sold your Uncle Sam a couple of consignments of mosquitoes to plant in France so that more mosquito netting would be in order.

Airplane and engine manufacturers felt they, too, should get their just profits out of this war. Why not? Everybody else was getting theirs. So $1,000,000,000 – count them if you live long enough – was spent by Uncle Sam in building airplane engines that never left the ground! Not one plane, or motor, out of the billion dollars worth ordered, ever got into a battle in France. Just the same the manufacturers made their little profit of 30, 100, or perhaps 300 per cent.

Undershirts for soldiers cost 14¢ [cents] to make and uncle Sam paid 30¢ to 40¢ each for them – a nice little profit for the undershirt manufacturer. And the stocking manufacturer and the uniform manufacturers and the cap manufacturers and the steel helmet manufacturers – all got theirs.

Why, when the war was over some 4,000,000 sets of equipment – knapsacks and the things that go to fill them – crammed warehouses on this side. Now they are being scrapped because the regulations have changed the contents. But the manufacturers collected their wartime profits on them – and they will do it all over again the next time.

There were lots of brilliant ideas for profit making during the war.

One very versatile patriot sold Uncle Sam twelve dozen 48-inch wrenches. Oh, they were very nice wrenches. The only trouble was that there was only one nut ever made that was large enough for these wrenches. That is the one that holds the turbines at Niagara Falls. Well, after Uncle Sam had bought them and the manufacturer had pocketed the profit, the wrenches were put on freight cars and shunted all around the United States in an effort to find a use for them. When the Armistice was signed it was indeed a sad blow to the wrench manufacturer. He was just about to make some nuts to fit the wrenches. Then he planned to sell these, too, to your Uncle Sam.

Still another had the brilliant idea that colonels shouldn’t ride in automobiles, nor should they even ride on horseback. One has probably seen a picture of Andy Jackson riding in a buckboard. Well, some 6,000 buckboards were sold to Uncle Sam for the use of colonels! Not one of them was used. But the buckboard manufacturer got his war profit.

The shipbuilders felt they should come in on some of it, too. They built a lot of ships that made a lot of profit. More than $3,000,000,000 worth. Some of the ships were all right. But $635,000,000 worth of them were made of wood and wouldn’t float! The seams opened up – and they sank. We paid for them, though. And somebody pocketed the profits.

It has been estimated by statisticians and economists and researchers that the war cost your Uncle Sam $52,000,000,000. Of this sum, $39,000,000,000 was expended in the actual war itself. This expenditure yielded $16,000,000,000 in profits. That is how the 21,000 billionaires and millionaires got that way. This $16,000,000,000 profits is not to be sneezed at. It is quite a tidy sum. And it went to a very few.

The Senate (Nye) committee probe of the munitions industry and its wartime profits, despite its sensational disclosures, hardly has scratched the surface.

Even so, it has had some effect. The State Department has been studying “for some time” methods of keeping out of war. The War Department suddenly decides it has a wonderful plan to spring. The Administration names a committee – with the War and Navy Departments ably represented under the chairmanship of a Wall Street speculator – to limit profits in war time. To what extent isn’t suggested. Hmmm. Possibly the profits of 300 and 600 and 1,600 per cent of those who turned blood into gold in the World War would be limited to some smaller figure.

Apparently, however, the plan does not call for any limitation of losses – that is, the losses of those who fight the war. As far as I have been able to ascertain there is nothing in the scheme to limit a soldier to the loss of but one eye, or one arm, or to limit his wounds to one or two or three. Or to limit the loss of life.

There is nothing in this scheme, apparently, that says not more than 12 per cent of a regiment shall be wounded in battle, or that not more than 7 per cent in a division shall be killed.

Of course, the committee cannot be bothered with such trifling matters.

 CHAPTER THREE

WHO PAYS THE BILLS?

Who provides the profits – these nice little profits of 20, 100, 300, 1,500 and 1,800 per cent? We all pay them – in taxation. We paid the bankers their profits when we bought Liberty Bonds at $100.00 and sold them back at $84 or $86 to the bankers. These bankers collected $100 plus. It was a simple manipulation. The bankers control the security marts. It was easy for them to depress the price of these bonds. Then all of us – the people – got frightened and sold the bonds at $84 or $86. The bankers bought them. Then these same bankers stimulated a boom and government bonds went to par – and above. Then the bankers collected their profits.

But the soldier pays the biggest part of the bill.

If you don’t believe this, visit the American cemeteries on the battlefields abroad. Or visit any of the veteran’s hospitals in the United States. On a tour of the country, in the midst of which I am at the time of this writing, I have visited eighteen government hospitals for veterans. In them are a total of about 50,000 destroyed men – men who were the pick of the nation eighteen years ago. The very able chief surgeon at the government hospital; at Milwaukee, where there are 3,800 of the living dead, told me that mortality among veterans is three times as great as among those who stayed at home.

Boys with a normal viewpoint were taken out of the fields and offices and factories and classrooms and put into the ranks. There they were remolded; they were made over; they were made to “about face”; to regard murder as the order of the day. They were put shoulder to shoulder and, through mass psychology, they were entirely changed. We used them for a couple of years and trained them to think nothing at all of killing or of being killed.

Then, suddenly, we discharged them and told them to make another “about face” ! This time they had to do their own readjustment, sans [without] mass psychology, sans officers’ aid and advice and sans nation-wide propaganda. We didn’t need them any more. So we scattered them about without any “three-minute” or “Liberty Loan” speeches or parades. Many, too many, of these fine young boys are eventually destroyed, mentally, because they could not make that final “about face” alone.

In the government hospital in Marion, Indiana, 1,800 of these boys are in pens! Five hundred of them in a barracks with steel bars and wires all around outside the buildings and on the porches. These already have been mentally destroyed. These boys don’t even look like human beings. Oh, the looks on their faces! Physically, they are in good shape; mentally, they are gone.

There are thousands and thousands of these cases, and more and more are coming in all the time. The tremendous excitement of the war, the sudden cutting off of that excitement – the young boys couldn’t stand it.

That’s a part of the bill. So much for the dead – they have paid their part of the war profits. So much for the mentally and physically wounded – they are paying now their share of the war profits. But the others paid, too – they paid with heartbreaks when they tore themselves away from their firesides and their families to don the uniform of Uncle Sam – on which a profit had been made. They paid another part in the training camps where they were regimented and drilled while others took their jobs and their places in the lives of their communities. The paid for it in the trenches where they shot and were shot; where they were hungry for days at a time; where they slept in the mud and the cold and in the rain – with the moans and shrieks of the dying for a horrible lullaby.

But don’t forget – the soldier paid part of the dollars and cents bill too.

Up to and including the Spanish-American War, we had a prize system, and soldiers and sailors fought for money. During the Civil War they were paid bonuses, in many instances, before they went into service. The government, or states, paid as high as $1,200 for an enlistment. In the Spanish-American War they gave prize money. When we captured any vessels, the soldiers all got their share – at least, they were supposed to. Then it was found that we could reduce the cost of wars by taking all the prize money and keeping it, but conscripting [drafting] the soldier anyway. Then soldiers couldn’t bargain for their labor, Everyone else could bargain, but the soldier couldn’t.

Napoleon once said,

“All men are enamored of decorations…they positively hunger for them.”

So by developing the Napoleonic system – the medal business – the government learned it could get soldiers for less money, because the boys liked to be decorated. Until the Civil War there were no medals. Then the Congressional Medal of Honor was handed out. It made enlistments easier. After the Civil War no new medals were issued until the Spanish-American War.

In the World War, we used propaganda to make the boys accept conscription. They were made to feel ashamed if they didn’t join the army.

So vicious was this war propaganda that even God was brought into it. With few exceptions our clergymen joined in the clamor to kill, kill, kill. To kill the Germans. God is on our side…it is His will that the Germans be killed.

And in Germany, the good pastors called upon the Germans to kill the allies…to please the same God. That was a part of the general propaganda, built up to make people war conscious and murder conscious.

Beautiful ideals were painted for our boys who were sent out to die. This was the “war to end all wars.” This was the “war to make the world safe for democracy.” No one mentioned to them, as they marched away, that their going and their dying would mean huge war profits. No one told these American soldiers that they might be shot down by bullets made by their own brothers here. No one told them that the ships on which they were going to cross might be torpedoed by submarines built with United States patents. They were just told it was to be a “glorious adventure.”

Thus, having stuffed patriotism down their throats, it was decided to make them help pay for the war, too. So, we gave them the large salary of $30 a month.

All they had to do for this munificent sum was to leave their dear ones behind, give up their jobs, lie in swampy trenches, eat canned willy (when they could get it) and kill and kill and kill…and be killed.

But wait!

Half of that wage (just a little more than a riveter in a shipyard or a laborer in a munitions factory safe at home made in a day) was promptly taken from him to support his dependents, so that they would not become a charge upon his community. Then we made him pay what amounted to accident insurance – something the employer pays for in an enlightened state – and that cost him $6 a month. He had less than $9 a month left.

Then, the most crowning insolence of all – he was virtually blackjacked into paying for his own ammunition, clothing, and food by being made to buy Liberty Bonds. Most soldiers got no money at all on pay days.

We made them buy Liberty Bonds at $100 and then we bought them back – when they came back from the war and couldn’t find work – at $84 and $86. And the soldiers bought about $2,000,000,000 worth of these bonds!

Yes, the soldier pays the greater part of the bill. His family pays too. They pay it in the same heart-break that he does. As he suffers, they suffer. At nights, as he lay in the trenches and watched shrapnel burst about him, they lay home in their beds and tossed sleeplessly – his father, his mother, his wife, his sisters, his brothers, his sons, and his daughters.

When he returned home minus an eye, or minus a leg or with his mind broken, they suffered too – as much as and even sometimes more than he. Yes, and they, too, contributed their dollars to the profits of the munitions makers and bankers and shipbuilders and the manufacturers and the speculators made. They, too, bought Liberty Bonds and contributed to the profit of the bankers after the Armistice in the hocus-pocus of manipulated Liberty Bond prices.

And even now the families of the wounded men and of the mentally broken and those who never were able to readjust themselves are still suffering and still paying.

 CHAPTER FOUR

HOW TO SMASH THIS RACKET!

WELL, it’s a racket, all right.

A few profit – and the many pay. But there is a way to stop it. You can’t end it by disarmament conferences. You can’t eliminate it by peace parleys at Geneva. Well-meaning but impractical groups can’t wipe it out by resolutions. It can be smashed effectively only by taking the profit out of war.

The only way to smash this racket is to conscript capital and industry and labor before the nations manhood can be conscripted. One month before the Government can conscript the young men of the nation – it must conscript capital and industry and labor. Let the officers and the directors and the high-powered executives of our armament factories and our munitions makers and our shipbuilders and our airplane builders and the manufacturers of all the other things that provide profit in war time as well as the bankers and the speculators, be conscripted – to get $30 a month, the same wage as the lads in the trenches get.

Let the workers in these plants get the same wages – all the workers, all presidents, all executives, all directors, all managers, all bankers –

yes, and all generals and all admirals and all officers and all politicians and all government office holders – everyone in the nation be restricted to a total monthly income not to exceed that paid to the soldier in the trenches!

Let all these kings and tycoons and masters of business and all those workers in industry and all our senators and governors and majors pay half of their monthly $30 wage to their families and pay war risk insurance and buy Liberty Bonds.

Why shouldn’t they?

They aren’t running any risk of being killed or of having their bodies mangled or their minds shattered. They aren’t sleeping in muddy trenches. They aren’t hungry. The soldiers are!

Give capital and industry and labor thirty days to think it over and you will find, by that time, there will be no war. That will smash the war racket – that and nothing else.

Maybe I am a little too optimistic. Capital still has some say. So capital won’t permit the taking of the profit out of war until the people – those who do the suffering and still pay the price – make up their minds that those they elect to office shall do their bidding, and not that of the profiteers.

Another step necessary in this fight to smash the war racket is the limited plebiscite to determine whether a war should be declared. A plebiscite not of all the voters but merely of those who would be called upon to do the fighting and dying. There wouldn’t be very much sense in having a 76-year-old president of a munitions factory or the flat-footed head of an international banking firm or the cross-eyed manager of a uniform manufacturing plant – all of whom see visions of tremendous profits in the event of war – voting on whether the nation should go to war or not. They never would be called upon to shoulder arms – to sleep in a trench and to be shot. Only those who would be called upon to risk their lives for their country should have the privilege of voting to determine whether the nation should go to war.

There is ample precedent for restricting the voting to those affected. Many of our states have restrictions on those permitted to vote. In most, it is necessary to be able to read and write before you may vote. In some, you must own property. It would be a simple matter each year for the men coming of military age to register in their communities as they did in the draft during the World War and be examined physically. Those who could pass and who would therefore be called upon to bear arms in the event of war would be eligible to vote in a limited plebiscite. They should be the ones to have the power to decide – and not a Congress few of whose members are within the age limit and fewer still of whom are in physical condition to bear arms. Only those who must suffer should have the right to vote.

A third step in this business of smashing the war racket is to make certain that our military forces are truly forces for defense only.

At each session of Congress the question of further naval appropriations comes up. The swivel-chair admirals of Washington (and there are always a lot of them) are very adroit lobbyists. And they are smart. They don’t shout that “We need a lot of battleships to war on this nation or that nation.” Oh no. First of all, they let it be known that America is menaced by a great naval power. Almost any day, these admirals will tell you, the great fleet of this supposed enemy will strike suddenly and annihilate 125,000,000 people. Just like that. Then they begin to cry for a larger navy. For what? To fight the enemy? Oh my, no. Oh, no. For defense purposes only.

Then, incidentally, they announce maneuvers in the Pacific. For defense. Uh, huh.

The Pacific is a great big ocean. We have a tremendous coastline on the Pacific. Will the maneuvers be off the coast, two or three hundred miles? Oh, no. The maneuvers will be two thousand, yes, perhaps even thirty-five hundred miles, off the coast.

The Japanese, a proud people, of course will be pleased beyond expression to see the united States fleet so close to Nippon’s shores. Even as pleased as would be the residents of California were they to dimly discern through the morning mist, the Japanese fleet playing at war games off Los Angeles.

The ships of our navy, it can be seen, should be specifically limited, by law, to within 200 miles of our coastline. Had that been the law in 1898 the Maine would never have gone to Havana Harbor. She never would have been blown up. There would have been no war with Spain with its attendant loss of life. Two hundred miles is ample, in the opinion of experts, for defense purposes. Our nation cannot start an offensive war if its ships can’t go further than 200 miles from the coastline. Planes might be permitted to go as far as 500 miles from the coast for purposes of reconnaissance. And the army should never leave the territorial limits of our nation.

To summarize: Three steps must be taken to smash the war racket.

We must take the profit out of war.

We must permit the youth of the land who would bear arms to decide whether or not there should be war.

We must limit our military forces to home defense purposes.

 CHAPTER FIVE

TO HELL WITH WAR!

I am not a fool as to believe that war is a thing of the past. I know the people do not want war, but there is no use in saying we cannot be pushed into another war.

Looking back, Woodrow Wilson was re-elected president in 1916 on a platform that he had “kept us out of war” and on the implied promise that he would “keep us out of war.” Yet, five months later he asked Congress to declare war on Germany.

In that five-month interval the people had not been asked whether they had changed their minds. The 4,000,000 young men who put on uniforms and marched or sailed away were not asked whether they wanted to go forth to suffer and die.

Then what caused our government to change its mind so suddenly?

Money.

An allied commission, it may be recalled, came over shortly before the war declaration and called on the President. The President summoned a group of advisers. The head of the commission spoke. Stripped of its diplomatic language, this is what he told the President and his group:

 

“There is no use kidding ourselves any longer. The cause of the allies is lost. We now owe you (American bankers, American munitions makers, American manufacturers, American speculators, American exporters) five or six billion dollars.

If we lose (and without the help of the United States we must lose) we, England, France and Italy, cannot pay back this money…and Germany won’t.

So…”

Had secrecy been outlawed as far as war negotiations were concerned, and had the press been invited to be present at that conference, or had radio been available to broadcast the proceedings, America never would have entered the World War. But this conference, like all war discussions, was shrouded in utmost secrecy. When our boys were sent off to war they were told it was a “war to make the world safe for democracy” and a “war to end all wars.”

Well, eighteen years after, the world has less of democracy than it had then. Besides, what business is it of ours whether Russia or Germany or England or France or Italy or Austria live under democracies or monarchies? Whether they are Fascists or Communists? Our problem is to preserve our own democracy.

And very little, if anything, has been accomplished to assure us that the World War was really the war to end all wars.

Yes, we have had disarmament conferences and limitations of arms conferences. They don’t mean a thing. One has just failed; the results of another have been nullified. We send our professional soldiers and our sailors and our politicians and our diplomats to these conferences. And what happens?

The professional soldiers and sailors don’t want to disarm. No admiral wants to be without a ship. No general wants to be without a command. Both mean men without jobs. They are not for disarmament. They cannot be for limitations of arms. And at all these conferences, lurking in the background but all-powerful, just the same, are the sinister agents of those who profit by war. They see to it that these conferences do not disarm or seriously limit armaments.

The chief aim of any power at any of these conferences has not been to achieve disarmament to prevent war but rather to get more armament for itself and less for any potential foe.

There is only one way to disarm with any semblance of practicability. That is for all nations to get together and scrap every ship, every gun, every rifle, every tank, every war plane. Even this, if it were possible, would not be enough.

The next war, according to experts, will be fought not with battleships, not by artillery, not with rifles and not with machine guns. It will be fought with deadly chemicals and gases.

Secretly each nation is studying and perfecting newer and ghastlier means of annihilating its foes wholesale. Yes, ships will continue to be built, for the shipbuilders must make their profits. And guns still will be manufactured and powder and rifles will be made, for the munitions makers must make their huge profits. And the soldiers, of course, must wear uniforms, for the manufacturer must make their war profits too.

But victory or defeat will be determined by the skill and ingenuity of our scientists.

If we put them to work making poison gas and more and more fiendish mechanical and explosive instruments of destruction, they will have no time for the constructive job of building greater prosperity for all peoples. By putting them to this useful job, we can all make more money out of peace than we can out of war – even the munitions makers.

So…I say, TO HELL WITH WAR.

Smedley Darlington Butler

Major General – United States Marine Corps [Retired]

Born West Chester, Pa., July 30, 1881

Educated Haverford School

Married Ethel C. Peters, of Philadelphia, June 30, 1905

Awarded two congressional medals of honor, for capture of Vera Cruz, Mexico, 1914,

and for capture of Ft. Riviere, Haiti, 1917

Distinguished service medal, 1919

Retired Oct. 1, 1931

On leave of absence to act as director of Department of Safety, Philadelphia, 1932

Lecturer 1930’s

Republican Candidate for Senate, 1932

Died at Naval Hospital, Philadelphia, June 21, 1940

Ruble Run Insanity

logopodcastOff the microphone of RE

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Aired on the Doomstead Diner on December 18, 2014

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Run, Ruble, Run…

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Snippet:

…In the matter of a couple of days here, the financial INSANITY game being played has gone from senile dementia to psychotic, and instead of gradually deteriorating to the point the various players in the game can’t remember who they are, instead they are all out there on the financial markets suffering all the classic sypmtoms of schizophrenia, Delusions, Hallucinations, Disoraganized Thinking and Speech and assorted other Negative Symptoms. For example, the person appears to lack emotion, such as not making eye contact, not changing facial expressions, speaking without inflection or monotone, or not adding hand or head movements that normally provide the emotional emphasis in speech. Does this sound like Super Mario Dragon making a speech or WHAT? LOL.

The rapid Insanity escalation hasn’t occurred in the Yen Basket Case or the Euro Fruit Loops, no instead it SNAPPED with the Ruskie Rouble. In the last 24 hours or so, first all trading was halted in the Rouble, and then shortly after that the Ruskie Credit Card was cut off from virtually ALL liquidity from the Western Banking system, which essentially renders the Ruble worthless outside of Mother Russia. If you have a pile of Rubles in your Swiss Bank Account, they are about as good now as Confederate Dollars, anywhere outside of Mother Russia anyhow…

For the rest, LISTEN TO THE RANT!!!

Note: For non-native speakers of English and Diners who prefer to read rather than listen, the transcript of this Rant will be available HERE on Saturday.  Remind me if I forget to publish it.

Ferguson and the False Promise of “Revolution”

Off the keyboard of Anthony Cartalucci

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Published on Land Destroyer on November 26, 2014

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November 26, 2014 (Tony Cartalucci – LD) – When faced on the battlefield with a numerically superior enemy, one must attempt to divide his enemy into smaller, more easily dispatched opponents, or even more ideally, divide them against one another, and have them defeat each other without ever drawing your sword. For Wall Street’s 0.1%, divide and conquer is a way of life.Divide and ConquerNever in human history has there been a more effective way for tyrants to rule over large groups of people who, should they ever learn to cooperate, would easily throw off such tyranny.At the conclusion of the Anglo-Zulu War, the British despoiled Zululand, divided it into 14 separate cheifdoms, each led by a proxy obedient to the British Empire. The British ensured that these 14 cheifdoms harbored animosities toward one another and fostered petty infighting between them to ensure British interests would never again be challenged by a unified Zulu threat. Before the British, the Romans would employ similar tactics across Germania and Gual.

Image: Zululand lies in flaming ruins, its legendary army decimated, but the British were not about to take any chances of allowing them to unite and resit again. They divided the defeated nation into 14 chiefdoms each headed by leaders harboring dislike for the others ensuring perpetual infighting and a divided, weakened Zululand never again to rise and challenge British subjugation. 
In this way, the British Empire and the Romans managed to not only decimate their enemies, but by keeping them perpetually infighting, divided, and at war with one another, manged to keep them subservient to imperial rule for generations.

But one would be mistaken to believe that imperialism is only waged abroad. Imperialism is as much about manipulating, controlling, and perpetuating subservience at home as it is projecting hegemony abroad. For the imperialist, all of humanity represents a sea of potential usurpers. The systematic division, weakening, and subjugation of various social groups along political, religious, class, or racial lines has proven an ageless solution for the elite.
One remembers the infamous use of Christians as a scapegoat for the corruption of Roman Emperor Nero, deflecting public anger away from the ruling elite and unto others among the plebeians.This is a game that has continued throughout the centuries and continues on to this very day. While racial, religious, and political divisions are aspects of human nature, they are viciously exploited by the ruling elite to divide and destroy any capacity of the general public to organize, resist, or compete with established sociopolitical and economic monopolies.Ferguson – Playing America Like a Fiddle 
 
Before protests began breaking out in Ferguson, Missouri, and even after the first of the protests in August, many across America’s polarized “left/right” paradigm began to find a common ground, shocked at the level of militarization the police had undergone and the heavy-handed response they exercised amid protests. Even among the generally pro-police and military “right,” there was concern over what was finally recognized as a growing and quite menacing “police state” in America.Politicians, the corporate media, and security agencies set off to work, dividing America’s public down very predictable lines. Convenient “revelations” that the police were connected with the ultra-racist Ku Klux Klan, coupled with growing choruses across the right to circle the wagons in support of the militarized police attempted to place those who converged on this common ground back into their assigned places on the “right” and “left” of America’s ultimately Wall Street-controlled political order.Regardless of its success, attempts to intentionally provoke violence, confusion, and division on both sides is an attempt by the establishment to keep people divided and weak while maintaining their position of primacy over the country and the expansive “international order” it imposes globally. It was this establishment, in fact, that intentionally militarized the police, intentionally cultivates both institutional racism as well as sociopolitical and economic rot in America’s inner cities, creating breeding grounds of violence and crime. So busy is America managing the predictable conflict amongst themselves, they have neither the time nor the energy to recognize their true tormentors.
In reality, the police and protesters and those across America and around the world “picking sides” have more in common with one another than the government and corporate-financier interests that reign in Washington and on Wall Street.Get Off the Hamster Wheel 
One cannot accomplish anything by burning down one’s own community, killing one another, or complaining and protesting endlessly. Real revolution is not taking to the streets and destroying a political order, it is creating a new order that displaces the old.
The American Revolution, for instance, occurred after the colonies established their own economic system, as well as their own militias, political networks, and infrastructure. The violence broke out only after the British tried to reassert themselves amid the steady process of being displaced. By the time shots were being fired, the real revolution had already occurred – the subsequent war was to defend its success.
Today, the establishment constitutes unchecked, unwarranted power and influence held by the corporate-financier elite – an establishment we are in fact paying into daily every time we patronize their businesses, use their services, associate with their institutions, and pay in attention and time to their propaganda and political agenda we ourselves should be setting and executing. Ironically many of both the police and protesters clashing in Ferguson on opposite sides of the “conflict” have homes full of Wall Street’s goods, and subscriptions to many of their services.
Indeed, Walmart ends up filling our homes with most of the consumer products we depend on in America. A handful of agricultural giants feed us. A handful of pharmaceutical giants medicate us. A handful of energy monopolies light our homes and fuel our vehicles. You could fill a single sheet of paper with the names of corporate-financier interests that rule over nearly every aspect of our lives.Such monopolies exist because they have extinguished competitors. Ensuring that competition remains extinguished means creating a society that is incapable of producing individuals or paradigms capable of challenging their established order. This includes sabotaging the education system, creating a socioeconomic system that encourages unsustainable dependence rather than self-sufficiency and independence, and rigging rules, regulations, and laws against any potential upstarts.The notion of Ferguson protesters demanding justice from a system created of injustice, upon injustice, is as absurd as trying to squeeze apple juice from a lemon. It is the definition of fantastical futility.
Instead of demanding justice, jobs, education, healthcare, food, and other necessities and desires from a system with no intention of ever empowering the people – a system that in order to continue perpetuating itself must by necessity never truly empower the people – we must begin working together locally to empower ourselves.Power stems from infrastructure and institutions – and locally this can be accomplished in innumerable ways. Already farmers’ markets, organic cooperatives, makerspaces, churches, community centers, community gardens, and charities along with innovative small businesses leveraging technology to do locally what once required global spanning industry to accomplish, all constitute the seeds of this shifting paradigm. For communities unlucky enough not to have one of these above institutions, or a lack of them, instead of baying for blood in the streets, burning building down, or clashing with police, build them.
The alternative media itself is proof of what power people have when they stop depending on others, stop demanding others to do their jobs properly, and instead take up the responsibility themselves. Expanding this paradigm shift to other aspects of our daily lives, from agriculture to energy, to education, will be key to true and enduring change.Ferguson teaches us that real change in the mind of many is still far off. America isn’t on the edge of revolution. A hamster wheel endlessly spinning has no “edge.” Those picking sides and bickering over the events in Ferguson are playing into an elementary strategy of divide and conquer. We are divided, Wall Street has conquered.At the end of it all, Wall Street comes out even stronger. Because in the smoking remnants of our communities after all is said and done, we have even less with which to build an alternative to the system we live trapped within. Divided, we have half the people we should be joining together with, collaborating and building together with, to build the world we want to live in tomorrow.Build, don’t burn. Collaborate, don’t complain. Don’t simply “resist” the system, replace it altogether.

Post-Eurozone Stress Test Syndrome: PESTS

Off the keyboard of John Ward

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Published on The Slog on October 27, 2014

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POST-EUROZONE STRESS TEST SYNDROME (PESTS): An update on the calumny involved

Interrogate harmonised eurobanking, and it rapidly becomes clear that the entire edifice is designed to stop capital flight. A disgruntled Slog investigates.

It’s enough to make a chap vote UKip.

You may have seen from this morning’s Slogpost that I’ve been having trouble with Ding Dong Bank – a French institution keen to profit from its totally manufactured ‘success’ in the EBA stress tests. This morning I was back in my local branch to ask why – with nearly €60,000 deposited in my accounts there – I’d been left with no liquidity during the weekend, and my bank card had been refused from Avignon to Zabalza.

The excuses for non-performance of service so far have been:

* There is a ceiling on your account withdrawals. (At €150 on €60,000?)

* The IBAN number for your transfer is wrong

* The amount you wanted to send to Poland is above the €6000 limit for foreign transfers

* For some reason, nobody raised your ceiling last time you asked us

Absent so far from any dealings with Ding Dong Bank have been “Je suis désolé” (I’m sorry). But the story changes every time I talk to these scoundrels. Today has seen yet more multivariate change of excuses:

* Your new ceiling of withdrawals was only for a month.

* You need a Gold Card to have such an account

* ALL foreign transfers have to be done personally here at the Bank.

All three have either (a) never been mentioned before now or (b) been contradicted by others in the bank.

Typically, this morning’s comment thread was full of more wiseasses telling me how daft I am to have a French bank account with more than thruppence in it. I should have assets and no money in the bank, they say. One wonders how they pay their bills, or buy the assets. In carrot futures, perhaps?

My solution (having calmed down) was simply to treat the bank as a Maginot Line: to walk round it and use people like Transferwise or UKForex. But now I discover that for euro-to-euro transfers within the EU such is impossible without paying fees to go through a bank.

Well just fancy that. Mario has introduced a fantastic new innovation called SEPA – the Single Euro Payments Area. Read this terrific blurb-bollocks from the ECB site:

‘The Single Euro Payments Area (SEPA) is a project to harmonise the way we make and process retail payments in euros….Retail payments are “everyday” payments between individuals – private persons, companies, NGOs, government agencies…..an increasing number of payments can be done entirely electronically (e.g. mobile, online banking or contactless card payments….[requiring] a clear and transparent governance structure involving all stakeholders’.

Or – reduced to two words – ‘banking monopoly’. Go to the Transferwise site, and you will see that euro2euro transfers have to use SEPA now.

This is the European Union folks – a deregulated free trade area in which there is a single currency. But the bad news is, you have to use a bank and pay their fees to send transfers from one member nation to another in euros. The only way to avoid that is to do the deal from euros to, say, Szloti, or Pounds into euros, or Dollars into Remnimbi.

Aaah, the advantages of the EU, eh? Wheelchair Wolfie Schäuble’s harmonised eurobanking system. Harmony for the bankers, cacophony for the customers.

Related recent Slogpost: The neoliberal free trade open market fascist monopoly that is Microsoft

Brass Balls or Marshmallows: What’s Beneath a Scottish Kilt?

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Aired on the Doomstead Diner on September 17, 2014

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Don’t miss the recent popular rant on Secession:

Secession: Scotland to Texas to Alaska…and BEYOND!

Snippet:

its-showtime_zoomIt’s SHOWTIME tomorrow on the Kilty Independence Vote, so we will finally find out just what the Scots have under those Kilts, Brass Balls or Marshmallows?

John Ward of The Slog has published numerous Blogs over the last week looking at the Polls, overall determining it as “Too Close to Call”, although his latest Blog on the referendum seems to indicate he thinks the Nos will win the day unless Salmond makes a final Push on the subjects of Unemployment and Family Security to tug at the heartstrings of the Scot females.

As mentioned before in my previous Rants on this topic, it seems close to impossible that with such a close measure in the Polling, TPTB won’t rig the election to make SURE that No takes the day. One of the numerous reasons why “Democracy” doesn’t work too well on critical and divisive issues where roughly 50% of the population thinks one thing, the other 50% the other. Election Rigging is one means to get what you want in a close vote, it doesn’t take too much ballot stuffing to alter the result.

Slightly less unethical but even more prevalent is the use of Gobs of Money to sway a close election. While even the Koch Brothers can’t buy 10% of the voters in a fairly large electorate, if all they have to buy is 1% to change the result, that is well in the budget. Bombard the MSM with Fear Mongering threats, it’s quite likely 1% of Kilties will have their Brass Balls turned to Marshmallows when they pull the curtain on the Voting Booth…

For the rest, LISTEN TO THE RANT!!!

Coming Soon to Diner Podcasts: A discussion with Ugo Bardi of Resource Limits and Author Jim Laughter of “Polar City Red” on Climate Fiction

 A not to be missed chat for fans of Doomer Porn!

IMF Hit Men

Off the microphone of RE

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Aired on the Doomstead Diner on June 17, 2014

logopodcast

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Who has the better Tan?

George Hamilton                              Christine LaGarde

http://images.buddytv.com/btv_2_100266621_1_434_593_0_/george-hamilton-phot.jpghttp://bindocelebrity.com/wp-content/uploads/2013/12/Christine-Lagarde-3.jpg

Snippet:

http://2.bp.blogspot.com/-ERKB4SSMDJM/Tc_6E_8KjbI/AAAAAAAABkk/GlWvUreWRBs/s1600/confessions-of-an-economic-hit-man.jpgNewz for today is that Christine LaGarde, winner of the George Hamilton award for Best Suntan and current head of the IMF can see the day coming where the IMF will move it’s headquarters to Beijing, because the IMF Charter has it they are supposed to set up their main Shop in whatever country is funding them with the most Funny Money. Apparently Christine is suffering a high degree of Sun Stroke and is trying to jawbone the Chinese into funding the IMF, which is basically dead broke with everybody else in this Kabuki.

The IMF is one of several institutions set up by the Illuminati in the aftermath of WWII to manage the flow of Funny Money out to the Little People of the World. You have the World Bank also, and then of course the Big Daddy of them all, the Bank for International Settlements in Basel Switzerland, better known as the “Central Bank of Central Banks”. These folks determine the quantity of money available, and who gets it. It is ALL debt money, everybody has to BORROW it, including the TBTF banks and Tycoons too. Then it gets pitched around in Markets which are always thoroughly manipulated, as on corporation battles another, one country battles another and one tycoon battles another in the great game of Capitalism, which in essence is gambling on debt OTHER people will get the bill for..

For the rest, LISTEN TO THE RANT

RE

The Money Valve II

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Published on the Doomstead Diner on June 1, 2014

money_spigot_1

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Prior articles in this series: The Money Valve

In my last article, I diagrammed out the gross flow of downhill energy through the Money Valve, down through Industry and Consumption toward its final destination as Waste. Readers interested in this aspect of Industrial Economics may be interested also in the Waste Based Economy series here on the Diner.

Waste Based Society
Waste Based Society II: Vendor Financing & Planned Obsolescence
Waste Based Society III: Solutions & Alternatives

MoneyValve3

The basic flowchart turning resources into waste through the Money Valve of Central Banks is straightforward and easy to understand. However, it does not look at all the various Feedback Loops that are engineered into the system in order to keep it operating. Most notably what is not included in the diagram is how Goobermint and the Military are involved, or how taxation and interest serve to capture wealth out of the system for the Elite class of society.

So for this installment of the Money Valve series, I made a basic Web diagram to show the relationships of these portions of the economy, and from that define where the waste is produced at each level. Rather than try to show all the flows and backflows on the diagram with a bazillion arrows and colored lines (which would have taken forever),  what I did was to label each of the Nodes with a number, and each number has a corresponding explanation below for the connections. So, let’s look at the Web of Connections in the Waste Based Economy.

The large number of connections that results from even a restricted number of nodes results in a lot of information to cover, much more than you want to eat for the Diner Brunch on a Sunday Morning.  So I have broken this analysis up into 3 parts, and for today we will look at the first 5 nodes and their relationship to the rest of the economy.

MoneyValve7

oilwell1- Energy Resource

The whole game begins with a large stock of Energy yet to be accessed. In the example I will use here, we are looking mainly at the FSoA in the mid-1800s when Standard Oil first began pumping Oil out of Pennsylvania, then Texas and Oklahoma and California, right up to today fracking the last of it out of the Bakken and Marcellus shale formations. However, all the principles apply globally as well to Saudi Arabia, Iran, Russia, everywhere the Industrial Economy moved to either on the Extraction or Consumption end.

In order to gain control over the resource in any given area, you need a Military to take control over the area.

2- Military Acquisition and Control

In the case of the FSoA, using the Military to gain control over the territories was done during the “Manifest Destiny” period, clearing the land of the Native Population that still remained and making it “safe” for the Industrial Economy begun in Europe to move into. The Civil War was a part of that Battle, pitting Industrialists from the North against the more Agrarian based economy of the South. Globally speaking, WWI & WWII were about taking control over the vast Oil Reserves held in the Middle East, and bringing those resources under the control of the Industrial based Economy.

http://www.christiebooks.com/ChristieBooksWP/wp-content/uploads/2014/04/Smedley_Butler.jpgGeneral Smedley Butler wrote about how the Military functions as the enforcement arm of the Capitalist Racket in his paper War is a Racket.

You see 4 Connections in addition to the Energy Connection on the Web from the Military Node, to Industry, Consumers, Goobermint and Infrastructure.

The connection to Goobermint should be obvious, your Goobermint provides the Justification for your Army. If you don’t have the Stamp of Approval for Violence from Da Goobermint, then you are Thieves and Murderers. Goobermint has a monopoly on Legal Violence, and provides Political and Legal justifications for all military actions.

Industry is essential for the Military in the modern age, since all warfare is conducted using Machines made by Industry. As Smedley Butler wrote, the folks who benefit the most from War are those who control the factories that make the War Machines. Industrialists profit by selling Guns & Bullets to BOTH sides of any War

Why are Consumers necessary for the Military? Consumers are the Cannon Fodder! Where else are you gonna get people to go out and fight from? The Elite certainly aren’t going to get out in front of the Bullets and RPGs!

Infrastructure? Just how much do you think it costs each year to maintain hundreds of Military Bases here in the FSoA and all over the world? That is some expensive Infrastructure out there! Besides that, you have all those roads necessary to drive the Humvees and APCs on! HTF would the military machine operate without all those roads? About as well as it operated in the Jungle of Vietnam, which is to say EPIC FAIL. Does the Military pay for those roads? Hell no, the Taxpayer pays for them so he can Happy Motor around, longs as he can still afford Gas anyhow.

http://upload.wikimedia.org/wikipedia/commons/6/6f/John_D._Rockefeller_1885.jpg3- Energy Extractors

Now, in popular parlance these folks are called “Energy PRODUCERS” but in fact they produce nothing so this is a complete misnomer. These folks simply extract Energy that has been stored up underground for a few million years and pitch it out to be burned up. The process of burning it is what generates the gobs of “wealth” the folks controlling this bizness have, so it behooves them to encourage as much consumption as possible. At least it did as long as they had gobs of it easily available to dig up anyhow.

The energy because it came up so cheap and easy served as a Loss Leader for the other Industries it was based on, specifically the Automotive Industry, the Aircraft Industry, the Electrical Grid and the Telecommunications Grid. Each of these Industries requires copious amounts of cheap oil and cheap credit to keep functioning. At the moment, these industries continue to be supported by cheap credit, but they run shorter each day on cheap energy to keep them functioning. Even if they still have access to credit, if the Consumers do not, they can’t sell it.

http://upload.wikimedia.org/wikipedia/commons/3/30/Standard_Oil.jpg

http://www.bilderberg.org/standard.jpg4- The Money Valve: Central Banking

Obviously the topic of Central Banking is way too deep to explore in a couple of paragraphs here. Basically however, once you have control over a Resource, you need to also have control over the credit creation mechanism for people to begin to buy that resource from you. It is no coincidence of course that the very same people who are the energy extractors and Industrialists involved in this game are ALSO the people who issue out the credit to buy it. John D. Rockefeller and J.P. Morgan both live on today as JP Morgan Chase, Standard Oil lives on in Exxon-Mobil and so forth. The Banking and Energy Industries are integrally tied together, one does not function without the other.

In presenting it, you notice I use a much larger Font for the Banking System, and also present this before Goobermint in the structure. Why?

Well, in the olden days, Goobermint came before Banking and Money, but in the modern world, Banking controls Goobermint. Entities like the Bank for International Settlements (BIS) and Da Federal Reserve Bank (really a Private Company, not a Goobermint Agency) are all controlled by a supra-national Cartel, often referred to as the “Illuminati”. Basically these are just all the people and families which took control of the Banking System beginning in the Medici Era, continuing through the Colonial Period and currently running the entire economic syste that built up through the period.

Today, this system can even make somebody like Vlad the Impaler in control of Russia capitulate. Remains to be seen if a Chinese-Ruskie alliance is strong enough to combat the economic sanctions and loss of credit from the International Bankster Cartel.

So for today, and for at least the last couple of Centuries, Banking has led Goobermint in control over the kind of civilization that developed, which of course is the Waste Based Economy.

 

http://anticap.files.wordpress.com/2013/09/broken-ladder-economic-immobility-cartoon.jpg

5- Goobermint

On the administrative level, Goobermint is necessary as a means to make Legal Warfare, and provide cover for the Banking System. J6P is sold the idea his Goobermint is Democratic and represents what he wants, when really it represents what the Banking Cartel wants. Nobody gets elected without kowtowing to the Banksters, money required to GET elected is beyond the reach of all but Billionaires these days, so each person elected to a Representative position in a “republic” is in fact beholden to numerous Special Interests that funded his campaign. Whether Democrat or Republican, every member of Congress and State legislatures is beholden to the folks who can fund their campaigns.

Once IN office, anyone who has even a sliver of moral decency left in their soul is bombarded every day by various Lobbyist, all also funded by Industry. The end result is that all legislation that gets passed is directed to benefit the Industrialists who run the system. Even supposedly good Agencies like the EPA just serve as an excuse to offshore industry to cheaper labor countries where they don’t have strict laws regarding pitching pollutants out into the atmosphere and water supply. The EPA would never have gained any ground at all if industrialists didn’t KNOW they could simply move the factories to other locations.

http://s3-eu-west-1.amazonaws.com/lookandlearn-preview/B/B001/B001746.jpgAs you can see, Goobermint has numerous connections to all the other areas of the Economy, primarily funded by Taxes on all the Commerce going on, and Debt floated by the Money Valve Banks. Taxes worked OK in the early days of the Ponzi, now it is all increasing Debt that keeps Da Goobermint floating. In theory a Goobermint should be able to issue it’s own money, however since the International Banking Cartel took over the Money Biz going back to the Medici Era, it has been close to impossible for any Goobermint to do this independently. The Cartel steps all over them, cuts them off from Credit, their Money Hyperinflates and they are screwed. In the current case of the Ruskies and China, they are trying to break free of this and may be large enough to do so, but even if they succeed it just crashes the whole global trade system. No win situation there, damned if you do, damned if you don’t.

Besides providing Justification for the Military arm, the main job of Da Goobermint is to provide Infrastructure to make the whole system work tha Industry doesn’t want to pay for, because if they did they couldn’t sieve off any Profits. This includes all the Road Maintenance, Police necessary to enforce laws and Private Property claims,Teachers and Schools to Warehouse kids until old enough to get a job (assuming any exist in the economy when they get out of school in their 30s sometime) etc. Also of course the ballooning SS and Medicaire liabilities incurred here over time. Da Goobermint provides the sinkhole for all the stuff Industrialists don’t want to foot the bill for. Which of course becomes greater all the time as the system becomes more complex and involves a greater population size, while at the same time revenues decrease across the board because of a decreasing energy stock available at a cheap credit price. its a combination of positive feedback loops that send the debt levels exponential as the Ponzi draws to a close.

http://www.fedupusa.org/wp-content/uploads/2013/01/sec-revolving-door-cartoon.jpg

The main difference in this part of the network chart is the curved lines I drew between the Money Valve and Goobermint. What those represent is the Revolving Door that exists between these two entities that allows for stuff like Regulatory Capture to occur and keeps all legislation favorable to Industry. It is the system of Fascism which underlies all Goobermints participating in this monetary system, which is essentially all of them around the Globe today. Central Bankers and Financial Ministers are all selected from the ranks of Banksters who worked for Goldman-Sachs or JP Morgan Chase. Lobbyists all come from the ranks of ex-Politicians who get juicy high paid jobs from Industry after leaving office. Agencies like the SEC which supposedly regulate the system are entirely in the pocket of those they are supposed to be regulating. Together, these two entities form a parasitical symbiosis that feeds on the rest of the surrounding economy.

In Part III of The Money Valve series next Sunday, we will look at the connections between the core Infrastructructure and Systems elements of the economy that serve as the engine which drives the machine forward, so long as there is sufficient available energy to drive it.

RE

The Death of Debt

Off the keyboard of RE

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Published on the Doomstead Diner on March 16, 2014

singularity

Drawing ever closer to the Singularity

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Anyone who has been following Economic and Political Newz over the last 5 years knows there are two words you will find in practically every article written  during this period,  DEBT & GROWTH.

The Debt issue comes up whenever you talk about any country, from the PIIGS to Japan to the FSoA, and the massive overhang of debt these countries have accumulated through the Age of Industrialization.  It’s measured in the $Trillions$, it’s measured as Percentage of GDP, and it keeps getting BIGGER every year by any measure you want to make, and that is just the stuff listed as Debt, like Treasury Bonds, Gilts, Bunds etc.  It doesn’t even include “Unfunded Liabilities” which are things like Social Security and Medicaire, and even private Pension Funds as well.

http://steadystaterevolution.org/wp-content/uploads/2009/03/cartoon_economic_growth1.jpgThe ANSWER to all the Debt always presented as coming down the Pipe at some point is further GROWTH, that other totally ubiquitous word that is featured in every speech from every Politician in every country, along with appearing in the papers of every Economista out there.  Growth will Save Us!  We need to Export more!  We need to be productive and competitive in the Global Marketplace!  EVERYBODY wants to Grow and to Export more, and certainly no politician ever talks about Shrinking and Importing more stuff as a means to become successful.

The issue of course is that EVERYBODY can’t be an Exporter, for every Exporter you need an Importer to buy your stuff.  What if the people you want to SELL your stuff to have no MONEY?  How can you sell anything to them if they got no money?  It doesn’t matter what it is that you want to sell, whether it is just Raw Commodities like Iron Ore or Manufactured products like Carz, Iphonez and Big Screen TVz, they gotta have the MONEY to buy it with.

How do they GET this money to begin with?  It is LOANED to them, basically from the Top Down through the Elite class of a given society, which takes out these loans in the Name of the People.  The People of the State are the Bag Holders on these loans the Elite sign for in their name, and the Elite sieve off a decent portion of it for themselves and sequester it in foreign bank accounts, but that is another story for another day and not really the fundamental problem, though it certainly exacerbates it a good deal depending just how Corrupt & Greedy the Elite in any given country are.

For Chinese to build all the Industrial Infrastructure they did over the last 20-30 years, they had to borrow GOBS of money.  For American Konsumers to buy the products that came out of said factories, they ALSO had to borrow tons of money.  Everybody has to borrow Money to get this rolling, because that is how ALL the money gets created in the first place, it is Lent into existence, and this creates an Asset and a Liability.  Whoever makes the Loan holds the debt of whoever took out the Loan as an Asset,  whoever took out the loan has it on their books as a Liability.  Once created this way, this money can then circulate around the economy in the form of Paper Notes in the Olden Days, or nowadays as Digibits but it is the same general principle.  Interest is created on top of this, and this of course is the final failing of the system, but more on that later.

You can think of the beginning of a monetary system as a Singularity,  a Zero Point.  At Zero, nobody has Credits and nobody has Debits on their personal or corporate balance sheets.  Once you take control of something, say a patch of land that grows food, you now can issue Debt to everyone else to buy that food from you.  Same idea if you control Oil Fields.  You now can issue Debt to others to buy that Oil from you.  If you control Manufacturing Plants, you can issue debt for people to buy the products of that Factory.  Your Zero Point now gets split up into +1 and -1.  It still nets to Zero, except of course for the Interest Charges on the newly loaned money, which each year compound up, so there is never enough money at the end of each year to fill this gap without constantly Inflating the money supply.  Which means of course, ADDING MORE DEBT!

To do this and to still have Stuff to sell in return for this ever increasing Debt load, whoever is issuing the Debt has to constantly increase the control they have over various Resources of the Earth, primarily Energy of course since the Age of Industrialization began.  Gaining such control generally takes Military Force, although once you get a given society to buy into the Legal System and the Monetary System you are running, you can use that to gain control as well.  See Confessions of an IMF Hit Man for this.

Who gets to be the Lender in such a schema?  Whoever holds control of the Resource Base upon which you are making these Loans.  So as the system Evolved in its modern incarnation since around the time of the Medici Banksters, various Feudal Lords and eventually Nation States got control over territorial Resources, and each state could issue Money based on those resources.  The more you controlled, the more money you could Issue.  The Brits got particularly good at this early on with a Powerful Navy that controlled the Sea lanes for trade, and the Bank of England has been issuing out money on this stuff since 1692 when said bank was Chartered.  Similarly, in the aftermath of WWII when most of the rest of the Industrialized world in Europe was a Pile of Rubble, the FSoA was able to start issuing out Dollars on its great Resource base of the era, all those Oil fields in Texas and Oklahoma of course.

http://callisto.ggsrv.com/imgsrv/FastFetch/UBER2/dah_02_img0296For the first 25 years of this act in the play from 1945 to 1970 or so, the FSoA was totally in the Cat Bird Seat as far as issuing debt was concerned.  We had the most producing Oil Wells, we had undamaged Industrial Infrastructure ramped up to supply WWII armies with Planes, Tanks and Bombs, and we had the Bread Basket of the Great Plains able to produce Copious Food at Low, Low Prices every day, courtesy of the Cheap Oil coming up out of the ground under Jed Clampett’s Farm.  The Baby Boom arrived, and the Amerikan Economy expanded Exponentially, though of course the proceeds of this expansion were not too evenly distributed.  in fact you had large pockets of Poverty developing even back then, and this blew up in the late 1950s and 1960s with the Race Riots from Alabama to Watts.  The economy was expanding so rapidly at this time though that the Elite came up with the Great Society program, basically a buy off of the disenfranchised with various forms of Public Assistance.

On the aggregate Debt level though, things started to Go South in the early 70s, once the EZ Oil started to run thin in the FSoA and we became an Oil Importer rather than Exporter.  At this point we had to start exponentially increasing Debt Issuance to be able to buy Oil from Saudi Arabia, basically holding a Gun to their heads to accept our Debt as the MONEY to buy their Oil.  The Saudis played along, and with their resource base we were able to keep expanding, while at the same time putting Outta Biz the old Soviet Union, which just did not ever have the same Credit Creation apparatus the West had developed over the Centuries for this.

The exponential increase in total Debt and the total money Supply measured in US Dollars has been ongoing since the 1970s, it was the only way to keep the Industrial Game rolling here over the period.

http://cdn.theatlantic.com/static/mt/assets/business/assets_c/2011/04/Debt%20Ceiling%20History-thumb-570x314-49343.png

We could keep issuing the debt and everybody else would take it as money because we have the Big Ass Military.  You don’t take our Debt, we will Bomb You Back to the Stone Age, basically.  Various countries from Vietnam to Iraq have been subject to this sort of coersion over the years.  South American countries were taken over by different means, utilizing the Hit Men from the the IMF mostly, sprinkled in with Regime Destabilization from our friends in the CIA.  In pretty much all cases though, the system has been propped up through this period through the threat of violence as the Stick on one side, and the offer of Loan Money to buy into the American Dream of Fast Cars and Hollywood Entertainment on the other.  Everybody can be RICH like Americans!  We’ll LOAN you the money to do it!

http://1.bp.blogspot.com/_KCXLGR6gNyE/SvTyUSxNu6I/AAAAAAAAAGw/UpqPKZG_Sw4/s400/dees-fed-reserve-bank-counterfeit.jpgIn Actuality of course, it wasn’t America making the loans, it was the TBTF Banks, controlled as they always have been by a very small Oligarchy.  They control the creation of credit, the only thing “Amerika” does as a “Democratic” nation is to staff a Military Operation that backs up their right to create the credit and control the resources.  In fact Amerika itself has to Borrow Money from these TBTF Banks, through the artifice of the Central Bank of Da Fed, which is in fact a Privately Owned subsidiary of the TBTF Banks!

You don’t Own the money you hold, it is just a claim on resources that many other people hold also.  Over the time period that this system has expanded, those claims have become ever more diffuse and widespread, with the abstract “worth” of many assets dependent simply on what someone in  a position to issue EXTREME levels of debt money can pitch out.  Examples of this are the Railroads, the Interstate Highway System, and the Internet.  All of them have value only insofar as they still can work, and working depends on constant input of energy and maintenance.  They all are costly things to maintain.  The builders sieve out profit in the building of them, the public is left with the liability of maintaining them in the aftermath, when they have become dependent on them.

Recently in one of his articles, William Blum bemoaned the fact we are not using taxation revenues to maintain the Infrastructure we developed here.  Thing is, Tax revenues never built it, and they can’t maintain it either.  The stuff does not pay for itself, there is no Free Lunch here.

This is the basic History of the modern incarnation of Money that we are working with, so now is time to look at what is actually occurring with this artifice.

To keep the Daisy Chain going, new money in the form of new loans constantly has to be created.  If it is not, you run into Liquidity Problems.  All the Old Money invested is essentially Locked Up in various ways, you can’t really sell out a large position in any asset class you have money invested in without driving down the value of that asset class.  This would be the problem faced by the Chinese with respect to USTs for example.  Nominally, they hold $3T or more of this Toilet Paper, but if they tried to sell even a minor portion of this of say 10% or so, it would crash the market for USTs.  If you have 10 tons of Gold in your basement safe and try to sell all of it to cover other bad bets you made, this crashes the Gold Market.  Etc. So nobody holding large positions of anything wants to rock the boat and sell a lot of it at once.  They want to “Stealth Sell”, trying to get rid of it in dribs and drabs without rocking the boat too much.

Problem with this is that if some asset class starts to go Belly Up in a big hurry (like say the Chinese Credit Market), in order to stay Solvent you may have NO CHOICE but to try to sell a large position in something else to cover your leverage in the bottoming asset class.  That is where the Chinese market presents the most danger right now, and NOBODY KNOWS how much funny money the TBTF banks have invested in the Chinese Shadow Banking industry at all.  What’s the counter party risk if a Coal Trust in China goes Belly Up?  Nobody Knows.

Here’s a little bit from my favorite Illuminati Shill, Ambrose Evans-Pritchard:

The proof is in the monetary pudding, and this shows that EMU is already in worse shape than Japan in early 1998 by a large margin. Private lending is contracting at 2.3pc, the M3 money supply has ground to a halt and EMU-wide unemployment is stuck at a near-record 12pc.

http://4.bp.blogspot.com/-Rrf6b9lhh0E/TxfHpiOQjZI/AAAAAAAAN8w/4iQ41oyzVcg/s400/Italy%2BMoney%2BSupply%2BFigures.pngThe ECB and the TBTF EuroBanks aren’t creating enough new loans, so money supply is drying up.  Similarly in China, the Shadow Banking Industry which in January issued out something like $150B in new Loans issue out close to Zero in February, and various trusts all leveraged up to beat the band are cracking under the pressure.

No new loans, the system grinds to a halt.  Thing is, to issue out the new loans you have to have the resource base upon which to issue them, and you have to issue out the loans not just to the extractors of the resources but also to the consumers of the resource.  If you look at Fracking of NG for example, if you offer up loans to Drillers to access more gas but don’t simultaneously offer up new loans to consumers, they can’t buy the new gas at any price you offer it up at.

The  issue is, just about all consumers of such energy are in such deep debt up to their eyeballs already TBTF Banks are choking on issuing them more Credit, and the only way it happens is with Skanky deals through the IMF and World Bank.  A few large corporations are still able to access debt, particularly Energy companies since the same people who control those companies control the Banks that issue the credit, but if they can’t sell the product to tapped out consumers, even their credit lines will end up being cut eventually.

We can’t rebuild the industrial infrastructure on Taxation revenues, nor can we pay off the Bad Debts of the TBTF Banks on such revenues.  The TBTF banks weren’t bailed out from your Taxes, they were bailed out by Da Goobermint expanding its Debt load on Da Fed Balance sheet.  The choice was made to do this because if you did not do it, said banks would collapse, and with their collapse goes the entire artifice of the Money you are using.  Working money would essentially disappear close to overnight, ATMs would all shut down and rebooting a NEW system everybody could agree on with overall resources now so depleted would be a lot harder than it was when they made the original Bretton Woods agreements after WWII, when resources were still in copious supply.

Debt is Dying here, because there are not enough resources around per capita to issue more debt to all the Consumers to consume those resources.  Selectively, some areas of the world are being Cut Off from new Debt issuance, places like Greece, Spain, Portugal et al.  Places with their own ability to create internal debt like China have expanded it, but that is a very unstable House of Cards.  The most well off places are those with the closest connection to the main Credit Creators on Wall Street and the City of London.  They have the biggest and most well developed Credit Creation apparatus, and the Debt they create still is “trusted”, though less trusted all the time here of course.  When these behemoths finally do die, it is the END of the monetary system we have been using since the time of the Medici.

http://www.caehealthcare.com/images/made/images/uploads/Leiden_1_450_247_s_c1.jpgAs of right now, this Monetary System and the TBTF Banks that administer it are in the ICU on Life Support, propped up by Goobermints like the FSoA still deemed worthy of more Credit, but anyone in their right mind needs only look at the exponentially increasing Debt chart above here to realize that there is no way to ever pay off the debt, you just have to keep increasing it until something BREAKS.  CODE BLUE in the ICU!  Bring on the Crash Cart and the Paddles!

We are going to get another Code in the ICU here pretty soon, it remains to be seen if there is enough Juice left to kick start the Gomer TBTF Banks one more time when it does.  Based on what is going down here Geopolitically in Ukraine, it seems unlikely such a kickstart will work again.  The Ruskie Banking system is in at least as precarious a position as the Chinese one, and they are likely to suffer financial Lock Up slightly before the West does, but that won’t make Putin any less willing to roll his tanks.  He has Energy, and he can run a Command Economy.  If the Ruskies lose access to Western Credit and/or see their financial assets seized, Putin’s only alternative is to PHYSICALLY seize assets, like the rest of Ukraine, Poland…GERMANY.

The Death of Debt is the Road to War, they are one in the same thing really.  It all stems from an exhausted resource base that too many people Globally are competing to use and exploit.  Individuals don’t have much choice when they get cut off, so Suicide becomes a fairly Common Option.  Suicide rates in the hardest hit countries are already Skyrocketing, and even here in the FSoA Suicide is on the rise.

http://qzprod.files.wordpress.com/2013/05/number-of-suicides-in-greece_chart-1.png?w=1024&h=576

http://static4.businessinsider.com/image/5134c5b46bb3f7431f00001c-2308-1731/vladimir-putin-4.jpgNation-States that are organized with Large Military Apparatus DO have an Option besides Suicide, which is to Go Belligerent as a  group and try to kill somebody else instead of dieing themselves.  Russia has a large Military force, they have Energy, and they have Vlad the Impaler, ex-head of the KGB, Capo di Tutti Capis.  Vlad will not roll over and die here.  If the Western Illuminati shut down Ruskie credit and freeze their overseas assets, Vlad will retaliate with the only weapon he has left, his Energy and his Military Machine.  It would seem likely that in such a situation, for at least the beginning of it the Chinese would line up with the Ruskies.  I doubt short of Global Thermonuclear War there is anything the FSoA could do about that, the Chinese and Ruskies would just roll over Western Europe.  Shall we Play a Game?

http://www.mikechurch.com/wp-content/uploads/2013/01/wargames.jpg?2578ec

However, I doubt such an alliance can last too long in the face of the resource problems.  I see a lot of Stranded Military units as logistics and supply lines fail here, at which point the issues become all Local.

It is hard to say how fast this scenario will play out, but it seems the likeliest scenario at the moment.  One thing it does mean is that if/when it does escalate, we will see Conscription and the Draft into the Military again, at first for 18-25 year olds, but likely to go up to the 30s.  Avoiding the Electronic Press Gang into the Military will be quite difficult, you definitely would need to dispose of your Iphone to even have a chance at that.

The next year will see  how it goes.  Everybody Knows though, it’s not going to be pretty.

RE

Slogger Trifecta

Off the keyboard of John Ward

Published on The Slog on August 19, 2013

trifecta

Discuss this article at the Epicurean Delights Smorgasbord inside the Diner

August 19, 2013 · 9:25 pm

At the End of the Day

Over the last few days, cheated preferentes depositors in the Novagalicia Bank  have been demonstrating in Spain. At this morning’s demo they rightly proclaimed themselves to be hard working, thrifty savers who had simply kept their savings there. They can no longer withdraw their life savings, because some hastily manufactured legality has told them they are creditors, not customers.

When, after twenty years hard graft, I finally in 1988 received a large cheque at 3am one morning for my shares in an ad agency I’d helped found, seven hours later I dashed down to the local Building Society and whacked the cheque in. When it cleared three days later – and only then – did I phone my first wife to say “The money’s safely banked”.

Safely. What a rare word that is these days in financial services.

Exactly who do these language-manipulating sociopaths think they are? They are bankers who took money in at minimal sight rates, making eternal profits from their customer base – and then had the gall to introduce service charges. They are blank-faced, goggle-eyed  bureaucrats in Whitehall, Brussels and Washington who approved this weasel terminology as if they might be rubber-stamping the train times to Auschwitz. And they are the multi-faced politicians who perpetually apologise for the indefensible behaviour of those whose money they so desperately need…having failed, year in year out, to keep within budgets.

Feeling safe is about having trust. The EC finally lost the trust of the lenders after the 37th dithering lie about the problem being solved. The ECB lost the trust of the bond markets when it illegally subordinated holders of Greek debt, and then went on to rape Cypriot investors for no good reason at all. Bernanke lost the trust of the American people when he carried on chucking their dollars at an intractable problem intrinsic to neoliberal economics. Parliament lost the last vestige of my trust when it said nothing against the theft of money from Cooperative Bank depositors to save its own neck. David Cameron lost the trust of millions of Britons when he continued to insist there had been nothing improper in his personal relationships with senior Newscorp officials. Congress lost the trust of the entire world when it bickered about the biggest deficit in US history. And last but not least, the Church of England lost any last vestige of trust when it began trying to profit from fracking.

Everything from love to money is based on trust and mutual respect. I no longer love my country, because it is a whore. There isn’t a single institution there I would trust. I can’t even feel that banked money is safe.

But still the apologists for this insane f**ked up fiat currency version of globalist ‘free market’ capitalism witter on, failing as ever to acknowledge that not a single investment market anywhere on the planet is free from artificial (and usually illegal) interference.

Please Britain, don’t put off your protest or jump off the cliff because they tell you to. Switch off the telly, get off the sofa, and tell the bastards where to get off.

· 7:11 am

CRASH2: China plans new gold standard for dominant Yuan

Uncle Sam goes foot-shooting, gets felled by snipers

bondbuy

Last week I posted about how Bernanke has run out of road in his attempt to keep everyone happy. As so often in such circumstances, he’s pleased nobody in the end: not the brokers, not the Asian creditors, and most definitely not the US consumer.

I also posted last week about the huge percentage of US bond-offloading accounted for by Chinese and Japanese dumping. And I’ve posted ad nauseam about the inability to generate spending from people who’s wages one just spent a decade eroding by 30%.

But as America shoots itself in the foot, snipers are busy targeting its head. What follows will explain how.

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From Day One of QE, Ben Bernanke insisted he was showering American consumers with money. Along with millions of other sites, The Slog always maintained he did it to get dividends up, keep the Dow high, and create liquidity/solvency/new business at the banks. Some neat new charts now show us precisely why we were right and he was telling porkies.

In this one, we can see how the supply (aka printing) of money went stratospheric during and after Greenspangling and Bernankenomics, and then upcurved further after 2010:

Fredcrop1There are today almost exactly twice as many dollars in circulation than there were…..but middle America’s share of it went down 30%. So they had less money with less spending capacity. So they spent less, took out more credit – and bought cheap Asian imports. Bang! There go the toes in your right foot.

Now let’s look at what happened as that Nixonian shift off the Gold Standard inevitably turned into Uncle Ben’s buck-showering bonanza:

Fred3cropWhile the supply of Fiat paper rocketed, consumer purchasing velocity fell even faster under QE than it had been doing during the previous pauperisation of the populace. And as blue-collars are now working fewer hours for less money with little chance of further credit, most of the money never reached them….and if it did, they paid off debt rather than indulging in retail therapy. Bang! There goes your right instep. Try to keep your balance now…

There is a growing feeling around the globe (if my contacts are even remotely typical) that after all this mess has finally covered every Westerner in excrement, there will be pressure to end the era of fiat paper. Not only would this be a disaster for the US, it would be a major coup for Beijing: there is every chance that a Yuan set against a new gold standard would make it the dominant reserve currency in short order….especially as the Dollar even now is predictably drifting down in value. China, it seems, has the aim of de-linking the Yuan from the US dollar. And Asian media are increasingly of the view that they will, when the time is right, fix it to gold instead.

China continues to amass gold. In June alone, it imported 104.6 tonnes from Hong Kong. That would bring China’s gold imports from Hong Kong to 1,160 tonnes since the beginning of this year. Officially, China hat around 1,000 tonnes of the stuff. But past experience has shown the Beijing suddenly pops up one day far more of shiny metal than you thought. The real figure is estimated to be around 8,000 tonnes….and likely to pass the US total, audited at 8,113 tonnes.

Yao Yudong, major money-man on the China Bank MPC, has of late been talking about fiat paper being a disaster, and his admiration for Bretton Woods. Further, China has been doing currency swap contracts big time with other countries to bypass the Buck. It has currency swap agreements with Brazil, Russia, Iran, Australia and the UK, to name a few. This aim here is clearly to get Westerners accustomed to the idea of dealing with the Yuan, and seeing it as a new ‘Central Currency’.

Bang! That first assassin’s bullet went straight through your neck. Breathing is getting difficult.

And of course, as I posted in recent days, those interest rates that were never going to rise are, um, rising. Very fast. The American cost of borrowing just doubled. And the Chinese are far and away the biggest sellers of those T-Bonds….which must now offer higher yields.

Oh look America, you just fell over, and your lungs are filling with blood….just as the traders, brokers, and big banking dicks get back to their desks next week, only to see a topping Dow, a falling T-Bond, and a backfiring, stuttering economy. And even though you’re manipulating the gold downwards to repair those bank balance sheets, it becomes even easier for Beijing to fill its boots with that gold.

Bang! That was the rear of your cerebrum coming off. It’s over.

August 18, 2013 · 9:02 pm

At the End of the Day

Lines on the nature of being united in idiocy

I think top marks tonight must surely go to Spain, for its unique ability to get Tom Watson agreeing with David Cameron. Yes, there can be no doubt about it, as long as Spain wants Gibraltar “back”, then the Iberian peoples have the capacity to unite Britain…a set of Islands not so much great any more as disintegrating.

It’s a useful distraction for both sides of course, but none of the fuss from Senor Rajoy holds any water at all. Britain has actually ‘owned’ Gibraltar for far longer and more continuously than the Spanish ever did and – as in the case of the Falklands with Argentina – its inhabitants have no desire at all to be Spanish. But if things get very nasty, I can’t wait to see how Operation Barbarossa van Pumpy in Brussels “handles” it.

At the same time, however, one must recognise the ability of almost any event in the Middle East to have Brit and US pols united in myopia, their respective leaders drivelling on about a Special Relationship that deserves the adjective only in the context of kids who require special needs education. After the demonisation of Assad in Syria comes the glorification of the Muslim Brotherhood in Egypt. I came across some Brits down here on holiday this morning, and they clearly didn’t have the remotest notion which way was up about Egypt’s tragedy….or indeed, who was for what, and why David Cameron wants to galvanise the EU into condemning the wicked military “coup”.

A simple analysis of the Egyptian dilemma doesn’t require that many brain cells. Early in July this year, I posted to say that “What [the US] State [Department] has done is bestow respectability upon the Muslim Brotherhood without in any way changing its truly ghastly attitudes and barbaric behaviour.” Tracing the lineage of this dynasty of deranged thinking, as long ago as November 2011, The Slog suggested that “the [Egyptian] military is playing upon a real fear: Egyptian liberals are sympathetic to the military’s attempt to dominate the constitution-writing process, being rightly fearful of Muslim Brotherhood dominance”.

Now we have MB fanatics desperate to present themselves as martyrs – and the usual figures of dead demonstrators growing with every report by Western news agencies. I can only repeat what I’ve been saying for nearly three years about the ‘Arab Spring’: it is based on Anglo-Saxon ignorance about the fundamental nature of Arab liberalism and Islamist fascism.

Very few international situations are as cut and dried as our mamipulative politicians would suggest: in the end – despite the EU nonsense and the Levitt myth of globalism – every nation is out for itself most of the time. The “deposed” President Mohamed Morsi had, from Day One of his term, worked overtime to marginalise a pro-secular Military in favour of his rabidly fundamentalist associates. There is no discernible difference between what Morsi was up to, and what Recep Erdogan has been up to in Turkey – viz, purging all those elements in the political and military class who support the secular aims of the hero Kemal Ataturk, in favour of his own closet Islamist agenda.

From the very start of this dire history of needless death in the name of a religious leader who is a myth, David Cameron and the US State department have placed themselves cynically on the side of authoritarianism: Cameron because he wants trade deals with Turkey, and the US because they want the oil. Yet  again, it is all about munneeeee. And that root of many evils has placed allegedly liberal democracies on the side of a neo-Nazi, misogynist bunch of religious maniacs.

And in other dramatic news developments today, the BBC’s Newsnight anchor Jeremy Paxman has a beard. I realise that in gay circles this means he has a girlfriend to hide an aberrant sexuality, but there haven’t really ever been any doubts about Paxo when it comes to which way he swings: basically, he would I suspect like to see 95% of politicians swinging from a lamppost. So it is especially sad to see that by far the biggest brain and toughest interviewer at the BBC needs to grow facial hair to catch the fickle gnat’s-length attention of the British public for longer than a tweet.

When the David Kelly affair began the sad descent of the BBC into Government lapdog, Paxman was a steady influence in favour of telling all politicians TGF themselves. After the McApine scam, he once again urged the Governors to face this unpleasant opportunist down. When the Jimmy Savile drivel about him “grooming a whole nation” went full-on tabloid, yet again our Jeremy tried to find some evidence of a spine in the Beeb’s management tier. Having discovered that his employer is, effectively, a mollusc, it is little wonder that he now carries a care-worn, slightly bored air around with him.

To relegate Jeremy Paxman to the margins of our national broadcaster is rather like taking Robin Day’s knighthood away because he gave Thatcher what-for. I’m afraid it symptomatically defines what is wrong with Britain.

Catastrophic Shocks in Complex Socio-Economic Systems—a pandemic perspective

Off the keyboard of David Korowicz
Podcast off the Microphones of David, RE & Monsta

Article Published on FEASTA on July 19, 2013
Podcast aired on the Doomstead Diner on July 20, 2013

logopodcast

Discuss at the Podcast Table inside the Diner


The globalised economy has become more complex (connectivity, interdependence, and speed), and delocalized, with increasing concentration within critical systems. This has made us all more vulnerable to systemic shocks. This paper by David Korowicz provides an overview of the effect of a major pandemic on the operation of complex socio-economic systems using some simple models. It discusses the links between initial pandemic absenteeism and supply-chain contagion, and the evolution and rate of shock propagation. It discusses systemic collapse and the difficulties of re-booting socio-economic systems.

Download the paper

Related posts:

  1. Sustainable currency and the green economy: An Irish perspective
  2. Trade Off: Financial system supply-chain cross contagion – a study in global systemic collapse
  3. Comment on Liquidity Networks: local trading systems using a debt-free electronic currency by Bruno Ricardo
  4. Energy & Food Constraints will Collapse Global Economic Recovery
  5. Seeing Systems: a short course on applying systems thinking

That Was The Week That Was in Doom June 23, 2013

From the Keyboard of Surly1

Originally published on the Doomstead Diner on June 23, 2013

http://991.com/newGallery/That-Was-The-Week-That-W-That-Was-The-Week-473964.jpg

Discuss this article here in the Diner Forum.

This edition caps a week full of nonsense, proving nothing so much as that rust never sleeps. We were shocked… shocked to learn that Bank of America issued performance bonus for employees managing to force homeowners into foreclosure.  Negotiators firmly set upon enacting a treason against the American people continued busily negotiating the Trans-Pacfic Partnership under circumstances so secret they may well as be hermetically sealed,  lest the proles get wind of the scale of the planned sellout. In other surprises, Congress' poll rating is the lowest EVAH, Klansmen attempted to build a radiation weapon to use on Muslims, Louie Gohmert sees king crab legs in the shopping carts of SNAP card recipients, reporter Michael Hastings perished in a vehicle fire in a vehicle that, being among the safest on the planet, should never have caught fire, and an entrepreneur is planning a megadoomstead in underground limestone caves, in a facility formerly used for government storage. I know there is meaning in these entrails, so grab a stick and let's start rooting around for signs, shall we?

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Bank of America Lied to Homeowners and Rewarded Foreclosures, Former Employees Say

As an Occupier, special opprobrium was reserved for the Bank of America. Located close enough to the Occupy Norfolk encampment to cast a shadow in late afternoon, B of A seemed to embody the very incarnation of everything wrong with banking.

The popular "Move Your Money" campaign shifted around a few millions, and quoted bank execs shrugged it off, but one sensed they were at least a bit concerned.

Then we find out this, courtesy of ProPublica:

Bank of America employees regularly lied to homeowners seeking loan modifications, denied their applications for made-up reasons, and were rewarded for sending homeowners to foreclosure, according to sworn statements by former bank employees.

The employee statements were filed late last week in federal court in Boston as part of a multi-state class action suit brought on behalf of homeowners who sought to avoid foreclosure through the government’s Home Affordable Modification Program (HAMP) but say they had their cases botched by Bank of America.

In a statement, a Bank of America spokesman said that each of the former employees’ statements is “rife with factual inaccuracies” and that the bank will respond more fully in court next month. He said that Bank of America had modified more loans than any other bank and continues to “demonstrate our commitment to assisting customers who are at risk of foreclosure.”

Six of the former employees worked for the bank, while one worked for a contractor. They range from former managers to front-line employees, and all dealt with homeowners seeking to avoid foreclosure through the government’s program.

 

And Paul Kiel's reporting even gets better. The Squid itself is involved, through a subsidiary:

Sometimes, homeowners were simply denied en masse in a procedure called a “blitz,” said William Wilson, Jr., who worked as an underwriter and manager from 2010 until 2012. As part of the modification applications, homeowners were required to send in documents with their financial information. About twice a month, Wilson said, the bank ordered that all files with documentation 60 or more days old simply be denied. “During a blitz, a single team would decline between 600 and 1,500 modification files at a time,” he said in the sworn declaration. To justify the denials, employees produced fictitious reasons, for instance saying the homeowner had not sent in the required documents, when in actuality, they had.

Such mass denials may have occurred at other mortgage servicers. Chris Wyatt, a former employee of Goldman Sachs subsidiary Litton Loan Servicing, told ProPublica in 2012 that the company periodically conducted “denial sweeps” to reduce the backlog of homeowners. A spokesman for Goldman Sachs said at the time that the company disagreed with Wyatt's account but offered no specifics.

Five of the former Bank of America employees stated that they were encouraged to mislead customers. “We were told to lie to customers and claim that Bank of America had not received documents it had requested,” said Simone Gordon, who worked at the bank from 2007 until early 2012 as a senior collector. “We were told that admitting that the Bank received documents ‘would open a can of worms,’” she said, since the bank was required to underwrite applications within 30 days of receiving documents and didn’t have adequate staff.

Your refinance dollars at work. The HAMP program was an apparent clusterfk for banks from inception, as they never had any intention of hiring sufficient staff in order to process the paperwork needed to fully implement it. ProPublica began detailing its failures  from its inception in 2009. HAMP turned out to be a perfect storm created by banks that refused to adequately fund their mortgage servicing operations and lax government oversight.

Bank of America was far slower to modify loans than other servicers, as other analyses ProPublica has cited have shown. A study last year found that about 800,000 homeowners would have qualified for HAMP had Bank of America, Wells and the other largest servicers  done an adequate job of handling applications and paperwork. And we'll not event mention the outright fraud of robosigning. Yet.

Add B of A

This in, from firedoglake.

 

The latest story is courtesy of one of those much maligned whistle-blowers who saw something and said something. In this case the whistle-blower disclosed that the Too Big To Fail/Jail bank had a bonus system setup encouraging foreclosure on desperate homeowners.

Bank of America (BAC) rewarded staff with cash bonuses and gift cards for meeting quotas tied to sending distressed homeowners into foreclosure, former employees said in court documents.

Mortgage workers falsified records and were told to delay U.S. loan-assistance applications by requesting paperwork that the Charlotte, North Carolina-based bank had already received, according to statements from ex-employees filed last week in federal court in Boston.

 

The affidavit details a litany of abuse including widespread fraud.

I witnessed employees and managers change and falsify information in the systems of record, and remove documents from homeowners’ files to make the account appear ineligible for a loan modification,” said Terrelonge, a loan servicing representative. This allowed managers to meet quotas for closed cases, she said.

Bank of America instructed employees to delay applications and mislead customers “as part of a deliberate practice of stringing homeowners along,” lawyers said in a June 7 filing.

 

Salon published a very fine article by David Dayen that included this morsel:

And they would have very specific targets: the ex-employees listed specific executives by name who authorized and directed the fraudulent process. “The delay and rejection programs were methodically carried out under the overall direction of Patrick Kerry, a Vice President who oversaw the entire eastern region’s loan modification process,” wrote William Wilson. Other executives mentioned by name include John Berens, Patricia Feltch and Rebecca Mairone (now at JPMorgan Chase, and already named in a separate financial fraud case). These are senior executives who, if this alleged conduct is true, should face criminal liability.

Bankers facing criminal liability. Here in the FSA. That's pretty funny.

 

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More on the "Trans-Pacific Partnership"

Last week we kicked the tires of the Trans-Pacific partnership, a piece of secret legislation being secretly negotiated by the White House, with the help of more than 600 corporate advisers and representative from Pacific Rim nations. Described as a "trade agreement," the US already has trade agreements covering 90 percent of the GDP of the countries involved in the talks. Instead, the TPP is a major power grab by large corporations, conducted under cover in much the same way that NAFTA was foisted upon the American middle class. The deal will reportedly give multinational corporations a favorable economic and legal status vis a vis sovereign nations, and the ability to challenge legislation in each nation unfavorable to the corporation's interests.

Why so secretive?

As Margaret Flowers reports in an article, if people knew what was in the bill, the groundswell of opposition would be such as to make it impossible to sign.

The text of the TPP includes 29 chapters, only five of which are about trade. The remaining chapters are focused on changes that multinational corporations have not been able to pass in Congress such as restrictions on internet privacy, increased patent protections, greater access to litigation and further financial deregulation.

So far, all that is known about the contents of the TPP is from documents that have been leaked and reports from NGOs and industry meetings. Unlike other trade deals, the White House refuses to make the text available to the public. In fact, the negotiators refuse to publish the text until four years after it is signed into law. Why are they being so secretive? Former US Trade Representative Ron Kirk said he opposed making the text public because doing so would raise such opposition that it could make the deal impossible to sign.

From the information available, one thing is clear about the impacts of the TPP on health care: the intention of the TPP is to enhance and protect the profits of medical and pharmaceutical corporations without considering the harmful effects their policies will have on human health.

recession-2

No reader will be surprised to learn that the net impact of this pernicious bit of treason is to maximize corporate profits. The TPP agreement takes particular loving care of Big Pharma, and attempts to limit the capacities of state owned public health enterprises to care for its own citizenry.

Text from a section of the TPP called "Annex on Transparency and Procedural Fairness for Healthcare Technologies" was leaked in June 2011. It reveals this conflict between medical industries that have strictly commercial interests and public health systems that are concerned about the health of the population. Medical industries are pushing on all fronts to keep their prices high while public health systems must negotiate to keep prices affordable and maximise what they can cover within their budgets.

To the medical industries, such price negotiation is one of the "unfair advantages" of public health systems. When a public health system negotiates a lower price, it is said to be exerting its market power. On the flip side, when a government extends patent protections to medical industries to keep prices high, this is not considered to be an unfair advantage granted by the government.

Medical industries are pushing for other concessions within the TPP to "level the playing field", also known as forcing public entities to operate as market-based entities, such as factoring the cost of not just research, development and production of drugs and medical devices, but also the cost of marketing them into what is considered to be a fair market price. And they only view prices negotiated without any government influence as fair.

As always, Mammon remains hungry.

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Americans' Confidence in Congress Falls to Lowest on Record

Congress ranks last on list of 16 institutions; military earns top spot again

To the surprise of almost nobody, the results are in: virtually no one trusts the scripted mainstream media and even fewer trust Congress. We’ve known it for years, but a new Gallup poll shows that a whopping 77% of Americans distrust mainstream media television and nobody likes Congress who is willing to give their name to an interviewer. . .

Only a bit more ‘trustworthy’ than Congress, which scored in at a record low of 90% saying they do not trust the government body, the Gallup poll details that only 23% of viewers actually trust the mainstream media television news. A reality that has been clear as day in light of blatant mainstream media blackouts on key events like the outrageous DHS Fourth Amendment free zones that stretch up to 100 miles out from every single border of the US, to the blackout over eyewitness reports at the Boston Marathon.

Gallup sez:

Americans' confidence in Congress is not only at its lowest point on record, but also is the worst Gallup has ever found for any institution it has measured since 1973. This low level of confidence is in line with Americans' low job approval of Congress, which has also been stuck below 30% for years.

 

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Gohmert: Cutting food stamps not evil because poor people buy king crab legs

 

Going out on a limb here, but just perhaps– perhaps– the low approval rating of Congress stems in large measure from antics like these. Raw Story moved this item in the wake of the defeated Farm Bill this week, which illustrated a new level of political incompetence in Washington unseen in at least one observer's lifetime.

Congressional comedian Louis Gohmert

complained that Democrats had portrayed Republicans as evil because they supported a measure to cut nearly 2 million low-income people off the Supplemental Nutrition Assistance Program, which would mainly impact working families with children.

On the other hand, Gohmert said, poor people were using food stamps to buy food that other Americans could not afford. He claimed his “broken-hearted” constituents had repeatedly told him they had seen people use food stamps to buy king crab legs.

“Because he does pay income tax, he doesn’t get more back than he pays in, he is actually helping pay for king crab legs when he can’t pay for them for himself,” Gohmert explained.

“How can you begrudge somebody who feels that way,” he added. “How can you begrudge anyone who steps up on behalf of constituents who feel that way. We don’t want anyone to go hungry, and from the amount of obesity in this country by people who we’re told do not have enough to eat, it does seem like we could have a debate about this issue without allegations about wanting to slap down or starve children.”

The average monthly SNAP benefit for one person is $133.44.

Reports have circulated that the king crab leg purchaser was wearing purple wings and riding an ebony unicorn when sighted making the crab leg purchase.

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Klansman and accomplice charged for building radiation gun

The men allegedly intended for their "Hiroshima on a light switch" to be used on the Muslim community

We are all familiar with elements of the ignorant , violent nativist right in this country, which is much like the ignorant violent and nativist right in every country. But these folks have set a new by attempting to apply technology with a lethal, deadly twist.

 

Two men, one of them a member of the Ku Klux Klan, were arraigned today in Albany, N.Y., on federal charges of plotting to build a mobile radiation gun intended to kill Muslims – or “medical waste,” as the plotters called their intended targets.

Glendon Scott Crawford, 49, a Klan member from Galway, N.Y., and Eric J. Feight, 54, of Hudson, are both charged with conspiracy to provide material support for terrorism in the use of a weapon of mass destruction.

The case has been under investigation by a Joint Terrorism Task Force since at least April 2012, when Crawford allegedly reached out to Jewish organizations, asking if Israel would be interested in such a weapon to kill its enemies.

“The essence of Crawford’s scheme is the creation of a mobile, remotely operated, radiation emitting device capable of killing human targets silently and from a distance with lethal doses of radiation,” says a 67-page criminal complaint filed by the FBI.

It might sound far-fetched, but experts told investigators that the design would work, producing a “a lethal, and functioning, remotely controlled radiation-emitting device,” the complaint says

A “central feature of the weaponized radiation device is that the target(s) and those around them would not immediately be aware they had absorbed lethal doses of radiation and the harmful effects of that radiation would not become apparent until days after the exposure,” the complaint says.

At one point, Crawford described his planned device as “Hiroshima on a light switch,” the complaint says.

The case against this pair appears built around extensive recordings of their conversations and e-mails. Within six weeks of Crawford’s attempts to solicit financing from two Jewish organizations, the FBI was monitoring and recording much of his activity and had recruited an snitch In.

Last August, Crawford traveled by car from his home in Albany to North Carolina to meet and solicit funding from an unidentified  “ranking member of the Ku Klux Klan,” who cooperated when contacted by FBI agents. In early October, he traveled to Greensboro, N.C., to meet with a cooperating witness and two undercover FBI agents who posed as “Southern businessmen of means who were associated with the KKK.”

Reminds me of the descriptions we often hear about serial killers. “He was a nice boy. Quiet. Shy. He didn't have much to say.”  Keep this in mind when you're tricorn hat-wearing neighbor seems to be spending the too many late nights in his garage, tinkering on his neighborhood death ray.

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Michael Hastings, RIP.

As you know, reporter Michael Hastings died in a fiery car crash earlier this week. There's a great deal loves that chelation about the causes of the crash, and especially the resultant fireball that supposedly consumed is vehicle. Reader Supported News moved an article earlier in the week, and I can do no better than to run it in toto:

The death of reporter Michael Hastings, best remembered for taking on General Stanley McChrystal and other powerful people, has been met with shock and grief in the journalistic community, especially from those fortunate enough to work alongside him. But one layer below the fond remembrances are a host of vague questions and inferences about the circumstances surrounding the 33-year-old BuzzFeed reporter's fiery solo car crash early Tuesday in Los Angeles. Bringing those suspicions to the forefront last night was WikiLeaks, never reticent to insert itself into a story, which teased, "Michael Hastings death has a very serious non-public complication. We will have more details later." And after three hours tweeted: "Michael Hastings contacted WikiLeaks lawyer Jennifer Robinson just a few hours before he died, saying that the FBI was investigating him."

"Yeah," BuzzFeed editor Ben Smith confirmed to Daily Intelligencer. "Before his death, Michael told a number of his friends and colleagues that he was concerned that he was under investigation."

But other, less reputable sources have taken the speculation much further. "Vince Foster-like murder plot emerging in Los Angeles? Did the Obama administration knock off a star reporter?" asked one blog early on Wednesday, adding to existing conspiratorialTwitterchatter. Another wrote, "Admit it, Michael Hastings' Death is Weird and Scary." Hours before revelations about a potential FBI investigation, InfoWars, the Alex Jones website that serves as a catch-all conspiracy-theory clearing house, mentioned Hastings's death with an editor's note: "Journalists who mess with government and military power often die under mysterious circumstances." None had more than conjecture.

The circumstances are these: "Police said a vehicle was southbound on Highland about 4:20 a.m. when it lost control south of Melrose and smashed into a tree," the L.A. Times reported. Videopurports to show Hastings's Mercedes-Benz running a red light at a high speed minutes before the crash. "It sounded like a bomb went off in the middle of the night," a witness told the local news. "I couldn't have written a scene like this for a movie, where the engine flies from the car." Photos and video from the aftermath show extreme wreckage, and as of yesterday, the coroner had not officially identified the body because it was too badly burned.

But an automotive writer also fed the doubters:

I'm here to state that I've seen dozens of cars hit walls and stuff at high speeds and the number of them that I have observed to eject their powertrains and immediately catch massive fire is, um, ah, zero. Modern cars are very good at not catching fire in accidents. The Mercedes-Benz C-Class, which is an evolutionary design from a company known for sweating the safety details over and above the Euro NCAP requirements, should be leading the pack in the not-catching-on-fire category. Nor is the C-Class known for sudden veering out of control into trees and whatnot.The crash is under investigation and there will be an official accident report (a toxicology report could take weeks). Whatever its findings, they can likely coexist with Hastings's mind-set at the time and a potential government investigation without representing something more sinister.

"He was incredibly tense and very worried and was concerned that the government was looking in on his material," said Hastings's friend and Current TV host Cenk Uygur. "I don't know what his state of mind was at 4:30 in the morning, but I do know what his state of mind was in general, and it was a nervous wreck." But Mother Jones editor Clara Jeffery put it plainly: "Ugh, the people posting Vince Foster style comments re Hastings death do a disservice to his no BS truth telling." Let's wait for the facts.

Update: The L.A. Times reports that Hastings, prior to his death, "was researching a story about a privacy lawsuit brought by the Florida socialite Jill Kelley against the Department of Defense and the FBI." The paper also notes, "Since Hastings's death early Tuesday, wild conspiracy theories have bloomed on the Internet implying that he was murdered by powerful forces wanting to silence him."

 ___________________________________________________________

Limestone Doomstead

 We've entertained a lot of discussion about doomsteads on the Doomsday Diner, and discussed many of the preparations and planning that would be necessary to create such a place. It appears that one man is planning on an extinction level event, and is acquired a former government facility in which to plan a doomstead with a few of his friends.
 

After most of the world's population is wiped off the map by a wayward meteorite or hail of nuclear missiles, the survival of the human race might just depend on a few thousand people huddled in recreational vehicles deep in the bowels of an eastern Kansas mine. 

That's the vision of a California man who is creating what he calls the world's largest private underground survivor shelter, using a complex of limestone caves dug more than 100 years ago beneath gently rolling hills overlooking the Missouri River.

'I do believe I am on a mission and doing a spiritual thing,' said Robert Vicino, who has purchased a large portion of the former U.S. Army storage facility on the southeast edge of Atchison, about 50 miles northwest of Kansas City. 'We will certainly be part of the genesis.'


 

Before it comes time to ride out Armageddon or a deadly global pandemic, though, Vicino says the Vivos Survival Shelter and Resort will be a fun place for members to take vacations and learn assorted survival skills to prepare them for whatever world-changing catastrophe awaits.

Jacque Pregont, president of the Atchison Chamber of Commerce, said some people think the shelter plan sounds creepy or that Vicino has 'lost his mind,' while others are excited because they will finally get a chance to tour the property.

Atchison is known as the birthplace of Amelia Earhart and one of the most haunted towns in Kansas, Pregont said, so the survival shelter is likely to add to the town's tourism draw.

 

Here is a scale model of the facility:
 
Apparently according to the current pricing structure, a person who plans to park a 30-foot vehicle in the shelter with four people inside will pay $30,000 for the space and $6,000 for food.  Actual sales won't begin until a 'critical mass' of reservations are received and processed, Vicino said, which hasn't happened yet at the Kansas shelter. Vivos also owns a shelter in Indiana with room for 80 people to live comfortably for up to a year.There, members pay $50,000 per adult and $35,000 per child, so a family with two adults and two children would have to come up with $170,000 to be part of the "new beginnings" generation. So it appears that the 1% will at least be safe in their year-round, 70°, temperature regulated chambers.
 
In closing, I am moved to wonder why the government sold this facility. Where have they moved whatever was stored here? Why did they sell it, and so cheaply?
 
Just wondering.
 
I'm sure the answer lies in the entrails of the next sheep.

Easter 2013: The Crucifiction of Money

Off the keyboard of RE

Published on the Doomstead Diner March 31, 2013

Discuss this article at the Economics Table inside the Diner

Easter Sunday 2013, and as usual the Dominoes are Toppling all over the world economically and geopolitically, as a portion of the world population celebrates the Life-Death-Life-Death of a Carpenter-Preacher who claimed to be 1/3 of God.

Inside the Diner as usual also, the debate goes on about the Validity of these claims and what the Significance of them are. From my POV, with so much shit currently ongoing with a MUCH more direct impact on our further Earthly Existence, whether or not JC was 1/3rd of God or not is not a major concern. That is just me though, and does not reflect the Group Think of the Diner. LOL.

Let me go to my major concern of the day, the ongoing Redefinition of what it means to be a Bank Depositor. Most people believe that a Bank is place that Holds Your Money, keeps it Safe from Thieves and you can go get it anytime the Bank is Open and you have your ID with you to prove you are the Owner of said Money. Sorry, no.

The NEW definition of a Bank Depositor is as an UNSECURED CREDITOR of the Bank! When you make a deposit, you are LOANING your money to the bank, and the Bankster now owns it and is free to Gamble it in any way he sees fit. If he loses the money, since you are Unsecured, any assets the bank might still have go FIRST to Senior Bondholders, they get to Divy up the Carcass, the Depositor is left with BUPKIS.

Now, this is hardly the first time in History a Banking System has crashed, in fact it happens at VERY regular intervals in the 80 year Nabe. Every time though, the same folks Reboot, claim to Own Everything they Repoed in the Crash and start Loaning out money AGAIN based on the Assets they Claim to Own. If you want access to any of those Assets, you gotta Borrow the New Money from them, pay interest on it and get taxed on it, try to Save it until the NEXT crash when POOF Up in Smoke it goes again, Rinse and Repeat.

Last time this occurred in the Great Depression, to “Restore Faith” in the Bankstering System, they came up with the Marvelous Gimmick of Goobermint INSURANCE of Bank Deposits! Known here in the FSoA as FDIC. In this farce, supposedly if your Bank goes Belly Up, Da Goobermint will make good on your Deposit up to some nominal figure, 100K has been the common amount chosen for this, though with Inflation in some places it was upped to 250K.

While such Insurance can sorta work in the case of Individual Bank Failures, it can’t work in a systemic Banking Collapse, especially when Da Goobermints doing the Insuring themselves are BK. They don’t HAVE the money to “make good”, and no they can’t just print it either. Why not?

Well first off because NONE of Da Goobermints INCLUDING the FSoA owns the money based on the World Reserve Currency of the Dollar. The Banking Syndicate owns this money and they’ll only Print It in return for Bonds issued by the respective Goobermints, and they’ll only buy those Bonds with Freshly Printed currency of one color or another if they think they can extract further Wealth and Profit out of a given country. Once you look like a Bad Bet as a country, you can’t sell your Bonds, unless yet ANOTHER supra-national agency guarantees them, read that the Troika in the case of Eurotrashland.

The Troika over in Europe and Da Fed here are ALSO insolvent entities, but they are Last Up the Line until the Ferengi Interstellar Freighters loaded with Gold Pressed Latinum show up and the Vulcans arrive to share their Matter-Antimatter Energy system powered by Dilithium Crystals stolen from the Klingons and Romulans. LOL.

Political Pressures abound on both Da Fed and the Troika, but neither is currently engaged in Naked Printing, they are still just buying Bonds from the few countries they consider good bets to extract more wealth from, aka the FSoA and Germany mostly. Said countries have to keep issuing out more debt to support the collapsed debt already everywhere else. The more peripheral countries sucked into this Black Hole of Debt, the bigger the problem becomes for the Core countries, and eventually their Bond Market collapses too. Then the Big Repo begins, along with of course the concomittant Warfare involved.

The HI scenario for the Dollar only occurs if Da Fed will Naked Print to Cover on all the FDIC Insured accounts when systemic Bank failure crosses the pond, and so far what is occurring in Greece & Cyprus indicates they will not do that. Rather Capital Controls will be put in place to prevent Bank Runs and Depositors will be Locked Out from their savings held in the banks.

Exactly WHY any J6P in Eurotrashland is keeping money in a Bank now past a month worth of Bills is a mystery to me. It’s not like any accounts pay much interest under ZIRP. The security is NIL, there is a WAY more likely chance your deposit will be confiscated by the Bank than there is someone will find the cash buried in your backyard.

Small to Medium size Biznesses have an altogether more difficult issue, they HAVE to keep sizable sums in Banks to do commerce and make payroll. Said accounts usually are beyond even Fake Goobermint Insurance, so when the Bank Holiday comes to their Bank, they are basically SOL. Thus a Banking Collapse leads rapidly to a collapse of trade, widespread Unemployment and Depression. Ongoing in Cyprus now as we speak.

There is much Smoke now in Eurotrashland that a Bank Run is already underway out of the Euro even beyond Cyprus. Slovenia is being hit hard, and Super Mario Draghi is hiding behind the Refrigerator with the rest of the Goldman Cockroaches. The ECB is being very Cagey about publishing numbers on Capital Outflow. Measures to restrict Capital flow across borders are being implemented everywhere. The Banksters are LOCKING DOWN.

Where there is SMOKE, there is FIRE. If you are in Europe, I highly suggest you get your money OUT of the Bank and OUT of Euros sooner rather than later. That Titanic is GOING DOWN. For the Dollar Holders here in the FSoA, you probably have a bit longer, but not by much I think. When it goes down in Europe, the AVALANCHE truly begins. Avalanches don’t go SLOW.

RE

Black Friday

Off the keyboard of William Hunter Duncan

Published  on Off the Grid in Minneapolis on Novemebr 23.. 21012

Discuss this article  at the Epicurean Delights Smorgasboard inside the Diner

I biked the mile to the bus stop this morning, twenty degrees outside and a thirty mile-an-hour headwind, blowing snow, at six am, to discover that this post-Thanksgiving Day Friday, Black Friday, is considered a Metro Transit holiday. No bus waiting. Hmm. At first I imagined, I would bike the five miles to big bank, which I can do, even under the conditions, comfortably enough. I imagined sitting down at my computer station, firing off an email to my immediate management and the temp people, informing them precisely what I had done and what I think about that. Except for much of the journey would be on the shoulder of a four lane 55mph speed limit everybody driving 60, it snowed and rained last night, the roads are slippery, and a bike helmet, which I couldn’t find this morning anyway in a very symbolic Hmmmm, isn’t going to protect me from a 2000+ lbs projectile moving at six or eight times the speed I am, bearing down on me from behind. By the time I got half way home, which is on the way to big bank from the bus station, I was like, that’s fucking crazy. No WAY am I biking that, and no way am I putting someone else out, on a day that just about everybody thinks is a holiday (judging by the lack of automobile traffic as I write this), so I can go and FORECLOSE ON HOUSES FOR UBER_BANK_LEVIATHAN-KRAKEN. LOL.

So I got home, and called the automated overseer computer lady at big bank, and spoke the words, “William Duncan, Kodi {manager}, 7am MONDAY,” in reference to the time I would be returning to work. I left a voicemail with my contact at the temp agency, and sent an email to the top two managers in my department. It’s a liberty, what I’ve done, relative to my station. Still, I don’t expect any push back. If I even hear about it, I’ll be surprised, though it is strictly speaking, grounds for me to be dis-invited, to work for big bank.

It’s not like I’m going shopping. Nor am I going to sit around smoke pot get drunk chow left-over Thanksgiving dinner watch Tee-Vee. It’s not even very comfortable in my house, when it’s this cold, with the wind blowing hard. Mostly, aside from drinking coffee writing blog posts researching, I will be working, insulating the house, which is a drafty sieve. Lots of work to do, here. Might get a buzz on too, eventually. 😉

If I lose the job, which is a possibility, I’ll just tell the temp agency, listen, if big bank doesn’t take me back, I’ll write an op-ed in the straightest, most conventional clear easy to understand language I can muster, for one of the local MSM newsprint outlets, about the arrangement as it stands, in its full absurdity. I mean really, there are people expected to work the second shift starting at 3:30 pm, Monday, Christmas Eve Day, FORECLOSING ON HOUSES! Maybe they want to, but it’s also like a threat of economic dissolution otherwise, and really when you are a “butt’s in seats in the morgue, or the meat-house,” a day off is also one less day of pay, when we are making about $7 LESS than the average American wage. Which is kind a of low grade terror, this sort of economic hegemony exercised with such ruthless, numerical logic. Which then calls into question the whole War on Terror, when, if you dare not participate in the making of dollars in the imperial way prescribed, you are fucked. Get with the fucking program?

It’s not like I’m a weak performer, either. My numbers are solid, in their metric. 100% accuracy, in my last review. There is a threshold one must reach, in sheer numbers, before one is eligible for overtime, which I crossed some time ago, though I have not partaken of the so-called fruit (nor have I striven to do more, necessarily.) They can fire me, but if they do, I’m going to do what I can to return the favor. 😉

Meanwhile, the bulk of America shops. I was at my sister’s yesterday, consuming tee-vee programming. Whether it was that or the industrial food she fed me, I can’t say was the cause of my ill stomach. It was more like soul sadness, in the presence of such grotesqurie’, as was splashed across my cerebral cortex, with such cynical abandon. In my last post, I said I am not a “moral” man. Do not mistake that for moral relativity, which Americans display with monstrous pride. On one Newz program, a woman was interviewed about her attack plan, shopping today. She advocated teamwork, with everyone with a plan of operation, “otherwise you won’t get everything you need.” She bought seven flat-screen tv’s Black Friday 2011, most of which remain in the boxes. She was presented as an ideal of normality by the network, which she is, in America. We scoff at the savages, those responsible in the past for human sacrifice to placate the gods. By how many orders of magnitude worse, all those who have died that we might be free to shop – what is being done to the earth, to fulfill our “needs”?

My sister said she had been made to feel guilty for doing damage to the “environment”, because she had ordered some product on-line, instead of in a store. The rationale, that those things ordered online travel more miles, than they would if they were housed in a centralized retail box. I laughed and asked her how long she thought 7 billion people could continue buying the resources of the earth transformed into consumer product to be thrown away as garbage, esp. when we are adding 200,000 people a day, globally? I didn’t ask, but I’m guessing, she bought the turkey at Sam’s Club, and most everything else for dinner besides. She gets it, the madness of it, she just can’t imagine any other way, or won’t.

I recognize too, the slippery slope I am on, justifying my work at big bank at all, in any way. Perhaps after Black Friday 2012, I will no longer have to.

This is what my lightning bug niece and I did Thanksgiving. It’s hard to see her wings, but they are there. The bike, a gift from RE, head Admin at the Doomstead Diner

Lately…

Off the keyboard of WHD

First published @ Off the Grid in Minneapolis
Discuss this at the Epicurian Delights Smorgasbord inside the Diner

How much can happen in a week?

About a week ago*, I awoke to a story on NPR about organic food. Stanford University had released a study suggesting organic foods aren’t any healthier than industrial foods. I was only half shocked, as I was only partially awake.

When I walked into big bank later that morning, into the break room, BBC teevee news was reporting on a Stanford study, suggesting organic foods are no better for you than industrial foods (though I think NPR and the BBC used the word “commercial.”) That was when I felt a watershed feeling, as of the last gasping breathe of a dying paradigm. Stanford, NPR, and the BBC. The commercialism of life is officially systemic, such that no authority of any kind remains, that is not suspect of bastardizing reality.

Then an Egyptian American coptic Christian con artist, pretending to be an Israeli Jew, released a film. An American Ambassador was killed in Libya, in an attempted kidnapping (why else would the “rioters” have rushed him to a hospital while he was still alive?), and anti-America sentiment with all the vigor and all-the-more ferocity of the Arab Spring, was released, all over the world. Meanwhile, much of China is alight with anti-Japanese fire breathing, many a Japanese automobile smashed to pieces in the street, Japanese restaurants and stores trashed, Japanese compared to dogs and demons. While one of the (debatable) Americans running for President, has been making increasingly aggressive statements against Russia, Iran, Syria and China, and at least 47% of his fellow Americans. Oh yeah, Apple released the iPhone 5. QE3?

First of all, hospitals have no incentive to lower Health Care costs. In fact, they have a financial incentive to fill the hospital, just as the prisons do. Hence, there is motive built into the system to keep people fat, unhealthy, and preferably stupid. Hence, a Federal and State policy in defense of industrial food. Second, we Americans don’t get to presume we have the right to 35%+ of the world’s resources, and then get uppity about the blowback, or to blame the languishing economy on poor people. Third, that attempted kidnapping that went awry can’t be explained away with stories about radical Islam, as wretched as Fundamentalist Islam is, when the very private brain behind American foreign policy, the Council on Foreign Relations, is praising al Qaida for their support of the rebels in Syria; as in, don’t put it past the CIA to kidnap an American Ambassador, or pay al Qaida to do it, with weapons to be used in Syria, to incite Americans to war in the Middle East, to forget about the economy – when NPR, the BBC and Stanford can’t be trusted not to eviscerate the truth with mass media absurdities. Fourth, I can’t tell the difference between Christianity, Islam, and Judaism. How many Christian pastors stood up this week and defended Ro-money’s de-humanization of half the country, with the poor put to the proverbial boot? On the whole as Religions with a capital R, Christianity, Islam and Judaism strike me as hostile to women, to the weak and to life, and bent toward world domination. The old beliefs speak of a triple Goddess arising in this world as the archetype of the maiden, the mother, and the crone. Today they are all subdued by dominant visions of the One Male God (OMG), or the One Male Omniscient God (OMOG), as a triplicate tyranny in God the Father, Yahweh and Allah.

An email came through to our department Wednesday, in big bank, that there would be a managerial walk-through at 1:30, and besides not having any personal items at our computer stations, we were required to have our keyboards on our computer trays, NOT on the desk. I didn’t see the email, and no one confronted me, though I can’t be sure it won’t be counted against me that I had my backpack under the desk and my keyboard on the desk. It’s hard to imagine any of my immediate managers insisting.

This is big bank, thinking not of my comfort or health, but of orderly appearances. This is especially obtuse, this kind of oversight, as I’ve waded through two hundred and fifty different big bank proffered mortgage loans in default, the last two days. Talk about government incompetence? Say, institutional. Indeed, Government facilitated these loans I’m expected to do this one thing for, highlighting HUD settlement statements, 150 loans every day the next several days, but the banks profited, big time. Nevertheless, because I have a job to do, I cleared 100 yesterday, 150 loans today, through this stage of the process.

The largest loan of the 250 was $929,000. There were three above $700,000,  about 75 today from Maryland and Virginia, above $400,000. I don’t generally feel too bad about my part until I see a loan under $200,000, the closer the loan gets to $100,000. The especially saddening ones are under $100,000, in rural areas, though the documents aren’t necessarily indicative of refinancing for a quick cash infusion, whatever the state of the debtors. On the whole, these loans do speak of a people trying to step up in class, who overshot, who got suckered into a classic bubble, according to a commercial version of the American dream. The vaunted $25 billion dollar mortgage settlement between the big banks and the State Attorney’s General, is vinyl siding and window treatments to a rotten house, a Cherrio sponge in a bucket full of sour milk. Something I may attempt to benefit from, and report on faithfully if I do, btw, as I am $50,000 under water.

For those readers who remember about my job search, an email arrived from HR, of the DREAM JOB – not just the DREAM JOB, the Job I Was Made To Do. I wasn’t deemed worthy of an interview.

I’m not surprised, nor am I wrecked about it either. Big Bank is not my first choice, but big bank is a kind of blessing in disguise, lipstick on a pig maybe, but a blessing for me now, for sure. A paycheck every week! Though my sister made more in one night serving drinks last week, than I made in my 40 hrs of service to Big Bank. That was sobering. Turns out people don’t drink less when the economy is shitty. Tough work though, hard on the body, slinging drinks. Tough I can’t imagine staring at mortgage documents years on end (though defaults are sure to continue in abundance into the forseeable future, notwithstanding the wish making of the Wall Street Journal, Bloomberg et al.) The benefits have abounded, for me; my house is cleaner than it has been in awhile, I’ve brought a lunch every day since I started, most of it from my garden, and I’m encouraged to think about orderly progress on the house and garden. There is much to do, including turning the garage into a greenhouse, tearing up more of the driveway, a paver patio by the pond, insulating boards for the windows, besides putting the garden to bed for the winter, and the full harvest of course. I get up every weekday at 5am with the alarm. I’ve economised somehow and my best dreams seem to come around 2am.

I wish I could show you pictures of my garden, though no image or series of images or words would suffice to capture the beauty of my garden, after a rain, in the twilight, in the fall. My garden is a lush, abundant, enchanted food and medicinal forest, compared to my neighbor’s consensual, bleak, burned out yards of sod. There is a spontaneous landscape artist on the corner right now (with an easel,) painting the sunflowers in the front, which stand ten feet tall, next to the equally tall broom grass, and the heavenly blue morning glory’s on the fifteen-foot, dead, spiraled lilac trunk I propped up right at the corner. Surrounded by cosmos, hyssop, New-England aster, tomatoes, cabbages, melons and sapling fruit trees.

I finished reading a book this week, called The Alphabet Versus the Goddess. Leonard Shlain’s basic premise is, five thousand years ago, everywhere in many cultures the Great Mother was supplanted by a Violent Male God, wherever there is evidence of the emergence of the written word. The word, he claims, is linear, abstract, and analytical, which is the purview of the left hemisphere of the brain, which is associated with the right side of the body. The right brain is about emotion, connection, image and sound, intuition, art and dancing. The written word literally rewired our brains to be left brain dominant, hence the imbalance in the world, the right angles, the general aggressiveness, incongruous attitudes about life, economy, the earth and universal processes. The world is in process toward re-balance, a return to wholeness and equanimity between the opposites of our being, as evidenced by the re-emergence of the image, Shlain contends. Teevee isn’t so bad, in this sense, insofar as the near universality of the image has primed the human brain toward a greater openness to right brained activity, a greater expansion in the feminine. Shlain believes we are on the verge of a golden age, in which the masculine and the feminine are in greater balance. He wrote his book in the Nineties, before 9/ll, though I don’t think he would be surprised necessarily by the resurgenge everywhere of mysogyny, whether that be fundamentalist Islam or the white male American Republican obsession with controlling the womb. Like I said, the watershed, the final thrust, of a dying paradigm.

I gave the painter a watermelon. I’ve made juice from three kinds of grapes that grow here. I’ve made salsa, and I’ve canned tomatoes and peppers. And while I have the urge to store, preeminent, or at least evident, is a desire to share. I measure the true abundance of this garden by what I will keep and what I will give away. Trusting, when I remember, that what I give will come back.

Shlain though contends, it is not to do away with the word, with Logos, with the analytical and science, but to embrace the spontaneous, life as Art and the joy of being alive, emotion, connection and the relation in every aspect to all things. Because therein arises the essence of the next stage of our evolution, the dis-illusion of duality and the unification of opposites. Arising above all out of the body, as it is a fount of universal energies, to the degree we open up to it.

*er, two. LOL

Knarf plays the Doomer Blues

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Event Update For 2019-05-16http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-05-15http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-05-14http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

Event Update For 2019-05-13http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.htmlThe [...]

With fusion energy perpetually 20 years away we now also perpetually have [fill in the blank] years [...]

My mea culpa for having inadvertently neglected FF2F for so long, and an update on the upcoming post [...]

NYC plans to undertake the swindle of the civilisation by suing the companies that have enabled it t [...]

MbS, the personification of the age-old pre-revolutionary scenario in which an expiring regime attem [...]

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Sustainability

  • Peak Surfer
  • SUN
  • Transition Voice

What is your climate pawprint?"If US dogs had their own country it would be bigger than 200 other countries and likely be on [...]

Orellana's Robots"Climate scientists are now connecting the dots and starting to glimpse how a terra preta thera [...]

Can some nut unseat King Corn?"Acornucopia is sprouting under a tree near you."“I am partial to the peculiar and wholeso [...]

Cheddar and the Leafcutters"What can you do when geophysics outpaces evolution?"My personal ancestry has a major limb [...]

Pushing on to Venus"We need to stop our warming ways or there will be Hell to pay." I sometimes look back at [...]

The folks at Windward have been doing great work at living sustainably for many years now.  Part of [...]

 The Daily SUN☼ Building a Better Tomorrow by Sustaining Universal Needs April 3, 2017 Powering Down [...]

Off the keyboard of Bob Montgomery Follow us on Twitter @doomstead666 Friend us on Facebook Publishe [...]

Visit SUN on Facebook Here [...]

To fight climate change, you need to get the world off of fossil fuels. And to do that, you need to [...]

Americans are good on the "thoughts and prayers" thing. Also not so bad about digging in f [...]

In the echo-sphere of political punditry consensus forms rapidly, gels, and then, in short order…cal [...]

Discussions with figures from Noam Chomsky and Peter Senge to Thich Nhat Hanh and the Dalai Lama off [...]

Lefty Greenies have some laudable ideas. Why is it then that they don't bother to really build [...]

Top Commentariats

  • Our Finite World
  • Economic Undertow

So we've ruined this Planet, we're ruining outer space and we want to start life on other [...]

If I lived in Southern Florida, I would be a lot more concerned about the effects of sea level rise [...]

From the table of contents of the report, Kissinger and others well looking at fertility reduction t [...]

How do pension funds make money at these interest rates? [...]

Hi Steve. I recently found what I believe is a little gem, and I'm quite confident you'd a [...]

The Federal Reserve is thinking about capping yields? I don't know how long TPTB can keep this [...]

As some one who has spent years trying to figure out what the limits to growth are. let me say that [...]

Peak oil definitely happened for gods sake. Just because it isn't mad max right now is no indic [...]

@Volvo - KMO says he made some life choices he regrets. Not sure what they were. And I don't th [...]

RE Economics

Going Cashless

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Simplifying the Final Countdown

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Bond Market Collapse and the Banning of Cash

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Do Central Bankers Recognize there is NO GROWTH?

Discuss this article @ the ECONOMICS TABLE inside the...

Singularity of the Dollar

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Kurrency Kollapse: To Print or Not To Print?

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SWISSIE CAPITULATION!

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Of Heat Sinks & Debt Sinks: A Thermodynamic View of Money

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Merry Doomy Christmas

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Peak Customers: The Final Liquidation Sale

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Collapse Fiction

Useful Links

Technical Journals

The creation of realistic gridded precipitation fields improves our understanding of the observed cl [...]

A recent article reviewed data on Great Salt Lake (Utah) and concluded falsely that climate changes, [...]

Stretching along the border of North Dakota and Minnesota, The Red River Valley (RRV) of the North h [...]

The idea of compact cities is attracting enthusiasts, and some have proposed sustainable options for [...]